Is Outsourcing Pure Evil for the UK?

  • June 13, 2013
Is Outsourcing Pure Evil for the UK?

It is a widely known fact that the majority of British population considers outsourcing as something completely evil. Why does that happen and does outsourcing really destroy the economics of Great Britain by depriving the UK citizens of their well-deserved jobs? I've come across a few interesting studies in some of the articles from Times, and put together a piece of curious material.

 

Whenever British companies come to a decision to outsource, one of the places they address their primary needs to is NOA - National Outsourcing Association. It is an independent, not-for-profit organization whose major purpose is to help everyone willing to make outsourcing work. NOA is accredited by Middlesex University, the qualifications of which include a wide range of outsourcing management roles; the research they provide is extremely important for those striving to stay on top of the industry.

One of the latest challenges is dealing with common misunderstandings around software development services outsourcing. The thing is that when the NOA was founded back in 1987, outsourcing was on the verge of being acknowledged as a key operational strategy. Former outsourcing practices were significantly limited to domestic suppliers and contractors, which is still the major part of UK industry. However, as far as public goes that seems to be forgotten.

Outsourcing Equals Offshoring?

Today outsourcing is a synonym to offshoring, as the recent study into The Public Perception of Outsourcing vividly demonstrates. It is the first wave of research in the NOA's flagship campaign for 2012/13: Outsourcing Works. The next step is a study which will evaluate the business and macro-economic advantages of driving work away.

Outsourcing equals Offshoring

Outsourcing is a supreme contributor to UK PLC weighing in with nearly 10% of GDP, yet it is the unrecognized champion often defamed, hugely misunderstood. Whenever something goes wrong, it's all over the national news. When everything is fine – nobody notices it. However, it is important to have everyone understand that not all offshoring is an actual outsourcing and not all outsourcing is offshoring.

Besides all the work that is being done offshore, there is still plenty of projects required to be performed onshore. Therefore NOA is working to redetermine the notion of outsourcing in the minds of the society and make certain that UK becomes an offshore destination as well. There is also such a term as ‘our-shoring' in picture that is basically a key element of the Outsourcing Works campaign aiming to direct onshore investment in British sector, which eventually should help create jobs in the UK. From the geographical point of view the United Kingdom is in great position to turn into a strategic international outsourcing center one day. And the aim of NOA is to keep competitive advantages of Great Britain, preserve jobs and bring a lot more into the country.

Concepts of Outsourcing

There have been two studies that showed two different concepts about outsourcing. The first report is the latest research accredited by BSA (Business Services Association). It was held by Oxford Economics, and it showed that the outsourcing industry of UK accounts for £200 billion a year and 8% of the UK economic output, which is somewhat less than the financial services sector that accounts for 8.1%.

outsourcing in uk pie chart

The second research was published by NOA back in May, and according to it, over 2,000 people polled with only 20% of British adults believing that outsourcing can help UK get out of the economic crisis.

Adding the two polls together it becomes obvious that there is a large blank between the perception of outsourcing and its reality. In spite of bringing a significant percentage of UK's GDP, outsourcing carries on to have negative association at respondents - according to the NOA's poll 22% of people mention outsourcing as an occupation they don't like.

But then again, what is the source of all this negativity around outsourcing? The answer is simple and it's right there – current economic ‘weather' is the reason of common fear of job losses and the alternative of having all the work moved abroad. Particularly, ‘offshoring' and ‘outsourcing' terms are quite often used interchangeably. But they don't stand for the same things, whereas offshoring means bringing work in a different country, outsourcing stands for contracting work to a third party, not necessarily abroad. Unfortunately, as the polls demonstrate, this difference is not commonly understood. Thus only 14% of respondents correctly determined employing an accountant to help with a tax return as an outsourcing example, and 58% defined major bank opening a call center in India that is in fact a captive offshoring example. This confusion of terms is crucial because often the negative perceptions around outsourcing are rather applicable to offshoring.

What Words do You Associate with Outsourcing?

Another interesting question that was asked “What words do you associate with outsourcing?” gave the following results: 65% said ‘cost cutting', and the next most popular answers were ‘job losses', ‘call center' and ‘India'.

Outsourcing associations

In reality, outsourced parts of business in most cases do stay within the country, even though they may be taken to different parts of the UK. The alternative of job losses is not a myth, of course, but it is rather common for employees to carry on with their careers by getting transferred to their company's outsourcing partners/vendors etc.

One more curious fact taken from the survey: male respondents agreed that outsourcing profits the UK easier than their female counterparts. Age affected the choice of the research participants as well – 27% of 18-24 year-olds recognized the advantages for the economy in comparison with 12% of 55-64 year-olds. When they were asked a question ‘Will outsourcing help the UK get out of economic crisis?', only 11% of 55-64 year-olds said ‘Yes' in comparison to the total figure of 19%.

When the respondents of NOA survey were asked ‘Which of the following do you think would make outsourcing more acceptable to you?', 70% of them selected “Evidence of how many UK jobs are created by outsourcing”, followed by the second most popular answer “Proof of how much outsourcing positively contributes to UK economy”.

Goals and Targets

Currently the NOA is planning to hold a further study which will delve into the subject of Outsourcing as improve its profile among the citizens of the UK.

Another great goal for the time being is to set Great Britain as an offshoring location that would concentrate on specific areas such as software development and knowledge management to enable more investments and jobs in the UK.

The main concern here is that these bad perceptions make outsourcing unattractive, no matter all the benefits associated with it. Therefore, even outsourcing vendors can do a great deal to change the negative understanding of the term. Organizations care about PR implications of outsourcing some of their activities and may end up not taking a chance with this sort of move. Therefore lots and lots of solid proof is required to change such perceptions, and all the profits that outsourcing brings must be popularized and success stories must be told to the public.

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