Can governments really ban offshoring in this day and age?

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US state of Ohio's decision to ban the offshoring of government work to countries like India has triggered a debate that could be an important one for the UK as the government looks for ways to cut costs.

Ohio State has prohibited the spending of state funds on services provided offshore in countries such as India. Other US states could follow suit as they attempt to create more local jobs.

With public sector cost cutting increasing the likelihood of UK public sector jobs being outsourced higher tha ever before, the Ohio stort is relevant.

Ohio Governor Ted Strickland (a Democrat) was quoted as arguing that offshoring undermines economic development and has unacceptable business consequences for his state

This is exactly what one of Inside Outsourcing's readers said in a thoughtful blog comment recently. I later blogged about it here.

NASSCOM, which represents Indian IT suppliers, said this in a statement. "Ohio state's proposed ban on outsourcing of government IT projects comes at a time when the November elections to the United State Congress and Ohio governorship are drawing nearer. The ban can only be viewed as counterproductive to the US government thrust on reducing public deficit and possibly lead to an increased tax burden on its citizens,"

But the question is could the UK do a similar thing?

It wouldn't fit well with the government's recent visit to India aimed at increasing business ties which was welcomed in India.

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"It wouldn't fit well with the government's recent visit to India aimed at increasing business ties which was welcomed in India."

Who votes for the UK government - UK citizens or Indian IT corporations?

Who pays the taxes to fund UK government IT expenditure - UK citizens or Indian IT corporations?

Where are the short term job market and the long term viability of the indigenous IT industry most at risk - UK or India?

Whose interests is the UK government elected to represent - UK citizens or Indian IT corporations?

There should definitely be some kind of action to protect our IT industry, graduates and experienced workers.

Whilst UK companies are able to easily off-shore IT work there is little incentive for them to train up our own graduates. This is probably why IT Graduates have the highest unemployment rate of any degree subject.

http://www.bbc.co.uk/news/10477551

In addition, allowing off-shoring without any kind of tariffs or special tax rates is deeply unfair to experienced on-shore resource. With the cost of living so high in the U.K. compared with India, there is no way in this world that a UK based worker could afford to work for anywhere near the off-shore rates. We have trade tariffs on manufactured goods, so why not do the same with off-shore services?

In terms of the future of our IT industry, companies are too short term focused which is why the government needs to step in.
We are yet to see the long term effects of this unchecked and increasing IT off-shoring trend. However, I expect that companies will be paying the price at some point in the future. Not training up graduates and not letting people come up the ranks will lead to an IT management crisis. I am already seeing the consequence of IT staff being “fast-tracked” to management without getting enough proper hands on project exposure. These are the managers whose lack of real experience leads them to make disastrous and costly decisions which lead to a high percentage of project re-work and delays.

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About this Entry

This page contains a single entry by Karl Flinders published on September 9, 2010 10:24 AM.

Is the offshoring of IT destroying UK living standards? was the previous entry in this blog.

NHS IT project scrapped as central control is abandoned is the next entry in this blog.

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