Outsourcing UK jobs has not harmed economy, says IMF

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The Independent Online

Moving British services jobs overseas has not led to a net loss of employment in the UK, according to research by the International Monetary Fund.

Moving British services jobs overseas has not led to a net loss of employment in the UK, according to research by the International Monetary Fund.

Research by economists at the global financial watchdog found there was "no significant negative effect" on services industries from outsourcing jobs such as call centre, IT and back office staff. The findings come as a boost to the Government, which has argued outsourcing allows UK companies to use the cost savings to create higher-paid jobs elsewhere.

The IMF staff focused on the UK because of the level of anxiety over an exodus of jobs overseas and the sheer scale of outsourcing by British firms.

The UK engages in about three times as much services outsourcing as a share of economic wealth as the US, they found. They examined 13 services activities from telecoms to architects and found no evidence that sectors with higher levels of outsourcing had slower rate of job creation.

Mary Amiti and Shanh-Jin Wei, economists at the IMF, said: "The risk of service outsourcing dramatically reducing jobs growth in the advanced economies has been greatly exaggerated." They acknowledged there was a "tremendous anxiety", that the global boom in services trade was dominated by "lopsided, one-way" outsourcing from developed to developing countries, leading to huge jobs losses in nations such as the UK and the US.

"These results suggest that service outsourcing not only would not induce a fall in aggregate employment, but also has the potential to make firms or sectors more efficient, leading to job creation in the same sectors to offset the lost jobs," they said. The research showed that while Germany and the UK topped the table in terms of raw numbers of IT jobs relocated offshore, in terms of a share of GDP the largest outsourcing was undertaken by Cyprus, with the UK coming in 30th and the US 73rd.

India, which has been the focus of trade union anger over call centre jobs, outsourced almost as much business services work as the UK.

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