Sunday, 21 August 2011

Civil servants jobs under threat from offshoring as companies seek to boost profits

There’s the prospect of civil servants jobs being lost in the future after a senior government figure expressed support for offshoring. Under this practice - the economic logic of which is to reduce costs by employing lower paid workers - the transfer of some business operations abroad throws people out of work and diminishes the skills base here.

Speaking recently Paul Grey, Head of UK Trade and Investment [North India] told a group of businessmen in India that: “We are not interested in restricting offshoring and there is no interest from our side to make it difficult for companies who operate here.” The reason? “To reduce spending in the UK.”

Private sector companies - including Hewlett Packard [HP], IBM and BT - have for sometime now been outsourcing, amongst others, their IT operations and the Bangalore region of India, where wages are around a quarter of those paid to British workers, has largely been the preferred destination

Seven years ago however ‘new’ Labour were willing, admittedly during a period when jobs were in greater supply, to allow contractor Siemens to send 250 posts within NS&I to India. Then five years later the British Council, a body established to promote British interests abroad, was allowed to move 100 plus jobs.

Now comes news that the coalition government is considering allowing an offshoring contract that in addition to sending 200 jobs at HP abroad will also permit, for the first time ever, live personal data about people in the UK to be held overseas. [see below] Previously sacred public sector practices could be abandoned. So too could 200 experienced staff and yet, as the PCS union has constantly pointed out, putting people out of work doesn’t - as yet, but who knows what this Government has in mind - come without a price to British taxpayers who can expect to pick up the bill in terms of lost tax revenues and increased benefit liabilities.

As HP rep Ian Fitzpatrick said when interviewed: “This and other proposed transfers appear to be a clear case of inflicting public pain for private shareholders gain.”

There may also be other costs as there’s the possibility that any transfers may not work out as smoothly as hoped. Government systems are incredibly complex.  It is not the genius of the individual software programme that makes them function efficiently but the fact that 120 systems can interlock together on a platform.

Developing parts in isolation is a huge risk and it is more than likely that work developed overseas will need to re-written in the UK, and the promised savings so desired by Grey and his Government colleagues won’t materialise.

That’s increasingly proved to be the case with offshored work in the private sector. Back in November 2008 Orange returned 1,200 call centre jobs from India to the UK. This year BT opened a new call centre in Sandwell in the West Midlands after taking a decision two years ago to move some jobs back to the UK from India. And now United Utilities has decided to return call-centre work from the Philippines handled under contract there by Accenture. The subsequent boost in staff levels at United’s Warrington and Whitehaven offices is seen by the company as the most efficient method of dealing with customers genuinely struggling to pay their bills.

 “A lot of our customers do face difficulties, and we have to work out the ‘can’t pays’ from the ‘won’t pays. Having local people collecting from local people will make this easier,” said Russ Houlden, United’s chief financial officer. A principal the Government would do well to keep in mind. 

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