Threat from off-shoring ‘exaggerated’

Despite the rhetoric of an abundance of Indian knowledge workers hungry for British jobs, there is little direct evidence so far of significant job migration, while trade in information and communications services with developed countries such as Germany dwarfs that with India. The report finds that, according to independent analysis, just 5.5% of all jobs lost across Europe were due to off-shoring activities in the first quarter of 2007*. In 2005, the figure was 3.4%. Travel (£626 million) and transportation (£289 million) are the largest services imported from India**. The UK imports almost four times more computer and information services, and more than 16 times more business services from Germany than from India. India ranks fifteenth on the list of countries from which the UK imports services. The paper finds that labour costs are only one factor in decisions regarding business location. Cultural contexts, in particular the advantage for producers in being located near to key target markets, remain critically important for successful organisations. Katerina Rüdiger, author of the paper – ‘Offshoring, a threat for the UK’s knowledge jobs?’ – says: ‘If you go to an Indian business district, you could be forgiven for thinking the whole world is chucking work and jobs at India, because of its magical high-skill, low-wage mix. India’s high-tech sector is indeed booming, but is not ‘coming for our lunch’, as some of the more apocalyptic commentators have suggested.” The evidence suggests that, while trade in services between the UK and India is certainly rising, it is not happening nearly as fast as is sometimes imagined, she adds. “[There has been] an increase from 0.4 per cent to 1.2 per cent between 1995 and 2004 – less of an explosion, more of a slow evolution. 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.’