Union wades into offshoring row

The investigation, which will address e-commerce, call centres, Internet services, IT, and software development, in addition to other, non-IT related, back-office functions, is likely to run in parallel with a study commissioned by the DTI into offshoring.

Amicus said the unions "do not want a protectionist solution" but "believe that the DTI has needs to do more to address the offshoring phenomenon, which has resulted in 15,000 UK jobs being offshored since October 2003".

The aim of the investigation, said Amicus, is to analyse how decision makers arrive at the business case that is driving companies to either offshore or to make a commercial decision to stay within the UK. "It would also seek evidence as to where cost savings are made, and how and where those savings are channelled into training, re-skilling, high-tech job creation and building foreign economies."

An investigation would also widen the public debate on offshoring and show that the issue is not solely about call centres, said Amicus.

The investigation is part of a campaign by Amicus, along with other service-sector unions, including CWU, UNIFI and Connect, to highlight what they say are the dangers associated with outsourcing work from the UK to the developing world. The cost savings, say the unions, are so big "that it will be impossible for UK companies, particularly in insurance, banking and IT, to refuse".

Deloitte Consultancy has predicted that 2 million jobs currently based in western economies will migrate to India by 2008, and Amicus is predicting that we can expect 200,000 call-centre and back-office processing jobs to leave British soil by the end of the decade.

In a paper published on 5 December last year, the DTI highlighted the main issues connected to offshoring, and has since commissioned research on the relative competitiveness of the UK's call-centre industry that, it says, will help identify "any appropriate actions which need to be taken by industry or Government in response to the increasingly global market for call centre services". In response to a parliamentary question last week, secretary of state for trade and industry Patricia Hewitt said she plans to publish the findings of the report in April.

The opposition says there are some obvious fixes that should be addressed now. Speaking on the BBC's Today programme this morning, Shadow chancellor Oliver Letwin said that VAT rules need changing. "What the government is doing is to allow the VAT rules to continue as present, which means that if banks outsource to people inside Britain they pay VAT which they can't reclaim," said Letwin. "Whereas if they outsource outside, they don't pay VAT."

"Obviously you can't make Indians pay VAT," said Letwin, who argued for a change in the rules to "achieve some kind of tax competitiveness so we have some sort of equilibrium."

"I’m not saying outsourcing is bad," said Letwin. "I agree that firms should be able to make decisions themselves... But then we shouldn't add bias that means that they are likely to go abroad."

Amicus has recently said that it will take strike action against "any organisations that cut UK jobs". Joint general secretary Roger Lyons said the union would ballot members on any plans that involved companies moving business operations elsewhere and cutting jobs in the UK. "What we have said is there shall be no involuntary redundancies affecting our members," Lyons said.

Lyons was speaking in London at The Focus Group's forum on offshore outsourcing and the global economy. He warned that companies trying to save costs by taking advantage of the cheap labour force in India and China were really only getting a quick-fix solution, and that factors such as high staff turnover rates would eventually force companies to return to the UK.

Although he said that Amicus recognised the need for the international division of labour, Lyons said the union wanted to see greater long-term investment made in India and China, rather than firms reaping short-term cost savings.