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The Boys from Bangalore

Last month, I warned companies that the urge to create a ‘Takeaway economy', an unholy rush to outsource skilled jobs to the cheapest bidder, was likely to have a longer-term damaging effect on our economy. Outsourcing at present levels can’t avoid a social consequence further down the road and without a doubt, the attractiveness of shifting jobs to the Indian subcontinent, undermines the confidence of the knowledge workers who are responsible for our future economic wellbeing and the flexibility of a labour market that has made the UK a more competitive and productive environment than any of its European neighbors.

Perhaps I sound as if I’m protesting against the forces of globalization, a futile exercise, because multi-national companies will chase their profits and their cost-savings across the globe. But today, I read that Hewlett Packard is to transfer “accounting support functions currently conducted by former Compaq staff to Bangalore, with the loss of twenty UK jobs”.

Hewlett Packard has apparently concentrated its internal financial services into three Global Business Centres, located in India, Mexico and Spain over the last two years and Compaq's internal accounting operations are next.

And why not, you might ask? It’s a drop in the ocean, the Tequila is cheap and after all, times are tight and HP is no different to anyone else, it needs to keep its costs down and its share price high and if British workers are more expensive than their Bangalore equivalents, then tough.

But last time I commented on this issue, I received a rash of emails from people telling me “That all that glitters is not gold”. In many cases, outsourcing works well but as one programmer told me, the standard of coding he has seen coming out of his company’s Indian partner has been quite abysmal. Now I can’t tell you whether this is true or not but I do know that aggressive Indian-based companies want a larger slice of the UK pie and our public sector, one of the biggest tells me, is high on their wish list.

The radical alternative is of course a form of ‘protectionism’ but in a global economy that will turn us into the IT equivalent of North Korea, so it’s hardly an option. No, I’m asking government and business to consider the potential impact of outsourcing ‘knowledge-based’ jobs much more carefully. As an economy, we, like our European neighbours, are attempting to poach skilled workers from other countries and we can’t find enough teachers, doctors and nurses. But it’s a revolving door and I’m sure many of us would like to know how many IT or knowledge-based jobs have been lost over the last five years as a consequence of outsourcing and ill considered legislation like IR45.

In ten years time, what will Britain produce? We’re no longer a great manufacturing economy and even Bentleys are expensive BMWs. Without our North Sea oil revenues we would have felt the pain a long time ago and the oil is running out, so what’s left? Financial services? DIY? Tourism?

Government talks a great deal about our future as a knowledge economy but we're seemingly happy for the knowledge costs to live in Mexico or India? Forgive me but I don’t believe this will work and I worry that the ill-considered enthusiasm for cheap outsourcing will ultimately be the equivalent of shooting this country in its socio-economic foot.


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