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CII warns offshore business suppliers may suffer in recession

The Chartered Insurance Institute is warning that offshore business suppliers look set to suffer as companies cut investment and political pressure mounts to protect domestic jobs.

The CII says the offshoring of business services faces a difficult future which could have a serious impact on the insurance industry.
A CII report on outsourcing written in partnership with The Royal Institute of International Affairs, concludes that the current recession has slowed the growth of the offshoring sector.
It says that companies are refocusing attention on core and essential support activities as funding becomes more difficult, with new projects and innovation the casualty of cut backs in spending.

Globally the TPI index – a measure of commercial contracts greater than $25m – fell by 20 per cent per cent in the first three months of 2009.

CII head of policy and research Laurence Baxter says: “Offshoring providers have been a major beneficiary of the boom in business services since the mid 1990s, but now their outlook is less assured as they suffer amidst a downturn in the global economy.”
But Vanessa Rossi, senior research fellow in International Economics at Chatham House, and one of the authors of the thinkpiece, says that once the global economy has begun to recover so will the outsourcing industry.
She says: “Within a few years we expect that offshoring may well see a reversal in fortune.

“Although the upturn could take some time to emerge as the jobs market typically lags behind recovery in production and demand by at least two or three years.”



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