The multi-billion pound business buyouts being thrashed out at Boots, Barclays and British Airways (BA) are part of a growing trend that will increase the flow of HR jobs to low-cost countries, experts have warned.
Private equity firms are driving a new wave of HR offshoring – and even setting up their own centres in India to compete with established outsourcing providers.
One senior outsourcing expert told Personnel Today: “Offshoring is an increasing trend. If a private equity firm looks at a company, it is because it thinks it is not being run well enough, so it will look to change the management and create economies of scale.
“Private equity companies look to offshore from other companies in their portfolio, and are setting up their own captive offshoring centres to compete in this market.”
Last week, private equity firm Kohlberg Kravis Roberts secured an £11bn takeover of high-street retailer Alliance Boots. Fears have been raised of massive job cuts when the group comes under private ownership.
Meanwhile, BA has reportedly held talks with three private equity firms about a takeover bid for Spanish airline Iberia, likely to be in the region of £2bn. And in a slightly different move, Barclays and RBS launched multi-billion pound bids for Dutch bank ABN Amro.
Barclays admitted that more than 10,000 jobs would be offshored as part of the deal. A source close to the Barclays bid told Personnel Today: “Initially, IT jobs will be sent to low-cost countries, then other back-office functions will follow.”
Mark Kobayashi-Hillary, offshoring director at the National Outsourcing Association, said: “There is a trend towards private equity being used [in buyouts], and this certainly puts pressure on costs. Offshoring back-office functions is high on the list of ways to achieve this.”
Are mergers and takeover deals a threat to UK HR jobs?