23 August 2004 A recent study by analyst group Forrester Research has concluded that more than one million jobs in Europe will move offshore by 2015.
Principal analyst Andrew Parker, the author of the report, says that the UK will lead the migration. “As European firms – especially in the UK – ramp up their spending with offshore service providers in countries like India,” he says, “they will increasingly displace substantial numbers of employees from their current roles.”
According to the report, 56,000 UK jobs will move to offshore locations this year alone. By 2015, the number of jobs being exported overseas annually will increase to 760,000, according to Parker, suggesting that 3% of all UK jobs will be outsourced offshore every year.
Following the UK will be Germany, France, the Netherlands and Italy. Countries such as Ireland, Greece and Portugal face far lower employment impacts from the trend since companies in these countries show a far lower tendency to adopt offshore outsourcing as a budget option. Also, in many respects such countries act as low-cost IT and service locations in their own right.
IT workers will take the biggest hit, according to the report. Across the whole of Europe, Forrester expects that almost 150,000 IT-related jobs will move offshore by 2015. A further group – representing at least 100,000 IT-oriented clerical jobs such as data entry – will push the IT job loss total to 250,000.
But it is not only lower-level IT workers whose careers are at risk; the jobs of IT managers are also threatened. According to the report, more than 74,000 executives in the general management category will lose their jobs to offshore activity by 2015.
The trend to migrate jobs to lower-cost locations such as India and Russia will be motivated by a number of factors, says Parker. First, there is a strong emerging skills base in low-wage countries. Russia, for example, has 40% more scientists per head than the UK, France or Germany.
Second, ubiquitous computing arising from the spread of global Internet access, as well as the increased sophistication of voice and data communications tools, will combine to make the remote delivery of IT and business services more practical and economically viable.
Finally, offshoring is much cheaper. The annual salary of a systems architect in the UK currently stands at about €130,000 per annum, while a comparable systems architect in India commands just €40,000.