Consultant Spotlight: Daniel Hill
Digital Futures 
The offshoring of technology jobs has become a central economic policy issue, posing significant implications for employment, innovation, and national economic stability. Recent shifts in global economic strategies, particularly the protectionist policies enacted by U.S. President Donald Trump, have sparked global debates about the merits and risks of economic nationalism versus globalisation. Trump’s approach, characterised by significant tariffs, incentivising domestic production, and promoting local employment, aimed to bolster American industries, safeguard local jobs, and revitalise economic sovereignty. While controversial, these measures underscore critical lessons for the UK, particularly the importance of assessing the sustainability of current globalisation practices.
As the UK confronts rising economic pressures and uncertainties, policymakers and corporate leaders must critically evaluate whether the nation’s ongoing reliance on offshoring IT roles continues to serve the UK’s strategic interests. The possible erosion of local talent pools, weakened organisational resilience, reduced innovation capabilities, and mounting youth unemployment suggest a pressing need to reconsider economic strategies. Following on from our previous article on this critical issue, this analysis explores the substantial economic and social costs associated with offshoring UK IT jobs, arguing for a strategic reorientation towards robust domestic employment and talent development.
Young professionals, particularly those at the outset of their careers, are especially vulnerable to the detrimental effects of offshoring IT roles. Entry-level positions, crucial for gaining initial industry experience and developing essential skills, have seen a steady decline year-on-year. According to the UK’s Tech Nation report (2024), the availability of entry-level technology roles has decreased by approximately 12% year-on-year, driven significantly by automation and offshoring. This trend has been further exacerbated by the rapid adoption of generative AI. Research by Goldman Sachs (2023) suggests generative AI could automate up to 25% of foundational software engineering tasks within the next five years, disproportionately affecting junior-level roles and significantly reducing opportunities available at entry level.
This shift has played a major role in elevating youth unemployment rates, which currently stand around 15%. Without targeted and strategic policy interventions, projections indicate this could surge to as high as 20% by 2027, intensifying existing economic and social challenges.
The reduction in accessible career entry points significantly restricts social mobility, disproportionately affecting young people from disadvantaged backgrounds. It also places heightened pressure on public support systems. The UK’s current NEET (not in education, employment, or training) rate of 13.4% already far exceeds rates in comparable European countries, such as Germany at 7.5% and the Netherlands at 5.8%, highlighting the urgency of addressing this issue through targeted regional policies and investment in alternative employment pathways.
Furthermore, declining employment rates among university graduates underline the systemic issue in higher education, specifically the widening gap between the needs of business versus the skills developed in degree programmes which increasingly fail to align with the practical and rapidly evolving needs of UK businesses. Education reform has been spoken about by successive governments but has never been actioned. We have reached a critical juncture and urgent changes need to be made to enhance graduate employability, including shortening degree durations and ensuring curricula directly align with the current and future demands of business.
The practice of offshoring IT jobs imposes hidden yet profound economic costs beyond the immediate and visible displacement of domestic employment. Currently, the UK’s largest companies allocate approximately £65 billion annually towards offshore IT services, a significant economic outflow that detracts from domestic economic potential. If even a fraction of this expenditure were redirected domestically, it could potentially create over one million high-quality jobs, each contributing roughly £15,000–£20,000 annually in taxes and National Insurance contributions. This redirection represents an additional £20 billion per year in potential government revenue—funds crucial for investment in infrastructure, healthcare, education, and essential public services, thereby enhancing the broader economic health and resilience of the nation.
Furthermore, the repercussions of offshoring extend deeply into local economies. Economic analyses indicate that each technology position moved offshore indirectly results in the loss of approximately three ancillary local jobs within sectors such as retail, hospitality, and various service industries. This cascading effect depresses local consumer spending, disrupts supply chains, and significantly weakens regional economic vitality, exacerbating socio-economic disparities.
"For every role offshored, three jobs are lost within the local economy."
Additionally, traditional economic arguments supporting offshoring have weakened significantly. The cost arbitrage advantage historically enjoyed by offshoring destinations, notably India, has diminished due to rising salaries and increased operational costs. Concurrently, the offshoring model faces critical disruption from advancements in artificial intelligence and automation technologies, compelling companies to re-evaluate the strategic rationale behind offshore engagements.
Ultimately, offshoring poses significant risks, not only to individual careers but to the structural integrity of local economies and national competitiveness. This situation necessitates immediate strategic realignment towards bolstering domestic employment as a core strategy for enduring economic resilience.
Government intervention must also work in parallel in order to support this strategy reorientation away from offshoring. Future fiscal policies, for example, must be carefully designed to prevent unintentionally incentivising business practices that undermine the labour market. The recent increase in Employers National Insurance contributions, for example, illustrates how poorly calibrated policies can reinforce negative perceptions of the UK as an expensive investment location.
Therefore, through decisive, coordinated action among government bodies, educational institutions, and industry stakeholders, the UK can construct a robust and sustainable economic future, driving inclusive prosperity for future generations.
Addressing these challenges requires immediate and innovative approaches. Initiatives focused on targeted, industry-relevant digital skills training, such as those developed by organisations like Digital Futures, offer a proven model. These programmes equip individuals quickly and efficiently with in-demand skills in emerging technology fields, including AI, data, cloud computing, and software development. The success of the programme lies in its ability to rapidly integrate individuals into critical roles, effectively reducing unemployment rates, particularly among young people, and significantly enhancing social mobility.
However, private-sector initiatives alone are insufficient without robust government support. Policymakers must adapt existing frameworks, such as empowering organisations to use the apprenticeship levy with greater flexibility. On average in 2024, employers spent only 41% of their levy (Institute of Student Employers) indicating a critical misuse of resources. Allowing organisations to utilise the apprenticeship levy without the restrictions and regulation typically required for apprenticeships will enable more targeted funding for specialist workforce upskilling and digital training programmes.
The persistent trend of offshoring presents significant structural challenges to the UK’s economic stability and social cohesion, requiring immediate and decisive action from policymakers and business leaders alike. Companies must look beyond short-term financial gains and consider the broader implications their strategic decisions have on the domestic economy and society as a whole.
When UK-based companies offshore jobs, particularly those serving primarily domestic markets, it effectively represents a vote of no-confidence in the UK’s talent pool, education system, and overall capacity to compete globally. Such decisions undermine public confidence and weaken the domestic economy. Strategic corporate decision-making should therefore prioritise sustainable, long-term growth that benefits shareholders while simultaneously reinforcing the UK’s economic foundations.
With the talent and skills that exist in the UK, there is no excuse for companies to be offshoring jobs. Through targeted investment in skills training and proactive collaboration between public authorities and private enterprises, the UK can reinforce its position as a global leader in innovation and, as business leaders, we all have a responsibility to ensure the prosperity of the labour market for generations to come.
Digital Futures 
Scott Vincent 
Deryn Cullen 
Digital Futures 
Digital Futures 
Digital Futures