Offshoring still creating debate

The debate on the benefits of offshore outsourcing continues to divide the procurement profession with professionals split on whether the costs and benefits of the move are really worth it.

Governments have been hoping that economies perform better and markets will automatically redistribute wealth to the poor as well as making the wealthy even better off.  As a result, society in general becomes well off, with previously inactive people becoming included within the mainstream economic system.

Well this has been the mainstay view from the optimistic supporter of offshore outsourcing. However, Ben Ngobi argues that this is not the case, and furthermore, the financial crisis may have helped reinforce this view.

“Potentially, this [offshoring] may lead to the introduction of government taxes or other incentives that reduce the need for businesses to offshore jobs,” Ngobi said.

“It is not necessarily about protectionism but more about a need to improve failures within market structures. I therefore disagree with some of the economic drivers for offshoring. It creates unemployment and the benefits often take a long time to accrue,” he said.

Instead of businesses paying to relocate their call centres overseas, they could consider the merits of setting up labour-intensive activities within their home countries, Ngobi said.

In support of this, there has been an increasing trend of locating call centres within the UK alone than was the case in the past.

“Government policy should start focusing on reducing income inequality by encouraging the private sector to utilise low-skilled labour. This will have the effect of reducing polarisation in society, leading to lower unemployment and thereby overall economic growth,” Ngobi said.

The offshoring debate continues. 

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