Economic Geography

The changing global geography of service work
1
The quickening pace of relocation of services overseas, calls into question our
normal thinking about what a ‘service’ is.
2
The ongoing transformation of the
global location of service delivery is captured in Jones (2005) where he discusses
how service firms are trying to transform their operations from national to func-
tional operations in which there are global competency centers for particular
functions. In the case of manufacturing, most persons would agree that it is a
process that involves the transformation of a tangible good, though as Sturgeon
(2002) has pointed out there is an entire industry providing manufacturing as a
‘service’. In terms of the location and discharge of manufacturing, it is generally
accepted that manufacturing does not necessarily require constant face-to-face
contact between the producer and consumer. Manufacturing usually creates a
good that can be stored, thereby allowing a physical separation of the buyer and
the seller.
Services have usually been defined as the opposite of manufacturing: they are
transactions of intangible, nonstorable goods, requiring that client and vendor
be face-to-face while the service was being delivered. For example, Gadrey 
and Gallouj (1998) define services as goods that are ‘intangible, cosubstantial
(e.g. they cannot be held in stock) and coproduced (e.g. very often their produc-
tion/consumption requires the cooperation between users and producers).’ This
is obviously true when the service requires face-to-face experience, such as
receiving a haircut, but also true when the ‘service experience’ did not require
proximity, such as when a bank’s client wants to check their bank balance.
These definitions, though never exhaustive in prior periods, are now under
great stress in the digital age that was inaugurated by the application of von
Neumann’s principles and actualized by the development of low cost techniques
for information digitization, transmission, and processing. These new technologies
have had a profound impact on the discharge of services. Paraphrasing futurists
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Martin Kenney and Rafiq Dossani

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of the 1960s, if robots were going to change the factory of the future, digitiza-
tion would change the office of the future. First, the digital age allowed (or, at
least, dramatically eased) the conversion of service flows into stocks of informa-
tion, making it possible to store (or, more properly, productize) a service. For
example, a legal opinion that earlier had to be delivered to the client in person
could now be prepared as a computer document and transmitted to the client
over email or, better yet, encoded into software. Easy storage and transmission
allowed for the physical separation of the client and vendor as well as their sepa-
ration in time. It also facilitated the separation of services into components that
were standardized and could be prepared in advance (such as a template for a
legal opinion) and other components that were customized for the client (such
as the opinion itself) or remained nonstorable. Taking advantage of the possibil-
ity of subdividing tasks and the economies that come with a division of labor, 
this reduced costs by offering the possibility of preparing the standardized
components with lower cost labor and, possibly, at another location or if all the
necessary materials were digitized then the entire product could be produced at
another location.
The second fundamental impact was the conversion of non-information serv-
ice flows into information service flows. For example, sampling of tangible goods
by a buyer visiting a showroom is increasingly being replaced by virtual samples
delivered over the Internet. Once converted to an information flow, the service
may also then be converted into a stock of information, as noted earlier, and
subjected to the above mentioned forces of cost reduction through standardization
and remote production.
By enabling transmission and storability, the digital age accelerated the reloca-
tion of services. The offshoring of services such as writing software was enabled
by digitized storage and facilitated by the adoption of standardized program-
ming languages. As transmission costs fell (just as digital storage costs had earlier
fallen), even non-storable services, such as customer care, could be relocated. 
As a result, any location with the requisite labor power could become a services
producer. The range of such services is massive, and includes back office services
such as payroll, front-line services such as customer care and telemedicine, 
patent preparation, equity analysis, medical transcription, medical imaging inter-
pretation, remote facilities management, and, of course, software services such as
programming and remote IT infrastructure management.
The current emerging insertion of India into the global economy illustrates
how activities that were once considered planted in the developed world are
being uprooted and redistributed globally (Dossani and Kenney 2003). The
thesis is that the tasks being moved are not only the simple commoditized 
activities that most persons suspect will be relocated, but rather there are a
number of high-value activities also being transferred, and that it is these that give
us a far better insight into the future geography of innovation and the location of
value creation.
India’s entry into the global economy came through the very simple stratagem
initiated by United States computer firm, Burroughs Corporation, which suggested