Offshoring growth will create a jobless recovery

Business functions such as IT and finance at European and US companies will continue to be offshored to low-cost locations as the practice matures.

Business functions such as IT and finance at European and US companies will continue to be offshored to low-cost locations as the practice matures.

According to business advisory the Hackett Group, 1.1 million jobs, including those in IT and finance departments, have been offshored since 2008 and another 1.3 million will go the same way by 2014.

The company said IT has dominated offshoring since 2000 but it is now levelling off, while finance job offshoring is accelerating.

"With the modest resumption of economic growth this year, policy makers throughout the industrialised world have been struggling to create jobs. But our research shows that across key business functions, their efforts are simply being overwhelmed by offshoring and other factors," said Michel Janssen, chief research officer at The Hackett Group.

"This is what's driving the jobless recovery we're seeing in key white-collar job categories, and it's likely to continue for the foreseeable future."

The Hackett Group said that in 2009 nearly 700,000 jobs in finance, IT, and other areas were lost to a combination of offshoring, productivity improvements, and lack of economic growth.

"We see the number levelling out at around 250,000 jobs lost each year through 2014, and possibly beyond," said Janssen.

The group said that businesses are becoming more mature consumers of offshore services.

Honorio Padron, global business services practice leader for The Hackett Group said many companies have become much more mature in their use of offshore resources.

"They began with shared service centres nearly a decade ago, taking basic transactional areas offshore on a one-off basis. But today we're seeing the rapid ascendance of comprehensive cross-functional global business services operations that are moving far beyond transactional work, to handle the lion's share of the support function for many companies. The result is a globalisation trend from which there's simply no turning back."

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