Offshoring in the ICT Sector in Europe: Trends and Scenario Analysis

Abstract

In the context of globalization and internationalization, offshoring processes in the ICT Industry have increased considerably in the software and service sector in recent years due to the cost saving strategies and market entry policies of ICT organizations. Through the heterogeneity of the European ICT sector a regionalization trend regarding host country selection for ICT offshore is, nevertheless, observable. Historical and cultural ties between host and home countries as well as related national stereotypes play an important role in the regionalization process. Moreover, due to favorable EU policies and regulations, off- and nearshoring within the European Union acquire an additional attractive character for some major European producers, such as, for example, Germany. Thus the Eastern European Member States, which already build out certain sectoral specialization in regard to ICT service provision, have benefited from direct foreign investments. Off- and nearshoring also imply risks and hidden costs linked to structural aspects in host countries as well as to the overestimation of cultural and historical nearness. In our chapter we discuss the trends of the internationalization process in the European ICT sector taking into account related risks in off- and nearshore processes. We argue, furthermore, that long-term cooperation and intercultural training, with the support of local and European institutions, should be considered to confrontin a better way the challenges of the internationalization of ICT in Europe.