Two-thirds of UK firms plan to outsource the same or more of their IT services within the next two years, a new report has revealed.
A third of those companies (33 per cent) plan an increase to their outsourcing over that period, the survey of more than 250 British businesses found.
Manufacturing and chemical firms, and those in the financial industry, are the most likely to move more or all of their IT services out-of-house, according to the report.
Reducing costs was given as the main reason for outsourcing, the survey found.
It comes as another report, by the Tony Blair Institute for Global Change, warned that almost six million white-collar jobs are at risk of being shipped abroad if the work-from-home revolution continues.
Meanwhile, a leaked report today revealed how the Government was considering introducing a legal right for employees to be able to work-from-home post-Covid.
But in a stark message former CBI boss Digby Jones warned that if office workers are given the right to ‘flexible working’, town and city centres will die, local tax revenues will evaporate, transport systems will collapse and productivity will fall.
The outsourcing survey, by Whitelane Research and PA Consulting, found that 65 per cent of respondents plan to outsource at the same rate or more in the next two years. One third (33 per cent) said they were planning to outsource more of their business.
However 16 per cent of organisations said they were planning to outsource less, meaning the amount of companies planning to up their outsourcing in the next two years is around 17 per cent net.
By industry, the manufacturing and chemicals sector (59 per cent), and the financial services sector (46 per cent), are planning to increase outsourcing the most.
Cost reduction was cited as the number one driver for businesses to outsource, with 66 per cent listing it as their reason.
Manish Khandelwal, IT Transformation expert at PA Consulting, said the pandemic had been a key driver in companies increasingly turning to outsourcing and that expected the demand to ‘increase post-Covid’.
A third of those businesses (33 per cent) plan to increase their outsourcing over that period, the survey, of more than 250 British businesses, found.
Manish Khandelwal (pictured left), IT Transformation expert at PA Consulting, said the pandemic had been a key driver in companies increasingly turning to outsourcing and that expected the demand to ‘increase post-Covid’. It comes as No.10 (pictured right: Prime Minister Boris Johnson) today poured cold water on the idea that the Government could make new legislation which would mean workers were no longer forced to come into the office
The outsourcing survey, by Whitelane Research and PA Consulting, found that 65 per cent of respondents plan to outsource at the same rate or more in the next two years. One third of those said they are planning to outsource more of their business
Cost reduction was cited as the number one driver for businesses to outsource, with 66 per cent listing it as their reason
Firms that have already outsourced since the start of the Covid pandemic
In April it was announced that Barclays has shifted some call centre operations to the UK from India as staff there struggle to cope with the ongoing Covid-19 crisis.
Chief executive Jes Staley said the bank employs 20,000 people in India but many have been forced to stay at home to look after family members as the country’s death toll soars.
Mr Staley said Barclays had sent money via its charitable foundation to support the efforts in the country, and moved some work back to the UK.
Mr Staley said: ‘India is very important to the bank and there is extraordinary hardship going on there right now.
‘We were very mindful that a number of employees need to stay home now, they’ve got family that are sick that they need to take care of.
‘We are making payments, but allowing them to help their families manage through this pandemic. It’s a very tough place right now.’
It was also announced in April that Nestlé is planning to axe nearly 600 staff and shut its Newcastle factory that makes Fruit Pastilles – and shift production of most of its sweets to EU plants instead.
The Swiss-owned firm is proposing the closure of its site in Fawdon towards the end of 2023, with the loss of around 475 jobs, with a further 98 job cuts in York.
While some production will continue to remain in Britain, more than half will be moved to the continent, it emerged today.
The company said it was proposing changes to adapt its confectionery manufacturing for the future, with a £29.4 million investment at its factories in York and Halifax.
Nestlé said the proposed changes would ‘create a more efficient manufacturing footprint’ and have been announced as early as possible to allow time for consultation with workers and unions.
The multinational company acknowledged that the closure of the Fawdon would have a major impact on the area and pledged to support the local community.
The factory, which first opened in 1958, makes all the Rolos in the world and also produces a range of sweets that includes Fruit Pastilles, Mini Eggs, Caramac and Munchies.
In July last year it was reported that hundreds of ASOS workers were set to lose their jobs with the firm moving the bulk of customer service work to the Philippines
Around 500 day shift employees at its customer care centre in Leavesden, Hertfordshire, were informed that they were facing possible redundancy.
An email to staff from chief executive Nick Beighton in July last year insisted that the move was ‘not an impact of Covid-19’.
In a video call, bosses announced they were opening a new customer care centre in the Philippines to support their international customers, an insider said.
