Information Technology, Business Strategy and the Reassignment of Work from In‐House Employees to Agency Temps

Though we now understand how information technology (IT) influences work, we know much less about how it reshapes the actual relationship between workers and their employers. That is, to what extent do employers deploy new technologies towards the erosion of traditional employment relationships? This study relies on a cross section of British workplaces to provide statistical evidence that IT actually facilitates managers’ reassignment of work once done by in‐house employees to those working instead for a staffing agency, an effect that trebles in magnitude where managers have simultaneously cut employment. Furthermore, IT differentially serves opposing business strategies. While employers electing to compete on price rather than quality are more likely to reassign work, managers enacting quality‐centred strategies are more likely to rely on IT to avert work reassignment. The findings demonstrate that new technologies may facilitate this form of externalization, but they do not unilaterally drive it. The estimates also illuminate IT's indirect impact on workers via managers’ use of it as a tool for restructuring employment.