Fears that hundreds of thousands of high- quality British jobs have been outsourced to low-cost emerging economies such as India are largely unfounded, but developing nations are being plundered for skilled staff to keep Britain growing, according to reports out recently.
A study by the financial services arm of Siemens suggests outsourcing of public services to private sector companies is modest — contrary to popular perception.
Research by the London-based Work Foundation finds that 5,5% of job losses across Europe were due to offshoring in the first quarter of this year, compared with 3,4% in 2005, but it suggests the speed is not dramatic, especially in Britain, where jobs in local call centres are going up rather than down.
The work from the politically neutral Work Foundation study suggests IT services, popularly viewed as the main source of offshoring, rank third (at £122-million) behind travel (£626-million) and transport (£289-million) as the largest services imported from India.
It notes that Britain imports four times more IT services and 16 times more business services from Germany and says labour costs are only one of many factors taken into account when a business looks at the benefits of different locations.
Katerina Rudiger, the study’s author, said: ”If you go to an Indian business district, you could be forgiven for thinking the whole world is chucking work and jobs at India because of its magical high-skill, low-wage mix. India’s hi-tech sector is indeed booming but is not ‘coming for lunch’ as some of the more apocalyptic commentators have suggested.”
Trade in services between Britain and India rose from 0,4% to no more than 1,2% in the 10 years to 2004, which makes it ”less of an explosion, more of a slow evolution”.
”Technology has always led to people being displaced from some lines of work into others, but what is not happening is a straightforward jobs migration from north to south, west to east.”
The latest figures raise questions about the wisdom of European leaders, including the French President Nicolas Sarkozy, acting against ”delocalisation” with protectionist measures to defend local employment.
Germany is planning laws to prevent cash-rich emerging economies such as China taking over domestic firms and exporting employment.
A second study, for Siemens Financial Services (SFS), indicates that widespread outsourcing of public services by councils and the national health service is limited. Across Europe it is 10%, ranging from 6% in Germany to 22% in Spain, with Britain at 12%.
Siemens, Britain’s leading asset finance provider to the public sector for services such as vehicle fleets, said its survey of 400 public service finance chiefs in six European Union countries indicated that the public sector had hugely improved efficiency and could compete with private firms.
David Martin, SFS general manager, said that, though other research showed IT outsourcing levels in excess of 20%, wider outsourcing was more modest. ”The general public, the taxpayer, seems to be getting best value from public services provided by governments. We found that 55% of employees in public finance in Britain have private-sector experience and are being brought in to improve processes.”
A third survey undertaken for the Institution of Engineering and Technology talks of a ”growing recruitment crisis” in Britain, with companies losing confidence that they will be able to attract enough experienced staff in the short and medium term. Nearly half of the 500 companies surveyed this year revealed they are turning to countries such as China, India and South Africa to plug the skills gap.
Businesses that expect to face difficulties in recruiting suitably qualified engineers, technicians or technologists over the past four years had risen from 40% in 2006 to 52% in 2007. — Â