August 27, 2013 1:57 pm

Offshoring goes into reverse gear

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It used to be that offshoring was a one-way road, with jobs in the west sacrificed to cheaper workers in the east such as India and China. However, the flow has started to reverse, creating jobs for UK professionals servicing successful emerging economy companies looking to up their game.

PeoplePerHour, an online marketplace that connects small businesses with freelancers, has seen a trebling over the past year in the number of users selling their skills to businesses based in countries that have historically been outsourcing hubs. The number of PeoplePerHour users selling to India alone has increased 239 per cent to 1,119.

“This burgeoning freelance marketplace, which enables UK professionals with specialist skills to export their talents, could radically change the way businesses operate in the future,” Xenios Thrasyvoulou, PeoplePerHour’s founder and chief executive, says.

Skills like writing good English copy, organisational tasks, helping with basic maths or data management and some more specialised skills like design and technical development, are all in demand, he adds.

This reverse offshoring is not about price competitivity. The average British freelancer on PeoplePerHour earns $35 per hour. The equivalent for the Philippines and India is nearer $9 per hour, Mr Thrasyvoulou notes.

The amount companies in emerging economies are willing to pay western professionals has even increased. For instance, web developers selling to these markets through PeoplePerHour on average get $37 an hour compared with $27 a year ago.

“We can’t compete with the east on labour costs,” Mr Thrasyvoulou says. “Where we do have a competitive advantage are the specialist skills that our workforce has to offer.”

Patrick Eve’s company, Translate Media, earns about 10 per cent of its revenue from emerging market companies, a doubling in 18 months. This reverse offshoring is generated by the original wave of offshoring, Mr Eve notes.

“Indian offshorers are now coming back to us because they have promised their clients in the US and Europe multilanguage marketing and they cannot find the quality of resource to supply Danish and Swedish translations locally.”

Indian suppliers not only pay promptly but they prefer employing a British worker for higher value services, according to Mr Eve. “They would rather have western graduates, based in the UK, not just because of the service we offer but because it is then easier for us to service their customers in the US and Europe.”

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The reason small businesses in places like India are willing to pay higher rates for British workers is that they value a higher quality of service in assembling the building blocks of their companies, Mr Thrasyvoulou says.

Martina Mercer has been selling her copywriting services for two years and gets about a fifth of her work from overseas. Her work, which she produces from the Victorian Manor House where she lives, just outside York, includes brochures for shopping malls in Dubai and a blog for a Honduran coffee company.

Overseas clients tend to pay more promptly and are more complimentary about the writing style, Ms Mercer says. “A lot of them have translated some copy but want it to be rewritten in a more snappy way. They also tend to like the English sense of humour.”

This flow of services from the UK to emerging economies is the logical consequence of the offshoring trend, according to Martyn Hart, chairman of the National Outsourcing Association, the industry’s UK lobbying group. “The real problem is that people cannot decide what they think about offshoring,” he says. “You have to be careful how you manage it, but globally it is good for everybody.”

However, some doubt that the hunger for reverse offshoring can last. Adam Hughes set up PA Consulting’s Indian office 12 years ago. He says Indian companies face pressure to bring high-value work closer to home because western companies have much higher labour costs.

“If they think they can get even 60 per cent of the skillset locally, they will do that,” he says. “We are also seeing a lot of Indian nationals, who have spent 10 years in the US and the UK, moving back. They have earned their dollars or pounds and can have a good lifestyle in India while taking that skillset back.”

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