Could the double dip recession provide the straw that breaks the camel’s back in terms of IT offshoring?
The Indian IT services sector thinks so. This article in the Economic Times of India displays a bit of confidence in the face of economic turmoil in the US, despite a large part of Indian IT revenues coming from the US.
The basic argument is that during tough economic periods businesses need to get more for less out of IT and need a bit of flexibility in terms of costs.
Outsourcers, particularly those offshore, can offer a lower cost of service and flexible payments.
But the current economic climate brings with it a catch. Governments are getting involved and are not going to take kindly to companies sacking staff onshore and sending staff offshore.
The US is a good example.
But as usual big businesses are one step ahead of the game and are once again very interested in setting up captive IT centres as a result.
This means that rather than becoming unpopular with a national government by offshoring jobs they can just create new ones overseas. Later on they might make redundancies in more expensive locations such as the UK and US but they will not actually be offshoring work.
Similarly I heard a while back that Lloyds Banking Group, which has publicly stated that it will not offshore any more permanent operational roles, is planning on having all the new integration work related to its acquisition of TSB and HBOS completed in India. But the union representing workers at Lloyds Banking Group says, in Lloyds Banking Group terminology, permanent operational roles do not include IT jobs.
And again it will not be offshoring jobs but just creating new ones offshore.
The whether it is right to offshore IT or not debate is in the news at the moment. Birmingham City Council has been criticised for deciding to send UK IT jobs to India and Department of Work and Pensions IT staff are currently working to rule in protest to supplier HP sending 200 DWP IT jobs to Bangalore.
So I recently asked the question: Should UK public sector work be done offshore to cut costs?
So far I have had 43 responses.
6 said yes.
2 said perhaps in the future
19 said no
16 said never
Here is the questionnaire if you want to contribute to the debate.