A typology of offshoring and outsourcing in electronically transmitted services

The offshoring and outsourcing of service work from high-wage to low-wage countries has received considerable exposure in the popular press. Some have claimed that virtually all services that can be electronically transmitted should be offshored due to the extreme labor rate differentials. Relatively little work has actually been offshored to date, making empirical assessment difficult. Here, a normative model of the appropriate role of offshoring is proposed. We present a strategic contingency model, to be viewed at the process level, intimating that firms with the same processes should come to different solutions regarding these decisions.