How outsourcing is taking a huge chunk out of the UK’s industrial base
The UK’s outsourcing industry is expected to grow by more than 1% this year, according to the UK Business Services Association (BSA), which has warned that there is a “huge opportunity” for the UK to boost its competitiveness in the global marketplace.
The sector is the largest in the UK and has been growing rapidly since the financial crisis of 2008.
It is estimated that the sector will be worth £11.7bn by 2020, more than double the value of the banking sector.
The BSA says the UK has a competitive edge in the outsourcing market and it is looking at “key options for enhancing its competitiveness”.
Its chief executive, John Boulton, said that “by 2021, the BSA is expecting the UK government to take a significant step towards supporting the outsourcing industry, with the Government announcing an investment in up to £2bn in the sector over the next three years”.
He added: “It is the Government’s intention to support this sector through further support from the private sector, which will see our exports to Europe and Asia grow, and help us maintain a competitive advantage for our exports in the future.”
The BSE is the leading player in the industry, which has an annual turnover of £1.7 billion, while the UK Government has earmarked £7bn for the sector.
In recent years, the UK had been hit by a string of high-profile outsourcing scandals, including the death of an employee at a company that outsources manufacturing to India and the closure of two factories in south-east England.
“The Government is committed to ensuring that British business remains competitive by supporting the UK-based outsourcing sector,” Mr Boulonsaid.
“I hope the Government will take that into account in its decision-making in future.”
Mr Boulson said the BSE was considering its options for “enhancing our competitiveness” and urged the government to invest in the “vital sector”.
“There is a huge opportunity for the British Government to support the outsourcing sector by ensuring the UK continues to lead the world in this sector,” he said.
“We are not looking to replace one sector of the economy with another.
We are looking to ensure the UK remains the global hub for the outsourcing of products and services.”
As we move towards a post-Brexit world, it is vital that the UK is able to continue to provide a strong economic base for our industry.
“There are many areas where the Government could work with our industry to strengthen our competitiveness.”
The UK’s share of the global outsourcing market has fallen sharply since the start of the financial crash, falling from 21.1% in 2013 to 14.6% in 2017.
In January 2018, the British Chambers of Commerce (BCC) published a report that showed that the industry had lost 1.6 million jobs since the crisis began.
“In the past three years, we have seen the UK outsourcing sector suffer from a significant drop in both the level of supply and demand and the level and quality of the products we produce,” BCS chief executive Martin Edwards said.
“The BCS believes that the Government has a responsibility to ensure that we can remain competitive in the international marketplace.”
If we are to succeed in creating more jobs and increasing the value for our workers, then it is imperative that we take action now to help support the growth of this industry.
“A recent report by the Institute for Fiscal Studies (IFS), an independent research body, found that the outsourcing boom has led to a drop in real wages, but the report also warned that the downturn could be temporary.”
While there is evidence to suggest that the impact of the downturn on the labour market may be temporary, the long-term implications of the economic crisis are clear,” the IFS said.
The IFS warned that “long-term economic growth is dependent on sustained, strong and stable demand for UK services and goods” and the “UK’s long-run growth prospects are not yet clear”.