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HP urges European debate over outsourcing

Graeme Wearden ZDNet.co.uk

Published: 23 Jan 2004 10:30 GMT

European states must respond to the boom in offshore outsourcing by reinforcing their strengths as knowledge-based economies rather than attempting to protect their workforces through sanctions.

That's the view of Kasper Rorsted, Hewlett-Packard's managing director for Europe, Middle East and Africa, who believes it inevitable that many existing jobs in Europe's IT sector will move overseas to lower-cost countries.

Rorsted wants Europeans to accept this economic reality, as he sees it, and to engage in discussions about how to best respond to it. "We need a debate on how we manage this movement of jobs, and how we in Europe create the educational system we need to become a successful, predominantly knowledge-based economy," said Rorsted, speaking at Cisco Connection 2004 this week.

Rorsted added that many IT-based jobs are moving from Western Europe to countries such as Bulgaria, Russia and Romania -- where he says standards of mathematics are particularly high -- as well as to Asia.

Offshore outsourcing has grown dramatically in popularity over the last 12 months, with many large companies setting up software-development, support-centre or back-office operations in countries such as India. This trend has worried some politicians and union leaders, and sparked demands that some work -- such as that related to public service contracts -- should be kept within the home country.

Rorsted, though, warns that such measures would be counterproductive.

"Any country who takes a protectionist approach to its workforce always loses," said Rorsted, adding that most European countries can never compete on raw cost.

But even though big firms such as Oracle, IBM and Microsoft are all increasing the number of people they employ in the Asia, fears that Europe is pricing itself out of the IT sector are probably misplaced.

"We have 30 years of experience optimising IT into business process," said Rorsted. This view was backed up by Rob Lloyd -- Cisco's president of Europe, Middle East and Africa -- who is confident that Europe has enough unique skills to survive.

"The experience that Europe's banking systems have of working with IT isn't easily replicated, for example. Nor are the individual skill bases of countries such as Germany and Holland," Lloyd said.