One third of employers feel pressured to offshore

Out-Law News | 27 Jan 2006 | 3:14 pm | 1 min. read

Almost a third of UK organisations feel under pressure to offshore some of their business activity in order to cut costs and tackle skill shortages, according to a new survey from the Chartered Institute of Personnel and Development (CIPD).

This pressure has led to the offshoring of around 30,000 jobs a year since 2000, according to CIPD, which warns that plans to offshore must involve human resource professionals in order to minimise any negative effects.

The survey found that over 60% of participants who had had experience of offshoring were satisfied or fairly satisfied with the experience, but 17% found that the benefits were less than anticipated.

Over half (55%) found that the experience had caused low staff morale, 48% thought that managerial control was more difficult, 44% saw the resulting UK job losses as a problem and 33% found language barriers to be an obstacle.

“Organisations that decide to go down the offshoring road focusing purely on cutting costs, without taking account of the people management challenges and the potential pitfalls are likely to face considerable problems,” warned Ben Willmott, CIPD Employee Relations Adviser and author of the report.

“Too many organisations (42%) don’t involve HR when strategic decisions about offshoring are being made with the result that some of the real people management challenges that exist may not be taken into account in the excitement over the potential cost savings,” he explained.

The survey shows a clear discrepancy between the role respondents believe human resource professionals should take in the offshoring process and the role they play in practice – particularly regarding communication and training.

Around four-fifths of organisations believe HR should contribute to internal communications and play a central role in consulting with unions and employee representatives at the planning phase but about two-thirds actually give their HR professionals this responsibility.

Other areas where there is greater potential for HR involvement during the planning of offshoring projects include manpower planning, designing and redesigning jobs and identifying training needs.

The survey reveals that on average organisations make 180 UK job cuts as a result of offshoring. In spite of these job losses, offshoring business activities also leads to the creation of new jobs, with organisations generating an average of 58 jobs in the UK as a result of offshoring, says the survey.

Projecting the results onto the whole economy, Dr John Philpott, CIPD Chief Economist, suggested that around 30,000 UK jobs have been offshored each year since the start of the decade. This should be considered in the light of the 250,000 net new jobs created in the UK in the same period, he said.

”On balance, if handled well offshoring is good news for UK consumers and will ultimately result in more jobs and greater prosperity both at home and abroad. The key requirement is to ensure that those workers that are adversely affected are given every help to find new jobs,” he added.