What now for offshoring?

News last Friday that the economy shrank for the first time in 16 years looks set to make the grim prospect of a recession inescapable. How will this impact on the offshoring industry - a business practice that was beginning to take off the last time Britain was in a recession? This question is, in part, answered today by a new report launched by Intellect, which identifies potential trends in offshoring that the UK is likely to see over the next half decade.

The report, based on a survey of industry experts, found that despite political opposition to global sourcing, many believe that the economic downturn will increase demand for offshoring. These findings are echoed by the Everest Research Institute, which predicts that Business Process Offshoring (BPO) from the financial services sector will increase, in an effort to minimise costs. Intellect's report also draws attention to the changing nature of the industry: as offshoring increases, both in terms of the types of processes being offshored and the number of business turning to offshoring to cut costs, there is evidence that providers will consolidate into fewer but larger companies, which will continue to grow their offerings.

One thing to remember, however, is that some influential factors are still to be determined: perhaps one of the biggest impacts on the future of offshoring will become clearer next Tuesday - US election day. If Senator Obama is elected US President, he is likely to enact his pledge to discourage the offshoring of jobs. However, while this could spell more uncertainty for the sector, Intellect's research has also found that offshoring is now very much seen as a standard business practice. What remains to be seen is whether external factors such as the recession and US presidency are enough to reverse this trend.

By Scarlett Graham, Programme Executive