Globally Relocating Jobs
In addition to acquiring internationally mobile talent internally or externally, organizations can often accomplish their recruiting goals by moving the work to be closer to the targeted talent pool. Offshoring company activities can be done internally through company-owned and controlled subsidiaries or centres in foreign countries (Bunyaratavej, Hahn & Doh, 2007) or externally by outsourcing business functions to foreign service providers (Hahn & Bunyaratavej, 2010; Kedia & Mukherjee, 2009). Organizations that engage more extensively in benchmarking activities appear to be more likely to outsource HR activities such as training and recruitment (Tremblay, Patry & Lanoie, 2008). However, global firms often encounter challenges when trying to replicate HR practices among culturally and geographically dispersed subsidiaries (Morris et al., 2009).
Anner (2011) shows that to the extent that labour costs comprise a large portion of total production costs organizations are more motivated to relocate jobs globally to capitalize on low labour costs. Although labour cost control is often cited as a primary reason for offshoring, research has found that organizations are increasingly offshoring innovation projects, not for labour arbitrage, but merely to access the qualified talent unavailable in the home country (Doh, Lewin, Massini, Hahn & Bunyaratavej, 2010; Kedia & Lahiri, 2007; Lewin, Massini & Peeters, 2009). Although labour cost is often an important factor, as offshoring is frequently motivated by the opportunity to benefit from lower wage standards in foreign countries (Stringfellow, Teagarden & Nie, 2008), the abundance and quality of human capital (Doh, 2005), and access to talent (Couto, Mani, Lewin & Peeters, 2006; Lewin et al., 2009) are increasingly driving offshoring decisions. The global sourcing and recruiting of science and engineering talent through offshoring have increased as the availability of this talent has decreased in advanced economies while increasing in emerging economies (Manning, Massini & Lewin, 2008). Unfortunately, we know little about how recruitment takes place when jobs are offshored and determinants of attraction to positions and opportunities that are the result of offshoring efforts.
Although significant variability has been found with regard to the performance associated with offshoring projects (Elia, Caniato, Luzzini & Piscitello, 2014), the ramifications of offshoring have been found to go well beyond immediate cost reduction (Doh, Lewin, Massini, Hahn & Bunyaratavej, 2010; Ellram, Tate & Billington, 2008; Mudambi & Venzin, 2010). The impact of offshoring also includes negative job impacts in developed countries (Amiti & Wei, 2009; Farrell, 2005; Farrell, Laboissiere & Rosenfeld, 2006), and often service quality declines (Ren & Zhou, 2008). Additionally, offshoring activities can have significant consequences for organizational image and branding, which can then influence recruitment outcomes, both domestically and globally.
When offshoring fails to attain desired objectives or when the offshoring process itself increases labour costs, reduces productivity or quality, increases customer dissatisfaction or detrimentally increases transportation costs, then reshoring (also known as onshoring, inshoring or backshoring) or returning jobs to the original country, often with increased automation of the work, can take place (Gray, Skowronski, Esenduran & Rungtusan- atham, 2013; Jensen, Kirkegaard & Laugesen, 2009; Kinkel & Maloca, 2009). However, the conditions in which this can take place and the manner in which organizations can effectively recruit people to reshore projects and activities are completely unknown. As an illustration, we do not know if effective recruitment processes for offshoring operations are the same as reshoring operations. If people have experienced temporary job loss as a result of global relocation of operations, then if the job opportunity opens up during a return of operations, will recruitment processes unfold identically? Most likely not, but we know nothing about such effects.
Also, nothing is known about the possible spillover effects to a company’s employer image or reputation or its recruiting effectiveness from offshoring or reshoring decisions or treatment of offshore employees. If an organization moves jobs to a less developed economy to benefit from labour arbitrage, what are the consequences? Does an organization’s treatment of offshore workers have any spillover effects? What are the effects on the remaining employees in the company and on the organization’s ability to recruit quality talent in the future of deciding to move some jobs to another country? Additional research is needed to explore these important questions.