IT professionals and unions warn of the damaging effects of moving IT offshore

Parliamentary committee to consider how offshoring affects IT jobs.

Parliamentary committee to consider how offshoring affects IT jobs.

Many IT staff in the UK who believe they have lost their livelihoods because of IT work moving offshore to countries such as India plan to make their voices heard in 2004.

One such activist is Maldwyn Palmer, an experienced IT professional in his fifties who is struggling to find work. Palmer formed Stop Offshore Outsourcing Now in the autumn of 2003. "Our aim is to raise the issue and persuade some MPs to take up our case. Our objective is to stop the outflow of IT and other jobs," he said.

"The campaign is purely grass-roots, was started by myself and involves a loose collection of like-minded IT professionals who see their future under threat."

Palmer said he and his colleagues would build links with other affected workers and relevant unions to take the issue forward. Palmer has persuaded his local Bournemouth MPs Peter Lilley and Robert Key to put his concerns to trade and industry secretary Patricia Hewitt.

If action is not taken, "this country will lose its expertise in software and hardware technology", he warned.

Where tomorrow's highly skilled jobs will come from is on the agenda of the House of Commons Trade & Industry Select Committee. It is due to meet later this year to consider this and other related issues and has received submissions from IT groups the Professional Contractors Group (PCG) and Shout99.

The select committee will respond to a December 1998 government white paper "Building the Knowledge Driven Economy", which contained 75 commitments by government designed to reduce the performance gap between the UK and its competitors, and to measure progress towards that goal.

Challenges identified in the white paper included increased competition from low-cost economies using new technologies, highly skilled workforces and mobile capital; and the development of science and knowledge bases to underpin the new technologies available to industry.

Losing skills

David Ramsden, who lobbies parliament on behalf of the PCG, said the group's submission focused on the dangers to the UK economy of losing IT skills and of a fall in IT skills training. It also highlighted that offshoring is not necessarily an efficient, low-cost option, backed by a case study.

"It is not about PCG members whingeing about outsourcing," said Ramsden. "The government wants the UK to be a lead nation in IT. But offshoring and a decline in training point to the government being unlikely to meet those goals."

Ramsden said the PCG also believed consumer pressure would hinder the growth of offshoring - a view shared by the UK's largest manufacturing union, Amicus, and the Communication Workers Union.

Shout99, an online IT contractors' pressure group, also submitted its views to the select committee last November. It called on MPs on the committee to focus on offshoring and fast-track visas.

"By exporting jobs and sectors of the knowledge-based economy the UK is removing much of its ability to compete in a global economy by exporting its requirements for a skills base and removing incentives to train, work in and develop the UK's own technological industry," said the Shout99 submission.

Shout99 also wants a crackdown on abuse of the work permit system. It believes many employers bring in low-cost IT labour on intra-company transfer schemes and breach work permit regulations.

Protectionism

Last week, in a signal that offshoring is high on the political agenda, Hewitt met representatives of organisations which have an interest in outsourcing. The pro-outsourcing firms included HSBC and Deloitte and Touche and the anti-outsourcing view was put forward by six unions, including Amicus. Hewitt ruled out protectionist measures, stressing that trade with India was worth £2.5bn to the UK economy. Some of those present pressed for more research into the impact of offshoring on the UK economy.

A government review into the impact of offshoring on the call centre industry will be published this spring.

The prime minister is also anti-protectionism. Last November Tony Blair told the CBI conference, "I cannot shield you from the world. The economy out there will be decided by knowledge, skills and education, by value-added goods and services."

This is why Amicus' anti-offshoring campaign "Leading Edge of the Bleeding Edge" is not focused on lobbying MPs.

"The prime minister said we just have to live with it," said campaign organiser Lee Whitehill. "It shows Tony Blair has lost the common touch."

Amicus aims to bring offshoring to the public's attention and to get the DTI to set up a forum to assess what the UK economy will look like in 10 years' time, and the skills and training that will be needed.

Consumer concern

Amicus said research into public attitudes to offshoring undertaken last summer, indicated consumer concern. Some 63% of respondents said they would take offshoring into account when making purchasing decisions, and 85% said they were worried about the protection of information which had been stored offshore.

"We recognise offshoring is inevitable," said Whitehill. "We want to mitigate against its negative aspects by looking at developing the skills we will need as the process unfolds."

It is hard to believe that, in a free trade environment, offshoring can be stopped. But should the IT jobs outflow turn into a flood, it is likely that opposition to offshoring will rise and be a force to reckon with.

Ominously, environmental campaigner and writer George Monbiot predicted, "If you live in a rich nation in the English-speaking world and most of your work involves a computer or telephone, do not expect to have a job in five years' time."

The state of the industry

  • Amicus claims 1,000 UK jobs a week are lost to off-shoring and believes 200,000 UK jobs, especially in IT support, are at risk l Analyst firm Deloitte Research predicts two million jobs will be outsourced from Western economies to India by 2008 
  • According to Gartner, India has 90% of total offshore revenues, though China and Russia are making inroads
  • The total number of IT jobs in the UK is rising. The Office of National Statistics said there were 507,300 jobs in the computer and related activities category in June 2003. The figures for 2002 and 2001 were 502,600 and 502,300 respectively 
  • Unemployment rates for the ONS' associated professional and technical category was 2.3% in summer 2003, compared to a national unemployment rate of 5% 
  • The unemployment rate for recent UK IT graduates is 14.6%, according to the November 2003 What Do Graduates Do report - the highest of all categories measured
  • Annual salaries for Indian IT staff range from £1,200 to £2,500.

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