Is outsourcing to blame for unemployment?

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Governance
Written by Gary Howes   
Tuesday, 17 March 2009

Tomorrow UK unemployment figures are due and the debate starts to rage over the causes and what can be done.

The UK is bracing for the latest monthly unemployment figures due out tomorrow with the British Chamber of Commerce predicting unemployment will top 3 million before the recession is over.

Last months data came in at 1.97 million out of work and tomorrow a figure of 2 million is expected.

Eagle Consulting - a leading UK payroll bureau - has today suggested that the impact of outsourcing work may be a contributing factor to the high level of unemployment.

Harry Hornby, managing director of Eagle Consulting, says: “It is incredible to see that companies are off-shoring their outsourced services while the UK is suffering from a declining economy, high unemployment and a lack of jobs. As in the US, the UK government should provide a tax incentive for companies that near-shore their outsourced services rather than sending money and jobs abroad.”

 

The case against offshore:


Many of the economic benefits of off-shore outsourcing no longer stand.

  • In 2008, Indian inflation rose to 11% – a new 13-year high – which has remained above the government’s target and continues to weaken the economic argument

 

  • Off-shore outsourcing requires local liaison to front-end the agreement which adds to cost

 

  • In the last two years, undersea cables have been damaged at least twice in shipping or geological incidents resulting in significant degradation to communications and the time-critical transfer of important data

 

  • Different standards of regulation and trustworthiness outside of the UK e.g. the escapades of Enron and recently Bernard Madoff in the US, and the $1bn Satyam fraud in India

 

  • A successful outsourcing arrangement requires an understanding of culture, local language and business practices

 

  • “British jobs for British workers”

 

  • “Education, Education, Education” – British Jobs for British Graduates

 

  • British Employment pays British Taxes

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