Think tank bursts outsourcing job drain myth

A study by Nottingham University's Globalisation and Economic Policy Centre (GEP) has challenged the perception that outsourcing to India and China has harmed jobs in the UK. The GEP's paper –The Economic Impact of Offshoring – looked at data from 66,000 firms between 1996 and 2005, making it the largest study of outsourcing ever conducted. The findings reveal that, far from damaging the UK employment market, the phenomenon had actually created 100,000 jobs.

GEP centre director, Professor David Greenaway, said: 'People fear their jobs are being exported to countries like India and China where labour is cheaper, but the picture is far more complex than that and much more positive. It would seem that firms that offshore part of their production process, or service provision, become more efficient. This boosts productivity and turnover and, as a result, these firms grow and end up employing more people at home – not fewer.'

Professor Greenaway's sole caveat was that the rapid changes inherent in the outsourcing trade had led to an increase in job-switches – but he was keen to point out that a flexible response to the bracing pace would bring success over time. 'Offshoring does lead to increased job turnover and a change in the skill mix in a firm,' he said. 'The winners are those who have the skills required by firms that are offshoring and growing; the losers are those who cannot adapt. The lesson for policymakers is that offshoring is to be embraced, not feared, [and] that we need to continually invest in upgrading the skills of British workers to increase their adaptability and help smooth the transition from one job to another.'

Find out more about the GEP's work at www.gep.org.uk.