international service tradability understanding the service offshoring pierre-yves leo jean philippe...

International service tradability

understanding the service offshoring

Pierre-Yves LEOJean PHILIPPE

Aix Marseille UniversityCERGAM-MI, Faculté d’économie et de gestion

MC MonnoyerToulouse University

France

The context

2

International outsourcing of service activities fuels fears of globalization Low skilled jobs and skilled workers are both concerned Concentration on software, tech-consulting business,

marketing surveys, call centers, pharmaceutical testing services

But a small % of the total service workforce can be performed

in foreign locations Few truly multinational service companies Outsourced Job loss are less than job loss by service

productivity gains in home countries

ECLAC 2012 LEO et PHILIPPE

A research question Offshoring could take to a far greater

magnitude in the very near future Services are no longer “protected” from

international competition Former planned economies have opened up free

trade The drop in the price of telecommunications

has enabled the emergence of crossborder service exchanges

Which kind of offshoring for service firms ?

ECLAC 2012 LEO et PHILIPPE3

AgendaTo clarify the debate

1. Service firms organization models

1. The mecanisms of service offshoring

1. Determining factors of delocalization

2. Conclusion


1.Service firms organization models

5

Traditional service firms Face to face in firm premises Dichotomy between back and front office

Professional service firms Face to face in client premises Administrative back office

Internet service firms No face to face, firm location in cyber space


6

L’entreprise de service traditionnelle

ClientB

ClientB

Service A

Service B

ClientA

S

O

I

SupportPhysiqueet M.O

Managementde l'unité

SUPPORTPHYSIQUE

PERSONNELEN CONTACT

Jamaisvisiblepar leclient

"back office"

partiellement et/ouépisodiquementvisible par le client

"front office"

toujours visiblepar le client

ARRIERE DEVANT

Eiglier & Langeard


77

client

Le modèle Flexiform

Directeur général

Équipe de gestion

Centre économique

consultant

client

consultant

Chef d’équipe

Aire de travail

Espace de liaison

Centre administratif

Unité opérationnelle

Unité opérationnelle

Environnement hors client

Flux de pouvoir : Flux d’autorité :


88

Le modèle Internet

interfaces

serveur

données

Centres de données de 2° niveau

Exemplesbourse

bibliothèques

@personnel en contact

@client

@client

Centre logistique

ServuctionTraditionnelle

Hôtel, etc.

Cyber espace


2.The mecanisms of service offshoring

9

ICT bring costs reduction and new service concepts

The internationalization of firms works like a catalyser of the new concepts It constitutes a factor for standardized

procedures It brings plasticity


2. Conditions of ICT use

Service immateriality

Propensity to be digitalized

Simple service offer


2. Conditions of ICT use

Accuracy of information given by clients

Length of customer contact

Foreseeable service result


2. Impact of ICT on service tradability

12

Use of cross border relations instead of movements of person either the client or the contact personnel

Wiring of the foreign agencies to multinational networks

Production of services through network (Intranet, Extranet, Internet) on a fragmented mode by added value collected in different locations similar to industrial mode of production


2.Impact of ICT on firms

13

Spatial dissociation of back and front office Exportation of cross borders services Service of domestic clients by outsourced front

offices (call centers) Outsourcing of back offices working for various

domestic front offices Network of foreign front offices to share elements

of back office (client data, firm data) Grouping of back offices agencies of

multinational firm in central regional location


2.Determinants of outsourcing - costs

14

Low-wage work force, flexibility and skills

Cultural and linguistic proximity

International IT connections

Fiscal and administrative attractiveness

Metropolitan location in order to benefit of customers concentration, quality of infrastructures, skilled work force


2.Determinants of outsourcing – demand

15

Markets dynamics for customers services Level and growth of revenue per capita Urban concentration

Markets dynamics for producers services Level of externalization in the economy % of tertiary jobs in manufacturing firms Rate of structural sector change


16

Type of Delocalization

Geography Fiscal and administrative environment

Economy Culture

Foreign agencyserving

local market

-Metropolitanpopulation-Transport & Telecom infrastructures- Climate

- Settlement laws

- Profit Transfer

regulation- Profession regulation

- Market size & growth rate

- Importance of the population

(consumer services)

- Consumer incomes (personal

services)- Tertiarization of

the economy (Business Serv.)

- Religious & social norms

- Cultural proximity


3. Determining factors of delocalization

17

Type of internationalization


Economy Culture

Foreign agencyserving home

market

-Transport & telecom infrastructures-Compatibility of time zones-Distance

- Settlement law- Profit Transfer

regulation-Job flexibility

-Fiscal competitiveness-Bureaucratic

style

-Skilled workers with low wages-Importance of man power turn

over

- Common language- Cultural proximity


3.Determining factors of delocalization

18



Economy Culture

Outsourced back office -Telecom

infrastructures-Compatibility of time zones-Distance

- Administrative

system-Job flexibility

-Fiscal exemption

-Light bureaucratic

style

-Skilled workers with low wages

-Importance of man power turn over

-Efficient laws and judiciary system against digital

piracy & counterfeit

- Common language

- Religious neutrality



19



Economy Culture

Regional outsourced back office

of multinational

Firms

-Central regional position-International metropolis-Transport & Telecom infrastructures-Infrastructures position (hub)

-Administrative system

-Job flexibility-Fiscal

exemption- bureaucratic

style

-Skilled workers with low wages

-Importance of man power turn over

-Efficient laws and judiciary system against digital

piracy & counterfeit

- Common language

- Religious neutrality



Conclusion

Several outsourcing trends:

- East to Western Europe

- North to South

No more shelter for service jobs

But still most services can only be consumed and performed locally


06/2005 French Sénat


Thank you,Muchas gracias

Merci

international service tradability understanding the service offshoring pierre-yves leo jean philippe...

Documents

service b client

leo et philippe slide

traditional service

office internet service

leo et philippe10 slide

leo et philippe11 slide

new service concepts

leo et philippe3 slide