by Tony Collins, Managing Director, OPAL, the financial outsourcing company www.opal-uk.com
In the past outsourcing has, at times, been misrepresented in the media and consumers have been wary that it may generate unemployment. But – although it rarely makes the headlines - outsourcing can also create jobs. Almost every major multi-national study concludes that outsourcing actually creates more jobs than it destroys, for example Global Insight investigated the total process of offshoring and outsourcing in the US and found that more jobs were created than lost. It has also been highlighted by economists at the IMF that outsourcing jobs such as call centre, IT and back office staff does not create a negative effect on service industries. In financial services – the industry which OPAL spends most of its time working in – outsourcing has become an integral part of the business model, and many jobs have been created as a result.
Job Creation - how it works
Designed to reduce costs for businesses and consumers, outsourcing increases productivity and product investment, thus improving profitability and creating a demand for more new jobs. Therefore there are two sides to the argument, on one hand jobs will be cut and belts will tighten, but on the other these changes are necessary for a company to and remain competitive. When businesses outsource, the ultimate impact is often to create new, better quality jobs that pay more.
Key stats
In the UK, financial services outsourcing is continuing to grow as many seek to maintain a competitive edge whilst operating cost-effectively. It is estimated that the total UK outsourcing industry is currently worth £80 billion a year, and will continue to grow.
The UK Government is said to be looking to outsource more work, contradicting recent claims that outsourcing providers are facing a downturn because of the forthcoming Spending Review. Although the Government is trying to keep public sector jobs in the UK, offshoring is becoming increasingly popular in order to cut costs – and research carried out by the IMF shows that relocating British service jobs overseas has not led to a net loss of employment in the UK.
Financial Sourcing - Products to market
Here at OPAL, we provide third party administration for the financial services sector with clients including HBOS and Investec. We facilitate the need for our clients to launch financial products into the market place by providing full services including product development; marketing; IT; staff and resourcing. In order to do this we hire specialists in the field and since December 2008 we have employed 28 new members of staff and aim to increase that by the end of 2010. As such, we are a working example that outsourcing is creating jobs onshore in our St.Albans HQ.
The quarterly outsourcing confidence index released earlier this year by the NOA (National Outsourcing Association) included positive figures about the future of outsourcing, particularly in the financial sector. The report assessed confidence in outsourcing and found that the financial sector is the most positive with 71% convinced about the use of outsourcing in 2010 and thereafter. Business professional consultants, the Corporate Executive Board, conducted a survey amongst companies implementing restructuring plans and outsourcing was found to be the fourth most common activity taking place over the next twelve months.
The future looks bright for the outsourcing industry, after a few tough years financial services is thriving, innovating and dealing with regulation and outsourcing will play a major part in continuing this success. As providers look to bring new, more innovative products to market to help consumers repair their battered finances, the outsourcing industry will be there to help them along the way.
