Finance: Jobs drift to the east

Thanks to computers, much clerical work can be done overseas. Accountants who face job loss must be ready to develop other skills. Paul Gosling reports

British Airways' establishment of an accounting centre in India may be the prelude to a massive transfer of accountancy jobs to low-wage countries. Increasingly sophisticated computer systems may de-skill the work and enable analysis as well as data entry to be conducted electronically from the far side of the world.

BA, which earlier this week announced annual profits up pounds 55m to pounds 640m, is one of many airlines that has moved passenger revenue accounting centres (which account for ticket income) to the Third World to bring down labour costs. Several US airlines have data entry work done either in the Dominican Republic or in Mexico, and Singapore Airlines has contracted out its revenue centre to a state-owned enterprise in China.

"Many of our competitors have already transferred activities overseas, where costs are significantly lower than at home," says Bob Ayling, BA's chief executive. "We cannot continue to compete effectively on this basis without facing up to the need for change."

The company will move 500 jobs to India - on 10 per cent of the pay of comparable workers in Britain - while phasing out about 600 jobs through greater automation. This will save about pounds 9m a year; it is part of an overall re-engineering of BA to make it a "virtual corporation" that outsources more operations, requires internal departments to be market-tested against outside tenders, and transfers some functions to lower-waged countries.

John Claret, deputy secretary of the Chartered Institute of Management Accountants, says that accountants in the UK should not feel threatened. "It is largely transaction processing and report generation. People have been centralising and decentralising this forever. It has been mostly within one country because we did not have the technology we have today.

"It doesn't matter where your transaction processing takes place, as it is largely de-skilled, so it is done automatically by machine and needs technicians and clerical workers to look after it. The qualified accountant has been the manager or creator of the system, rather than making the entries. When you discuss what accountants have been becoming in recent years, they are now part of the management team, and they will continue to be where the management team is."

The Institute of Chartered Accountants takes a less sanguine view. In its consultation document, Added value professionals, chartered accountants in 2005, the ICA predicts: "Some companies will even find it attractive to outsource entire departments, such as management accounting, to low- cost regions."

David Stewart, former partner at Coopers & Lybrand, was chairman of the committee that produced the ICA report. He says that all elements of the accountant's role may transfer to low-wage regions within the next few years. "A lot of people are trying it out at the moment ... Things are moving more quickly than people realise."

The ICA believes that two clear trends are discernible. One is for more automation, reducing not only the number of clerical jobs, but also the numbers of accountants in work. Another trend is for the world's economy to move east, taking with it jobs formerly done in Europe - though it believes that London will continue to be a leading global financial centre. The report adds that if accountants are to have jobs in the next decade they must concentrate on adding value in their work, and be willing to move around the world.

But a more global accounting profession needs international acceptance of qualifications, and a single accounting standard. Liesel Knorr, technical director of the International Accounting Standards Committee, says that progress is fast on both fronts. In practice, accountants with qualifications in one country can already work elsewhere. Acceptance of a single accounting standard is within sight. "We are working to our programme," says Ms Knorr.

By April next year the IASC will have drawn up a single international accounting standard for company accounts that will be acceptable to all the world's stock exchanges and regulators. The code should be in place within a further two years.

Some major British-based multinationals are rumoured to be closely watching BA's transformation. The strong international competition in the airline industry, together with its naturally global character, has made it more willing than other sectors to transfer jobs from the First to the Third World, but others are following.

India has become one of the world's leading computer software production centres. The Caribbean is the base for computer data inputting for some of the United States' financial services industry, which has followed the example of the airline corporations. Many of the world's top IT corporations are considering major investment in Malaysia as a centre for a range of manufacturing and service activities.

Analysts have warned for some years that jobs in some of the professions could follow data processing work in going east. Now it is accountants' jobs that may be on the line - in more ways than onen

Paul Gosling is the author of 'Financial Services in the Digital Age', published by Bowerdean.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
news
Sport
footballLive! Chelsea vs West Ham kicked off 10 Boxing Day matches, with Arsenal vs QPR closing the action
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
PROMOTED VIDEO
News
i100
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
News
news
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

    Christmas without hope

    Gaza fears grow that conflict with Israel will soon reignite
    After 150 years, you can finally visit the grisliest museum in the country

    The 'Black Museum'

    After 150 years, you can finally visit Britain's grisliest museum
    No ho-ho-hos with Nick Frost's badass Santa

    No ho-ho-hos with Nick Frost's badass Santa

    Doctor Who Christmas Special TV review
    Chilly Christmas: Swimmers take festive dip for charity

    Chilly Christmas

    Swimmers dive into freezing British waters for charity
    Veterans' hostel 'overwhelmed by kindness' for festive dinner

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all