Sizing the Emerging Global Labor Market: Rational Behavior from Both Companies and Countries Can Help It Work More Efficiently

Farrell, Diana; Laboissière, Martha A.; Rosenfeld, Jaeson
November 2006
Academy of Management Perspectives;Nov2006, Vol. 20 Issue 4, p23
Academic Journal
Offshoring is a growing phenomenon. Increasingly, companies based in high-wage economies are hiring skilled workers in lower-wage economies to undertake service tasks that can be performed remotely, such as IT maintenance and call center operation. Today, improvements in information technology and falling telecommunication costs mean that any activity that is not tied to a particular place by the need for customer contact, or local knowledge, or complex, face-to-face interactions with colleagues can--in theory--be performed remotely. Thanks to freer trade between countries and a reduction in the perceived risks of operating overseas, companies can choose to perform such an activity in a lower-cost offshore location, if that seems advantageous, either by outsourcing to a third party vendor, or by developing its own, captive operation. Both choices comprise what we know as "offshoring."


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