Devil's Advocate: Is UK's outsourcing addiction unhealthy?

The UK loves foreign goods, including foreign software development. But, asks Martin Brampton, is outsourcing this speciality good for the country and IT?

Forrester Research believes the UK will account for three-quarters of all European offshore outsourcing in five years' time. Software development will be the main service provided. It seems there is a huge divergence between our European neighbours and us in the UK.

Perhaps we should not be too surprised. For many years there has been an obvious contrast with our nearest neighbours in France. UK consumers have had a huge appetite for foreign goods, a factor in many of the balance of payments crises in the past. Often, this is attributed to greater awareness, as buyers look at a wide range of alternatives, choosing the best regardless of source.

Sometimes purchase decisions have been connected with a perception of superior quality, such as the move to buy large quantities of Japanese cars. Other times it seems to be linked with a belief that only foreign goods can really have style. The French are chic, the Italians dashing, the British just solidly dull.

Despite this, for many years Marks & Spencer, the UK's leading retailer, was able to make a virtue of selling mainly British-made goods. However, this suddenly seemed to turn into a liability, dragging the company from its position as the beacon of retailing skill to being seen as a relative failure.

The French, by contrast, seem to have a high regard for their own products and to find all kinds of ways to prevent imports from reaching their shops. Quirky French designs, such as the Citro ën 2CV, attract a loyal following long after their practical viability has become suspect.

It is not obvious which attitude is the more reasonable. The French seem to believe that it pays to buy the product of your compatriots' labours, presumably in the hopes that they will do the same for you. 'Buy British' campaigns have only ever had limited success and presumably most consumers believe in buying the best product and letting the market sort things out.

The same seems to be happening with the purchase of software development. At one time, the UK saw itself as a leader in software skills. But nowadays, it appears there are very few indigenous software companies and that buying software from abroad is the best way to satisfy demand. Are we wiser than our European neighbours or more foolish?

Free trade is the subject of much rhetoric, but reality is frequently different. In recent times, for example, the US has spent more on subsidies to cotton farmers than the value of the entire crop. Generally, free trade has been advocated only after a country has achieved a strong industry that can readily withstand competition from newcomers.

It also seems curious that so many constraints are placed on the movement of workers around the world, whereas it is thought quite acceptable to move the jobs. Moreover, the arguments seem to work in opposite directions in different sectors. For some jobs, it is argued that high salaries must be paid, otherwise people will move abroad. In other cases, it is argued that unless salaries are reduced, jobs will be lost.

Perhaps we must give up on rational analysis of the situation. Even then, the people who work in the software sector need to decide how best to protect their future. Tackling that question takes us back to another recent theme, the creativity of software writers and the limited horizons of most recruitment processors.

Currently, people are hired largely on the strength of candidate databases that record basic information such as the number of years spent working with such and such programming language. If the databases start to include outsourced software developers, these attributes will easily be found associated with much lower costs. The decision will seem obvious.

But this approach ignores the real core of software development, the imaginative creation of new computer models. That is still best achieved close to the location of the problems, and that tends to mean at the place the software is to be deployed. So we do, after all, have the means to compete if we concentrate on the more abstract skills, even if they are harder to record into simple candidate databases. Perhaps our enthusiasm for outsourcing will spur our software industry to new levels.