Source: www.bbc.com

A study suggests the shifting of UK financial services jobs to developing countries, such as, India and China has saved the sector about £1.5-billion a year.

Deloitte Touche, an accounting firm confirms the findings, saying the number of financial jobs going overseas over the past four years, had increased 18-fold.

As compared to fewer than 10% in 2001, currently more than 75% of major financial institutions have operations overseas. However, Unite, a trade union does not believe that there is an effective case for off-shoring. Instead, it points to growing staff turnovers and companies having to retrain entire workforces over the course of a year, even as wages continued to rise.

China vs. India

However, there is no doubt that off-shoring has spread across nearly all business functions, with significant growth around transaction processing, finance and human resources.

As well, India keeps the top spot for firms looking to move processes overseas, with about two-thirds of global off-shored staff employed there.

But, China is fast becoming a viable option, as one-third of financial institutions now have back-office, mainly IT processes on its mainland. Currently, with some 200-million Chinese people learning English, there is no reason to suppose, it could well be able to provide a potential pool of skilled workers, who may compete with India in the coming years.

Complex Complexities

Chris Gentle, Associated Partner for Financial Services at Deloitte and author of the study, says: “Financial institutions need to re-engineer business processes, or risk simply transferring offshore the legacy inefficiencies of older, onshore processes.”

With 6% of its staff outside the host country, Deloitte, a typical financial services firm has seen numbers double in the past year.

However David Fleming, a union leader at Unite, differs in opinion on the outcome of off-shoring / outsourcing saying, the human and social costs of moving jobs ‘have been absolutely huge and customer dis-satisfaction is widespread’.

He adds: “Unite still believes that organisations are overlooking the complexities of off-shoring and are still failing to make a sound business case for exporting work overseas.

However, that is what Fleming is paid to do and there is no doubt that off-shoring / outsourcing to low cost countries like India and China, is playing a huge part in keeping profit margins healthy and stakeholders happily satisfied with the returns they are getting on their investments. Despite, all the rumblings and the anti-off-shoring slogans unions might raise, globalisation is here to stay and no amount of wishful thinking will do away with it.

Firms struggling to survive in an highly competitive market are not interested in the ramblings of a union leader. The only thing on their minds is to keep profits out of the red, wholly in the black, so they can continue to invite investments and keep shareholders happy with the outsourcing state of affairs.

Off-shoring / outsourcing is a major part of globalisation, with a reverse trend taking place as Indian firms set up centres across the Americas and Europe, offering employment to local people. So, all that chuntering on about the human and social costs of moving jobs is just that, simple chuntering!