Large firms in Europe are losing over 130,000 jobs each year in IT, finance and other areas, as jobs are increasingly offshored to cheaper locations, meaning that by 2017, some 1.9 million European jobs will have disappeared, according to new report.
Offshoring, combined with technological advances that can replace jobs, and the euro zone’s low-growth business environment, could result in the loss of half of all “back office” jobs that existed in Europe in 2002, according to a report by consulting firm The Hackett Group. Of the roughly 4.2 million business services jobs that existed in Europe in 2002, 46 per cent, or 1.9 million, will have disappeared by 2017.
“For many people in Europe seeking jobs in corporate finance, IT, or other business services areas, our research offers a bleak picture,” said Rashpal Hullait, managing director of The Hackett Group. “The evolving offshore job market and the maturing of global business services operations has simply eliminated many of the jobs that used to exist.”
The report followed better-than-expected economic data from the euro zone in recent weeks, suggesting the area may be finalizing exiting recession. Last month, unemployment fell in the zone for the first time in more than two years, according to official European Union statistics. Plus, the region posted 0.3 percent growth in the second quarter of 2013 quarter-on-quarter, beating expectations for 0.2 percent growth.
Nonetheless, The Hackett Group forecast that 137,800 business services jobs will disappear in Europe in 2013, in the tail-end of a spike in job losses which began with the recession in 2008. Annual job losses will then shrink each year, said the Group’s report, with a loss of 59,000 jobs in 2017.
While the job losses are bad news for European citizens, the report said that the shift of labor offshore was far more cost-effective for the businesses concerned.
“Lower offshore labor cost permits development of new business services that would be impossible to deliver cost-effectively using onshore resources,” said the report authors.
Hullait added that new opportunities would continue to present themselves to Europeans. “Staff that can develop the knowledge-centric skills that companies need to support their companies’ shift to global business services, and overall globalisation goals, will find themselves in great demand,” he said.