ICT forum

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Work Organisation Restructuring in the KBS

• Global value chain restructuring and the position
  of ICT services in the NMS

Monique Ramioul Higher Institute of Labour
Studies - KUL
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Value chain restructuring in ICT

• Restructuring characteristics in ICT
• The position of NMS in IT value chains
• Some social dialogue issues

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Core concepts

• Global value chain restructuring
• outsourcing and/or relocation of the different
  activities/business functions of firms along the
  value chain
• Core function production for the market
• Support functions facilitate production
• Distributionlogistics, marketingsales, CS,
  administrative management functions,
  engineeringtechnical service, ResearchDevelopmen
  t and...
• ICT services hardware and software consultancy,
  customised software data processing and database
  services, maintenance and repair, webhosting.

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Source of the data

• International Sourcing Survey
• Eurostat Pilot study, results to date only from
  SE, DK, FI, NO, NL
• International sourcing, both within the group
  (insourcing) or outside the group (outsourcing)
• Movement of activities business function
  approach
• 2. WORKS
• Secondary analysis on EU CLFS datasets,
  estimating job growth and job decline in
  business functions, using a proxy occupations
  in sectors (ISCO/NACE classification)
• Case studies on the ICT business function and
  sector

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1. Restructuring characteristics

• 1. International sourcing survey (Eurostat)
• between 14 and 16 of all enterprises source
  internationally
• Main BF sourced abroad is the core production
  function, esp. by manufacturing firms
• The most commonly sourced support function is ICT
  services 25-30 of all enterprises having
  sourced internationally
• in service enterprises more than in manufacturing
  firms up to 43 of all sourcing service firms,
  source the ICT services internationally

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1. Restructuring characteristics

• ...
• Insourcing is the preferred mode of international
  sourcing
• In particular support functions are clearly
  insourced internationnally rather than outsourced
• This is especially true for ICT services almost
  70 of firms source ICT inside (exc. DK).
• This confirms the trend of centralisation/concentr
  ation of ICT services on specific sites

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1. Restructuring characteristics

• 2. Estimating job growth and job decline in
  business functions (WORKS)
• what is the evolution of employment in ICT
  occupations in different sectors
• gt growing proportion of all ICT occupations is
  found in the IT sector
• gt the business functions ICT services is
  increasingly performed in specialised sectors, in
  casu the IT sector
• gtthis supports the growing outsourcing trend of
  ICT jobs from other sectors

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1. Restructuring characteristics

• Employment in ICT-occupations
• Old EU 1996-2004
• 1.2 million jobs (76 per cent)
• New EU 1999-2004
• 86 000 jobs (35 per cent)
• Proportion of ICT occupations working in
  IT- sector
• Old EU 1996-2004
• 34 -gt 42
• New EU 1999-2004
• 29 -gt 35

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1. Restructuring characteristics

• ...
• Sectoral approach what is the evolution of
  different occupations within the IT sector
• gtThere is a growing concentration on core
  activities in all sectors, also in the IT sector

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1. Restructuring characteristics

• Employment in IT-sector
• Old EU 1996-2004
• 1.2 million jobs ( 106 per cent)
• New EU 1999-2004 (excl. Poland)
• 40 000 jobs ( 48 per cent)
• Proportion of core IT occupations in total
  employment in ICT-sector

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1. Restructuring characteristics

• Resuming
• ICT services is the most internationally sourced
  business function
• the ICT services business function is
  increasingly concentrated and centralised (within
  large TNC)
• The value chains in IT are lengthened and
  internationalised

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1. Restructuring characteristics

• 3. The WORKS case studies show
• VC restructuring implies concentration on
  knowledge-intensive activities and business
  functions while the codified work is
  externalised
• Activities (BF) are divided along the chain
  according to knowledge codification, K. is spread
  uneven along the chain
• This implies a struggle for the best bits
• Internationalisation leads to more formalisation
  and bureaucratisation (SLA, classifications,...)
• In parallel, there is a trend of standardisation
  of SW development

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1. Restructuring characteristics

• These combined characteristics lead to the
  following strategies
• Logics of global sourcing and internal tendering
• Logics of internal competition vs. collaboration
• a growing knowledge dependency of employees,
  sites and customers
• pressure to adapt knowledge management in view of
  improving the position in the chain
• Leading to conflicting trends for workers and
  firms, increasing tension between
• Competition gtlt collaboration
• Market pressure gtlt innovation/creativity

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2. The perspective of the NMS

• 1. International Sourcing Survey (Eurostat)
• Destinations of international sourcing
• Most sourcing is within the EU
• New MS and Asia (China) are most popular for core
  functions also in the future
• Old MS most popular for all support functions
• for ICT, the second most popular destination is
  Asia (DK, FI, NL)
• the most frequently expected sourcing
  destinations for ICT are the old MS

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2. The perspective of the NMS

• 2. WORKS GVC restructuring in the
  transformation economies (MakoKirov)
• In general growing involvement and integration
  of local firms into global value chains related
  to
• privatisation
• FDI
• Subcontracting

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2. The perspective of the NMS

• Moving up the value chain is a key issue for the
  NMS and enhanced by
• Centralisation tendencies within TNC, leading to
  more standardisation and formalisation
• import of technologies ànd of new
  organisational practices related to knowledge
  management and innovation
• Trend to (long-term) relations with customers
  implying shift of responsibilities
• Wage increases low cost is no longer main
  competitive asset

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2. The perspective of the NMS

• Moving up the value chain implies
• absorption of high value-added functions from
  other links in the chain
• combined with outsourcing of low added-value
  activities further down the chain
• Development of innovative knowledge management
  systems
• Project work and teamwork
• Learning organisation models
• Managerial and coordination tasks in matrix
  organisations

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2. The perspective of the NMS

• If succesful, this may lead to growing power
  within the chain
• In contract negotiations
• In the orders received
• In involvement in decision making processes in
  the chain
• In long-term relations with customers
• In developing area-specific domain knowledge

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3. Social Dialogue Issues

• Global Value Chain Restructuring and workers
  representation (MeilTengblad)
• A lot of challenges
• Careers become boundaryless
• Collaboration becomes boundaryless
• Employment relationship becomes boundaryless
• Traditional issues (wage, WTA) seem to have less
  relevance for professionals
• IR framework in the destination is mostly weaker
• What is the basis and level for
  collectivitisation, collective representation and
  regulation?

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3. Social Dialogue Issues

• And some opportunities
• There is still a role for source employees
• Knowledge transfer, Training
• Design and prototyping, Quality control
• Volume flexibility, Disaster management
• VC restructuring may reinforce importance of
  scarce skills and competences and highly demanded
  resources
• Growing marketisation, bureaucratisation and
  formalisation make collective strategies more
  attractive, even in non-traditional formats
• EU directives are there but need national
  monitoring

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WORKS
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