On the opening day of the CBI’s conference, Director-General Digby Jones described offshoring as “part and parcel of doing business in the global economy,” and continued, “Make no mistake, this is a survival issue.
Anyone who believes that firms have a great deal of choice are naive. Companies know if they don’t do it, somebody else will. If competitors act and they don’t respond, they may put their business at risk.”
In a survey published by the CBI and power tool manufacturer Alba, 51% of respondent companies said that pressure to offshore had increased in the past two years. Almost a third said that they had outsourced some activities.
But Jones insisted business should be positive about offshoring, and that the benefits outweighed the drawbacks.
He said: “Off-shoring means greater productivity and more efficient goods and services. It also means UK jobs will be of higher quality, more skilled and in many cases more secure…The challenge [of globalisation] is to create more jobs than we lose – which we are doing – and to ensure people have the skills to take advantage of them.”
According to the survey, China and India are the most popular off-shore locations. But increasingly firms see Eastern European countries such as Poland and the Czech Republic as attractive destinations for offshoring.
The CBI says the most important reasons for choosing a country were low employment costs and the availability of a skilled workforce. Drawbacks cited by respondents to the survey included difficulties exercising managerial control, and the risk of supply disruption. Smaller companies were less likely to off-shore than larger companies.