Skills development and the ability to innovate and
deliver added-value projects will be key to the UK maintaining its
position as a global leader in IT services, according to a recent
BCS Thought Leadership Debate.
The UK needs a knowledge-based economy because its manufacturing
base is declining, and it must survive on highly skilled,
knowledge-based professional work, the debate heard. However,
knowledge work not only dominates the activities of developed
countries but also emerging economies such as China and India.
Competition is strong.
Given that wage levels in China and India are relatively low and
Chinese and Indian companies can undercut UK costs, it is not
surprising that the trend to offshore IT services is growing.
Most of the services provided by these countries are still
relatively low grade, the debate heard, but with time, India and
China will move up the value chain. The Japanese car and Taiwanese
electronics industries both began by manufacturing entry-level
products but have moved on to becoming brand leaders.
"The UK cannot expect to have an advantage over other countries
through education and intelligence," said one delegate. "Indian
workers are already just as educated as the UK's and the sheer size
of India's investment in education is concerning."
Another factor in India's and China's favour is that wealthier
countries tend to be more risk-averse, reducing their involvement
in high-risk innovation. The diversity of the European Union and
its member states' regulations tends to make potential markets
smaller and raise the cost of development work, as applications
need to be adapted to different markets, delegates were told.
The UK is, however, in a strong position, having the seventh
largest economy in the world, a healthy surplus of trade and high
exports. The UK excels in IT services, according to one delegate,
because proximity to customers still matters.
Many important client firms for business services are located in
the UK. Proximity is important because there are some services,
such as strategy consulting, that require face-to-face contact.
The UK also has the advantage of a highly mobile workforce.
Furthermore, IT professionals are migrating to the UK, helping
support the industry.
A widely shared view was that the UK must appreciate that
offshoring is happening and embrace it, work on its relations with
China and India and not put up barriers. UK firms should be
encouraged to globalise.
The UK must identify what it does well and what is sustainable,
and build upon those activities. UK plc must use its engagement
with customers to learn and innovate, making the most of new
opportunities. The ability to innovate is key for UK
sustainability, said debate participants. The UK tends to be good
at research and development work and should profit from this.
One opportunity lies in added-value projects that are less well
defined - tightly defined projects can be more easily commoditised,
hence they are suitable for outsourcing, the debate heard
However, competitive advantage does not come from technology but
people - their experience and skills. Education, training and
qualifications could contribute to the UK's sustainability by
promoting certain key subjects.
The UK's IT industry can also promote itself as one that
protects its customers' trade knowledge, benefiting from some
companies' reluctance to offshore because of concerns about
compromising intellectual property.
The government has a role to play in sustaining the UK's
advantage, by promoting professionalism, creating the right
environ- ment for the IT service industry, and supporting education
and professional standards, the debate concluded.
Who debates?
The BCS Thought Leadership Debates invite up to 40 influential
people who are relevant to the subject under discussion, and aim to
have a mixture of delegates from different backgrounds and
organisations.