BT CEO: Offshoring is "better and cheaper"

Outsourcing is a reality of modern times and the world should get used to the idea, BT CEO Ben Verwaayen said in a lecture at the Judge Institute of Management last night.

Verwaayen praised the development and innovation of key offshore locations including China and India as "better and cheaper" than their western counterparts and warned the naysayers to accept the offshoring trend and move on.

"Globalisation is a good thing, a very good thing and I would like to remind everyone for a long time the West did a lot of talking about how aid should transfer into trade. Now it's happening and we say 'oh my god, it's not what we intended'," he said.

The BT boss told attendees that outsourcing has forced western businesses to compete with offshore workers on entirely new levels and that such competition can only benefit the global economy. "That's not the outsourcing of a call centre to India, that's the next step in drive to productivity. It's the next step in a global world where people will compete individually."

Why does Yemen Airlines recruit its pilots from India, he asked. Because they're "better and cheaper". He added that sites such as RentACoder.com are flourishing because "on a freelance basis, [programmers are] ready to work for you at [the] click of mouse. It's better and cheaper".

And despite the move to offshore locations where wages are considerably lower, Verwaayen warned against ideological complacency towards offshoring. "We have to redefine words we use - it's no longer 'outsourcing', and it's certainly not 'low-wage markets'. That implies we have the knowledge, they have the cost; we think, they do. Well, think again. It is better and cheaper, in many cases."

Verwaayen described the blooming of the jobs market in developing nations as "a good thing", adding that the boost to overseas economies will benefit global economies: "Let's think again where we are - and I think that the world is going into a new era, a new era where the pie will become larger."

BT's CEO also advised against trying to turn the tide of offshoring: "We have to accept the realities are the realties - massive amount of jobs will leave their present location... it has happened every single time," Verwaayen said. "Now it crosses borders - that's the new element."

That's not to say offshoring and outsourcing won't mean problems for European businesses, according to Verwaayen - problems that governments are yet to address.

"In our world, we have to rethink how are we going to survive, how we going to survive in a world where the click of a mouse skips distance... Our leadership, collectively, have not articulated the problem, let alone articulated the answer," he said.