RBS job cuts will seem tiny if government offshores its IT work

If the UK government chooses to outsource and offshore IT jobs in the public sector the UK job cuts made by the Royal bank of Scotland (RBS), which now totals more than 20,000 since it was bailed out by the taxpayer, will be massively dwarfed.

Tax payer owned RBS is a good example to use when describing the cost advantages of offshoring IT and back office functions.

Although companies often talk up the value add that can undoubtedly be gained by sending roles offshore it is the low cost that is usually the driver.

News of more job cuts at RBS yesterday, which includes significant numbers of IT workers. Is a headline hitter.

But another interesting story behind this is how RBS has gone from being a company reluctant to send jobs overseas to one that has offshored work to a centre in India that it gained through the acquisition of Dutch bank ABN AMRO.

A source of mine told me there were several banks with numerous offshoring programmes waiting to be signed off so there could be more bad news on the UK IT jobs front. But this will be nothing compared to the carnage if the government decides to offshore work.

Ovum recently suggested that the government might have to offshore thousands of jobs. We know there is scope for it too, with Indian IT suppliers not amongst the major suppliers to government.

I wrote a blog recently asking whether the government could really offshore thousands of jobs and had some very interesting comments. Click this link and follow the discussion.

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The cost of employing an IT guy in India is cheap compared to the UK....a few years ago it was probably 50% cheaper...salaries are rising all the time and employees don't hang around for too long as they know if they move to another company they will get a nice 30%-50% salary increase - Long term this not sustainable and the banks will then be looking for the next cheap labour country.

Another point is to be clear, low cost is the only driver for the banks - RBS for example, employ 3-4 people in India to do the work that 1 person would do in the UK - The morale of people working at RBS is very low...it's like being on death row...just waiting for the day you are called to a meeting with HR and then escorted off the premises after being told you are surplus to requirements....