A Butterfly Answers Customer Service Calls in China: The Tempestuous Response to Service Offshoring Across the Globe and Why It’s Irrational

Abstract

This paper will discuss the current and future status of service offshoring, and will argue primarily that owing to certain natural constraints on offshoring, there is limited prospect for future growth in this field. In particular service offshoring will not be the cause of massive job dislocations as was the case with manufactures offshoring. The paper will examine both empirical and theoretical reasons why this is the case, and will synthesize the two when appropriate. Particular attention is paid to diverse reasons for the rise of offshoring, including those resulting from economic, political, historical and managerial rationales. The interplay of factors that gave rise to manufactures offshoring is examined, as is its relation to future growth in service offshoring. The paper will then entertain arguments against service offshoring and its continued growth, and will argue that such growth is likely to be mild and short-lived, and that benefits redound to all participants in offshoring, but especially to developed Anglophone nations. Finally, the associated issue of the particular effects of offshoring on developing-country participants is discussed, as are possible political and economic remedies for those minor adverse effects of increased offshoring, both for developed and developing countries.