Accessing offshoring advantages: what and how to offshore

The purpose of this paper is to advance the understanding of factors that affect offshoring performance results. To do so, this paper focuses on the access to location-specific advantages, rather than solely on the properties of the offshoring company, its strategy or environment. Assuming that different levels of synergy may exist between particular offshoring strategic decisions (choosing offshore outsourcing or captive offshoring and the type of function) and different offshoring advantages, this work advocates that the actual fact of realization of certain offshoring advantages (getting or not getting access to them) is a more reliable predictor of offshoring success.

A set of hypotheses derived from the extant literature is tested on the data from a quantitative survey of 1,143 Scandinavian firms.

The paper demonstrates that different governance modes and types of offshored function indeed provide different levels of access to different types of location-specific offshoring advantages. This difference may help to explain the ambiguity of offshoring initiatives performance results.

Limitations of the work include using only the offshoring strategy elements and only their limited variety as factors potentially influencing access to offshoring advantages. Also, the findings are limited to Scandinavian companies.

The paper introduces a new concept of access, which can help to more reliably predict performance outcomes of offshoring initiatives. Recommendations are also provided to practitioners dealing with offshoring initiatives.