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What is the impact of labor displacement on management consulting services?

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  • Edouard Ribes

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

Labor displacement off-or nearshore is a performance improvement instrument that currently sparks a lot of interest in the service sector. This article proposes a model to understand the consequences of such a decision on management consulting firms. Its calibration on the market of consulting services for the German transportation industry highlights that, under realistic assumptions, labor displacement translates in price decrease by-0.5% on average per year and that for MC practices to remain competitive/profitable they have to at least increase the amount of work they off/nears shore by +0.7% a year.

Suggested Citation

  • Edouard Ribes, 2020. "What is the impact of labor displacement on management consulting services?," Working Papers hal-03090593, HAL.
    • Handle: RePEc:hal:wpaper:hal-03090593
    Note: View the original document on HAL open archive server: https://hal.science/hal-03090593v1
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    References listed on IDEAS

    as
    1. Edouard Ribes, 2020. "Organizational sustainability and career frameworks in professional services firms," Economics Bulletin, AccessEcon, vol. 40(1), pages 880-889.
    2. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
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    6. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
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    8. Edouard Ribes, 2020. "Organizational sustainability and career frameworks in professional services firms," Post-Print hal-03052571, HAL.
    9. Royston Greenwood & Stan X. Li & Rajshree Prakash & David L. Deephouse, 2005. "Reputation, Diversification, and Organizational Explanations of Performance in Professional Service Firms," Organization Science, INFORMS, vol. 16(6), pages 661-673, December.
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