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Last year UK IT professionals who worked in hardware maintenance roles, on upgrade projects and in application development were the ones most likely to lose their jobs as a result of the continuing growth in offshore IT oursourcing to regions like India, China, and Eastern Europe. Cost remains one of the key drivers for offshore outsourcing, so some jobs will always be on the line. Consultant Technologies Ltd paints a grim forecast. It cites a recent debate held by the British Computer Society, which concluded that the UK’s IT contractor sector will disappear by 2025. Yet demand for IT contractors is still high, with more and more women being encouraged to join the industry. In March 2007 Prudential, the financial services group, annouced that it is to cut 520 UK-based IT jobs as part of an £80m plan to cut costs by offshoring and outsourcing. Silicon.com reports that this rationalisation programme will cost the company £165m to implement. Vodafone is also making 120 IT workers redundant, further to establising an outsourcing deal. The High Street off-licence chain, Threshers, has signed a five year £8m deal too with Xansa, replacing an existing contract that the firm has had with EDS since 2003. It hopes to annually save the group £1m, while creating a more flexible cost-base. Xansa will work on Threshers’ application management, IT operations and the hosting of its SAP financials, WebSphere, Business Objects, and JDA merchandising applications. Much of the work, from May 2007, will be handled by Xansa’s Noida office in India, not far from New Delhi. Not everything looks so bad because, “Offshore outsourcing is as much an opportunity as it is a threat to our economy”, says Dan Bowyer of The Engine Room. He adds that: “It may feel objectionable in the short-term because it is shifting traditional revenue and operational models. Change is normally uncomfortable.” Nevertheless he thinks that it is “ultimately always healthy.” The International Outsourcing Forum, which involved some leading IT and business process outsourcing (BPO) suppliers, met in Singapore during February 2007. The forum expects 3 million jobs to be created worldwide by 2008; the global outsourcing and offshoring market will also grow from a value of $10bn today to $50-60bn next year. BPO will catch-up with IT ourtsourcing this year. Most of the offshore outsourced IT work is low-level and low-skilled, explains Ben Brouwer - Managing Director of Global Marketing Direct Ltd, yet demand for highly and widely skilled IT contractors who work on high-end projects remains consistently high. This view is supported by The National Outsourcing Association. It comments that outsourcing does not necessarily benefit the developing nations to the detriment of the UK economy and that of other countries. A report by Jobserve presents a very positive outlook too. Demand for IT contractors grew by 22% between January and March 2007, and it has doubled since the same period last year. Yet there still remains an IT skills gap in the UK. The National Outsourcing Association says this situation is even replicating itself in India; there are a number of well-trained Indian IT contractors now working overseas, including in the UK, creating a skills shortage in India. This could prove detrimental, leading to increased outsourcing costs. Nevertheless, India and China are expected to maintain their low-cost labour advantage for the next 20 years or so. India and China are currently the most preferred offshore outsourcing locations, according to AT Kearney’s annual ‘Global Services Location List’. In order to fill the cultural gap and the need to improve the management of many outsourced projects, Indian outsourcing providers like Wipro are recruiting staff from their customers’ market. Wipro, for example, according to BBC News, is planning to open a new UK development centre in Birmingham, where it will employ 500 people. So IT professionals can count mixed blessings today; some jobs are being lost while others are created. “The smart contractors and organisations will shift with the times, take advantage of lower labour costs, find niches and the dead wood will fall away”, comments Bowyer. There’s a need for IT contractors to develop a wide-range of skills, including those involving business and project management. Offshore outsourcing would then become more of an opportunity than a threat to their jobs and the future of the industry. Graham Jarvis MA Apr 10, 2007 Email this article Printer friendly page Previous Page
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