Offshoring is a 'survival issue' for UK businesses

Offshore outsourcing is a "survival" issue for UK companies and now a mainstream business issue, according to the Confederation of British Industry (CBI).

Over half (51 per cent) of firms said the pressure to offshore has increased over the past two years, with a third already having moved some operations overseas, according to new research commissioned by the CBI in conjunction with Alba and carried out by Mori.

Digby Jones, director general of the CBI dismissed those who view offshoring as "naïve".

"Make no mistake, this is a survival issue. Anyone who believes that firms have a great deal of choice are naïve. Companies know if they don't do it, somebody else will. If competitors act and they don't respond, they may put their business at risk. Offshoring is now part-and-parcel of doing business in the global economy," he said in a statement.

He argued that offshoring means greater productivity and more efficient goods and services but admitted the loss of jobs issue is a challenge.

"Globalisation means that jobs will come, jobs will go and nothing remains the same forever. The challenge is to create more jobs than we lose - which we are doing - and to ensure people have the skills to take advantage of them, which remains a problem."

India and China remain the most popular offshore destinations, while cost-cutting is still cited as the main reason for offshoring by businesses.

The survey also shows no sign of the offshoring trend abating, with 87 per cent of businesses who have already located operations overseas expressing satisfaction with the experience.

The survey questioned 150 CBI members, employing a total of 750,000 people in the UK.

A separate report out today by analyst Datamonitor claims South Africa is increasing in popularity as a destination for offshore call centres.

Call centre numbers in South Africa will double in the next four years, due to the more culturally-aligned front and back-office nature of the country combined with significant labour savings, filling a gap between 'nearshore' locations such as Eastern Europe and traditional offshore destinations such as India.