It is believed staff were allowed to apply for new roles in the refund department, but only 128 positions were put up for grabs.
Commenting on the report, he said: ‘It is evident that industry has embraced the changes that have come about since COVID-19 and used the opportunity to reduce operating expense (Opex), introduce new ways of working, focus on innovation and improve productivity.
‘COVID-19 accelerated the pace of digital transformation and customers, service providers and employees have all have come together and demonstrated unprecedented agility and resilience.
‘As businesses look to grow post-pandemic the demand is expected to increase, digital transformation across all industries will speed-up and the war for talent will only intensify.’
The survey comes after a report by the Tony Blair Institute for Global Change warned almost six million white-collar jobs are at risk of being shipped abroad if the work-from-home revolution continues.
It said the ‘mass experiment’ with remote working during the pandemic has ‘begun to loosen the binds’ that previously tied working roles to specific places.
As a result, well-paid professions are vulnerable to being shifted overseas – including the jobs of graphic designers, accountants and software experts.
The report warned that if ministers do not take urgent action there will be consequences similar to those caused by the ‘loss of manufacturing jobs in the 1970s, but on an accelerated timeframe’.
According to the research, 5.9million jobs – 18 per cent of the UK’s workforce – could be lost offshore.
The report said: ‘Having put in place the digital infrastructure to make remote working possible, businesses, especially larger ones, are likely to persist with it even after the pandemic in order to reduce overheads, boost productivity and recruit talent from a wider geography.
‘As a result, they may opt to employ only the core staff required for in-person collaboration and decision-making while outsourcing and offshoring those who are not.’
Meanwhile, No10 today poured cold water on the idea of working from home becoming the ‘default’ after coronavirus amid a backlash from businesses – insisting there are ‘clear benefits’ from being in offices.
The emergence of proposals for a legal right to flexible working has sparked fears employers will be blocked from insisting staff attending offices unless they can prove it is essential.
The Government will consult on the plan – originally pledged in the 2019 Tory manifesto – over the summer ahead of possible legislation later this year.
But the prospect sparked a backlash amid fears it could damage productivity, harm firms that rely on workers going into the office and prevent a return to normality in town and city centres.
Businesses said it should a ‘conversation’ with staff, and ‘does not need intervention from Government’. London mayor Sadiq Khan also warned that the return to offices would be an ‘important part of our economic recovery’.
However, Downing Street insisted this afternoon that working from home will not be made the ‘default’ position, and the aim is to help parents and others who need more flexibility.
And Treasury minister Jesse Norman suggested that businesses could provide general reasons such as the need for staff to ‘develop’ to ask them to come to offices.
‘Every company and every different organisation is going to want to have different approaches,’ he told Sky News.
‘There are certainly people who are affected differently by lockdown and their needs need to be listened to just as much as anyone else’s.
‘You will have seen there are some institutions that are taking the view that it is really essential that people should be in the office, and it is unfair to younger people in their judgment not to do that because of the opportunities to grow and to develop peoples skills and bring them on in the organisation.
‘This is going to be very company or organisation specific and any guidance the government puts out is going to have to recognise that.’
Boris Johnson’s (pictured today) spokesman has played down alarm at the idea that millions of staff will be given a ‘default’ right to work from home after the pandemic
Treasury minister Jess Norman suggested that businesses could provide general reasons such as the need for staff to ‘develop’ to ask them to come to offices
Asked about the work from home rules, the PM’s spokesman said: ‘I think on this we have always been clear there are significant benefits to be gained from people working in the office, be it innovation, delivery, supporting and developing people and of course ensuring people have a higher quality working environment.
‘We have asked people to work from home where they can during the pandemic but there are no plans to make this permanent or introduce a legal right to work from home.’
Asked if people will have the legal right to request to work from home, the spokesman said: ‘What we are consulting on is making flexible working a default option unless employers have good reasons not to. That is the consultation as committed to at the last election.’
Challenged whether flexible working would mean the right to stay at home for at least some of the week, the spokesman said: ‘As I say, the work of the flexible working task force is to look at flexible working as a whole.
‘That covers a range of options. I am not going to pre-empt that work and we will set out the position in due course.
‘But as I have said, there is no plans to making working from home permanent or introduce a legal right to work from home.’
Both Chancellor Rishi Sunak and Boris Johnson have spoken about the benefits of office life as well as the danger that a permanent home-based culture could create ‘zombie towns’.
But there are mounting signs that the government will not urge all workers to return to offices when the delayed ‘Freedom Day’ unlocking finally happens – now meant to be on July 19.
