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By David Butler, 3 March 2004 07:30

COMMENT The natural churn of any developed economy greatly overshadows the threats of offshoring, argues executive advisor David Butler. But that won't stop this becoming one of the issues of 2004.

Last month I wrote for silicon.com about the effect of offshore development on the UK economy. The India-based research company Evalueserve has produced a report, sponsored by NASSCOM, the trade association of Indian software houses and service providers, which tries to give a reasoned assessment of the advantages and disadvantages of offshore developments. Although the sponsor of the report has a vested interest in proving that offshore business process outsourcing (BPO) is good for UK Plc, I have read the report and judge that it makes a credible effort at impartiality. I suppose it wouldn’t carry much weight if it were barefaced special pleading.

Briefly the argument is that the UK is set for a period of sustained economic growth that will make life much more pleasant for all of us. We are, however, in danger of squandering the advantage of that growth, because we might create the conditions for it but lack the manpower to achieve it.

We are becoming a geriatric society. People want to retire in their fifties or are sometimes obliged to do so. We are having fewer kids. We retain a jaundiced attitude towards vocational training but want half the population to go to university. For these and other reasons our economy has a raft of unfilled vacancies.

Offshore, along with immigration, can play a part in meeting the manpower gap. If there aren’t enough people to do the work in Croydon, there are in Bangalore. But what a hornet’s nest I stirred up. One of silicon.com’s readers registered a comment, apologising sarcastically for having the nerve to be a British person working in the British IT industry. From the reactions of some readers, you would think employment prospects in the UK are about to dry up as jobs disappear over the eastern horizon.

But Evalueserve argues between now and 2010 the total number of jobs exported to India will be around 200,000. And every year in the UK about three million jobs come and go as the economy evolves. In this context offshore is just a ripple on the surface of the economy.

But you wouldn’t think that, would you, if working in a call centre was the only job you knew and you saw it melting away? It is reasonable for company directors to state that if savings are available through offshore development they are bound by statute to advance the shareholders’ interests.

It is also perfectly reasonable for analysts and statisticians to point out the effects of offshore at the macro-economic level are beneficial to UK Plc.

But it’s also perfectly reasonable for trade union leaders to say that if people who’ve worked for a firm for 20 years are to be escorted to the junkyard, they will fight that move with every weapon they can find.

The trade unions are flexing their muscles and it’s important to recognise that they have every right to do so. Their obligation to their members is just as binding as that of shareholders to directors. Five big unions are to form a joint commission to study the effect of offshore development on the UK economy. They have said they’d like a business leader rather than a trade union official to head the commission.

No doubt the unions’ commission would like to punch big holes in the Evalueserve report, preferably below the water line. Amicus, which represents many call centre workers, is concentrating its attention on the appalling conditions of work which are allegedly imposed on Indian workers in order to achieve the much-vaunted cost savings. Dave Fleming, the Amicus national secretary for finance, argues that the burn out syndrome often affecting UK call centre workers is a stroll in the park compared with what their Indian counterparts endure - night shifts, long bus rides, huge levels of stress.

Amicus is also working with the National Union of Students to put commercial pressure on companies such as BA, HSBC and Norwich Union who are seen as guilty parties. Young people are often in the forefront of assaults on what they regard as the unacceptable face of globalisation.

Of course increases in productivity always produce victims. According to the writer George Monbiot, every time a branch of a major supermarket is opened, on average about 250 people lose their jobs in small retail outlets. But it’s also reasonable to ask, if increases in productivity cost people their jobs, that part of the saving should be used to re-equip them for another chance. When I was a director at a Rover company, we set up consulting sessions for production workers made redundant.

"Have you any idea what you’d like to try next?" one worker was asked. "Yes," he said. "I want to be an estate agent." "Why?" "Because I’ve never met a redundant estate agent."

My company, the Executive Learning Alliance, sees itself as having a modest role in this fierce controversy, holding the ring, ensuring fair play, adducing what objective evidence there is, helping European business leaders to visit India and find what’s real. On 9 March we’re holding a discussion meeting where business people, researchers, officials and trade unionists will have their say, and where we can all try to learn a little. I’ll let you know how we get on.

And if you are interested in attending the 9 March event, which is at the Institute of Directors on Pall Mall in London, please email silicon.com at editorial@silicon.com and we will pass on your enquiry .

David Butler was formerly chairman of Butler Cox Plc and is now chairman of the Executive Learning Alliance, a company that tracks developments in emerging markets. He can be contacted by emailing editorial@silicon.com.