Tag: offshoring

UK gov gives nod for Universal Credit IT off-shoring

The government is taking a hands off approach to companies off-shoring IT jobs, as Chris Grayling confirms that the Universal Credit system will allow work to go to staff in India.

The employment minister said that though existing jobs would be kept in the UK, it would not stop contractors IBM and Accenture from creating jobs abroad.  

“All off-shoring work for universal credit is new development and we are not moving existing UK based work to India,” Grayling said in a parliamentary written answer. “Off-shoring of work by our IT service providers is not a matter for the Department for Work and Pensions.”

He did not, however, state the number of roles which would be created abroad, though the Guardian has previously revealed the number to be in the “hundreds”.

Grayling said that firms were being forced to go abroad for IT work as the skill base on key technologies “resides overseas, and not necessarily in the UK”.

A spokesperson for the PCS union told TechEye that Grayling should be doing more to create more skilled jobs rather than shipping them abroad, particularly with unemployment levels rocketing.

While off-shoring continues to affect the IT industry, despite promises from the government to readdress its strategies, the situation with onshoring also continues to create problems.

The idea that there are not talented IT workers on a national or local level is just an idea. As TechEye has pointed out, firms are more than willing to employee foreign workers on the cheap at the expense of UK jobs, another area where the government has failed to act to protect domestic IT workers. 

Onshoring offers bleak view of UK economy

As talk increases of a double dip recession, a growing trend in returning offshored work to the call centres of Blighty is a sign that the vultures may well be circling.

While companies once couldn’t wait to move jobs to places such as Bangalore, contracts are increasingly finding their way back to the UK as onshoring increases.

An end to talking at IT helpdesks thousands of miles away might please legions of Daily Mail readers, but it is a worrying sign of high unemployment in the UK, and a troubled economy. 

One firm, Commensus, has announced that it will be moving work back to the UK due to the ability to pay more ‘competitive rates’ at home than countries generally considered poorer by comparison.

The UK job market has become “much more competitive in the recession”, according to the company MD.

Commensus says that with the pound value on the wane, off shoring is becoming a “less lucrative proposition for companies in the UK”.

We spoke to Commensus, which then said that the decision was in fact based more on skill. When the topic of economic implications reared its ugly head, a spokeperson was reticent to broach the topic, despite a statement clearly underlining financial reasons.

While offshoring is still common, the increase of work flowing in the opposite direction has clear undertones of a weaker financial environment.

TechEye also spoke to Peter Ryan, an outsourcing expert at Ovum, who told us that there is an increase in off shore work coming home.

“It has been becoming more pervasive since around 2008 and 2009,” Ryan told us. “I have seen more examples of onshoring since then, and there is some link between a recession and a weak economy.”

He continued: “It is likely that the increase in onshoring, mainly from India, is also a response to consumer and political pressure with unemployment high. But firms looking at onshoring need to be aware that it could be a false economy in the long term.  The recession will come to an end and those looking at repatriating work will find that the price points won’t work once the economy picks up.”

However, firms appear willing to take that risk, suggesting some, at least, think the recession will be more long term than we’d like to think.

RBS moves 700 IT job roles abroad. And to the USA

The Royal Bank of Scotland has agreed a deal for offshoring 700 jobs in the technology services sector to countries such as India, Singapore and… the US.

As reported earlier this week, a newsletter circulated by Unite the Union, the union in charge of the extensive reduction in staff that is occurring as part of a two year programme, claimed “upwards of 700 Technology Services jobs will be offshored to international locations”.

RBS reluctantly confirmed to TechEye that the US would be one of the countries where job roles would be relocated – at the cost of jobs in the UK.

RBS was not able to give any further details with regards to how many jobs have already gone abroad, or what numbers would be going to which country, though it is now claimed that most will be relocated to Singapore.

According to RBS the reason the jobs, which it claims actually amount to 500, will be leaving the UK is to meet cost needs as part of a corporate downsizing, however it refused to comment on how this would be achieved by moving staff to the States.

While it is not unusual for private firms to relocate specific IT jobs to foreign locations to reduce costs, what is interesting with RBS is that the bank received in the region of £20 billion of UK taxpayer’s money to bail it out not so long ago, so quite why it is reluctant to keep jobs with UK taxpayers is unclear.

It appears that UK taxpayers will essentially be paying wages for workers in the US and other countries to perform roles that could be performed by UK IT workers.

According to IT job analyst Nick Mayes, Research Director at PAC, the offshoring is a significant problem for the jobs sector.

“It is a highly charged issue,” he told TechEye, “and a very sensitive one as, though there are certainly good elements related to offshoring, many have had bad experiences with it.

“But considering the pressures that are involved in the public sector to reduce costs it is likely that offshoring within the public sector will only continue to become more commonplace, with public ownership remaining a strong issue.”

Mayes also describes the current government stance as “very grey” at the moment, as it is difficult for the government to criticise a partially publicly owned bank such as RBS without appearing hypocritical itself.

