Scales and Dynamics in Outsourcing

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Author(s): Iva Miranda Pires (Faculdade Ciências Sociais e Humanas, Portugal)and Torunn Kvinge (Fafo Institute for Labour and Social Research, Norway)
Copyright: 2008
Pages: 8
Source title: Encyclopedia of Networked and Virtual Organizations
Source Author(s)/Editor(s): Goran D. Putnik (University of Minho, Portugal)and Maria Manuela Cruz-Cunha (Polytechnic Institute of Cavado and Ave, Portugal)
DOI: 10.4018/978-1-59904-885-7.ch184

Keywords: Information Science Reference / Media & Communications / Social Computing / Virtual Communities & Virtual Reality

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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.

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