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Last Updated: Monday, 8 November, 2004, 12:44 GMT
UK firms to look abroad, CBI says
Mr Jones visits a Chinese factory in October 2004
Digby Jones (left) at Mico Electronics in Shenzhen. China
Low skilled employees could be out of a job within a decade as more UK firms shift work abroad, says the CBI.

More unskilled and semi-skilled jobs are being exported to countries like China, and are getting replaced at home by skilled worker and graduate posts.

But CBI boss Digby Jones insisted the benefits of moving jobs abroad outweighed the drawbacks - boosting workers skills, profits and output.

The claims came on the opening day of a CBI conference in Birmingham.

'Survival issue'

Why UK firms offshore
Reducing costs
Nearness to new customers
Customer satisfaction
Focus on core business
Increasing revenue

A CBI survey indicated that the principal reason UK firms have moved some of their operations abroad is to cut costs, followed by improving speed and quality of services.

It also found that more than half of businesses felt under more pressure to turn to foreign shores than a year ago - and one in four were considering moving jobs abroad in the future.

"Off-shoring is now part and parcel of doing business in the global economy," said Mr Jones.

India and China remain the most popular destinations, with the east European destinations of Poland and the Czech Republic as "attractive alternatives".

'Made for Britain'

The CBI surveyed 150 senior businessmen across a number of sectors, covering a UK workforce of 750,000 and a global one of two million.

The main driving forces among firms thinking of offshoring are "the rising cost of compliance with regulations" and "an increase in policies unfriendly to business".

Very shortly, there will not be work for unskilled people - that can come with the next 10 years
Digby Jones, CBI

A government-funded study appeared to back the CBI's claims, stating that the UK is one of the biggest beneficiaries of the offshoring trend.

The Advanced Institute of Management Research found that hundreds of thousands of jobs have been created as foreign companies look to benefit from British skills in areas such as computer services, advertising, architecture and recruitment - increasing the UK's 17bn surplus in business services.

The report's authors added that the commonly cited examples of UK call centre jobs being moved abroad was a misleading stereotype.

"That's only half the picture because foreign firms also purchase business services from the UK and the net effect has been positive," said Rachel Griffith, who helped write the report.

Manufacturing jobs

Younger Britons seem to be taking heed of the need for greater skills at home with 43% of young people going onto higher education now, compared to just 6% in the 1960s, British Chamber of Commerce figure show.

"Very shortly, there will not be work for unskilled people - that can come with the next 10 years," said the CBI's Mr Jones.

Call centre worker
India and China remain popular destinations for offshoring jobs

CBI chief economist Ian McCafferty admitted that thousands of jobs had been moved abroad, but these had been outstripped by the 500,000 new UK jobs created in the past two years alone.

One surprise result of the CBI survey was that organisations currently offshoring were more likely to be manufacturers than service providers.

A number of high-profile decisions by UK firms to move call centres overseas have attracted union anger, but more jobs have been shifted by producers of consumer goods, as well as in research and design, and IT support and development.

One firm working in the offshoring sector is global recruitment firm Harvey Nash.

In conjunction with the Vietnamese government, the firm has set up a software development centre in Hanoi, Vietnam, which employs 625 staff and provides programs to some of the UK's largest organisations.

'Cost issues'

Trying to recruit 50 IT developers in the UK could take six months
Paul Smith, Harvey Nash
"We have set up our own team in the technology market place," said Paul Smith, managing director of software development and outsourcing, adding that UK-based firms often did not have enough people with the right skills to develop new services.

"Cost reduction is one of the main benefits for firms, and the other is having a pool of labour that allows them to go to market much faster, he explained. "Trying to recruit 50 IT developers in the UK could take six months.

As well as offshoring the CBI conference will be examining issues of business security, European and public services reform, customs issues, and skills deficiencies in the UK workforce.

Mr Jones said the CBI would also be listening closely to Chancellor Gordon Brown speech at the conference on Tuesday.

The CBI is hoping to get reassurances that Mr Brown has no plans to do anything which would jeopardise the current climate of "low interest rates, low inflation and low unemployment".

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