ABSTRACT
The rapid diffusion of new technologies and organizational techniques is creating opportunities for reallocating software and service centres according to shifts in the costs and availability of qualified workforces and other resources. Zimmy and Mallampally (2002) observed that global IT firms were moving from the supply of equipment and software packages towards the provision of outsourced business services. As a consequence, they were locating some of their functions in foreign affiliates set up in order to take advantage of internalization as well as locational advantages, especially in the areas of human resources costs and skills, and integrating them through intra-firm trade. For Miozzo and Miles (2002), these developments may result in a new international division of labour, which encourages the splitting of the production processes of many services into discrete components, some of which can be ‘downloadable’ and processed by pockets of skilled specialists in less developed or intermediate countries.
