Contacts
A new paper by Clément Mazet-Sonilhac and colleagues explores how technology fueled outsourcing in France

When we think of broadband internet, we usually picture its positive effects: faster communication, new business opportunities, higher productivity. But every technological revolution comes with unexpected consequences. In France, during the early 2000s, the rollout of ADSL didn’t just transform communications—it also reshaped how companies organize work, pushing many of them to outsource tasks that had previously been done in-house.

A recent study by Clément Mazet-Sonilhac (Bocconi Department of Finance), Antonin Bergeaud (HEC Paris), Clément Malgouyres and Sara Signorelli (both of the Center for Research in Economics and Statistics, France), published in the Journal of Labor Economics, shows how broadband access stimulated domestic outsourcing: not offshoring to distant countries, but transferring jobs to other firms within the same national economy.

From in-house to outside: fewer tasks within firms

Using detailed administrative data on workers and firms in France between 1996 and 2007, the researchers found that the arrival of broadband led companies to increase their outsourcing expenditures while reducing the diversity of occupations employed directly.

In practice, firms became more specialized: they kept fewer functions in-house and relied more on external providers. This shift affected not only lower-skill jobs—like cleaning, security, and logistics—but also professional occupations, notably IT specialists and consultants.

A new geography of work

The result was a growing concentration of workers in firms specialized in outsourcing services. Security guards, drivers, programmers, and consultants alike increasingly found jobs in businesses dedicated solely to those services, rather than as part of large manufacturing or service firms.

Broadband expansion also spurred the creation of new outsourcing companies, further reinforcing this structural transformation.

Wage effects

Not all workers benefited. The study highlights a sharp divide in wage outcomes depending on skill level:

  • High-skill workers (e.g., IT specialists, consultants) generally saw their wages rise after being outsourced.
  • Low-skill workers, by contrast, experienced wage declines, losing part of the benefits and protections that came with direct employment in larger firms.

This divergence suggests that technology not only favors high skills (“skill-biased change”) but can also widen inequalities through the organizational shifts it triggers.

A lesson for the future

The French case shows how a seemingly neutral technological infrastructure—broadband internet—can have far-reaching social and economic consequences. It doesn’t just boost productivity: it redraws firm boundaries, shifts entire categories of jobs outside, and reshapes wage trajectories. This is a clear reminder that every innovation, even when it looks purely technical, creates winners and losers. Understanding this is essential to design policies that support transitions designed to provide assistance for those who end up paying some price.

 

Antonin Bergeaud, Clément Malgouyres, Clément Mazet-Sonilhac, Sara Signorelli, "Technological Change and Domestic Outsourcing", Journal of Labor Economics, volume 43, numero 4, ottobre 2025, DOI https://doi.org/10.1086/730166

CLEMENT JONATHAN MAZET-SONILHAC
Bocconi University
Department of Finance

Research