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Brexit migration controls will lead to more offshoring

Posted: 10/02/2016 - 04:44

One of the key arguments that really defined the Brexit referendum in the UK was migration. British voters supported an exit from the European Union largely because they wanted more control over their borders. Those arguing for Brexit say that they are not trying to end migration entirely, just they want to ensure that the people who enter the UK have the right skills. Nobody should be able to enter just because they were also born in Europe.

This is set to become one of the biggest arguments during the Brexit negotiations as the European Union considers the free movement of all EU citizens to be just as important as the free movement of capital and trade. Nobody knows what will happen yet, but it seems highly unlikely that Britain can retain tariff-free access to the EU market and also take control of migration in the way that Brexit supporters want.

The main argument for migration control is that it should create more jobs for local citizens and it would prevent the migration of EU citizens who then claim in-work benefits, however it could be that there is the opposite effect in some industries.

Take the outsourcing of IT services for example. IT companies from all over the world work with companies in the UK and there is usually a mix of local and offshore employees working on projects. However, as this Raconteur report suggests, if there are difficulties bringing offshore teams to the UK to work on projects and then return home then we may just see far more offshore resource used.

It sounds counter-intuitive, but it’s clearly a possibility. Take a look at any of the major Indian IT companies with operations in the UK. They all employ a lot of local British people as well as Europeans who currently have the right to work in the UK. However, they also transfer many people over from their head offices because there are specific skills and knowledge that these employees have that cannot be found locally.

If it suddenly becomes much harder to do this then it would be no surprise if the local team size is scaled back and the offshore teams become bigger. Offshore outsourcing may become a more common strategy just because the UK makes it so difficult for foreigners to work there.

I have written in the past that the modern world of work is one in which work can flow much more easily to skilled people - via outsourcing across borders - and skilled people are finding it easier than ever to migrate to the work. It’s a flow of work and skills that is global and has no real respect for national borders. We live in a network society. Projects can be managed in Brazil by an Indian company for a client in London - in the IT business this has become normal.

But can this global network persist after a Brexit that creates a hard border around the UK? The likely answer is that British companies will find that they cannot get all the local resource they need locally and so larger projects will be entirely offshored. It sounds to me almost like the opposite of the Brexit objectives, yet we cannot uninvent the global connectivity that facilitates this global trade in services. Brexit will mean more offshoring, not less.

About The Author

Mark Hillary's picture

Mark Hillary is a writer and analyst with an extensive track record of contributing to business media and opinion all over the world. He has written for the BBC, Financial Times, and Huffington Post with a focus on CX, technology, and the future of work. He edits the podcast and online magazine CX Files, focused entirely on best practice in customer experience. Mark has published 15 books on technology and has experience teaching MBAs in London and speaking at major conferences on five continents. He has advised the UN on technology development in Nigeria and Bangladesh and has helped several governments with the development of ICT related policies. He was an official London 2012 Olympic blogger and was the first ever blogger hired by the British government's department of education in 2010.