Tuesday, July 17, 2007

A study by the Work Foundation cited that the threat of job losses in the UK due to offshoring to developing countries (such as India) was overstated. It is evident from the study that the computer and information services were the third largest imported services in the UK from India and stood at GBP 122 million; after travel and transport services valued at GBP 626 million and GBP 289 million, respectively. In addition, the study cited that IT and business services imports from Germany to the UK have increased by 4 and 16 times, respectively, as compared to imports from India.

Low labor cost was identified as one of the factors for offshoring. However, cultural aspects are extremely important for successful organizations while offshoring. The study also revealed that offshoring led to job losses of 5.5 percent of the total in Europe in 1Q 2007 as compared to 3.4 percent in 2005. In addition, it has been found that call center jobs in the UK have increased as against expected decline. The trade of services between the UK and India is increasing at a slower rate than expected. It increased from 0.4 percent in 1995 to 1.2 percent in 2004, reflecting a marginal increase.

According to other key findings, an increasing number of western companies are adopting a mix of business models with nearshore, offshore, and onshore operations, while a majority of successful Indian companies are expanding their business operations in western locations to cater to the onshore/nearshore needs of their clients.


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