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On the Attractiveness of the UK for Outsourcing Services

  • Conference paper
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Governing Sourcing Relationships. A Collection of Studies at the Country, Sector and Firm Level (Global Sourcing 2014)

Part of the book series: Lecture Notes in Business Information Processing ((LNBIP,volume 195))

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Abstract

Outsourcing has entered what the industry is positioning as a new era of value-added services, innovation and transformation. This means that a shift of emphasis is underway towards skills, sector expertise and business transformation and away from mere technical solutions. Competition between the countries that supply outsourcing services is intensifying as the market moves away from its historic focus on slashing costs and towards providing superior technical and managerial skills, strategic guidance, and operational excellence. So where does the UK stand in all of this? The UK has long been a lucrative outsourcing market in that it is both the world’s second largest consumer of outsourcing services and a major hub for global ITO and BPO vendors that want to sell services into Europe, including into the UK itself. However, the global shift away from low-cost solutions and towards higher value professional services is also enabling the UK to position itself as a global provider of outsourcing services and not just as a customer for them. In this new environment, and despite its high cost base, the UK may be well positioned to capitalise on this shift in focus, given the high level of business and managerial skills that it offers and also given its proximity, in many senses, to the massive US market. In this article, we explore the attractiveness of the UK, as an example of a Western economy, for outsourcing services.

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Notes

  1. 1.

    Oshri and Kotlarsky, Value and Innovation in Outsourcing, 2010.

  2. 2.

    See Gartner report, 2011.

  3. 3.

    Debra Farrel framework.

  4. 4.

    http://world.bymap.org/Airports.html

  5. 5.

    http://smartinnovation.forumpa.it/story/70050/uk-preparing-move-4g-and-starts-planning-5g-mobile

Author information

Authors and Affiliations

  1. Loughborough Centre for Global Sourcing and Service, Loughborough School of Business and Services, Loughborough University, Loughborough, UK

    Ilan Oshri & Mayasandra-Nagaraja Ravishankar

Authors
  1. Ilan Oshri
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  2. Mayasandra-Nagaraja Ravishankar
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Corresponding author

Correspondence to Ilan Oshri .

Editor information

Editors and Affiliations

  1. Aston Business School, Birmingham, United Kingdom

    Julia Kotlarsky

  2. Loughborough School of Business and Economics, Loughborough, United Kingdom

    Ilan Oshri

  3. London School of Economics, London, United Kingdom

    Leslie P. Willcocks

Appendix A – Comparative Analysis of Attractive European Destinations

Appendix A – Comparative Analysis of Attractive European Destinations

  

UK

France

Germany

Netherlands

Czech

Ireland

Spain

Poland

Costs

Average wage per skilled employee and managers ($) (2011)a

33,513

27,452

24,174

29,269

15,115

41,170

26,856

14,390

Average rental office space per square metre (€/sq.m/yr)b

(2013)

717

(London)

234

(Outside London)

915

533

500

339

437

439

415

Cost of telecom, internet access (US$ per month)c

(2012)

27.25

12.43

27.4

12.37

18.76

31.06

31.72

11.27

Cost of power (Kw/H) (2011)d

0.158

0.142

0.253

0.298

0.147

0.209

0.209

0.135

Corporate taxese, f

(2011)

20–24 %

33.33 %

29.8 %

25 %g

19 %

12.5 %

25–30 %

19 %

Availability of skills

Size of the labour market (2011)a

31.72 million

27.99 million

43.51 million

8.33 million

5.4 million

2.3 million

22.97 million

5.58 million

Size of the local vendor market indicator

(0.1–1.0)

0.92

0.41

0.53

0.73

0.34

0.83

0.62

0.28

Quality of delivery skills indicator

(0.1–1.0)

0.9

0.65

0.65

0.66

0.71

0.9

0.68

0.74

Quality of sourcing management skills indicator

(0.1–1.0)

0.93

0.65

0.74

0.91

0.55

0.83

0.87

0.5

Environment

Level of corruption (2013)h

74

71

79

84

49

69

65

58

Quality of life (index) (2013)i

148.12

151.36

204.84

160.54

122.18

149.64

141.05

90.47

Serious crime per capita (per 1 million people) (2006)j

<0.7

8.0

2.5

8.7

<0.8

5.5

0.8

9.8

Accessibility to the country indicator

(1–100)

90

85

80

70

60

65

75

55

Quality of infrastructure

Average downtime per year

Recovery time per year (2011)k

25 h

13 h

24 h

16 h

14 h

9 h

12 h

13 h

16 h

15 h

19 h

21 h

11 h

8 h

31 h

20 h

Availability & quality of real estatel (2012)

