Is recent spate of job cuts a harbinger of tougher times ahead?

By Dawinderpal Sahota
26 Oct 2010 View Comments
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With a host of high-profile organisations announcing IT job cuts over the past few weeks, it could be argued that the landscape of the UK’s IT industry is fundamentally changing.

Lloyds TSB is set to make 4,500 staff redundant as a result of acquiring HBOS, with most of the outgoing roles being in its operations unit, which includes IT, collections and payment services. The bank is moving hundreds of jobs abroad as a result, according to union Unite.

Meanwhile, HP will shed 1,300 UK jobs as part of its restructuring efforts, and Nokia too is set to cut up to 310 jobs in the UK. Royal Bank of Scotland (RBS) is currently in the process of cutting a staggering 22,000 roles, many in IT, and has offshored hundreds of IT roles to a facility in India, which it gained through the acquisition of Dutch bank ABN Amro.

These cuts have fuelled concerns that organisations will look to move even more jobs abroad, primarily owing to the lower costs of offshoring to developing countries.

At the same time, the government’s Comprehensive Spending Review will see public sector spending curbed dramatically, with a number of IT roles expected to be cut as a result.

Dave Sobel, CEO at outsourcing provider Evolve Technologies, argues that job cuts in IT departments are an inevitable result of the changing nature of IT and that roles would have been outsourced anyway, as businesses begin to move their IT infrastructures off-premises.

The job cuts will see businesses outsource or offshore their IT infrastructures, leaving staff to concentrate on their firm’s core activity, rather than on IT, he added.

The change will alter the role of the CIO as they will have to devote more time and focus on developing and maintaining relationships with service providers and less on managing their own IT infrastructures.

“The CIO will become more of a relationship manager. Some companies will want to migrate their IT to the cloud, for example, but this creates more relationships to manage. Rather than having five or six vendor relationships to manage you’ve now got 12 to 15,” said Sobel.

Outsourcing vs offshoring

Despite the job cuts in both the private and public sectors, the outlook for the UK’s IT industry is not as gloomy as the recent announcements suggest, according to Jeff Brooks, chairman of REC Technology Group, as many of the roles will simply move from in-house to managed service providers within the UK.

“I hear from suppliers into the public sector, such as [outsourcing provider] Capita, that they see the spending cuts as an opportunity to provide more IT for local authorities and government looking to outsource,” he said.

“Therefore you can see the opportunity for UK workers to transfer across to some of those outsourcers. We can be guilty of looking at things too bleakly when there is opportunity.”

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