Will offshore boom help the UK economy?

Outsourcing has become a standard feature of the modern IT department - and one of the most controversial.

Outsourcing has become a standard feature of the modern IT department - and one of the most controversial.

Demand for outsourcing has continued to be strong throughout the downturn in the IT industry. During the past five years offshore outsourcing has become a mainstream business practice, with companies eager to take advantage of low-cost countries such as India and China that offer a highly-skilled workforce.

However, the trend for organisations to move their IT systems and business processes overseas has run into increasing opposition from unions.

Concerns centre on job losses and data protection issues.

A report by Forrester Research last month predicted that the UK will lead the growth in offshore outsourcing across Europe over the next 10 years.

By 2015, the UK will transfer 150,000 IT jobs and 100,000 IT-oriented clerical jobs offshore, more than in Germany, France or Italy, according to the market analyst.

When non-IT jobs are included, the total number of UK jobs expected to go offshore by 2015 rises to 760,000 in the UK, equivalent to 3% of the workforce.

This will place the UK at a strong economic advantage over other European countries that are moving jobs to offshore at slower rates, Forrester claimed. It also predicts that there are likely to be acquisitions within the IT services market as the economy in Europe falters and Indian suppliers become more dominant.

Companies including Barclays and Citigroup have recently bought a stake in or acquired their offshore outsourcing supplier outright. The deals, which are similar to joint ventures between financial and IT services companies over the past four years, suggest that the offshore outsourcing market is maturing and entering a new phase.

Meanwhile in the UK, strike action by Swansea council IT staff over a proposed outsourcing deal will give many users in the industry pause for thought.

IT managers are left with a number of challenges including selling an offshore deal to a sceptical workforce and managing a supplier thousands of miles away in a different time zone.

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