Studying Offshore HR

Dont get left back: Education may be the antidote to European offshoring.

by Andrew Kris

Hot off the plane from the London Business School (LBS), I emerged stimulated from a day spent in the company of 80 HR professionals at an Adecco-organized event on offshoring and its impact on our organizations and European society. Jerome Callie, CEO of Adecco, commented that, in reality, offshoring affects less than 1 percent of activities related to HR. Of course, HRO as a whole has the potential to impact as many as 35 to 45 percent of people engaged in HR activity, but many have found it easier to blame our problems on offshoring.

So how do you define offshoring? A little while ago, we asked SBPOA members to give it a try, and as you can imagine, we got some interesting definitions. These ranged from there not here, where more costs less, and not in my backyard, all the way to more thoughtful responses such as services delivered from a remote location, outside the country where the services are required. These are more in tune with the generally accepted definition than weird concepts like Home-A-Phobia: a fear of outsourcing anything to a location close to your home country, which is more of a reflection upon the prejudices of the respondent than an attempt at accuracy.

Still, speakers at LBS stuck to classic perceptions. India and China were the most used words of the day, reflecting fears among Europeans that if we did not learn to come to terms with our limited views of the world and create greater mobility in our workforces, we had all better learn to speak an Asian language.

There was one consistent message that filtered through the eventeducation. And no, it was not driven by the fact that the event was being held at a premier business school. What does education have to do with offshoring?

According to the presentation by M.K. Shankaralinge Gowda, secretary for IT, Biotech, and Science to the Government of Karnataka, India has 18 million graduates, more than one million engineers, and close to one million software professionals, with these numbers expected to increase dramatically. The United Kingdom, conversely, which has the most criticized graduate education policy in the European Union, musters no more than a few thousand engineer and software graduates each year. Robert Walters, chief executive of financial recruiter Robert Walters, predicts that the United Kingdom will have a shortage of skilled candidates for finance, legal, and IT jobs in the next few years. Fewer graduates are undertaking professional training courses, which is rapidly leading to a number of sectors already facing skills shortages.

We suffer from high costs that drive people-intensive, transactional activities offshore in search of greater competitiveness. But in five to 10 years, when automation and lights-out processing will eliminate substantial labor costs from transactional processes and cause higher value-added work to drift homeshore, we will not have enough adequately qualified people to take on the work. This point was driven home by Professor Richard Scase, author of Britain 2010: The Changing Business Landscape, who illustrated how Europes demographic time bomb, entrenched attitudes, and over-protective labor legislation will make response to future labor demands difficult.

A similar issue was raised in the discussion of what you do with all of the displaced HR professionals whose transactional work is outsourced and offshored. The typical response from speakers and the audience suggested that this freed up HR people to engage in higher-value added work to become strategic advisors to business. A great concept, but is there really a need for all these advisors? And as a business leader, would I respect their advice? After all, spending 20 years worrying about the accuracy of personnel administration is not necessarily the best qualification for a strategic HR advisor.

Where are all the post-graduate and professional education programs that raise the proficiency of talented professionals and ensure their future in HR? In Europe, at least, this type of forward-thinking HR education is not much in evidence.

So heres my call to actionchallenge your HR associations or organizations to get the future of HR on the agenda. Unless education and skills in Europe improve, the activity that is moving offshore today may never return if we dont have the skills to support it. If this turns out to be the case, it would not be the end of the world. But then, instead of worrying about our HR skills, we would need to worry about our linguistic skills.