Companies in the UK are under increasing pressure to relocate parts of their business offshore to Europe and Asia.
Fifty-one percent of respondents said pressure to outsource abroad had risen during the last two years, while 29% said the burden had increased a lot, according to a survey released by the CBI. In fact, 30% of the 150 businesses polled said their firms had switched activities abroad in recent years, while nearly one-quarter said they were considering such a move. Of those who have begun outsourcing, 98% cited cost reduction as a key reason for doing so.
The survey showed that 73% of the businesses have outsourced production and manufacturing of goods, while 29% have relocated IT services and 13% call centres. Putting a location on those moves, more than half (51%) of businesses that have begun outsourcing have moved their operations to India, while 49% have staff working in China, 24% in Poland and 20% in the Czech Republic.
“Offshoring is now part-and-parcel of doing business in the global economy,” CBI Director General Digby Jones said adding, “make no mistake, this is a survival issue. Anyone who believes that firms have a great deal of choice are naive.”
Commenting on the survey results was Matthew Vallance, UK head of I-OneSource, India’s largest provider of call centres to the UK, “the offshoring surveys from the CBI [is] good news for the UK economy. [It confirms] that offshoring is an inevitable reality of globalisation. We should be proud that the UK has been bold enough to embrace free trade and has adapted so well to the opportunities of global sourcing. The [report] are also a healthy reminder that Indian call centres and other outsourced services to India are good for our growth.
At the same time, the CBI said outsourcing was advantageous for British business, despite being pushed into a corner. “Offshoring means greater productivity and more efficient goods and services. It also means UK jobs will be of higher quality, more skilled and in many cases more secure,” Jones said.
Vallance took exception this blanket statement, “we should question the CBI’s assertions that only lower-skilled functions will be offshored to locations like India – there are growing number of skilled jobs moving offshore, enabling firms to become more competitive. The offshore Indian IT sector is large and it is being followed by other sectors including biotechnology and financial services which are building new hubs of expertise. “