Internationalism Does Not Mean Abandoning the Defence of Rights

Workers' Daily Internet Edition: Article Index :

Outsourcing and the Loss of Jobs:
Internationalism Does Not Mean Abandoning the Defence of Rights

Bank Sacks Workers and Moves Jobs Abroad

EU Outsourcing Contracts

At a reception hosted by the Labour Friends of India at the Labour Party Conference in Bournemouth, Deputy Prime Minister John Prescott suggested that trade unions are unfairly criticising outsourcing deals made by British companies. According to a report in the EconomicTimes of India, John Prescott said, "The trade unions here must show a sense of fairness towards India vis à vis winning outsourcing deals from some of Britain’s biggest firms." He added, "The furore is unfair and India must be given a chance to develop its skills and markets."

Under the guise of urging British workers to be internationalist, John Prescott is advocating that the interests of the monopolies should be the workers’ concern and that they should abandon the fight for their own rights and interests. Making businesses competitive in the global market is the name of the game, and workers are justly opposing this criterion and fighting in defence of their rights. For John Prescott to suggest that trade unions show a "sense of fairness towards India" is just a cruel deception.

In this context, a spokesman for trade union amicus said: "We're not blaming India. We're blaming companies already making a profit in the UK who are moving to India at the expense of skills in the UK. People think it's just about call centres, but all back office processing, underwriting, legal advice, IT support – the jobs that are the bread and butter of many of the UK population – are being put at risk. It's not just about spreading concerns, it's also about looking at the long term and finding solutions."

Amicus is not the only union to voice concerns about the impact of outsourcing. Finance sector union Unifi has threatened to hold strikes at British banks that fire staff to move jobs to India. And more than 1,000 jobs could go if Britain's national rail telephone inquiries service were moved to India. Amicus officials believe the move could threaten more than 1,000 jobs at call centres in Newcastle, Cardiff, Derby and Plymouth.

A statement from the Association of Train Operating Companies said: "National Rail Enquiries contracts with various suppliers for answering calls. As we announced some time ago, towards the end of this year our call answering contracts come up for competitive re-tendering, which is required to be carried out under EC procurement rules. These rules require that we select suppliers on the basis of the most economically advantageous tender.

Amicus also called for an immediate meeting with management after Abbey National announced a pilot programme to outsource back office jobs to Bangalore in India. The company has begun negotiations with US based MsourcE who offer transaction processing, accounting and pay roll services based in Bangalore and Pune. Abbey National has recently re-branded itself as Abbey and closed down its subsidiary brands.

Analysts, Deloitte Research, have predicted that two million jobs will be outsourced from western economies to India by 2008 because of labour cost savings of up to 40%.

Roger Lyons, Amicus Joint General Secretary, said: "Outsourcing is a fact of global life but it must not be done at the expense of any one national economy over another. The same thing that happened to manufacturing could happen in the service sector unless the Government, employers and unions take immediate action to properly manage technological change".

Royal Mail is one company where outsourcing is an issue affecting jobs, conditions and pensions. The company is apparently able to stoop to the most underhand tactics in the interests of privatisation and capitalist competition. Health and education are other social programmes which, under the guise of cutting costs, are resorting to outsourcing of support and other services, creating redundancies and "rationalisations". Public services are being handed over to private capital in the interests of maximising profit.

Worldwide, this is not benefiting working people, but the opposite. Through privatisation of public services and outsourcing, women, for example, are being forced into poor quality jobs, which contributes to a global situation where women earn between 30-60 per cent less than men.

Workers in Britain, in fighting for their rights, are not fighting for "British jobs" and saying to hell with the rest of the world. In first of all fighting for their rights, they are making common cause with workers everywhere in struggle against globalisation and are taking a stand against the argument which presents globalisation with a human face, as though outsourcing were a matter of benevolence of the monopoly capitalists.

The move towards outsourcing is a move towards attacking wages, working conditions and unionisation. It is being undertaken as competing in the global market becomes ever more vicious, and workers are being invited to cut their own throats. And this is being carried out under the banner of a "sense of fairness"!

Finance capital in the shape of HSBC has decided to axe 4,000 jobs by 2006, prompting workers to consider strike action.

The bank has plans to boost profits by transferring its office operations and customer telephone services to China, Malaysia and India by January. The four main HSBC locations affected are its Birmingham base, Swansea and Brentwood in Essex. Up to 1,400 jobs went earlier this year.

Rob O'Neil, official for finance sector union UNIFI, said of the 300 jobs threatened at the two HSBC centres in Birmingham: "These closures will have a devastating effect on local staff and the economy of Birmingham. The gloves are off."

He said the company was the city's second biggest private employer after MG Rover, adding: "We will campaign with local companies affected by the redundancies, as well as consumer interest groups and HSBC customers."

Dai Davies of Unifi, said, "We are very, very angry that they've decided that there are going to be compulsory redundancies."

HSBC director and chief executive Bill Dalton said the job cuts were "essential" for the banks continued success. "As one of the world's largest financial services companies, HSBC has a responsibility to all its stakeholders to remain efficient and competitive."

He is quoted as saying: "The creation of new jobs in developing countries such as China, India and Malaysia is a very positive contribution to their economies."

Union organiser Paul Bridge said: "We are consulting with members affected with a questionnaire and not shying away from industrial action if that is what the members want, this is massive escalation of the migration of UK jobs and as far as the bank is concerned, members who give value for money and excellent customer service count for nothing."

By the end of 2006 the bank expects about 87% (48,000) to be based in the UK and about 13% (7,000) to be in service centres in Asia.

The number of European outsourcing contracts worth over €200m (£140m) signed so far this year has leapt 83 per cent on 2002, as deals in the EU overtake those in the rest of the world it is reported.

To date this year, 22 mega deals have been signed in Europe, compared with 12 contracts in 2002. Globally, 54 major deals have so far been signed, worth a total of €37.2bn, compared with 51 deals, worth €33.8bn, by this time in 2002.

Mega deals signed at the back end of last year, all with IBM, included JP Morgan (€5bn), Deutsche Bank (€2.6bn), and retailer Boots (€1.1bn).

According to research by Technology Partners International (TPI), which advises on outsourcing deals, European contracts signed so far in 2003 represent almost 41 per cent of all contracts in the €200m-plus band.

Big outsourcing deals are becoming more common in Europe than ever before and are now outstripping the rest of the world, added TPI.

Despite the increasing popularity of business process outsourcing (BPO) projects and offshore contracts, the number of contracts worth at least €50m in Europe showed a much less dramatic five per cent increase, although average total contract values surged 39 per cent to €442m.

Duncan Aitchison, managing director of TPI's international business, told vnunet.com: "Larger contracts are more prevalent in Europe than ever before.

"My instinct tells me that it is due to a maturing of the outsourcing market, and larger organisations are taking bolder steps.

"We are also seeing increasing use of sourcing relationships not just for cost reduction but to drive change in the way things are done."