Offshoring poses 'exaggerated' risk

09-07-2007

Offshoring poses 'exaggerated' risk
Warnings about rapid shifts in jobs from the UK to developing countries like India are greatly exaggerated, a report says.

The Work Foundation thinktank's report says just 5.5 per cent of all jobs lost across Europe in the first quarter of 2007 came as a result of offshoring activities.

Furthermore trade between the UK and India specifically grew from 0.4 per cent in 1995 to 1.2 per cent in 2004 – what report author Katerina Rudiger described as "less of an explosion, more of a slow evolution ".

"India's high-tech sector is indeed booming, but is not 'coming for our lunch' as some of the more apocalyptic commentators have suggested," she said.

"Technology has always led to people being displaced from some lines of work into others, but what is not happening is a straightforward jobs migration from north to south, west to east."

As a result Ms Rudiger argues that the alarmist tone adopted by many commentators is unnecessarily strident.

The report points out that labour costs, which are popularly perceived as being a key determinant in triggering business' decision to seek offshore solutions, are only one factor.

It says "cultural contexts" and being close to "key target markets" are also important.


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