Friday, September 09, 2005

Leader: Is offshoring good or bad for UK workers?

Is offshore outsourcing good or bad for the UK? The answer depends on who you ask, and your own perspective will probably depend on whether you work at the coal face in IT and call centres or in the boardroom.
Ever since the emergence over the last five to 10 years of the trend toward outsourcing IT and call centre work overseas to countries such as India, to take advantage of vast pools of cheap skilled labour, a fierce debate has raged about the impact on UK jobs.
IT workers and trade unions claim offshoring will result in thousands of workers losing their jobs and a general de-skilling that could leave us with a "nation of hairdressers" as one union man put it.
Chief executives, CIOs and shareholders argue it is a vital tool to remain competitive, that it will save jobs in the long run and benefit the wider UK economy as the country's workers move on to higher value jobs.
Both positions were echoed in a 2004 report sponsored by the Indian IT industry's trade body Nasscom, which predicted that more than a quarter of a million UK workers will see their jobs disappear overseas, costing the UK economy £5.7bn in unemployment benefits and retraining costs.
The same report also said the cost to the UK by not offshoring would be much higher - £34bn - due to a drop in output and slowing of GDP growth.
This week has seen the first hard evidence around the impact of offshoring on UK jobs and the news, perhaps surprisingly for some, isn't bad.
Firstly the official UK employment statistics from the Office for National Statistics show that IT and call centre positions have grown at three times the rate of the national average since 2001 and that redundancy levels have been consistently falling.
Secondly there is the news that Indian business process outsourcing company HCL is to open two new call centres in Northern Ireland, creating 600 new jobs in Armagh and Belfast.
Of course this doesn't paint the full picture and, inevitably, there will be some short-term pain and job losses when certain companies decide to move work offshore.
But at least there is now hard evidence that offshore outsourcing can bring benefits not only to boardrooms and shareholders but also to the workers and the wider economy. So let's remember that and keep some perspective the next time we hear about a bank moving a call centre to India.

The article sponsored by A-1 Technology Inc, dealing in software outsourcing and software development outsourcing.