...OXFORD REVIEW OF ECONOMIC POLICY, VOL. 22, NO. 4 DOI: 10.1093/oxrep/grj029 OUTSOURCING AND OFFSHORING: IMPLICATIONS FOR PRODUCTIVITY OF BUSINESS SERVICES MARI SAKO Saïd Business School, Oxford1 This paper reviews the implications of outsourcing and offshoring for the productivity of business services in the UK. Official statistics indicate that business-service productivity has grown by over 20 per cent in the last 7 years at the same time as employment grew by 20 per cent. The paper considers possible factors that account for the simultaneous growth of employment and productivity. First, we discuss outsourcing and offshoring, and their role in enhancing productivity through greater specialization, standardization, and consolidation of business processes, and a shift to higher value-added services. Outsourcing of business services is interpreted as part of corporate restructuring, namely as the unbundling of corporate functions as well as vertical disintegration. Second, as some services become more like products, both low-skilled and high-skilled jobs are subjected to productivity growth through standardization and digitization. It is argued, however, that the future of business-service productivity is on a knife-edge, depending on the mix of two sources of productivity enhancement—namely greater standardization and capturing value from customized solutions. I. INTRODUCTION Services have become a dominant part of the UK economy, accounting for 66 per cent of GDP,...
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... "Why Do Some Countries Produce So Much More Output per Worker than Others?" Quarterly Journal of Economics, February 1999, Vol. 114, pp. 83-116. *John Fernald and Brent Neiman, “Growth Accounting with Misallocation: Or, Doing Less with More in Singapore” AEJ Macroeconomics, 3(2) April 2011 (Better than the optional article on the reading list, that you can still google.) Institutions “The Road to Hell is Unpaved” Economist, December 19, 2002 (on-line only) The Panda has Two Faces, The Economist, March 31, 3010 (on-line only) “Mad, Bad and Dangerous to Know” The Economist, Jan 14, 2010 (on-line only) Openness *“The Free Trade Fix” New York Times Magazine, August 18, 2002 *Blinder, Alan, “Offshoring: The Next Industrial Revolution?” Foreign Affairs, March/April 2006, pp. 113-128. Financial Markets “The Start of a Crisis, Through the Lens of Avis” New York Times, March 24, 2009 (on-line only) “Link by Link” The Economist, Oct 16, 2008 (on-line only) Technological progress Week 4: Money, inflation, banking (and...
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...J A N U A R Y 2 014 Next-shoring: A CEO’s guide Katy George, Sree Ramaswamy, and Lou Rassey Proximity to demand and innovative supply ecosystems will trump labor costs as technology transforms operations in the years ahead. The problem Demand for manufactured goods in emerging markets is surging and fragmenting as factor costs shift; technological advances, such as more powerful robotics and the Internet of Things, are creating a range of new opportunities for manufacturers to digitize operations. Why it matters Manufacturing strategies built on labor-cost arbitrage are becoming outmoded; the race is on to get ahead of what comes next. What to do about it Place greater emphasis on proximity to both demand and innovation while: • Making location decisions that balance economies of scale against the growing diversity of tastes within and across global markets Building supplier ecosystems that combine technical expertise with local domain and market knowledge Developing the people and skills needed to make the most of technological advances across the organization • • © Bruno Ehrs/Corbis 2 When offshoring entered the popular lexicon, in the 1990s, it became shorthand for efforts to arbitrage labor costs by using lowerwage workers in developing nations. But savvy manufacturing leaders saw it as more: a decisive change in globalization, made possible by a wave of liberalization in countries such as China and India, a steady improvement in the capabilities...
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...M A R C H 2 014 Are you ready for the resource revolution? Stefan Heck and Matt Rogers Meeting increasing global demand requires dramatically improving resource productivity. Yet technological advances mean companies have an extraordinary opportunity not only to meet that challenge but to spark the next industrial revolution as well. Most cars spend more than 95 percent of their time sitting in garages or parking lots. When in use, the average occupancy per vehicle is well below two people, even though most cars have five seats. Roads are likewise extremely inefficient. Freeways can operate at peak throughput (around 2,000 cars a lane per hour) only when they are less than 10 percent covered by cars. Add more, and congestion lowers speeds and reduces throughput. Most roads reach anything like peak usage only once a day and typically in only one direction. For a visualization of these dynamics, see Exhibit 1. The story is similar for utilities. Just 20 to 40 percent of the transmission and distribution capacity in the United States is in use at a given time, and only about 40 percent of the capacity of power plants. The heat-rate efficiency of the average coal-fired power plant has not significantly improved in more than 50 years—an extreme version of conditions in many industries over the past century. Automotive fuel-efficiency improvement, for example, has consistently lagged behind economy-wide productivity growth. Underutilization and chronic inefficiency cannot...
