Services offshoring and its strategic effects on value chains.
| Autor | Giao, Paulo Roberto |
INTRODUCTION
Worldwide, there is a rising need for highly skilled technology professionals. These factors have increased corporations' reliance on their outsourced technology service providers and are likely to continue to drive future growth for outsourced technology services. Customers are increasingly demanding improved products and services with shorter delivery times and lower prices. To address these needs, corporations are focusing on their core competencies and using outsourced technology service providers to help improve productivity, develop new products, conduct R&D activities, reduce business risks and manage operations more effectively. Gottfredson, Puryear and Phillips (2005, p. 132) stated that:
(...) outsourcing is becoming so sophisticated that even core functions like engineering, R&D, manufacturing, and marketing can--and often should--be moved outside. And that, in turn, is changing the way firms think about their organizations, their value chains, and their competitive positions. Effective use of offshore technology services offers a variety of benefits, including lower total cost of ownership of IT infrastructure, lower labor costs, improved quality and innovation, faster delivery of technology solutions and more scheduling flexibility. Linder (2004, p. 52) added that
Outsourcing isn't what it used to be. When executives began outsourcing substantial portions of their operations more than a decade ago, they did it due to several reasons. Frequently, the purpose was to offload activities they declared to be non-core in order to cut costs and improve strategic focus. (...) Today, however, companies are looking outside for help for more fundamental reasons ... to facilitate rapid organizational change, to launch new strategies and to reshape company boundaries. In doing so, they are engaging in transformational outsourcing: partnering with another company to achieve a rapid, substantial and sustainable improvement in enterprise-level performance. The changes reported above are influencing business strategies, business plans and, of course, the value chain of many organizations around the world. The main objective of this paper is to examine some known management theories from the offshoring point of view. It detaches some factors in existing theories and how they can be under risk in an increasing offshoring of services process. In the absence of more systematic studies into the effects of offshoring over value chain and core competencies, imprecise borders and definitions, we try to interpret them in a holistic manner and stimulate discussions in a new area of study rather than to provide definitive general conclusions. In a similar theoretical approach, Vasconcelos and Cyrino (2000) analyzed the convergence between business strategy and organizational theory and found a promising research opportunity for both disciplines.
In the recent past, it was felt that it was impossible to outsource some of these activities, such as R&D and innovation, because of their importance to the company, but many things are changing in the business environment, spurred by the pursuit of better financial results and by a more fragmented value chain, down to the level of identifying value chain sub-links.
This paper also has as a second objective: to identify in the literature Brazilian organizations that provide offshoring services to other countries. A recent survey of call centers showed that some organizations are providing services such as customer care, technical support and back-offices. However, this was merely the beginning of an informal or, in some cases, formal identification of companies able to provide these kinds of services. An attempt will be made to answer the following questions: what is the profile of Brazilian organizations in this line of business? How many companies are providing offshoring services? What is necessary to provide offshoring services? Do they only cover low cost services or are value-adding services being provided as well where Brazilian companies are concerned?
The methodological aspects considered mainly the offshoring bibliography that is so impressive, especially since 2000. There seems to be a new trend appearing, like a wedge between strategy and international business theories, or that at least complements these theories. Many citations were quoted as written by their original authors, in order to safeguard their opinions, interpretations and results and to avoid any potential misunderstanding of ours.
BRIEF HISTORY AND DEFINITIONS
Robinson and Kalakota (2004) stated that the origin of offshore outsourcing can be credited to Ronald Coase who, in 1937, in his work 'The Nature of the Firm' explained that firms choose what to produce and what needs to be hired or obtained from outside companies.
Thus, outsourcing is not a new idea. However, the outsourcing process was related to the manufacturing of goods by inshore or offshore third-party companies from the 60s to the 80s. The trend's difference, or the complement to it, was the growing inclusion of services, and not only manufacturing-related activities, in the outsourcing process. According to Farrel (2004), "in the 1980s, manufacturers based in North America, Europe, and Japan built plants and hired workers in low-wage countries, then exported the finished goods back home. (...). Now, globalization is beginning to transform the service industry" (p. 17).
