Because of service specificities, a face-to-face interaction between the consumer and the provider was required. However, the use of new information technologies eliminates the location constrain. Information can be standardized and stored through digitalization, and ICTs turn them into transportable services, thereby opening up the possibility of trade in some business and computing services. The fragmentation of services is a trend similar to that which happened in manufacturing, but it is proceeding much further and faster by affecting a wide range of service activities.
Published in Chapter:
Scales and Dynamics in Outsourcing
Iva Miranda Pires (Faculdade Ciências Sociais e Humanas, Portugal) and Torunn Kvinge (Fafo Institute for Labour and Social Research, Norway)
Copyright: © 2008
|Pages: 8
DOI: 10.4018/978-1-59904-885-7.ch184
Abstract
Outsourcing is used to describe the situation where a firm decides to subcontract assembly and/or service functions to an external supplier, either locally or abroad. When activities are subcontracted abroad, the term offshore outsourcing often applies. While offshore assembling activities have taken place for some time, the phenomenon of outsourcing services abroad is quite new. Several factors have contributed to these altered circumstances. First, the development of information and communication technologies (ICT) implies that services can, to a great degree, also be located at arm’s length or elsewhere in the flat world (Friedman, 2005). Second, institutional changes have opened access to new markets for goods and services as well as skilled labor, for instance in Eastern Europe and China. Third, the increased competition through globalization pushes firms to adapt quickly to new contexts and to achieve efficiency in order to maintain competitiveness.