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The case against outsourcing
Written by Editor   
Tuesday, 17 March 2009 11:04
Economic Policy News: The UK is bracing for the latest monthly unemployment figures due out tomorrow with the British Chamber of Commerce predicting unemployment will top 3 million before the recession is over.

Last months data came in at 1.97 million out of work and tomorrow a figure of 2 million is expected.

Eagle Consulting - a leading UK payroll bureau - has today suggested that the impact of outsourcing work may be a contributing factor to the high level of unemployment.

Harry Hornby, managing director of Eagle Consulting, says: “It is incredible to see that companies are off-shoring their outsourced services while the UK is suffering from a declining economy, high unemployment and a lack of jobs. As in the US, the UK government should provide a tax incentive for companies that near-shore their outsourced services rather than sending money and jobs abroad.”

Many of the economic benefits of off-shore outsourcing no longer stand:

  • In 2008, Indian inflation rose to 11% – a new 13-year high – which has remained above the government’s target and continues to weaken the economic argument

  • Off-shore outsourcing requires local liaison to front-end the agreement which adds to cost

  • In the last two years, undersea cables have been damaged at least twice in shipping or geological incidents resulting in significant degradation to communications and the time-critical transfer of important data

  • Different standards of regulation and trustworthiness outside of the UK e.g. the escapades of Enron and recently Bernard Madoff in the US, and the $1bn Satyam fraud in India

  • A successful outsourcing arrangement requires an understanding of culture, local language and business practices

  • “British jobs for British workers”

  • “Education, Education, Education” – British Jobs for British Graduates

  • British Employment pays British Taxes