In line with this evolution, Ramanujan and Sandhyia (2006, p. 51) felt that
(...) as the 1990s market matured, most of the companies were routinely outsourcing their information systems functions as well as other functions like finance and taxation, business process units, call centers and other important function which were considered as taboo in initial stages. The offshoring of services, particularly of business services, is a relatively recent phenomenon that first appeared in the 1990s. Because of this novelty factor, headline news tends to cover mainly the offshoring of call centers, back-office data processing, software development and R&D (Sako, 2005, p. 8).
Bardhan and Kroll (2003, pp. 1-2) felt there were two outsourcing waves in the U.S. market, the first regarding manufacturing and the second concerning white collar jobs. The foreign outsourcing of U.S. production and the associated loss of blue-collar jobs in many industries is attributed to the globalization of activities for offshore production of intermediate inputs, usually in low-cost developing countries, such as Taiwan, China, South Korea and Malaysia. However, the software sector was the first in the services field to transfer significant white collar activity abroad, especially to India. The Internet's rapid dissemination, the transnational networks set up by immigrants in the U.S., and the deregulation of emerging market economies set the stage for the outsourcing boom of the 1990s. The second wave of major manufacturing jobs outflow occurred in the late 1990's, chiefly driven by the high-tech sector.
Several major differences distinguish services outsourcing from the preceding wave of manufacturing jobs outsourcing. It is structurally simpler to outsource services than manufacturing, in terms of resources, space and equipment. Thus, services outsourcing can be implemented much more quickly. However, one should be aware that the occupational mix of a sector may determine its vulnerability to Business Process/Services Outsourcing [BPO/BSO]; in some circles it is said that any job that involves mostly "... sitting at a desk, talking on the phone and working on a computer ..." is a job potentially at risk (Bardhan & Kroll, 2003, p. 4).
Nevertheless, there appears to be no consensus as to the definition of outsourcing. For instance, Patki and Patki (2007) informed that the Institute of Electrical and Electronics Engineers [IEEE] and Association of Computing Machinery [ACM] use outsourcing and offshoring interchangeably. Grossman and Rossi-Hansberg (2006) also encountered this confusing interchangeability of words.
Robinson and Kalakota (2004, p. 3) presented a large number of examples that illustrate offshore outsourcing and define offshoring as the migration of part or all of the entire value chain to a low-cost location. They add that offshoring hinges on cost management through labor and skill arbitrage. It depends on the dramatic advances in telecommunications that have made it possible to establish backoffice operations in a variety of locations, thus benefiting from significantly lower labor costs.
The above definitions involve different approaches to these expressions. Excluding the firm's core business, geographical aspects, activities, occupations, the pursuit of cost reduction, better quality and collar color are all used (in an attempt) to define offshoring, but as one can see, no consensus has been reached.
A modest search in the Proquest[R] database using the outsourcing and offshoring words in the abstract field results in finding them mentioned in all documents, as shown in Table 1. It is interesting to note that the expression outsourcing has existed for far longer than the expression offshoring, which first appeared only in 2002 in the Wall Street Journal, in an article about offshoring IT services to India.
Whereas offshoring first appeared in 2002, outsourcing was mentioned 1,261 times that year. Curiously, both peaked in 2004, which was also when offshoring acquired a life of its own, as the column Only Offshoring shows. Additionally, Abramovsky, Griffith and Sako (2004) proposed, as shown in Figure 1, a scheme for differentiating all supply chain possibilities regarding inshore and offshore activities. Horvitz (2004) from McKinsey used the same matrix.
[FIGURE 1 OMITTED]
Our proposed adapted definitions are based on corporate boundaries and location, regardless of the different approaches used in the definitions above. Regardless of the reasons identified by...
Para continuar a ler
PEÇA SUA AVALIAÇÃOCOPYRIGHT GALE, Cengage Learning. All rights reserved.
