Offshoring Work: Business Hype or the Onset of Fundamental Transformation?

This paper reports the findings from the Offshoring Research Network (ORN), which studies the offshoring of administrative and technical work to low-cost countries. Initial data suggest that offshoring is still at an early stage but growing rapidly. However, as the practice of offshoring becomes more widely adopted it is likely to fundamentally change the way companies in the industrialised high-cost economies organise to compete globally. The picture that emerges is that adoption of offshoring practices largely follows an opportunistic bottom-up, sequential process. During the early phase companies report cost savings and achieved service levels far exceeding initial expectations. This paper presents the case that offshoring may actually foreshadow a much more fundamental transformation involving several co-evolving forces including the commoditisation of organisational processes, the emergence of hybrid organisational forms, the competition of developing countries for offshoring jobs, and the globalisation of sourcing and management of human capital.