Europe and outsourcing

How is Europe dealing with outsourcing? This article provides an interesting clue:

IBM Corp. cornered an outsourcing contract with Dutch life assurance and pensions business Delta Lloyd Group on Monday. The seven-year deal is worth – 200 million (US$255 million), according to IBM…. European companies are increasingly turning IT operations over to large U.S. corporations such as IBM and its competitors Hewlett-Packard Co. (HP) and Electronic Data Systems Corp. “It is an interesting time in the outsourcing industry, where you have massive companies, like IBM, that dwarf their customers,” said Kirk Smith, of U.K. IT services provider LogicaCMG PLC. European companies are feeling the pull of U.S. and U.K. business models that require businesses to control the level of costs, playing into the strengths of outsourcing deals, according to Smith. “Companies in Europe realize they have to exist in a global economy, and in doing so are turning to outsourcing,” he said. “The large companies like IBM and HP are appealing because they are well-known brands with a global reach.” Across Europe, businesses are outsourcing departments from IT to human resources as well as finance and accounting. “It’s now really getting to the heart of business,” Smith said. Last month, Nokia Corp., the world’s largest mobile phone maker, announced it had granted IBM a five-year global IT outsourcing deal valued at – 200 million. IBM will handle Nokia’s IT Helpdesk operations as well as manage and develop the Espoo, Finland, company’s desktop IT environment.

[Sure, that’s what European firms are doing. But the European Union is cheesed off, right?–ed. Not according to this report:

A European Union delegation said Monday outsourcing was beneficial for the world economy and added it understood India’s concerns about objections in western nations to shifting jobs overseas. “It’s something that is good for you (India) and good for our service industries,” EU’s External Relations Commissioner Christopher Patten told reporters in New Delhi. “We have no problems with outsourcing. We are very understanding of India’s concerns on the issue.”… Patten said the EU believed western outsourcing of jobs to countries like India, Mexico and China, where labour costs are lower and goods can be produced more cheaply, was an “an aspect of a more liberal world economy.”

UPDATE: This trend of European outsourcing to the United States is consistent with this editorial by Michael Walden from two weeks ago. The highlights:

While outsourcing has captured current attention, it is not a new phenomenon. If the term is defined as jobs operated by U.S. companies in foreign countries, the current total is 10 million positions, or 7 percent of domestic U.S. employment. Further, there’s been an upward trend in the number of outsourced jobs since the mid-1990s, when trade barriers were significantly reduced following the signing of the NAFTA and GATT agreements. What is less well publicized and understood is that “insourcing” also occurs in our economy. Insourcing happens when foreign companies establish jobs in the United States. The latest statistics show insourcing accounts for over 6.5 million jobs nationwide. Although this is less than the number of outsourced jobs, the gap has actually narrowed in the past quarter century. That is, there’s been a recent trend of foreign companies adding jobs in the U.S. faster than U.S companies have increased jobs in foreign countries…. The scorecard on job outsourcing versus job insourcing has actually moved in the favor of the U.S. in recent decades, and policy-makers must consider both when evaluating the worldwide movement of jobs.