Offshoring of Business Servicesand its Impact on the UK Economy

This Briefing Note considers recent trends in specialisation, outsourcing and offshoring of businessservices.Specialisation within a firm happens when a firm organises an activity in a specialised unit, for example,when a firm moves payroll activities out of the back office of a factory, and into a specialised payroll office.Outsourcing is specialisation outside the firm. This occurs when firms opt to ‘buy’ rather than ‘make’ inhouse.Outsourcing involves greater specialisation as firms switch from sourcing inputs internally tosourcing them from separately owned suppliers. Offshoring occurs when firms move production overseas- either its own specialised unit or outsourced services.Business Services are services that are provided to other business, rather than directly to the public. Theyinclude Computer Services, Professional Services (Legal, Accountancy, Market Research, Technical,Engineering, Architectural, Advertising and Consultancy), Research and Development, as well as otherservices such as Labour Placement Agencies and Call Centres.[...]

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Year of publication:	2004-11-01
Authors:	Abramovsky, Laura ; Griffith, Rachel ; Sako, Mari
Institutions:	Advanced Institute of Management Research <London>
Subject:	Dienstleistung \| services management \| Outsourcing \| Spezialisierung \| Standortverlagerung \| Offshoring

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1 EXECUTIVE SUMMARY
2 TABLE OF CONTENTS
3 INTRODUCTION
4 OFFSHORING
4.1 More business services are purchased from the UK than the UK purchases from overseas
4.2 How does the UK position compare to other G5 countries?
4.3 In which types of business services does the UK have a trade surplus?
5 OFFSHORING IS PART OF A MORE GENERAL TREND TOWARDS SPECIALISATION ANDOUTSOURCING
5.1 Offshoring in the context of domestic outsourcing
5.2 Who is purchasing business services?
6 IMPLICATIONS FOR THE UK ECONOMY
6.1 What does the economic theory tell us?
6.2 What has outsourcing and offshoring meant for the UK so far?
7 FUTURE RESEARCH
8 APPENDIX: REFERENCES AND DATA SOURCES
9 ACKNOWLEDGEMENTS .

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