Outsourcing for development

Project summary

Traditionally the debate on outsourcing has focused on outsourcing to low cost locations seen from the perspective of OECD countries. Rarely has the mirror question been asked: What are the development effects of growing outsourcing to developing countries? The “Outsourcing for Development” project contributes to answering this question by applying a firm perspective. It analyzes the opportunities and risks for developing country firms of integrating into global value chains through outsourcing arrangements. The project emphasizes Danish firm’s outsourcing collaborations with local firms in six developing countries, Vietnam, China, India, Malaysia, South Africa and Ghana. The project, running from 2006-2010, led to a number of outputs, including journal articles, books, chapters in edited anthologies and conference papers. The project organized two stakeholder workshops and an international conference. The project found that many developing country firms were using outsourcing collaborations to gain larger markets, learn new capabilities, and upgrade into higher value added activities. On the other hand, there are huge barriers for developing country firms to become partners in outsourcing collaborations, e.g. absense of proper market support institutions as well as lack managerial, strategic and financial capabilities of developing country firms. A possible implication for private sector development assistance of the 'Outsourcing for Development' project could be that private sector development assistance to a higher degree should focus on facilitating the development of capabilities in developing country firms that will allow them to become effective partners in outsourcing relationships and to upgrade based on these collaborations.