Do offshoring and outsourcing move jobs offshore?

Well of course they do … don’t they? Well, not necessarily. Let me explain: Of course choosing to hire someone for offshoring rather than locally does mean that role is now offshore. But when considering whether the overall effect is a reduction in local employment, some additional questions also need to be asked:

  • Was it financially feasible for the role to be performed locally? Often roles created offshore are new roles that a company could not afford to establish locally.
  • Did the new offshore roles create any new onshore roles? Often new management and other roles are created locally as a consequence of the offshore staff.
  • What was the effect of the offshoring on the company’s overall market competitiveness and profitability? Often companies become more competitive and profitable and a result of the savings and additional resourcing that can be achieved through offshoring – this can result in more local employment as the company grows and reinvests in its business.
  • What was the flow on effect of the offshoring? If it leads to businesses paying more local taxes, this usually has a multiplier effect with that tax money than recirculating in the local economy potentially providing further employment.

Offshoring’s effect

A recent study undertaken in the USA found that for every one job that had been offshored within their study group more than one new on-shore job had been created as a direct or indirect consequence of the offshoring.

Whilst it is easy to take a simplistic approach and say that offshoring is bad for local employment, the truth is that is not always the case. Whether we like it or not, globalisation of our workforces is now a fact of life and whether we chose to embrace and potentially prosper from this or resist may ultimately have a significant impact on the future success of our businesses.

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