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...Learning Objectives Chapter 1 1 Distinguish between business and not-for-profit organizations. 2 Identify and describe the factors of production. 3 Describe the private enterprise system, including basic rights and entrepreneurship. 4 Identify the six eras of business, and explain how the relationship era—including alliances, technology, and environmental concerns—influences contemporary business. 5 Explain how today’s business workforce and the nature of work itself is changing. 6 Identify the skills and attributes managers need to lead businesses in the 21st century. 7 Outline the characteristics that make a company admired by the business community. iStockphoto The Changing Face of Business S nuggie: The Break-out Blanket Hit I f the first thing you do when preparing to curl up with a good textbook like this one is to reach for your Snuggie, you have plenty of company. Sales of the funky blanket with sleeves were expected to reach as high as 20 million units in just the second year the cozy accessory was available. Combined with the 5 million blankets sold in the first year, that volume will bring the value of total retail sales of the Snuggie to more than $300 million. That’s a respectable profit for an inexpensive product whose unique design and ungainly shape have made it the butt of YouTube parodies and late-night talkshow jokes. It means Allstar Marketing Group, which markets the Snuggie, is obviously doing something ...
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...Journal of Economic Literature Vol. XLV (March 2007), pp. 83–126 A Flat World, a Level Playing Field, a Small World After All, or None of the Above? A Review of Thomas L. Friedman’s The World is Flat EDWARD E. LEAMER∗ Geography, flat or not, creates special relationships between buyers and sellers who reside in the same neighborhoods, but Friedman turns this metaphor inside-out by using The World is Flat to warn us of the perils of a relationship-free world in which every economic transaction is contested globally. In his “flat” world, your wages are set in Shanghai. In fact, most of the footloose relationship-free jobs in apparel and footwear and consumer electronics departed the United States several decades ago, and few U.S. workers today feel the force of Chinese and Indian competition, notwithstanding the alarming anecdotes about the outsourcing of intellectual services. Of course, standardization, mechanization, and computerization all work to increase the number of footloose tasks, but innovation and education work in the opposite direction, creating relationship-based activities—like the writing of this review. It may only be personal conceit, but I imagine there is a reason why the Journal of Economic Literature asked me to do this review. 1. Prologue hen the Journal of Economic Literature asked me to write a review of The World is Flat: A Brief History of the Twenty-First Century (Farrar, Straus, and Giroux 2005) by Thomas Friedman, I responded with enthusiasm,...
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...THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION?∗ Carl Benedikt Frey† and Michael A. Osborne‡ September 17, 2013 . Abstract We examine how susceptible jobs are to computerisation. To assess this, we begin by implementing a novel methodology to estimate the probability of computerisation for 702 detailed occupations, using a Gaussian process classifier. Based on these estimates, we examine expected impacts of future computerisation on US labour market outcomes, with the primary objective of analysing the number of jobs at risk and the relationship between an occupation’s probability of computerisation, wages and educational attainment. According to our estimates, about 47 percent of total US employment is at risk. We further provide evidence that wages and educational attainment exhibit a strong negative relationship with an occupation’s probability of computerisation. Keywords: Occupational Choice, Technological Change, Wage Inequality, Employment, Skill Demand JEL Classification: E24, J24, J31, J62, O33. We thank the Oxford University Engineering Sciences Department and the Oxford Martin Programme on the Impacts of Future Technology for hosting the “Machines and Employment” Workshop. We are indebted to Stuart Armstrong, Nick Bostrom, Eris Chinellato, Mark Cummins, Daniel Dewey, David Dorn, Alex Flint, Claudia Goldin, John Muellbauer, Vincent Mueller, Paul Newman, Seán Ó hÉigeartaigh, Anders Sandberg, Murray Shanahan, and Keith ...
