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date: 08 July 2020

Abstract and Keywords

This chapter analyzes the causes and consequences of outsourcing and offshoring by professional service firms (PSFs). Outsourcing and offshoring result from the same strategic drivers triggering firms to reconfigure their activities organizationally (make-or-buy) and geographically (onshore or offshore). The chapter reviews various economic and management theories that are relevant to outsourcing and offshoring, and makes links to professional services. It then discusses trends towards disaggregation and standardization of professional work, along with digital technology, as prerequisites for outsourcing and offshoring. The chapter homes in on PSFs, and argues that the mode of decisions over outsourcing and offshoring is affected by PSFs’ governance structure. It identifies reasons why professional partnerships make reluctant outsourcers and offshorers compared to managed professional business, and discusses the consequences of outsourcing and offshoring by PSFs, focusing on the ecology of professions, with non-professionals competing with professionals, and the disruptive nature of new entrants in business services.

Keywords: outsourcing, offshoring, professional service firms, make-or-buy, professional work, governance structure

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