Offshoring: More than just a short-term solution

The warning from the Chartered Institute of Personnel and Development (CIPD) last week on the dangers of the proposed immigration cap should be a stark warning to us all about the dangers of creating a skills gap in this country. After releasing...

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The warning from the Chartered Institute of Personnel and Development (CIPD) last week on the dangers of the proposed immigration cap should be a stark warning to us all about the dangers of creating a skills gap in this country.

After releasing figures which pointed to a 14% reduction in the number of work visas issued in the year to June 2010, the CIPD argued that not only is the present points-based system actually working, but that employers will struggle to fill the resulting skills gap in the UK, and rush many into offshoring services as a stop-gap measure.

Of course, a skills gap is something that seems inevitable for a number of reasons, particularly in sectors such as IT. Indeed, recent research found that although the IT sector is growing at a rate that far exceeds other industries, more than 500,000 new entrants will be needed over the next five years in order to meet its growing demands.

Meanwhile, A-level results released last week confirmed a 2.4 per cent drop in the number of students taking IT-related A-levels compared with 2009, and a 24 per cent reduction in the number of people who have taken IT-related A-levels since 2005.

A cursory examination of these figures demonstrates that future demand for skilled IT workers will outstrip supply in this country before too long. However, what’s important is that those organisations who find themselves searching for skilled workers do not jump too hastily into a relationship with an offshoring partner, looking for a quick fix to the solution.

A short-term skills gap must not be the only reason for organisations deciding to outsource services to offshore destinations. To gain real value and to build a successful relationship, it’s important that organisations take a long, hard examination of their core competencies, and take time to consider how offshoring can help them in the long term.

Bearing in mind that it can take up to two years before any outsourcing relationship begins to see results, and it becomes clear that the decision should be made for the long-term benefit of British organisations - not as a knee-jerk reaction.

Perhaps, however, we need to look for greater emphasis on providing these skills and their prospective benefits. The proposed immigration cap looks certain to limit the number of skilled foreign workers who are able to work in this country, which means that we will need to invest properly in our education system to ensure that, over the longer term, these issues are addressed, and not simply paid lip service.

The National Outsourcing Association will be holding an event on 7 September at Hogan Lovells International LLP to discuss all aspects of offshoring. Please contact Natalie Milsom on 0207 292 8689 for more details.