Of Offshore Service Outsourcing Location Choice Studies

Offshore service outsourcing is gaining increasing importance and attention in both theory and practice. The purpose of this research is to develop and apply theory to improve understanding of the offshore service outsourcing location decision. We do this by emphasising human capital dimension and adding firms-specific factors to the Dunning framework of distance, infrastructure, country risk and government policy. firms-specific factors includ firm's outsourcing motives, nature of outsourcing activities, and internationalized experiece such as FDI and outsourcing experiece. The model provides a way for firms and researchers to take a more systematic and comprehensive analysis to outsourcing location decision.Then we analyze the relationship between offshoring service outsourcing and loction factors including distance, infrastructure, country risk, government policy and human capital with panal data model based the data from six countries and 1995-2008. Our findings show that quality of IT infrasture, country risk and quality of human captial insignificantly impact on the amount of offshoring service outsourcing, which may be explained by firms-specific factors.Using cases study to vertify the moderating effect on location factors by firms-specific factors. The results consist four parts. One is that if firm's outsourcing motive is cost cutting, then location factors about costs will be more significant, such as cost of IT infrasture, government policies and cost of human capital. When motive is capability enhancement, the rest location factors will play more important role. Two is that if nature of outsourcing activities affacts location factors, there are similar results. Because if nature of outsourcing activities is high process standardization, low strategic importance and low asset specificity, firm's outsourcing motive is more likely to be cost cutting. Three is that nature of outsourcing activities are in connection with outsourcing motives. The last one is that firms-specific factors influence the choice between vendors and location in sequence.