Offshoring and outsourcing in the PC industry: A historical perspective

Offshoring and outsourcing of manufacturing and knowledge work is a highly visible and controversial issue in the public debate over the impacts of globalization. In their efforts to expand markets and optimize production for competitive advantage, firms distribute their activities around the world through their own offshore subsidiaries, by outsourcing to other firms, or both. This pattern is blamed by many critics for job losses in the U.S., while credited by others with benefiting U.S. firms, shareholders and consumers. In reality the impacts of offshoring and outsourcing are hard to measure as they can be subtle and indirect. For instance, there is no measure for jobs that were never created in the U.S. because new products were sourced from overseas from almost their inception. However, by observing one industry over time, it is possible to identify patterns in the location of production work and knowledge work, and to qualitatively assess the impacts of offshoring on firms and workers. Production work is operations-oriented and includes activities such as subassembly, final assembly and logistics. Knowledge work is innovation-oriented and includes activities such as R&gn and development of new products and process engineering. We focus on the PC industry, which offers an important case for understanding the forces that influence U.S. firms to outsource their activities, and for identifying the impacts of those decisions.