By silicon.com, 18 November 2005 16:05
Outsourcing work to offshore locations such as China, India, South Africa or Vietnam is no big deal for UK businesses these days.
Many companies are happy to take advantage of the lower costs and big labour pool that offshoring can offer, and suppliers see it as a good way of trimming their prices too.
And so, in a surprisingly short time, offshoring has become a standard business tool.
But not for the government. It has signed conspicuously few offshoring deals - especially, as we heard earlier this week, to India.
This can't be down to a generalised fear of outsourcing as the majority of public sector technology services are delivered by big IT companies.
So what makes it politically more acceptable to outsource to one company but not offshore to another? Inevitably it's down to where the jobs end up - no government wants to be seen to be creating jobs in another country at the expense of its own citizens.
Also, governments have to be accountable to the whole country - and not just to accountants. So the financial savings made have to be balanced against the wider impact on society.
The danger is that this means the government could end up effectively subsidising jobs in the UK that would otherwise be moved elsewhere in world. Should the taxpayer really be paying extra for IT because the government doesn't want to be seen in a bad light?
Of course, what happens at the moment is that the government outsources to an onshore company and then that supplier sub-contracts the work, and some of it inevitably goes offshore.
So really we're talking political sleight-of-hand.
What we need is more transparency and honesty - and a bigger debate about the role of offshoring, especially for government contracts - if we are to better address the IT skills issue.
Comments
There are 8 comments. Join the discussion
1. Chris Goodman
What puzzles me is why companies are playing follow my leader and heading for India for offshoring call centres. English in India is not the English that we speak at home, but is very much a home grown version in India. The often heavily accented and poorly pronounced words make comprehension very difficult at times.
I fail to understand why companies seeking to offshore do not look further to find former colonies where English is the FIRST language - and there are some of those.
2. Iain Benger-Stevenson
It seems to me that Gordon Brown is missing a great opportunity to raise a huge amount of money. Why not tax the traffic to and from offshore countries to such an extent that it will be undesirable to use such offsdhoring?
Similarly, why not tax immigrant IT labour at a higher rate (e.g. 40%) as some European countries do? This would benefit British IT and other freelance workers, and fill Brown's coffers at the same time.
3. Rich
if we are to better address the IT skills issue.
Whats skills issue are we atlking about. Its all a matter of money.
By the way thw current government in the UK are not right wing, (by definition anyway)
4. Dan
No one has had a problem the offshoring of manufacturing (clothing etc.) for years - as a child all of my toys had made in China/Hong Kong on them.
This is a cost play. Using tax to make offshoring more expensive will only drive up the cost of doing business in the UK and so assist companies in other countries that have cheaper costs.
5. Sandeep
All the time in our childhood we kept hearing preaching from west, including UK about the benefits of free trade. When we opened our economy to the world lots of our domestic industries perished as western companies dumped their goods in Indian market. Some of those products companies were subsidised by their goverments.
Now when we are using free trade to our own advantage in software offshoring west is crying foul. In my humble view it is called hypocrisy.
When 1 billion people will produce and consume, the world order is certainly going to be impacted and lots of people are going to have heart burns, some of which are being witnessed now.
6. anonymous
Data Protection, FoI, GSI, SCAT, DCSA etc.etc. are why Govt doesnt do much offshoring. The companies on SCAT use Govt to keep their UK arms profitable which masks their own slow but inexorable move offshore to where the management overheads will be lower. DPa and FoI still cause some civil servants to have nightmares when offshoring comes up. Putting an offshore support team on the GSI is just too difficult/dangerous.
Oh, and the comment regarding manufacturing offshore not being a headache - you forget that we had to completely transform our economy to a service industry (thereby raising the congestion on the roads as everyone tries to go to the customer in the name of service) based on IT and Financial Services and had strikes/civil unrest/ recession/ increased crime (especially benefits fraud) and sprialling national debt while all this happened.
That's why we need to be careful about managing the move to a global economy (that one's for you Sandeep - although on the point of ethics I agree with you on the point of pragmatics I say have patience).
7. anonymous
Data Protection, FoI, GSI, SCAT, DCSA etc.etc. are why Govt doesnt do much offshoring. The companies on SCAT use Govt to keep their UK arms profitable which masks their own slow but inexorable move offshore to where the management overheads will be lower. DPa and FoI still cause some civil servants to have nightmares when offshoring comes up. Putting an offshore support team on the GSI is just too difficult/dangerous.
Oh, and the comment regarding manufacturing offshore not being a headache - you forget that we had to completely transform our economy to a service industry (thereby raising the congestion on the roads as everyone tries to go to the customer in the name of service) based on IT and Financial Services and had strikes/civil unrest/ recession/ increased crime (especially benefits fraud) and sprialling national debt while all this happened.
That's why we need to be careful about managing the move to a global economy (that one's for you Sandeep - although on the point of ethics I agree with you on the point of pragmatics I say have patience).
8. Mark Kobayashi-Hillary
Though I agree offshore outsourcing is a valid business tool and could be employed by the government, they have existing problems that need to be addressed prior to any offshoring. The Gershon efficiency review was published over a year ago and the internal efficiencies documented in that report are proving a struggle to be achieved - until the public sector can improve processes and create efficiency from within there is probably not much of a need to examine offshoring. This is something that even most private sector companies find, that the principles of outsourcing allow them to create more efficient processes, even before any savings created through offshoring.