Offshore Behavior of Service Firms: Policy Implications for Firms and Nations

Abstract

The aim of this paper is to provide a more in-depth view on the offshore behavior of service firms and translating findings of an extensive research study on offshoring in the service sector into policy implications for firms and nations. In the article a distinction is made between different types of offshoring service firms use to relocate their business activities and jobs involved to foreign locations, i.e. under direct control (captive offshoring) or using an intermediary (offshore outsourcing) or a combination of both, as a special form of internationalization. The findings of our research study show that different motives result in distinct choices of service firms for offshore outsourcing or captive offshoring and offshore locations. Furthermore, various categories of motives relate to different barriers. More importantly, results of this study show that alignment of initial motives and set goals in different phases of the offshoring process increases the success rate of offshoring by service firms.

Keywords:

• Offshoring
• outsourcing
• global sourcing
• internationalization
• service firms
• competitive advantage

Additional information

Notes on contributors

Désirée van Gorp

Désirée M. van Gorp is a PhD-candidate and Assistant Professor of International Business at Nyenrode Business Universiteit. She teaches International Business and is awarded as teacher of the year in the Master of Science Program for Management in 2006. Her most current research is on global sourcing and offshoring with a special focus on the service industry. She joined Nyenrode in 1999 and is director of a centre of excellence in the study of competition: the Nyenrode Institute for Competition (NIC). NIC specializes in research and programs that provide to the participants a full understanding and insight in competition policies, the practical enforcement of EU and other competition rules and their impact on for example international cooperation.

Pieter Klaas Jagersma

Pieter K. Jagersma is Professor of International Business and Export Management at Nyenrode Business Universiteit and Professor of Strategy at Amsterdam Vrije Universiteit where he teaches (global) corporate and competitive strategy. He is CEO of eXistenZ Investments, an investment company. As a global executive, he serves on the boards of directors of various companies. Professor Jagersma is the author of 20 books and over 200 articles in his field. After receiving his PhD in Economics from Tilburg University, he worked with McKinsey&Co. Subsequently, he was appointed as managing director at KPN Finance. In 1997, Jagersma was appointed the youngest business administration professor in the Dutch history.

Alexander Livshits

Alexander Livshits is a research fellow at the Nyenrode Institute for Competition. Apart from his research activities at Nyenrode, he is since 2005 managing partner at the ETIRC (European Technology and Investment Research Centre), which is headquartered in the Netherlands and has several affiliated international offices. Being part of a thriving venture capital organization founded in 2003, he is involved in several start-up technology companies in the Former Soviet Union. He combines his research efforts with assisting these start-ups in assessing their viability and looking for investment capital. His current research focus is on foreign direct investments in emerging markets and especially in the FSU.