The number of people in offshore locations delivering software and IT services (S/ITS) to the UK will double to over 130,000 in the coming three years, according to a new study by Ovum on global sourcing. Rather than fight this trend, Ovum advises UK firms to focus on business-centric IT skills, as these will be critical to the success of both the IT sector and the wider UK economy.

Based on research conducted with vendors accounting for more than half of the UK S/ITS market, the report highlights a 6% fall in the number of UK-based S/ITS staff by the end of 2008. This equates to the loss of 5,000 onshore positions each year. "We will see the UK-based S/ITS workforce shrink in size under the effect of offshoring," says Phil Codling, the Ovum Senior Analyst who led the project. "But the overall loss of jobs will be gradual and less dramatic than some commentators might have you believe."

The bulk of the job reductions projected in the UK S/ITS industry will fall in programming, other lower-level technical roles, call centre/help desk and back-office corporate administration.

"These are functions that can readily be offshored and in some cases automated. There is no point in trying to fight the drop off in demand for such roles onshore. UK S/ITS firms must focus on the fact that the key value of onshore IT workers will be their ability to deliver innovative solutions in close co-operation with end customers," says Codling.

He also emphasises that such business-centric skills drive the success and competitive advantage not just of the UK's IT firms but also of technology dependent sectors such as banking, insurance, telecommunications, media and even government. "Not everything can be done offshore," he concludes. "There will remain a requirement for local domain experts that can translate business needs into IT solutions."

However, there is cause for concern over how well prepared the industry is for this challenge. "Workforce development, including formal training and graduate recruitment, has slipped down the agenda at many IT firms in the UK in recent years," says Codling. "We face the prospect of a skills time-bomb in IT. It is not clear where the next generation of highly skilled, experienced programme and project managers will come from."

Ovum's research predicts that the number of UK-based staff hired by offshore companies will continue to increase over the period, but not sufficiently to offset the overall decline in UK S/ITS jobs. "Offshore companies, particularly those from India such as TCS, Infosys and Wipro, will continue to hire onshore in order to boost their presence closer to customers in the UK and to support their rapid growth," concludes Codling.

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