June 2008

Offshoring jobs can boost employment

British businesses that export their jobs overseas are boosting employment levels in the UK. This is contrary to market claims - including from workers - that offshoring damages their prospects, said Karen Geldenhuys, MD of IT-focused recruitment agency.

"Often, when jobs are exported or 'offshored' by companies this leads to increased productivity - and increased revenues as more, and larger, projects can be handled. This can also lead to more employment.

"But," said Geldenhuys, "what is happening in SA is more a case of workers leaving the country to work independently overseas against a backdrop of continued political and economic uncertainty. What we might be gaining in offshoring is vastly offset by our current levels of braindrain," she said.

When it comes to the positive affects of offshoring jobs, Prof David Greenway of Nottingham University's Globalisation and Economic Policy Centre, believes jobs can be created.

His study, according to on-line recruitment publication, www.ContractorUk, is believed to be the biggest conducted in the UK thus far.

The study revolves around information received from 66,000 UK firms from 1996 to 2005. The report showed that the offshoring policy resulted in the creation of 100,000 extra jobs and a £10bn boost in company turnover.

Prof Greenway also found that most of the jobs outsourced from the UK go to "similarly developed European nations" and the US, where "language skills are better." He also said that a lot of the offshoring revolves around skilled work, and not low cost labour -as is often claimed by detractors.

Commenting further, Prof Greenway said: "If you think of manufacturing and the production of parts, then it is skilled work,"

This viewpoint delivers a significant a blow to the myth of only low-skilled jobs going offshore. "If you look at car manufacturing, Ford may make engines at Dagenham but gear boxes in Spain; if you think of Airbus - Britain makes the wings and engines, France the bodies."

He added: "Offshoring does lead to increased job turnover and a change in the skill mix in a firm. The winners are those who have the skills required by firms that are offshoring and growing; the losers are those who cannot adapt."

He said offshoring should be embraced, but the UK must "continually invest" in upgrading workers' skills so they can easily jump from one job to another.

This is something that should also be considered in South Africa.