Introduction

East Central Europe and within it Hungary are locations where, especially starting from 2000, more and more independent business services firms set up their operations and many firms concentrated their regional, European or even global service center. For example, in Hungary independent firms such as EDS, SAP, GenPact, Diageo and IBM are present. As for the second group, Alcoa, Vodafone, Exxon Mobil, Avis, Cemex, GE, InBev, Morgan Stanley, Celanese, Lexmark, British Telecom, among others, relocated certain regional, European or global service functions to Hungary. Not only the number of projects grew significantly, but there were also some very big projects involved, employing thousands of new employees in their newly opened sites (see for example Gál, 2007; Sass, 2008a; 2008b). In many cases, these service functions are transferred from other, usually Western European locations, causing white collar job losses there. This is one reason why these movements figure highly in the (Western) media.

Off shore outsourcing and off shoring of service activities is not a new phenomenon (Metters and Verma, 2007). After and parallel to outsourcing/off shoring the low- and medium-skilled production processes in manufacturing, starting mainly from the 1990s, the off shoring and off shore outsourcing of certain production processes of specific services from developed countries to other developed or developing countries has started to become more and more widespread (UNCTAD, 2004). The process has been induced by technological development – in many various ways. As a result of technology developments, the fragmentation, division, standardization, ‘algorithmization’ of services processes, evaluation of certain service process elements, digitalization, and the coding of information were made possible. This is similar to the fragmentation process in manufacturing, but on the basis of available evidence, the fragmentation can go deeper in services processes. After such fragmentation, certain service processes can be separated and they can be carried out in locations where it is cheaper, more efficient, or where it provides better quality. As a result, certain services became tradable, even internationally. Information and communication technologies made mainly services dealing with information tradable. It is now possible to produce certain services in far away locations and consume them in another far away location at the same time, or even at diff erent times (UNCTAD, 2004).