Infosys chairman tells Europe to immigrate or offshore!

(By Anthony Miller – Monday, 4th May 2009 12:0pm). Nandan Nilekani, the outspoken co-founder and now co-chairman of Infosys, has thrown in his two-euro’s worth into the European offshoring debate. According to today’s FT (see here), Nilekani sees immigration and offshoring as the answer to Europe’s ageing population: “either you import your workers or you export your work”. His comments follow the publication of a report from the European Commission (see here) which forecasts that the population of the present EU will be roughly the same in 2060 (around 500m), but will be significantly older. The biggest rise is expected during the period 2015-35 as the baby-boom cohorts retire.

While you can argue that Nilekani’s comments are a tad self-serving, I find it hard to disagree with the overall message, at least as regards offshoring. The major markets in Continental Europe have yet to embrace offshoring with the same vigour as the UK and US for oft-repeated reasons. There are clear signs that attitudes are changing, though, with most major IT services players noting increased offshoring interest in mainland Europe. This primarily comes from Europe-based multinationals, as you might expect, but is also affecting ‘local hero’ IT services players serving domestic enterprises which are only too aware of the lower ‘blended’ pricing that the multinationals are paying for much the same services.

Nilekani is treading on sensitive ground at a time when ‘local jobs for local workers’ has once again risen high on the political agenda. He doesn’t touch on the issue of how offshoring impacts onshore ‘grass roots’ IT skills, which are the base from which the high value-add skills are nurtured and developed. I imagine industry will set the long-term skills threats aside to seek the most expedient path to price-competitiveness. Indeed, shareholders would insist on it. Which leaves European governments in charge of looking after the long-term viability of their IT industries. Why doesn’t this thought fill me with unbridled optimism?