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...Abstract Over the past few decades, the global scenario has changed considerably with increased interdependence amongst nations and economies. This intertwining amongst nations and sharing of ideas and technology has been termed as “Globalization”. Globalization has been a buzzword of late, with heated discussions about its pros and cons. Some consider it to be a blessing for mankind while others take it as a curse. For some it has brought about material prosperity while others have become unemployed due to it. This paper tries to analyse the effect of Increased International Trade and Globalisation on the US economy. The first section discusses the pros and cons of Globalization while the second section discusses how globalization has lead to increased foreign trade. Thereafter, it discusses the effect of globalisation and increased foreign trade on the American economy. Introduction Trade is believed to have taken place throughout much of recorded human history, whether as barter or in exchange of currency. Till the 1800’s, trade was limited due to difficulties in transportation, communication and restrictive trade policies. However, in the mid 19th century, with advent of free trade and nation advantage concepts, trade started to pick up (Daniels & Sullivan, International Business and Operation). Although international trade has been present throughout much of history, for example Silk Route, its economic, social, and political importance have increased in recent...
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...No. 2005-12-A Office of Economics Working Paper U.S. International Trade Commission Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy? William Greene* U.S. International Trade Commission January 2006 *The author is with the Office of Economics of the U.S. International Trade Commission. Office of Economics working papers are the result of the ongoing professional research of USITC staff and are solely meant to represent the opinions and professional research of individual authors. These papers are not meant to represent in any way the views of the U.S. International Trade Commission or any of its individual Commissioners. Working papers are circulated to promote the active exchange of ideas between USITC Staff and recognized experts outside the USITC, and to promote professional development of Office staff by encouraging outside professional critique of staff research. Address correspondence to: Office of Economics U.S. International Trade Commission Washington, DC 20436 USA No. 2006-01-A OFFICE OF ECONOMICS WORKING PAPER U.S. INTERNATIONAL TRADE COMMISSION Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy? William Greene U.S. International Trade Commission January 2006 The authors is with the Office of Economics of the U.S. International Trade Commission. Office of Economics working papers are the result of the ongoing professional research of USITC Staff and are solely meant to represent...
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...What Is Organizational Communication?[edit] L ike defining many aspects of communication study, many of the definitions of organizational communication share common elements. Stanley Deetz (2001) argues that one way to enlighten our understanding of organization communication is to compare different approaches. However, for the purpose of this text, we want to define organizational communication so you have a frame of reference for understand this chapter. Our definition is not definitive, but creates a starting point for understanding this specialization of communication study. We define organizational communication as the sending and receiving of messages among interrelated individuals within a particular environment or setting to achieve individual and common goals. Organizational communication is highly contextual and culturally dependent, and is not an isolated phenomenon. Individuals in organizations transmit messages through face-to face, written, and mediated channels. Organizational communication largely focuses on building relationships, or repeated interpersonal interactions, with internal organizational members and interested external publics. Goldhaber (1990) identified a number of common characteristics in the variety of definitions of organizational communication -- Organizational communication 1) occurs within a complex open system which is influenced by, and influences its internal and external environments, 2) involves messages and their flow, purpose...
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...rP os t HAR VA R D B U S I N E SS S C H O O L P R E SS op yo The End of Management? E xc e r p t e d fro m The Future of Management By Do No tC Gary Hamel with Bill Breen Harvard Business School Press Boston, Massachusetts ISBN-13: 978-1-4221-2509-0 2509BC This document is authorized for use only by Juan Pablo Pimiento at UNIVERSIDAD AUTONOMA DE BUCARAMANGA UNAB until August 2013. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860. rP os t op yo Copyright 2007 Harvard Business School Publishing Corporation All rights reserved Printed in the United States of America This chapter was originally published as chapter 1 of The Future of Management, copyright 2007 Harvard Business School Publishing Corporation. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. Do No tC You can purchase Harvard Business School Press books at booksellers worldwide. You can order Harvard Business School Press books and book chapters online at www.HBSPress.org, or by calling 888-500-1016 or, outside...
