The Great Debate UK

Offshoring remains, it is just less visible

Today we are all used to an international trade in services. When you call up the bank, a contact centre agent in India probably answers the call. When you crash your car and file a claim, the claim form you painstakingly complete is scanned and sent thousands of kilometres away for processing. When you call to find out the next train to Cardiff, it’s not someone in Wales giving you the information you need.

This change in how services are delivered has become a part of everyday life. For many companies – such as banks – it went too far in the past decade. Many banks found that their customers were uncomfortable dealing with an agent in a far-flung location and it soon became a source of competitive advantage to answer calls locally. But those same banks advertising that ‘we answer your calls in the UK’ are all sending their IT systems offshore. The ‘offshoring’ continues, it is just less visible.

The man on the street would say that by sending skilled service-sector jobs to lower-cost economies we are hollowing out our own skills. People don’t start their careers in skilled roles — they graduate up to those jobs through experience. If the lower level clerk roles have all been outsourced offshore then we are storing up big trouble for the future.

That’s the theory of the heart, and perhaps it is what most people would call common sense too. But economists argue the exact opposite; that a country can build wealth in many ways and a UK-based company that is successful because it manufactures products at a low cost in China and customer calls are answered in India, can bring wealth to the wider economy.