do workers really have the upper hand? or will outsourcing 2.0 ruin their bargaining position?

When the pandemic struck, plenty of commentators expected dole queues to lengthen.  Instead, there has been something of a jobs miracle, with unemployment incredibly low.  Staff are in a strong bargaining position to be more demanding.  We think about 9 million people will be looking for a new role this spring as a result.  The balance of power in the workplace has shifted dramatically in favour of employees.  It’s gotten to the point that 45 per cent of hiring managers have now told us they would consider rehiring an employee they’d previously fired.  Employers are under pressure and professional workers are enjoying some bumper salary  deals as a result.

So all is well for professionals in the UK?  Well, not quite.

Remote working is about to become something of a double edged sword for employees, especially those in tech.  Almost everyone likes it.  But it makes it harder to justify higher salaries in the UK.  The two trends of rising pay demands and the almost universal adoption of working from home are coalescing to make offshoring attractive again.  Wage demands are emboldening global employers to think much more creatively about resourcing, including moving jobs to low-cost centres, reversing the trend of organisations in the UK focusing on near-shoring or on-shoring staff.  In fact, we think we might be seeing the beginning of OFFSHORING 2.0.

There are  fewer downsides to offshoring than there were before the pandemic.  It's not just the financials encouraging a new appreciation of offshoring - although they remain considerable.  It's also the limited capacity of UK teams and the laser-like focus managers now put on playing to their organisation's core strengths.  And it’s about risk.  Remember that there is a commercial risk to having roles unoccupied, too; if it’s taking too long to hire, say, a cyber security expert in London, you're leaving your organisation exposed.   Talent scarcity is also a driver. 

Tech is the big target for OUTSOURCING 2.0.  We do a huge amount of recruitment in education, in healthcare, and in construction; you would be hard-pressed to outsource roles in these sectors.  OUTSOURCING 2.0 will apply to professional roles which don’t centre around linguistics or culture.  Fewer legal, HR, or marketing jobs will be offshored than tech roles.  Laws operate within national jurisdictions; difficult employee conversations need to happen in real time, face-to-face; and good marketing requires an innate awareness of a culture and its buying signals and behavioural patterns.  But roles involving computer languages are top of the list.  OUTSOURCING 2.0 won't be about outsourcing call centres either - which only saves a few quid per employee per hour (and is often noted by an organisation's customers negatively - many businesses have learnt that lesson the first time around).  The jobs offshored will be more professional back/middle office roles that will create bigger savings for global employers.

It's early doors for OUTSOURCING 2.0 and it’s tricky to know exactly where these jobs will go.  India is still a massive destination but there are problems there - the Great Resignation is hitting India as hard as the UK.  Mexico is a big target for tech, as is Costa Rica.  Blackstone-controlled Mphasis, for instance, is opening offices in Mexico and Costa Rica.  Many organisations are looking at Brazil (still the fastest growing middle class in the world), central and Eastern Europe (where English is spoken so well and time differences are minimal), and the Iberian peninsula - Romania and Bulgaria, too. 

So, while workers have the upper hand for now, global employers still have a few aces up their sleeves.