Skills Shortages Heighten Pressure to Off-Shore

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Almost a third of employers say they are under pressure to off-shore in a bid to tackle skills shortages and cut recruitment costs.

A survey by the Chartered Institute of Personnel and Development (CIPD) found that more than 60% of respondents who had off-shored said they were very satisfied or fairly satisfied.

However, there were disadvantages, over half (55%) of employers said it could cause low staff morale, 48% believed managerial control was more difficult, 44% cited job losses in UK as a problem and 33% said language barriers were an obstacle.

Ben Willmott, CIPD employee relations adviser said that organisations need to focus on more than simply cutting costs when making the decision to off-shore.

"Too many organisations (42%) don't involve HR when strategic decisions about off-shoring are being made with the result that some of the real people management challenges that exist may not be taken into account in the excitement over the potential cost savings," he said.

"At the planning stage HR should also already be contributing to the internal communication strategy and identifying training needs."

In the average organisation, the CIPD said, off-shoring equated to 180 UK job cuts. Yet, it also led to new jobs, with organisations generating an average of 58 UK positions as a result of off-shoring.

Considering the survey results in broader context, Dr John Philpott, CIPD chief economist, said that the figures equated to around 30,000 jobs off-shored since 2000, but added that this needed to be seen in the context of the 250,000 net new jobs created in the economy during the same period.

Key findings:
* Over a fifth of organisations have off-shored in the last five years or are currently considering doing so.
* Manufacturing and production is the business activity most likely to be off-shored (34%). This is followed by IT support (24%), IT development (22%) and call centres/customer services (22%).
* Public sector employers are most likely to consider off-shoring as a result of a joint venture overseas and to increase focus on core business. Cost reduction is not a main driver for public sector organisations.
* India is the most popular offshoring destination (53%), followed by China (27%) and Poland (18%).

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