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UK dismisses protectionist offshoring stance
Focus is on re-skilling and re-training those whose jobs are affected

By Andy McCue

Published: Tuesday 18 January 2005

The UK government has dismissed the protectionist approach to offshoring, maintaining it is an opportunity and not a threat to the UK economy.

Instead, there is set to be a renewed focus on a skills and retraining strategy for those impacted by the trend for sending work to low cost countries such as India.

Speaking at the 'Beyond BPO' event in London, Malcolm McKinnon, head of trade in services and offshoring policy co-ordinator at the Department of Trade and Industry (DTI), said the UK needs to position itself to take advantage of the benefits from offshore outsourcing.

"We are not going to go down a protectionist route and we should not stop offshoring happening. Offshore outsourcing need not be seen as a threat. It can be a threat to individuals but at a macro level it is not," he said.

Instead the focus should be on re-skilling and re-training those affected by offshoring so that UK firms can move up the value chain and offer higher value services.

McKinnon said the DTI is due to put out a renewed and more detailed statement of the UK's position on offshore outsourcing later in the spring. He predicted that offshoring is also unlikely to become a party political issue during the general election here in the same way it was in the US.

Jerry Rao, chairman of Indian IT trade body Nasscom, said the offshoring debate has moved on from simply being about job losses as more complex and higher value services are starting to be moved overseas as well.

"The issue of movement of jobs from one region to another only becomes emotive when there is a general economic slowdown," he said. "It helps there is a high growth in the UK and low unemployment."

And while measures have been put in place to allay the fears of some Western firms, such as background checks on BPO and IT workers, Rao admitted that some improvements still need to be made to the country's telecoms and physical infrastructure, which he described as "medieval".

Analysts have coined the phrase 'knowledge process outsourcing (KPO)' for the next wave of services that will be offshored from Western countries to developing nations and research company Evalueserve predicts the offshore KPO market will be worth $17bn by 2010.

Marc Vollenweider, CEO at Evalueserve, said the kind of work currently being offshored in this bracket includes financial analysis work for many Western investment banking institutions, customer data analysis and IP and patent work.

He said 80 per cent of the legwork associated with these tasks can be offshored, freeing up time for expensive City-based analysts to spend on other projects.

"This is about quality and speed. These expensive people simply save time," he said.

The 'Beyond BPO' event was hosted by the Commonwealth Business Council's technology division.