Keeping jobs on shore will help tackle youth unemployment

12 June 2012

With youth unemployment hitting record levels, businesses and government must work together to change the way the UK competes for work, believes Adam Ripley, chairman of the Certeco consultancy. Hundreds of thousands of jobs that continue to be outsourced to offshore locations could be brought back onshore and carried out by young people in the UK who are already competent in information technology.

The UK outsourcing market is worth £41bn, the majority of which is labour costs. These roles are typically business service related and undertaken by people in the 20 to 30 age group. But the business case for bringing these jobs back onshore is strong. Continuing wage inflation in the offshore labour markets in India and elsewhere, added to increased travel and communication costs is making the use of offshore services less economically viable for financial institutions and others. Indeed one of the top UK high Street banks makes a virtue of its UK only call centres. Even in newer markets like China analysts predict that wages will equal the US by 2015. Reports indicate some telephone and broadband companies are leaving Mumbai for Burnley where rental and labour costs are lower.

Of course many organisations have a vested interest having created ‘captive’ offshore centres that are merely an extension of their UK operations. It is evident that these companies set the offshore operation up to avoid the costs and employment law constraints of the UK market. This has been an inevitable consequence of the increased employment legislation and costs of labour in the UK.

The reality is that many companies have significant commercial and intellectual investment in the offshore markets and will continue to see ‘offshore’ as the answer despite the lack of an overriding business case. I’ve been involved in a number of discussions recently about new projects where an ‘offshore element’ is still a requirement. It is apparent that in many large organisations the business case to ‘offshore’ is undertaken because of assumed cost savings and employment flexibility.

Therefore, we need a step change in the way the UK competes for its own work. We can offer a competitive workforce within the UK labour market for jobs that continue to be outsourced to offshore locations. However, this can’t be achieved without changes to the way we develop our young people and prepare them for the workplace.

The rapid advancement in IT over the past decades has made technology part of the fabric of everything we do at home and in business. These advancements have made every young person a competent user of technology. Despite this the education sector focuses on ICT as a separate skill and many children leave school believing a job related to technology is for ‘nerds’ who have an affinity for computer programming.

The truth is that in any large business there are many skills and capabilities needed around technology that do not relate specifically to the detail of the technology. In fact, in a typical business change project, where a business is making wholesale change to its business operation, very few of the roles relate to computer programming. There are a whole host of other skills needed to contribute to a project of size and scope.

But many young people leaving university have little experience of the workplace and the expectations employers have of them. This means many companies have need of additional support staff to undertake basic tasks such as project administration work. However, creating the environment where this is economically viable is less easy. Minimum wage, a competing benefits structure, employment legislation, lack of basic business skills, alongside the high expectations of university leaver’s means they are not easy to employ and support. In fact school leavers may be just as usefully prepared for this new business environment should the correct apprenticeship programme exist to give them the basic training to enter the workplace with useful skills.

I’ve had past successes in taking both graduates and undergraduates through a foundation raining programme and engaging them in basic project services work, such as testing software for our clients. However, the clients have to be receptive and supportive of this approach and often these services compete with their offshore service provider.

The fact is that the UK government already own several organisations that put thousands of jobs offshore. They have the mandate to put in place a scheme whereby it is economically viable for service providers, training companies and large enterprise organisations to recruit and develop our young people to do the jobs that are currently going outside of the UK or being done in the UK by temporary workers from abroad.

With the correct conditions this will create a work force to match the price/performance capability of offshore competitors. It will regenerate the UK’s business services market and breathe new life into the UK as one the leading business technology workforce locations. From an economic standpoint, it will simultaneously reduce the cost of our growing unemployment costs, while creating a new generation of UK taxpayers. Invest in youngsters at home and I believe you will reap the benefit.

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