HR offshoring on the rise as employers cut costs

The UK is experiencing an HR jobs exodus as companies increasingly look to save money by outsourcing positions overseas, a study has revealed.

A survey of 200 business leaders by Roland Berger Strategy Consultants found 53% of firms had already moved their HR functions abroad in the past five years, or were considering making a move by 2015. Eight in 10 companies admitted that moving at least one major business function overseas was being considered, which could place a third of the companies’ UK jobs at risk.

Respondents blamed poor skills, excessive staffing costs and stifling regulations for the exodus.

David Stern, UK managing partner at Roland Berger, said: “This trend towards offshoring is markedly different from the international outsourcing we have seen to date, with both knowledge economy jobs and core business functions now being exported to economies which are more competitive in the global environment.

“These jobs are unlikely to return once the economy picks up – a trend which threatens a permanent rise in UK unemployment, leading to falling revenues and ultimately a decline in GDP.”

The survey comes just weeks after the latest Monster Employment Index, which showed that demand for HR professionals had plummeted to its second lowest level in a year. The index – compiled from an analysis of millions of online job opportunities taken from corporate career sites and job boards – fell from 198 to 59 year-on-year (100 is the baseline).

Of the companies already considering offshoring their functions, 78% of respondents to the Roland Berger survey said the driving force behind the move was to make their costs more competitive, while more than three-quarters pointed specifically to the need to reduce large operational costs including high wages.

A further 58% of respondents said the UK’s competitiveness was being eroded by a lack of skilled personnel – a problem which they expected to persist in the future.

Stern added: “The government must help UK companies and employees to become more competitive in the global market place, otherwise the trickle of jobs moving offshore will become a torrent. This will require reducing bureaucracy, enhancing the skills of the labour pool, and alleviating the cost burden on business, but this will present a huge challenge in the current economic climate.”

A recent survey by outsourcing firm Ceridian found just 20% of HR directors had control over outsourcing their functions, with the decision largely being taken by CEOs and managing directors.

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