Preface

The world has become more complicated with the rapid change in the global economic environment, and new times require new dynamics and active strategies to cope with fundamental questions. In this sense, two important instruments that can be used by organizations are outsourcing and offshoring. These organizational forms have become applicable as entrepreneurial tools and as consequences of the opportunities and threats caused by globalization.s

The concept of outsourcing dates back to the 1940s, during the Second World War, when it emerged in the United States due to the war industry's need to concentrate on improving arms production in order to maintain the allies' supremacy. This industry passed on some activities supporting production to other firms providing services. However, only in the second half of the twentieth century was the concept put into practice in the service sector to stimulate organizations' profitability through subcontracting services. In addition, the offshoring phenomenon has contributed massive structural changes to organizations. Over the last decades, offshoring has fundamentally changed business strategies, processes, products, and services by deconstructing traditional ways of doing business. Therefore, outsourcing and offshoring emerge as strategic tools claiming to respond to current issues in the global economy, a real way to obtain a competitive advantage. These tools are an innovation in the service category allied to the dynamics of core competences.

Outsourcing and offshoring are beginning to be common practices in organizations, focusing on the softest organizational structures and in this way significantly reducing fixed structural costs, whether in production, service provision, or human capital. However, choosing these instruments involves risks and uncertainties since they involve transaction costs between the parties, important matters related to resources and assets and efficient, trusting relations between the contracting and contracted firms. It is therefore essential to make a detailed analysis of these risks in parallel with the benefits arising from these types of organizational mechanisms.

The importance of outsourcing and offshoring has been widely recognized in the literature, evidenced by the notable increase of relevant publications in the past years. Thus, this book studies the benefits and risks of these two organizational strategies. It also presents new perspectives about outsourcing and offshoring in different contexts.

This book is structured into seven chapters.

In Chapter 1, "Outsourcing: Overview and Trends" the authors present some general concerns and concepts about this system along with examples and arguments.

Chapter 2, "Outsourcing: State-of-the-Art in India and an Insight to Coal Mining Industry" examines the topics as outlined in its title and attempts to clarify the main challenges of outsourcing within the Indian context.

Chapter 3, "The Viability of Outsourcing in Organisational Performance: Benefits and Risks" explores the concept of outsourcing as a differentiating tool in an organizations' performance, emphasizing the benefits and risks. This chapter presents the dimensions to consider when deciding to implement outsourcing, including (1) transaction costs, (2) use of resources, and (3) collaboration between the parties.

Chapter 4, "The Evolution in Transport Operator's Corporate Structure: Ownership and Governance" offers a new perspective associated with the evolution in transport operators' corporate structure by examining the dimensions of ownership and governance. This chapter highlights innovation and success factors for the transportation industry, taking into consideration the digital era wave and best practices, and providing recommendations and guidelines to managers, planners and decision-makers.

Chapter 5, "Entry-Mode Selection and Firm's Productivity across Market Destinations: An Empirical Investigation" investigates the productivity premia of three alternative modes of internationalization for a panel of Italian manufacturing firms: FDI, international outsourcing, and exporting.

Chapter 6, "Onshore? Offshore? How about Firm Coherency?" discusses how the deciding factors for a firm to choose to be on onshore or offshore is the result of its coherency.

Finally, Chapter 7, "Offshoring-Outsourcing and Onshoring Tradeoffs: The Impact of Coronavirus on Global Supply Chain" more precisely describes offshoring– outsourcing and onshoring trade-offs with a focus on the impact of the coronavirus on the global supply chain. The authors examine how the medical industry and other industries have been impacted by the COVID-19 pandemic in relation to the offshoring–outsourcing business. The COVID-19 pandemic resulted in border closure, forcing nations to rethink onshoring.

> **Mário Franco** University of Beira Interior, CEFAGE-UBI Research Center, Portugal

> > **1**

**Chapter 1**

**Abstract**

outsourcing.

**1. Introduction**

past experience, future outlook

billion U.S. dollars to 135.5 billion U.S. dollars.

cloud computing and artificial intelligence.

Trends

Outsourcing: Overview and

*Yingying Pang, Shishu Zhang and Albert Xin Jiang*

Outsourcing is a valuable strategy for firms to gain more benefits from the global supply chain. Outsourcing can be defined as a business agreement in which a firm is contracting out certain existing parts of the firm to either domestic and/ or international third parties. In this chapter, we give an overview to the benefits and disadvantages of outsourcing. We also discuss recent trends in outsourcing; in particular, with the benefit of technology development, robots are starting to join in

Outsourcing is one of the current mainstream business strategies for firms to earn more benefits from the global supply chain [1]. According to [2], the U.S. outsourcing industry's revenue grew over 20 billion U.S. dollars from 2010 to 2019. Moreover, globally, the total outsourcing industry revenue increased from 93.1

With the blooming of outsourcing, academic researchers conducted studies to better understand the many aspects of outsourcing. To date, Google Scholar has listed approximately 390,000 articles related to the keyword "outsourcing" published since 2010. Although the researchers' interests in outsourcing varied, in recent years many researchers were focusing on outsourcing with Information Technologies [3–5], Logistics [6–8], and Education [9–11]. Researchers are particularly interested in outsourcing with Information Technologies [5, 12], including

In the rest of this chapter, we will first give an overview of the historical background of the development of outsourcing, and the definition of outsourcing. We will then discuss benefits of outsourcing, including lowering cost, improving the focus on core competencies, receiving the best technology within the industry which the firms did not have, and increasing the employees' flexibility. We will also discuss the risks or potential disadvantages of outsourcing. We will also discuss recent trends in outsourcing, focusing on the impact of new technologies including

issues related to cloud computing [13–16] and security [13–15, 17, 18].

**Keywords:** outsourcing and offshoring, pros and cons, industry trends,
