Direct and indirect value creation in offshored knowledge-intensive services

Abstract

Despite increasing interest in offshoring of knowledge-intensive services, it is still undetermined if sourcing of services, truly creates the anticipated value for clients. Moreover, even less is known if there is value created for service providers in the process beyond the general service trade. This lack of knowledge is based on the challenges in capturing value creation, the unique production process of the services and the impact of offshoring on both value creation and the production process. This paper studies offshored service production processes in order to identify direct and indirect value creation for clients as well as service providers in the service production process. Methods: The paper applies a multiple case study method and studies one conglomerate with three offshored service production processes. The chosen method allows investigating the service production process and indirect/direct value creation within the process in detail. Findings: The study finds that there is direct value creation for the client and the service provider towards the end of the production processes as expected. However, more importantly it finds additional indirect value creation in various production stages. The indirect value is reflected in enhanced understanding of problems and own operations for the client and gained knowledge about clients and problem-solving approaches for the service provider as well as knowledge on international communication and team coordination for both firms. Research implications: This study contributes to offshoring literature with a comprehensive understanding on value creation in service offshoring for clients as well as service providers. It

Bridging what we know: The effect of cognitive distance on knowledge-intensive business services produced offshore

“…Moreover, Stabell and Fjeldstad's (1998) model has been applied in various contexts, including knowledge intensive business services (e.g. Brandl, 2017).…”

“…In the example above, the client explains the model and shares knowledge on possible locations of information. The service provider establishes how the models are updated and where required information can be found (Brandl, 2017). Thus, the potential benefits of increased CD associated with problem solving are vast, as solutions have been framed and can be understood fairly easily (Stabell & Fjeldstad, 1998).…”

The reconfiguration of service production systems in response to offshoring

“…the production of services (e.g. Goldstein et al, 2002) is subject to change as a consequence of offshoring (see Brandl, 2017, for an exception). For example, in the case of Outsourcia, a Moroccan provider of offshore services, "employees soon progressed beyond simply fielding complaints and inquiries to developing close and continuing relationships with the clients" (Financial Times, 2013).…”

The impact of offshoring on knowledge‐intensive services: A study of activities in service production processes

“…Bertrand & Mol, 2013;Contractor, Kumar, Kundu, & Pedersen, 2010;Mukherjee, Gaur, & Datta, 2013) of service offshoring. However, in order to fully understand the complexities of service offshoring (as called for by Bals, Jensen, Larsen, & Pedersen, 2013), an activity-driven analysis that moves beyond a firm-level and static perspective is imperative (see also, for exceptions, Brandl, 2017;Brandl et al, 2017;Jensen & Pedersen, 2011;Srikanth & Puranam, 2014).…”

“…The framework is used to characterize KIS and identify the activities and actors to transfer and co-create knowledge in the production process. It corresponds with a variety of other service production processes from service management literature (e.g., Aarikka-Stenroos & Jaakkola, 2012;O'Farrell & Moffat, 1991;Ordanini & Pasini, 2008) and has, for example, been used by Brandl (2017) to study value creation possibilities for clients and service providers in service offshoring or by Mol and Brandl (2018), to conceptualize the impact of cognitive distance on service offshoring.…”