Leader: Globalisation cometh

Offshoring has for some time been synonymous with India but the recent trend of locating operations in 'nearshore' locations such as Eastern Europe or even as close as Wales has changed that somewhat.

Take, for example, the news today from LogicaCMG that it chose Wales over Bangalore for a new customer support and business process outsourcing (BPO) centre. And just a few weeks back two banks announced they'd be creating 500 call centre jobs in Newport and Cardiff.

Wales is providing kick-backs aplenty for new businesses but, according to LogicaCMG's UK finance director, the choice was "not all about cost".

Other factors commonly mentioned include finding a place with a skilled workforce and the right language skills. Lately we're also hearing talk of looking for countries which are politically neutral and have fast fibre-optic network connections, such as Iceland or Sweden.

When it comes to data centres - quite a different operation than a customer service or BPO centre - there are also legal issues. In order to remain compliant with the Data Protection Act and the financial services authority, for instance, UK businesses that offshore operations which require access to customer information must physically store much of the data here in the UK - and allow only remote access from the offshore centres. This would likely make sticking with a lower-cost UK destination such as Wales even more attractive.

What we're seeing here, in a larger sense, are the effects of globalisation. Globalisation, like offshoring, is another word which is often associated with but should not be synonymous with India. True globalisation means businesses decide how to run their businesses with less heed to national borders than in the past. It means locating each part of the business where it makes the most sense - whether that's Iceland, India, Wales or indeed somewhere else.

And for all those who think that 'somewhere else' is just about 'shipping jobs overseas', sometimes overseas means the UK. According to a report out last week by International Financial Services London, the UK comes in second only to India as a location for offshoring in that particular sector.