Future of the Outsourcing of British White Collar Jobs Term Paper

  • Length: 5 pages
  • Subject: Business - Management
  • Type: Term Paper
  • Paper: #43528414

Excerpt from Term Paper :

Future of the Outsourcing of British White-Collar Jobs

Outsourcing is the term given to the work that is done by anyone other than the full time employees of an organization. Outsourcing is the activity whereby certain elements of the processes in an organization are divested by an organization that bring in reasonable or little profit with respect to the capital invested. These activities that bring lesser profits than required or peripheral activities can be done supposedly in a more efficient manner by other and normally smaller organizations. These smaller organizations gain efficiency by focusing on the activity itself and sharpening the productive process in such a way that it can generate new efficiencies and make profits which the bigger organization would not be able to do in such in a focused manner. An example for this would be in the case of an automobile manufacturer purchasing headlights or speedometers instead of manufacturing them. In this manner the automobile manufacturer opts out of the process of designing and producing the headlight or speedometer and leaves that in the hands of the supplier, so that the automobile manufacturer can concentrate on the assembly and merchandising of automobiles. (Outsourcing in the Developing and Developed World: Part One: From Outsourcing to Offshoring)

Outsourcing has been growing with the ever increasing globalization that is having an effect on the lives of everybody. There is the very real possibility of more and more white-collar jobs in Britain being lost as a consequence of outsourcing of skilled jobs to countries like India, Sri Lanka and Poland. The headlines in many newspapers of the developed are more and more focused on the loss of jobs owing to many segments of the industry including banking and insurance moving some of the non-core functions offshore, as they observe the potential for reducing costs. The savings that these organizations make by moving these jobs outside Britain is such that this trend to offshore jobs is going to become permanent. Wages for staff and the requirements of office space for them to work in are two of the larger overheads that organizations have to put up with and so they are on the constant look out for the means to reduce these overheads and thereby reduce costs and increase profits and outsourcing provides them with these means. (Change of scene)

In Europe the first two countries to be hit by the wave of outsourcing are Britain and Ireland. The reason for this is that these white collar jobs can be easily shifted off shore to India, where there is strength in the English language, thanks to the nearly two hundred years of British rule over India. In the heydays of the British colonial rule, there was a tendency to employ Indians wherever they went to do the lower and clerical jobs. From serving the British the Indians now threaten to take away many a white collar job of the Englishman. (Job Exports: Europe's Turn) In the current outsourcing scenario in India between eighty to ninety percent of the service work that has been outsourced comes from either America or Britain and the reason for this is because of there has for long been strong linguistic and cultural links. Looking at whether the outsourcing wave would hit Europe as it has America and Britain, it appears doubtful. The linguistic and cultural links that India has with Britain and America are non-existent.

Though Germany did try to encourage the inflow of Indian IT workers in the 1990s when there was a shortage of domestic IT Engineers, it did not take off as the Indians who went across found the German language not too easy to learn and returned home. In the case of Britain and America Indians who have gone across have faced no such linguistic difficulty and most have chosen to settle there. In a survey conducted by IDC of five hundred European companies it was found that only eleven percent of these companies had opted for outsourcing of work to low cost countries and eighty percent indicated that they would not consider this option at all. These attitudes of the European companies are indicative of the resistance to outsourcing will come into play, with the exception of Britain and Ireland. In addition there is already unemployment issues in countries like Germany and outsourcing would only push up this unemployment issue. In the event that happens then there is every possibility that the European countries may introduce barriers to IT imports and thereby make outsourcing not so attractive. (Sink or Schwinn)

The resistance seen in Europe may also be seen in the Public Services of Britain. The Health sector has already been breached in the number of doctors and nurses that have gone across from India and have been employed in the health services in the country. But this may not relate to outsourcing as these jobs remain in Britain and have only been usurped by the Indians who have been going there. The more alarming news is that breaches are being seen in the Public Services with the announcement by National Rail enquiries that it will be shifting around one thousand jobs to India. Will this breach cause the dam to break and outsourcing from Public Services of white collar jobs to India follow is maybe just a question of time (Learning to love the offshore thing)

The outsourcing that started with production has now seen the turn come to the white collared worker and this is due to the growth in automation as well as the newer and faster techniques available in communication. An example of outsourcing work would be in the form of a company handling the administrative work for a credit card business, right from dealing with applications to authorizing the credit limits, processing the transactions, issuing the cards and providing then required service to the customers. The customers of the original may have hardly heard the name of the company to whom the work has been outsourced and operating in the background for the concerned bank. In this manner many organizations are outsourcing a lot of their administrative work and the supportive systems. Accounting departments happily outsource the responsibilities of processing invoices and payment collections to other smaller organizations. The Human Relations department out sources payroll work. Many large organizations are in fact outsourcing the complete human resources functions and the supporting systems to other organizations or specialists. (Men and machines)

The process of outsourcing of jobs came about with a combination of technological and management know-how that made global networks and relationships possible. This advancement was once hailed as a wonder to the new economy but the problem of losing jobs that are hitting the white collared worker pretty badly has made this hailing of technological muted. The same people that sang praises today mourn the loss of high paying white collar jobs that are outsourced as lesser paid jobs to other countries. (A world of work) There is genuine concern in Britain that a lot of jobs will be outsourced as these jobs could be done more profitably by outsourcing to India. The initial growth of call centers in India meant that these were the first jobs to flow from Britain to India, This is now changing as more and more skilled jobs flow from Britain to India. One of the sectors that appears most worrisome to the Britons is the financial sector and the flow of skilled jobs from this sector. The banks in Britain seem to have hoped on to the outsourcing band wagon in the search for better returns to their shareholders.

The services being outsourced by these banks include what was at one time considered core services such as cash management and payment processes. The other functions that were outsourced by these British banks included some finance and accounting functions like general ledger, tax accounting and financial reconciliation. The banks have been encouraged in this move by the fact that no negative effect was seen on the banks profiles. The predominant factor that appears to be behind the drive for outsourcing by the British industry and public services is that costs can be cut by it. For public services this means better utilization of their resources and for the private sector better bottom lines. These business strategies are based on hard facts that it is possible to have a cost savings in the region of around forty percent by out sourcing the pertinent functions of the organization. Yet there is the likelihood of greatest resistance coming in the area of outsourcing in the public sector as the public are not going to be too happy with the idea that jobs in Britain are being lost and that too may be to assist the economy in India. All said and done with the profit motivation of the private sector there is going to be no slow down in the white collar jobs being outsourced in Britain. These facts need to be accepted just…

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