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...International Journal of Business and Social Science Vol. 4 No. 8 [Special Issue – July 2013] Outsourcing: A Review of Trends, Winners & Losers and Future Directions Zafar Iqbal Lecturer Faculty of Administrative Sciences Kotli University of Azad Jammu and Kashmir MSc. University of Bedforshire, UK. Aasim Munir Dad PhD. Scholar The School of Business & Management University of Gloucestershire Cheltenham, GL50 2RH. Abstract The primary objective of this paper is to analyse the outsourcing trends in last one decade and to forecast the future on the basis of past studies. In this paper concepts and trends about outsourcing has been discussed on the basis of past studies. An extensive amount of literature review has been done to obtain the objective. This paper demonstrates the previous literature and findings. Outsourcing has become inevitable and virtually many of the multinationals are outsourcing to utilise scarce in-house resources. In this research it is being observed that owners of the companies are the prime winners in outsourcing and off shoring situation. Further, a detailed review of literature indicates that along with many other motives cost factor cause major influence in outsourcing decisions. There is an ultimate outcry over the jobs going overseas from industrialized nations such as United States, the UK and the western World. However, the net economic gains for these countries are growing, and outsourcing to an offshore destination will...
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...Chapter 1: THE DYNAMIC ENVIRONMENT OF HRM LEARNING OUTCOMES After reading this chapter, students should be able to: • Discuss how cultural environments affect human resource management (HRM) practices. • Describe how technology is changing HRM • Identify significant changes that have occurred in workforce composition • Describe the HRM implications of a labor shortage • Describe how changing skill requirements affect HRM • Explain why organizational members focus on quality and continuous improvements • Describe work process engineering and its implications for HRM • Identify who makes up the contingent workforce and the HRM implications • Define employee involvement and list its critical components • Explain the importance of ethics in an organization. CHAPTER OVERVIEW The chapter’s opening vignette illustrates how Four Seasons Resorts and Hotels uses the Golden Rule to treat the employees as you expect them to treat the customer. While customers like to be pampered, so do the employees as evidenced by the Four Seasons being listed in Fortune magazine as one of the “Best Companies to Work For” every year since the list started in 1998. Overviews of today’s dynamic business world, highlighting cultural environments, globalization, technology, and social history evolution, set the stage for discussions about the implications to the HR field. These topics include: multicultural issues, global workforces, HRM technology, workforce...
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...Management Quality and Competitiveness Christoph H. Loch Stephen E. Chick Arnd Huchzermeier ● Management Quality and Competitiveness Lessons from the Industrial Excellence Award Prof. Dr. Christoph H. Loch INSEAD Boulevard de Constance 77305 Fontainebleau Cedex France christoph.loch@insead.edu Prof. Dr. Arnd Huchzermeier WHU-Otto Beisheim School of Management Burgplatz 2 56179 Vallendar Germany ah@whu.edu Prof. Stephen E. Chick INSEAD Boulevard de Constance 77305 Fontainebleau Cedex France stephen.chick@insead.edu ISBN 978-3-540-79183-6 e-ISBN 978-3-540-79184-3 Library of Congress Control Number: 2008925414 © 2008 Springer-Verlag Berlin Heidelberg This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and...
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...Mapping the outsourcing landscape Jakki J. Mohr, Sanjit Sengupta and Stanley F. Slater Jakki J. Mohr is the Jeff and Martha Hamilton Distinguished Faculty Fellow, Regents Professor of Marketing, at the School of Business Administration, University of Montana, Missoula, Montana, USA. Sanjit Sengupta is Professor of Marketing at the College of Business, San Francisco State University, San Francisco, California, USA. Stanley F. Slater, is the Charles and Gwen Lillis Professor of Business Administration in the Department of Marketing, College of Business, Colorado State University, Fort Collins, Colorado, USA. The authors thank Professor Ron Premuroso for his helpful contributions to this manuscript. PAGE 42 j utsourcing is an arrangement in which one company (the client) hires another company (the service provider) to perform a particular function on its behalf. It involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. Based on a contractual agreement that defines the transferred services and fees, the client agrees to procure the services from the supplier for the term of the contract. Outsourcing has become more global and extensive in its scope, involving more business functions and complex contractual arrangements (Tadelis, 2007). As customer needs have evolved, so have service providers’ desire to ‘‘move up the value chain’’ and claim a larger share of...
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