Outsourcing and Offshoring of Business Services: Challenges to Theory, Management and Geography of Innovation

M<sc>assini</sc> S. and M<sc>iozzo</sc> M. Outsourcing and offshoring of business services: challenges to theory, management and geography of innovation, <italic>Regional Studies</italic>. Drawing on an original survey, this paper discusses the trends and challenges posed by the outsourcing and offshoring of business services. It documents and analyses the increasing offshoring of business services (administrative services, call centres, information technology services, procurement, and product development) from the United States and Europe to less developed countries, the functions offshored, the size of offshorers, their destination, and the delivery models, and it explores the role of information and communication technologies and the development of both large global services suppliers and entrepreneurial ventures in developed and less developed countries. The paper derives implications regarding outsourcing decisions, the globalization of high value-adding activities, such as product development and innovation, raising issues of evolving market structure and the emergence of technical clusters where companies develop expertise to provide, and compete for, activities and skills across a range of sectors.