Naked CIO: We need an offshoring tax

Think local for your suppliers

Offshoring is here to stay - but the government could help make sure it doesn't destroy British tech. The Naked CIO explains how.

In in last week's article I provided rhetoric as to the state of UK employment and prospects due to the ongoing offshoring trend. It was passionate and opinionated - and I stand by the views I expressed - but did not offer an alternative.

As a CIO I always hate when people argue against something without a solution from which to steer towards an alternative.

I am not willing to let go of the offshore debate just yet as I think systemically it is the most prevalent issue in the UK technology industry. I come to this debate not as a neophyte that doesn't see the potential value in offshoring but rather as someone who has managed offshore development and at times argued for offshoring over local solutions when faced one against the one.

I believe this places me in a situation where I can offer solutions that may be able to assist CIO and decision makers in their deliberations.

Because offshoring is not going away, we need to live with and work with it.

Let's start with the value proposition. Offshoring should never been seen as only a cost savings exercise - the hidden costs associated with quality control, oversight, lack of grass roots innovation, lower standards of service based on service agreements, and exit costs need to be fully considered.

If you don't consider all of these aspects, you have not properly understood the true value proposition and may be surprised when you do not see any real cost savings.

So what needs to be done?

I believe the government should set a tax on British corporations which choose to offshore labour and displace UK workers. This tax should be minimal and be driven towards technology education grants and grants encouraging companies to onshore labour or set up a new local business employing technology professionals locally.

Whether these grants are in the form of tax credits or incentives does not matter but business should be encouraged financially to employ and develop talent locally.

This is not an isolationist mentality but rather striking appropriate balance in the industry. Offshoring countries provide huge subsidies to their homegrown services companies to stimulate growth in the market, so it makes sense to provide offsetting incentives for companies to look at local talent.

Secondly, more research needs to be completed on the impact of offshoring to assess the impact on local skills, total cost and/or benefit, and the net impact on local businesses present and future. I encourage the government, BCS, other technology associations, media and educational institutes to commission and engage in research activities that will shed more light on the overall impact of the offshoring trend.

We live in an age of information deception and I think we can all benefit from more objective and specific information that addresses all the issues.

Finally, British companies should look at their suppliers and assess how much these companies invest in local communities - are they working to stimulate, educate, give back and grow local communities and businesses?

This should be a part of vendor selection and a criteria for whether you choose a supplier. If more companies give back locally then there is more opportunity to stimulate economies and drive up employment.

I want to take part in moving the offshoring issue beyond the usual pub debate and into a progressive discussion to assess how we can create work and opportunity for British technology professionals, stimulate local businesses and have mutually beneficial relationships with the immense and often effective capabilities of offshore communities.

I am speaking out so that those among us that want to improve the situation can pick up the torch and make it happen. Nothing changes unless we work towards changing it.