93.7

89.0

84.7

86.4

54

65.9

79.9

65.9

Quality of overall infrastructure (2012)m

5.6

6.4

6.2

6.2

5.5

5.2

5.8

4.0

Quality of electrical supply (2012)m

6.7

6.7

6.7

6.7

6.4

6.4

6.0

5.3

Scale and quality of roadsm

Rail (2012)

5.5

4.9

6.6

6.4

6.2

5.7

5.6

5.7

3.6

4.5

4.8

4.0

5.9

5.6

2.3

2.5

Risk Profile

Risk to personal security (fraud, crime and terrorism)

80.222

80.9

84.98

86.67

74.77

62.33

66.71

70.99

Risk of labour strikes indicator

(0.1–1.0)

Moderate-low

High

Moderate-high

High

Moderate-low

Moderate-low

High

Moderate-low

Political unrest (Political Instability Index)n

(2010)

4.6

5.3

3.8

4.0

3.7

4.6

5.5

4.5

Natural disasterso

(Economic Damage per year US$ X 1,000): (2009)o

Disaster reported

(2009)o

960,215

Flood, Storm

1,256,829

Storm

1,171,036

Flood

145,829

Flood

161,470

Flood

11,389

Flood, Epidemic

846,784

Drought, Flood, Wildfire

266,650

Flood

Cost inflation (2012)c

2.8

2.3

2.2

2.4

3.3

1.3

2.5

3.6

Intellectual property risks

(2013)p

Not listed

Not listed

Not listed

Not listed

Not listed

Not listed

On a watch list

Not listed

Market potential

Attractiveness of local market (GDP growth rate & GDP$) (2012)a

0.2

35,657

0.1

35,246

0.9

39,491

−0.5

42,772

−1.0

26,208

0.7

41,682

−1.5

32,045

2.4

21,261

Access to nearby markets

Indicator (0.1–1.0)

0.95

0.74

0.72

0.84

0.52

0.86

0.68

0.45

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  2. bCushman and Wakefield, “Office Space Around the World”, A Cushman & Wakefield Research Publication, pp. 1–35, 2013
  3. cWorld Economic Forum, “The Global Competitive Report”, 2012. [Online]. Available: http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf
  4. dEuroStats, “Energy Price Statistics”, European Commission, August 2012. [Online]. Available: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Energy_price_statistics#Further_Eurostat_information. [Accessed 13 May 2013]
  5. eHMRC, “Corporation Tax rates”, HM Revenue & Customs, April 2012. [Online]. Available: http://www.hmrc.gov.uk/rates/corp.htm. [Accessed 13 May 2013]
  6. fVAT. Live, “2013 European Union VAT Rates”, 11 May 2013. [Online]. Available: http://www.vatlive.com/vat-rates/european-vat-rates/eu-vat-rates/. [Accessed 13 May 2013]
  7. gKPMG, “Services”, KPMG. [Online]. Available: http://www.kpmg.com/DK/da/in-english/setting-up-business-in-denmark/Sider/services.aspx. [Accessed 13 May 2013]
  8. hTransparency, “Corruption Perceptions Index 2012”, Transparency International, 2012. [Online]. Available: http://www.transparency.org/cpi2012/results. [Accessed 13 May 2013]
  9. iNumebo. [Online]. Available: http://www.numbeo.com/quality-of-life/rankings_by_country.jsp
  10. jN. Master. [Online]. Available: http://www.nationmaster.com/graph/cri_mur_percap-crime-murders-per-capita
  11. kCATechnologies, “The impact of IT downtime on employee productivity”, CATechnologies, 2011
  12. lK. Lieser and A. P. Groh, “The attractiveness of 66 Countries for institutional real estate investments”, IESE Business School, 2010
  13. mWorld Economic Forum, “Quality of overall infrastructure, The Global Competitive Report”, 2012. [Online]. http://www3.weforum.org/docs/CSI/2012-13/GCR_Pillar2_2012-13.pdf
  14. nThe Economist, “Views Wire”, The Economist Intelligence Unit, 2010. [Online]. Available: http://viewswire.eiu.com/site_info.asp?info_name=social_unrest_table&page=noads. [Accessed 13 May 2013].
  15. oPrevention Web. “United Nations Office for Disaster Risk Reduction” [Online]. Available: http://www.preventionweb.net/english/.
  16. pUSTR, “2011 Special 301 Report”, Executive Office Of The President of The United States, 2011.

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Oshri, I., Ravishankar, MN. (2014). On the Attractiveness of the UK for Outsourcing Services. In: Kotlarsky, J., Oshri, I., Willcocks, L. (eds) Governing Sourcing Relationships. A Collection of Studies at the Country, Sector and Firm Level. Global Sourcing 2014. Lecture Notes in Business Information Processing, vol 195. Springer, Cham. https://doi.org/10.1007/978-3-319-11367-8_10

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