Time for action on jobs

By VICKI JAYNE

You're in London and want to know when and where you can catch a train to Manchester, so you do the logical thing and ring ... Bombay.

Well, that might not be what you thought you were doing, but from April it's the likely outcome. That's because a recent contract awarded by the Association of Train Operating Companies will see a goodly proportion of inquiries to British Rail being answered in Bombay and Bangalore.

In the weird and wonderful dub-dub-dub world, this kind of global outsourcing is becoming increasingly common. You never know quite which continent the call to your local bank, booking service or tech help-desk will be answered from.

The internet makes it easy to shift information systems, customer inquiry or information technology (IT) work to wherever cost structures or time zones make the service provision cheapest, more convenient or most efficient. It's how globalisation works - just as China has become the world's factory, places such as India are becoming its back office.

But that doesn't always sit well with those who see skilled work migrating offshore.

Australia's telecommunications giant Telstra recently earned flak from Government and trade unions over an agreement that involves shifting 450 IT jobs to India. It was reported as being a key plank in the company's plan to slash its IT costs and part of a process that could involve offshoring around 1500 jobs in coming years.

The Australian Labour Party tut-tutted that a largely monopolistic Government-owned organisation that takes its profits from Australians should show a bit more social responsibility.

Even Federal Treasurer Peter Costello weighed in with comments suggesting the company had better have a very good reason why it couldn't fill its employment needs from the pool of skilled Australian workers.

The Aussies are not alone in their concerns about being caught on the downside of the new global fluidity in job markets.

In the past couple of years, the United States has shed more than one million jobs, and some members of Congress now want legislation to help stop the flood of work moving to cheaper offshore markets.

Protest is probably about as useful as King Canute's efforts to control the tides. If economic rationale were not already a strong enough driver of job migration, another - perhaps even more powerful - looms. Demographics.

The fact that populations in developed countries are ageing and birth rates declining a heck of a lot faster than those in less developed parts of the world is set to have a big impact on the globalisation of labour markets.

How big is highlighted in a World Economic Forum report developed in partnership with international human capital consultants Watson Wyatt.

For instance, it points out Japan would have to increase its immigration rate 11-fold to make up for its low fertility rates. And while working-age populations in Mexico and Germany were roughly the same in 2000, Mexico's will be double that of Germany in just 26 years.

As the number of working-age folk in the 15 EU countries decrease by some 50 million, those in India will grow by 335 million - that's close to the entire working population of the EU and United States combined.

The outcome of all this is that countries with significant projected labour shortages may be unable to produce the goods and services needed to maintain their standard of living. What they're going to have to do, the report suggests, is either import more skilled labour (immigration), export more capital (to where the skills are), or find ways of tapping surplus labour pools in developing countries through greater economic integration.

Where does all this leave New Zealand?

Several factors are already impacting on the work that can be done in this country, says Watson Wyatt's New Zealand managing director, Paul Loof.

"It's becoming harder to have a manufacturing sector here - particularly one dependent on exports, because of its vulnerability to shifts in the dollar. In core sectors such as agribusiness, where we have natural advantages, manufacturing is stronger but even those sectors are worrying about their sustainability because of the high Kiwi dollar."

Such worries are fairly worldwide, says Loof. For example, India is worried it can't compete with China for low-cost manufacturing.

In New Zealand, a lot of local manufacturing went west as tariff barriers were dropped from the 1980s on. As well, a number of corporate head office functions have migrated across the Tasman, and back-office functions gone to lower-cost economies.

Loof reckons the best thing we have going for us is brainpower.

"I would have thought the model for New Zealand going forward is one where we set out to have the best educated and most mentally skilled and agile workforce in the OECD."

How we get there, he suggests, is first to focus on growing such a workforce internally; secondly we import the skills and ensure we make good use of them.

"Having them drive taxis around Auckland seems like a poor use," he notes.

The reality is that it is still tougher than it should be for skilled migrants to get work in New Zealand that matches their qualification area or level. Barriers include lack of local experience, language difficulties, an unfamiliar or hard-to-pronounce name - and poor understanding of overseas qualifications.

What, local employers ponder, is possession of a degree from a university in Bangalore or Beijing worth in terms of educational attainment?

Probably a lot more than it used to, suggests Andrew Barney, a lecturer in management at Massey University. He says one of the "push factors" affecting global labour force shifts is the growth of middle classes in developing countries, particularly Asia.

"Education is an expensive process there, but middle classes are pushing for it and one result is the standard of tertiary institutions is rising. Some of the programmes they teach there now are of a high standard. The people graduating from them are in demand to work overseas."

What's lacking, he believes, is some kind of international accreditation agency able to rank global degree standards so employers can be assured they're getting the standard of skills they require.

As to New Zealand's ability to both attract and hang on to a skilled labour force, it's worth noting that most of the countries with lower birth rates than ours are also wealthier and therefore in a better position to compete for skills in a more fluid global market.

Meanwhile, on the jobs front we could be more vigorously signalling our credentials as an outsourcing destination. At least that's the gist of a couple of reports on global outsourcing trends.

A study from IT and communication specialist adviser IDC described New Zealand as a "potential offshore outsourcing destination with high value" but possible access issues. Our advantages include cost differentials, market maturity, ability to support multiple languages, and a stable economy.

But we need to make ourselves a whole lot more visible. According to the report, many European business folk either mistakenly bundle us with Australia, or think we're just too isolated. It suggests the IT industry and the Government will need to work together to ensure this country earns a more prominent place on the outsourcing map.

Similar sentiments emerge from a report prepared by international IT research firm Gartner for New Zealand Trade & Enterprise, which found the only perceived risk of outsourcing to New Zealand was earthquakes.

Putting the worth of the global outsourcing market for IT services at around US$15 billion ($22.8 billion) and growing rapidly, the Gartner report also suggests a co-ordinated effort is needed to earn a hunk of it.

It is not the only outsourcing opportunity. As Loof points out, we've been providing outsoucing services for movie production work pretty successfully in recent times.

"If we could create several thousand jobs simply by creating a tax break for The Lord of the Rings, why aren't we coming up with an idea like that every month or two? It comes down to backing winners and having a policy about encouraging opportunity."

Such tactics might become an increasingly necessary part of ensuring Kiwis get a healthy share of a more globally mobile job market.