By 2015, 1.2 million European IT and services jobs will be displaced offshore. The UK will lead this move offshore. It will be the first European country to experience the economic boost from offshore efficiencies finds Forrester Research in its new report `Two-Speed Europe: Why One Million Jobs Will Move Offshore.¿
Andrew Parker, Research Director at Forrester Research and author of the report says, ¿It is not the loss of jobs that will have most impact but the lost competitiveness that will result for offshore shy companies from Germany, France, Italy and Netherlands. The laggards who fail to exploit the offshore opportunity risk loosing out in terms profitability, particularly in the finance, auto manufacturing and aerospace industries. This reduced competitiveness in the face of more aggressive offshore service users will lead to greater vulnerability to corporate predators from the US and the UK. Companies such as Deutsche Bank, Crédit Agricole, and Allianz risk finding themselves in this position.¿
The report, for the period of 2004 to 2015, identifies:
- Overall speed and level of impact of offshore IT and services outsourcing on a country by country basis
- Industries most affected
- Types of jobs most likely to be offshored
- In 2004, 56,000 UK workers will see their jobs moving to offshore locations. By 2015, 760,000 UK jobs will have been offshored, ie 3% of all employment in the UK. Proportionately the UK will undergo similar displacement levels to the US as both countries lead the offshore trend. Germany will experience just 140,000 jobs moving offshore. France and Italy will closely parallel Germany in terms of offshore impact. Near shore locations such as Ireland, Greece, Spain and Portugal will face far lower employment impacts, with less than one tenth of one percent of the country¿s jobs moving offshore.
- Clerical and administrative workers rank alongside IT staff in their susceptibility to offshoring with 35% of all offshored jobs from Europe during 2004. By 2015, 340,000 clerical jobs will be displaced offshore, 230,000 from the UK. By that time150,000 pure IT jobs will move offshore and 100,000 IT oriented clerical staff in jobs such as data entry will go. Not even IT management will escape the offshore push. Forrester predicts that 74,000 European managers in the general management category will lose their jobs to offshore activity between now and 2015.
- Financial firms will make up 30 percent of the offshore move with the UK driving this trend. During 2004 24,000 financial services jobs are expected to be displaced offshore, 17,000 of these will be from UK companies. By 2015 a total of 350,000 financial services jobs will have moved offshore. Manufacturing and TMT firms will each push approximately 175,000 jobs percent offshore by 2015 with the UK responsible for 114,000 job moves in each sector. Retail/CPG and utilities will move eight percent and six percent of overall jobs impacted.
- By 2007 companies in Germany and France will accelerate their offshore uptake. These late movers will miss the optimal timing to offshore to India and not be able to benefit from the low costs and availability of expertise. Such companies will need to look to locations such as China where the offshore boom to bloat cycle will be less mature.
- The likelihood of acquisitions within the IT services market as the dominant Indian suppliers increase in power and Europe¿s economy falters and IT services stock prices depressed. Further erosion of competitiveness and France¿s Altran or Germany¿s IDS Scheer could look likely targets.
Key findings include: