IT outsourcing: mind the (skills) gap

First, let me start by saying how delighted I am to have been appointed Editor at Sourcingfocus.com and given the chance to contribute to such a vibrant community. Over the coming weeks, I will be looking to that community to steer me in the right direction, so if there are particular issues you would like see covered, please drop me a line at

In considering how to tackle my first blog as Editor, one story from last week leapt out at me. It’s a report from advisory firm Roland Berger Strategy Consultants that boldly claims that as many as a third of UK jobs at multinationals will be “shipped abroad” by 2015.

That prediction is based on a survey of senior executives at 200 UK-based multinationals and would appear to spell particularly bad news for IT professionals. Among those companies polled, the IT function is earmarked as the most suitable function to offshore, with 68 per cent of the respondents confirming that they are thinking about such a move. IT was followed by customer service (64 per cent), research and development (61 per cent) and sales management (59 per cent). 

“This trend towards offshoring is markedly different from the international outsourcing we have seen to date, with both knowledge economy jobs and core business functions now being exported to economies that are more competitive in the global environment,” said David Stern, Roland Berger’s UK managing partner. “These [jobs] are unlikely to return once the economy picks up, a trend that threatens a permanent rise in UK unemployment, leading to falling revenues and ultimately a decline in GDP.”

That’s pretty strong stuff and it got me thinking: aren’t we constantly told that the UK faces a major skills gap when it comes to IT? According to sector skills body E-skills UK, around 14,000 vacancies a year need to be filled across the IT profession, yet UK universities churn out just 12,000 computer science graduates annually. And in a survey conducted last year by recruitment company The IT Job Board, around a fifth of UK companies looking to recruit IT staff say they find it difficult to attract applicants with the right skills. 

To me, this suggests that, when it comes to IT, it’s not really a case of shipping jobs abroad in order to drive down costs. While that might be true in some cases, many UK companies are simply widening the net in their search for the expertise they need to keep vital IT systems up and running. It clearly makes sense for them to look to countries where a career in IT is a highly prized aspirational goal for young people and where the latest skills can be found in abundance, unhindered by the problems of a rapidly ageing workforce seen in European economies. 

It also strikes me that when a company decides to use software-as-a-service (Saas) applications from salesforce.com and the like, we don’t see the nearly the same fuss. Yet the implications of this model of computing are often much the same as offshoring, putting systems management and software development jobs in the hands of third-party providers, often overseas.

The fact is that today’s CIOs aren’t just under pressure to cut costs - they’re also expected to invest in innovative new projects that will give their organisations a competitive edge when economic conditions improve. And if the talent and skills to help them do that aren’t available at home, doesn’t it make perfect sense for them to look abroad? I’m all for keeping jobs local where it makes good business sense, but when it comes to IT, we need to ‘mind the gap’. UK businesses cannot rely on local skills alone in order to compete.

Posted by on 05/12 at 11:38 AM

Comments

Dear Jessica

Congratulations on your new post at Sourcing Focus.

Your blog post makes interesting reading and yes it rings true that we are constantly told about the major IT skills gap that the UK suffers from.  Many companies do have difficulty in finding the right IT resources but I’m not so sure there’s an actual skills crisis as many believe.  The problem facing organisations is their inability to quickly and efficiently find the resources they need with the required IT skills and quality levels and then gain access to these at the right price.

The pervasiveness of the internet has meant that organisations are far better placed to find the IT skills they need then they otherwise believed.  A number of companies have sprung up over the last few years to address this need, and using the benefits the internet provides, are able to provide organisations with the skills they need and at their required quality level, on demand.

Posted by Katharine Nixon  on  06/15  at  07:30 AM

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