The Hidden Heist: How Outsourcing is Stealing UK Jobs in Tech and Financial Service

While the UK media is flooded with stories of migrant crossings, a more insidious threat to the nation's economy is going largely unreported: the massive outsourcing of jobs in the tech / artificial intelligence and financial services sectors to overseas companies.

This phenomenon is not only costing the UK billions of pounds in lost tax revenue and economic growth, but it's also stifling innovation and job creation in two of the country's most critical industries.

The numbers are staggering. In India alone, there are 5.4 million locals working in tech outsourcing companies, with at least the same number again freelancing. This number grows by a million each year, and when you factor in other Asian and African countries, the total is likely tripled. Meanwhile, these underpaid workers are unlikely to be contributing to the UK tax base as citizens.

The scale of the problem is enormous, with estimates suggesting that the UK loses over £100 billion annually to outsourcing in the tech sector alone. This figure is likely to be even higher when the financial services sector is included, given the large number of banks and financial institutions that have outsourced jobs to countries like India and Poland.

The involvement of global companies like Microsoft, Fujitsu, and Infosys in UK government tech contracts has been well-documented. These companies have offices and operations in many countries, including India, where labor costs are significantly lower. When the UK government awards a contract to one of these companies, they often choose to have the work done by their teams in India, leading to job losses and lower wages in the UK.

The financial services sector is also heavily impacted, with many banks and financial institutions outsourcing jobs to countries with lower labor costs. This not only leads to job losses and lower wages in the UK but also raises concerns about data security and financial stability.

The trend of globalization and the movement of jobs to countries with lower labor costs is a major concern. It's not just about the immediate cost savings for governments and companies; it's about the long-term impact on the UK economy and the livelihoods of its citizens.

It's time for politicians to have an open and honest discussion about the impact of outsourcing in the tech and financial services sectors. They need to consider policies that protect UK jobs, ensure fair competition, and prioritize the overall social and economic value of these industries.

Some of the key concerns around outsourcing in the tech and financial services sectors include:

• Job & tax Losses in the UK: When tech work is moved overseas, it means fewer jobs for tech workers in the UK. This leads to unnecessary unemployment and a decline in the domestic tech industry. Less tax and NI is paid and together with corporation tax planning, any British bidder is going to be uncompetitive. Even allowing for these costs would make the whole deal better for the UK economy
• Lower Wages: Even if some UK workers are still involved, the overall effect can be to drive down wages in the UK tech sector, as companies can point to the lower costs of labour in India.
• Quality Control: While India has a large pool of skilled tech workers, there can be concerns about quality control and communication challenges when work is done remotely and across different time zones.
• Data Security: Outsourcing government contracts to companies that then send data overseas raises concerns about data security and privacy. Different countries have different data protection laws, and there's a risk that sensitive information could be accessed or misused.

The Bigger Picture

The trend of globalisation and the movement of jobs to countries with lower labour costs shows how the oligarchs are playing our politicians and public sector procurement system. They should be looking for best value for Britain based on the overall social and true economic value. Short-sighted benefits, like lower costs for the government, has significant downsides for UK workers, the tax base (in terms of lost corporation and personal tax and NI) is hollowing out the overall current and future economy.

Antiquated a notion this may be, but surely it's important that our politicians have an open and honest discussion about the impact of outsourcing in the tech sector, and to consider policies that could protect UK jobs and ensure fair competition. Some chance when many big tech deals are done without tender. Perhaps like other industries they will be offering jobs to ex ministers once the three months conflict of interest period has elapsed.

It's time to shine a light on the hidden heist of outsourcing in the tech and financial services sectors. The future of the UK economy depends on it.