Offshoring can create, not cull, UK jobs

Reports of the demise of the IT department due to offshore computing are premature. This much can be deduced from a report, published by the Work Foundation earlier this week, which finds that potential job losses have been exaggerated by unions and the media.


The research based much of its findings on the activities of the IT industry, a sector that has been at the vanguard of the offshore trend.

Speculation about the decline of the IT department was sparked in 2002 by a study conducted by IT analysts, Forrester. It predicted that within the next 15 years, 3.3 million US white-collar service jobs - 500,000 of them in IT - would move offshore to countries such as India, leading to an overseas exodus. US economist and former adviser to Bill Clinton, Alan Blinder, likewise predicted that the offshore trend would result in the ‘third industrial revolution’.

Five years on, Work Foundation author, Katerina Rudiger, concludes that: “high value knowledge-intensive services are still principally located in developed countries”, a view supported by IT offshore practitioners. "Rather than be seen as an avenue of getting rid of bucket loads of staff, [the Indians] are saying we are an avenue to re-tuning service contracts while leveraging economies of scale," comments one offshore broker.

Other key conclusions from the Work Foundation report, Offshoring, a threat for UK’s knowledge jobs? are:

  • The tradability of knowledge jobs might increase, but this does not automatically mean that all jobs that are tradable will be offshored.
  • The future pattern of offshoring would need to be very different from the one today if it was going to affect knowledge jobs on a large scale.
  • The increasing use and sophistication of ICT means that tasks, rather than departments or can be sent offshore. The Economic Council of Finland coined the phrase the ‘great unbundling’ for the phenomenon.

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