This paper explores the relation between services offshoring through FDI or cross-border trade and the skills composition of labour demand, focusing in particular on its possible contribution to polarization of the labour market. It is found that outward investment does not shift jobs abroad. Linking economic stimulus packages to local production are therefore unlikely to protect local jobs. It is found that services trade does contribute to structural changes in employment, in particular a shift from low-skilled to highskilled employment. However, contrary to what has been feared, services offshoring does not seem to hurt medium-skilled workers. Finally, reducing behind the border regulatory barriers is the most effective policy measure that would stimulate FDI and employment while improving labour productivity, although also this measure reduce demand for low-skilled labour.