While this is a real problem affecting the IT jobs sector, it appears all sides of the discussion are extremely reluctant to step up for any discussion.

Unite the Union couldn’t comment, as it is highly implicated in the decision, while the TUC was also afraid to make any comment that might contradict Unite’s viewpoint.

Furthermore, the Taxpayer’s Alliance, described by one MP as an “arms-length Tory front operation run by big powerful business interests who want to remove themselves from paying tax by poisoning the well of public debate around the issue”, was similarly afraid of broaching a subject despite its direct and immediate implications for those who essentially pay taxes to move jobs abroad.

Representatives in parliament are also reluctant to talk, which is perhaps unsurprising due to the expected increase in government IT jobs going abroad as cuts are reduced.

But unless more is done to highlight the movement of UK IT sector jobs abroad it will increasingly mean that decisions such as the one made by RBS, and ratified by the unions, will continue.

UK taxpayers pay to send UK jobs abroad

A source told TechEye that RBS will shift their technology services and insurance divisions abroad.

More than 1,200 jobs will be lost in total.  The company has confirmed these jobs will go abroad but nobody will notice because the people you meet at the front desk will keep their jobs and keep smiling, fakely and feebly,  at you.

So the UK tax payers’ money is now paying for jobs abroad, the source claimed. Tax payers’ money baled out RBS during the credit crunch.

The British trade union called Unite confirms the “strategic review” and claims jobs are going to countries including Singapore, India, and even to the USA.

Marie Kiernan, vice chairwoman of the RBS National Company Committee said thousands of jobs have been lost across the different divisions of RBS. But the union newsletter gives few details although obviously Unite will be so busy that there will be few jobs lost at the mega-union. It will be too busy working out redundancies for its members.

At a rally held in London yesterday, over 250,000 people marched in support of jobs not being cut. Ed Milliband, the head of the Labour Party, was booed when he spoke in Trafalgar Square.  

More will follow.

India and China still top for global sourcing

Developing countries are leading the way in globally sourced activities.

That’s according to Gartner, which has put together a report on the top 30 countries for globally sourced activities in 2010-2011. Within the report it’s found that  many organisations which choose to move IT services to lower-cost countries are daunted by the task of determining which country or countries would best host their operations.

“This year the Top 30 countries are exclusively emerging nations,” said Ian Marriott, research vice president at Gartner. ”As the pace of change is slower in developed countries we have chosen to focus on those locations that are still maturing and developing, domestically and internationally.”

Nine countries from Asia/Pacific were represented in the 30 leading countries, compared with 10 in previous years. These include what Gartner describes as the “undisputed leader in offshore services”, India, and the “greatest challenger in terms of potential scale”, China.

In the Americas region Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru made the list, while the Asia/Pacific regions saw Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam come in the top 30.

In EMEA Bulgaria, the Czech Republic, Egypt, Hungary, Mauritius, Morocco, Poland, Romania, Russia, Slovakia, South Africa, Turkey and Ukraine are among those listed in the report.

Seven developed countries have moved out of the Top 30 this year. This includes Australia, Canada, Ireland, Israel, New Zealand, Singapore and Spain.

However, Gartner points out that these countries are still important in the context of nearshore locations as their maturity in this industry gave organisations “significant benefits.”

Over the past year Gartner said it had seen considerable efforts from many countries to consolidate or grow their positions as leading locations for offshore services. It pointed out that emerging nations had placed significant emphasis on IT and business process services providing a vehicle for economic growth, as many potential trading partners are moving from recession to tentative growth.

This in turn has led to Bangladesh, Bulgaria, Colombia, Mauritius and Peru, along with three re-entrants – Panama, Sri Lanka and Turkey, to move into the Top 30 list.

Gartner points out that this year, eight countries from Latin America appeared in the final list of 30 compared with seven from the Americas as a whole in previous years. However, it said that in the past, a lack of government support for offshore initiatives had restricted development by countries in the Americas. Currently Mexico and Chile are rated “very good” for government support, with Brazil and Costa Rica meriting a “good” rating. 

In the Asia/Pacific region Gartner says government support for promoting their countries as offshore service locations was strong. This was especially evident in India, China and Malaysia.

Indonesia continued to be considered poor for government support.

Gartner says that of the 13 EMEA countries who made the Top 30,  only Egypt achieved a rating higher than “good” for government support. It says this reflects the amount of focus still needed to create an environment that would support nations to become a part of organisations’ global delivery models.

“Sourcing managers and service providers should use the various ratings to help determine which locations are right for their individual organisations,” said Mr. Marriott.

“In this increasingly dynamic global environment, multinational providers will continue to extend their footprint in different geographies, carrying with them their expertise and maturity, while local providers will strive to become offshore providers, searching for opportunities and niches they can explore. Even though some countries are rated poorly for some categories, clients may find individual providers — global and local — whose capabilities mitigate some of the risks.”