Automation causes more disruption to jobs than offshoring

Try searching Google for the latest news on ‘offshoring’ and you will find a diverse mix of news reports and opinion. I tried it this morning and found news on the British government trying to encourage services to be delivered locally, analysts predicting that offshoring is slowing down, other analysts saying that IT jobs are vanishing because of offshoring, and other stories about the changing nature of offshoring and how many different services can now be delivered remotely.

There is a wide range of opinion and confusion over the term as I have been outlining in my last couple of blogs. The recent research by Hackett Group into service sector jobs was presented positively by most in the media, because it suggests that offshoring has peaked and may indeed be declining, but a close look at the numbers shows that Hackett believes this is only because there will be fewer service sector jobs in the economy as a whole.

Even when the offshoring phenomenon took off more than a decade ago, incensing politicians and the media alike, there were always a very small number of jobs that were really lost because companies were shipping them off to far-flung locations. The real story in companies across the world has been about automation, technological improvement, and efficiencies that have seen processes replacing people.

This is often called progress. Companies change and adapt to their environment with time and this means the adoption of new processes and systems that will often replace the old way of doing things – including the jobs supported by the old ways.

This gradual change in how companies do business is a lot harder to document and demonise than offshoring, so the headlines still talk of jobs lost to offshoring rather than companies operating (and benefiting) internationally.

What I have often wondered is that now we are in a more mature business environment that is truly global, will we be able to start measuring the benefits of the extra business and jobs created by having a global focus on finding customers? It is time for a more mature debate on offshoring, because over the long term a global approach to business may in fact have created many more jobs than offshoring has ever destroyed.


Photo by Jason Bachman licensed under Creative Commons.

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