The Hindu Business Line : `Over 1 million jobs in Europe moving out'

AS European firms, especially in the UK, ramp up their spending with offshore service providers in countries like India, they will increasingly displace substantial numbers of employees from their current roles, according to latest Forrester study.

The study estimates that Europe would lose a cumulative 1.2 million jobs to offshore locations by 2015, with the lion's share of the impact falling in the UK.

"Financial firms will move most aggressively offshore. Computing and clerical staff will suffer most. Protectionist measures will fail, as companies will use stealth tactics to avoid the barriers put in their way.

"Despite the pain involved in job losses in Europe, the European countries that use offshore services the least (France and Germany) will likely lose as a result, while aggressive offshore user countries like the UK get an economic boost from offshore efficiencies," Forrester said.

European firms have an increasingly viable option to move IT and services jobs to lower cost locations such as India and Russia, driven by factors such as strong emerging skills base in low cost countries; low cost global communication and computing infrastructure; overpricing of scarce skills and global cost competition.

"Countries such as India, Poland, Malaysia, and China offer a reservoir of highly educated, motivated individuals, many possessing useful European language skills, who flock to take up well-paid jobs in the services sector," the report titled `Two Speed Europe Why 1 million jobs will move offshore' said.

The report observed that ubiquitous computing arising from the spread of global Internet access and the increasing sophistication of international voice and data communications made remote delivery of IT and business services more practical and economically viable.

It said that European IT and services professionals commanded substantial salary premiums compared with similarly qualified people working in other disciplines. "The annual charge-out rate for a systems architect in the UK stands at about 130,000 per year, compared with 41,000 for a comparable individual in India. In contrast, the chief accountant of a midsize London company earns about 105,000 annually, and a typical London-based marketing director earns between 90,000 and 100,000," it said.

Forrester forecast showed that Europe would experience a far lower level of job displacement to offshore locations for the foreseeable future than will occur in the US.

Across the 16 countries Forrester considered, a cumulative total of a little less than 1.2 million jobs will move to offshore locations by 2015. That compares with a cumulative figure of 3.3 million jobs moving offshore over the same period in the US, which has a smaller population overall than the 16 European countries that Forrester studied.

But Europe's offshore picture plays out differently in specific countries, it said.

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