Before the pandemic, the Conservative manifesto promised to legislate for flexible working.
But the suggestion that businesses could be forced to agree to people permanently working from home sparked alarm.
Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation, said: ‘Businesses and workers across the UK have proven that long-term remote working is possible and beneficial for some of us.
‘It’s right that employees should have the right to request flexible working arrangements. However, remote working won’t be the best policy for everyone. Individual employers should think seriously about what is best for their business and consult with their employees before deciding their stance on remote or flexible working. This is a business conversation with their people, it does not need intervention from Government.’
Joe Fitzsimons, senior policy adviser at the Institute of Directors, said many business leaders were taking a hybrid stance into the future following a year of mixed experiences with remote working.
‘Ultimately different organisations have different needs, and they will be uniquely placed to work with their staff to find the best solution,’ he said.
Mike Clancy, general secretary of the Prospect union, said: ‘There is a real risk that we end up with a two-tier workforce, further divided between those who can work from home being given flexibility, and those who can’t being given none.’
Get back to work! Furious bosses condemn Whitehall blueprint to give workers the right to work from home forever and make it ILLEGAL to force them back to the office
By Jason Groves, Political Editor for the Daily Mail
Millions of office staff would be given a ‘default’ right to work from home under post-pandemic plans from ministers.
The proposals would change the law to make it impossible for employers to insist on staff attending the workplace unless they can show it is essential.
The Government will consult on the plan – part of a drive to promote flexible working – over the summer, ahead of possible legislation later this year.
The move is likely to spark a backlash amid fears it could damage productivity, harm businesses that rely on workers going into the office and prevent a return to normality in town and city centres.
A report from Tony Blair warned this week that almost six million white-collar jobs were at risk of being shipped abroad if the work-from-home revolution continued.
The plans are also likely to spark a fierce Cabinet battle. Both Chancellor Rishi Sunak and Boris Johnson have spoken about the benefits of office life as well as the danger that a permanent home-based culture could create ‘zombie towns’.
A Whitehall source said: ‘We are looking at introducing a default right to flexible working. That would cover things like reasonable requests by parents to start late so they can drop their kids at childcare.
‘But in the case of office workers in particular it would also cover working from home – that would be the default right unless the employer could show good reason why someone should not.’
Millions of office staff would be given a ‘default’ right to work from home under post-pandemic plans from ministers
Cabinet Office minister Michael Gove suggested this week that a hybrid model that included home working was likely to become the norm for many, adding: ‘We won’t go back to the status quo.’
It could effectively allow the millions of office staff who have worked from home during the pandemic to remain doing so for all or part of the week, indefinitely.
Yesterday, a leaked Cabinet Office presentation on the post-Covid ‘new normal’ revealed ministers had been told they should not encourage workers to go back to their desks even if all social distancing measures are lifted on July 19.
Ministers were told that the Government was now ‘actively looking at ways to help people continue working from home if there is no need for them to be in an office’. A formal consultation on giving workers a legal right to work from home goes a stage further however.
Ministers were also advised that face masks were likely to be needed ‘in some settings’, potentially for months or even years. And there was a warning that restrictions on foreign travel may have to remain in place for a ‘significant period’.
Any move to sanction a permanent shift to home working is likely to meet resistance from Conservative MPs.
Felicity Buchan, Tory MP for Kensington, said the continued advice to work from home was having a devastating impact on central London businesses.
Mark Harper, chairman of the Covid Recovery Group of Tory MPs, said ministers had no business interfering in relations between employers and their staff.
And fellow Conservative Sir Charles Walker claimed that for many younger people working from home was the equivalent of the new ‘dark satanic mills’.
Under existing law, employers can require staff to attend the workplace. Ultimately, a refusal to go in to work can be deemed an ‘unauthorised absence’, allowing an employer to begin disciplinary proceedings. But the Business Department is now looking to change the law to encourage flexible working.
Mr Johnson pledged to introduce the change at the 2019 election.
A Flexible Working Taskforce, established by Business Secretary Kwasi Kwarteng this year to advise on the change, is expected to recommend that people are given the right to continue working from home.
Peter Cheese, the co-chairman of the taskforce, said last month that the pandemic had demonstrated that staff could work effectively outside traditional workplaces. He cited a survey showing that 71 per cent of firms had found home working either boosted or made no difference to their productivity.
In March, Mr Sunak said that home working was no substitute for an office environment with ‘people riffing off each other’.
And a senior source last night insisted Mr Johnson continued to believe in the benefits of office working.