Don't shoot the offshoring corporates

The recent outrage from white-collar union Amicus over Norwich Union's plans to send yet more jobs to India was predictable but, as consolidation sees ever-larger broking firms emerge, it may in future be super-provincials and the like incurring the disapproval of unions such as Amicus.

Since the merger and acquisition activity of the 1990s, which formed the Avivas and Royal & SunAlliances of today, outsourcing has been a popular way of realising the value of bolting two large corporations together.

This would not of course be a new concept to brokers, with Willis and Budget being the obvious early adopters of offshoring to India and South Africa, respectively. Willis and Marsh are also reported to be conducting feasibility studies into the possibility of outsourcing jobs to the Asian subcontinent.

So, while Amicus has good reason to take issue with NU for sending UK jobs abroad, this is a trend that will only continue to grow.

Could it be that the demise of back-office and support roles in the UK is exactly like the demise of shipbuilding and mining in the 1970s. Once the backbone of UK industry, these involuntarily went abroad as UK production costs could no longer compete. Could it therefore be the case that NU and other corporations are being 'scalped' for being early adopters of a harsh but relentlessly emerging economic reality? Possibly.

But the firms that are offshoring jobs are working within the parameters and constraints of the UK market, which, like many, is full of customers whose only buying concept is price. It could be that, unless customers are prepared to stump up the difference through higher premium costs in defence of UK jobs, the off-shoring trend will only escalate in response to customer demand for cheap premiums.

The only way this is likely to be reversed is if the consumer pays extra for their policy and, given the noise Amicus is making and the ongoing controversy that the issue is creating, this could well be the case. This is, after all, the era of the 'ethical consumer', who is paying more for fair-trade coffee and investing in pension funds that promise not to exploit the workforce of underdeveloped countries.

Far fetched? Not according to recent research by offshoring consultant Troika, which found that as many as 40% of consumers would pay more for products sold and administered within the UK.