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CS/Econ/IR/Politics 125 Offshore Outsourcing Meaning, Extent, and Implications Jim Burke and Eva Paus February 6, 2006.

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Presentation on theme: "CS/Econ/IR/Politics 125 Offshore Outsourcing Meaning, Extent, and Implications Jim Burke and Eva Paus February 6, 2006."— Presentation transcript:

1 CS/Econ/IR/Politics 125 Offshore Outsourcing Meaning, Extent, and Implications Jim Burke and Eva Paus February 6, 2006

2 CS/Econ/IR/Politics 125 Distinguish: Outsourcing and Offshoring Outsourcing: a company buys from a third party a part/service it used to produce itself. Offshoring: a company buys from abroad a part/service it used to produce itself. The provider can be a third party or an affiliate.

3 CS/Econ/IR/Politics 125 Inflows of Foreign Direct Investment, 1970 – 2003 (millions of current U.S. dollars) 19701980199020002003 World12,92654,923208,5011,392,957559,576 Developed Countries9,47746,530171,0761,120,528366,573 EU5,12721,31796,773683,893295,194 Ireland3228662226,44725,497 US1,26016,91848,422314,00729,773 Developing Countries3,4498,35836,955246,057172,033 Developing Countries w/o China..8,30133,468205,285118,528 Africa9283922,4298,48915,033 South America5223,6314,87457,24821,268 Central America and Caribbean1,0633,8544,82638,11049,722 Asia79936224,260142,091107,120 Central and Eastern Europe..3547126,37320,970 Source: UNCTAD database

4 CS/Econ/IR/Politics 125 Inflows of Foreign Direct Investment, 1970 – 2003 (percentage distribution) 19701980199020002003 World100 Developed Countries73.384.782.180.465.5 EU39.738.846.449.152.7 Ireland0.20.50.31.94.6 US9.730.823.222.55.3 Developing Countries26.715.217.7 30.7 Developing Countries w/o China..15.116.114.721.2 Africa7.20.71.20.62.7 South America4.06.62.34.13.8 Central America and Caribbean8.27.02.32.78.9 Asia6.20.711.610.210.1 Central and Eastern Europe..0.10.21.93.7 Source: Calculated based on UNCTAD database

5 CS/Econ/IR/Politics 125 Sectoral Distribution of Employment in Sample Countries, 2003 Source: McKinsey, June 2005, p. 18

6 CS/Econ/IR/Politics 125 India$ 12.2 billion Ireland$ 8.6 billion Canada$ 3.8 billion Israel$ 3.6 billion China$ 3.4 billion Philippines$ 1.7 billion Mexico$ 0.5 billion Australia$ 0.4 billion Approximate Value of Offshore BPO and IT Services in Supplying Countries, 2003 Source: McKinsey, June 2005, p. 13

7 CS/Econ/IR/Politics 125 Attributes of Jobs Outsourced No face-to-face customer service requirement High information content Work process is telecommutable and internet enabled High wage differential with similar occupation in destination country Low setup barriers Low social networking requirements Source: Bardhan & Kroll, 2003, Figure 2, p.4

8 CS/Econ/IR/Politics 125 Data Difficulties Regarding Service Trade In 2001: U.S. cross-border exports of services was $ 276 billion. Sales of services by U.S. TNCs in foreign countries through foreign affiliates were $ 432 billion. Source: Kirkegaard 2004, 24-25.

9 CS/Econ/IR/Politics 125 Data Difficulties Regarding Service Trade: U.S.-India Trade in Computer and Information Services, in $ millions. Source: Kirkegaard 2004, Table 1, p.25

10 CS/Econ/IR/Politics 125 No of ISO 9000 Certificates Source: http://www.iso.org/iso/en/iso9000-14000/pdf/survey2003.pdf

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