News that another Sussex-based company plans to move part of its operations to India has once again highlighted the effects of outsourcing workers. Business Editor SAM THOMSON examines the controversial practice which sees jobs shifted to countries where workers are paid less than in Britain.

Back when IT workers in America's Silicon Valley started to notice their jobs being shifted to low-paid workers in the developing world, they said they'd been Bangalored.

The word derived from the city of Bangalore in India, where some of the first business process outsourcing (BPO) companies were set up.

Outsourcing - sometimes known as offshoring - is a worldwide phenomenon which usually involves Western companies substituting domestic labour for cheaper, foreign labour.

It affects different countries in different ways. For example, German companies tend to outsource to Poland and Romania, where proficiency in German is common while French firms outsource to North Africa for similar reasons.

Many American and British companies outsource to India, with hundreds of thousands of workers being "Bangalored"

over the last few decades.

In the 1980s, airlines including British Airways began using Delhi as a base for back office operations.

Other companies such as American Express quickly followed suit and, according to 1996 figures, the Indian BPO industry employed more than 245,000 people.

The latest Sussex workforce to face being "Bangalored"

is staff at share registration company Equiniti, which employs 2,000 people in Lancing.

It is not the first firm to move operations to India and is very unlikely to be the last.

In September 2006, Kleenex and Andrex manufacturer Kimberly-Clark axed more than a quarter of its 400-strong workforce based at Trafalgar Place in Brighton.

The company transferred its accounts and finance functions in order to cut costs.

In total, probably more than 2,000 people in Sussex have lost their jobs because of outsourcing in recent years.

Also in 2006, Norwich Union announced plans to shed 100 positions at its Worthing office and send much of its business to India.

In the same year, it emerged 300 staff at banking giant Barclays in Hastings faced redundancy.

Other Sussex employers which dabbled with outsourcing included Brighton and Sussex University Hospitals NHS Trust, which proposed sending patient notes and letters to South Africa or India to be typed up in a bid to save £1 million a year. The Surrey and Sussex NHS Trust was criticised for making a similar decision. Eleven finance workers were made redundant when their work was sent to South Africa.

Predictably, every attempt to outsource work is met with an outcry from unions and local politicians.

But proponents of the outsourcing industry say the threat of globalisation is often exaggerated. They also claim the workforce can benefit from outsourcing as the people in Western countries who lose their low-skilled jobs move on to higher paid jobs in a sector where the Western country still has a comparative advantage over the developing world.

The current state of Britain's call centre industry could be said to bear this out.

With most of us at some point phoning a company in Britain only to be put through to someone in India, the outsourcing of call centres has become one of the most familiar facets of the issue.

Companies including Virgin Media, the Prudential, British Airways and Lloyds TSB have call centre operations in India.

But a report last month by industry experts ContactBabel said work being switched to India is having little effect on call centres based here.

The industry grew by six per cent last year and will provide more than a million jobs by the end of this year, according to the report.

The research also showed more than three per cent of Britain's working population worked in call centres.

Moreover, businesses have also found the service provided by Indian and other developing world workers can be unreliable compared to domestic staff.

Last year Norwich Union closed a call centre in India amid concerns over standards while in April 2005, more than $350,000 (£184,000) was stolen from four Citibank customers.

The thefts occurred when call centre workers acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names.

The technology that has made the rapid expansion in outsourcing possible can also go wrong.

In February this year, thousands of British bank customers faced delays after Indian call centres were hit by a catastrophic failure of the area's internet system.

Two vital undersea fibreoptic cables off the coast of Egypt were accidentally severed by ships' anchors.

India reported that half of its broadband bandwidth was disrupted, which revealed how vulnerable the global communications system can be.

Despite these risks, it is clear companies will continue to outsource work to take advantage of cheaper labour.

Outsourcing was a big talking point during the 2004 US Presidential election, with Democratic candidate John Kerry branding such firms as "Benedict Arnold corporations" after the man who fought for American independence from the British Empire before switching sides while commanding a fort at West Point, New York.

If firms continue to follow the lead of Equiniti, it will not be long before politicians will rush to condemn them in a similar fashion.

Look out for the backlash against "Lord Haw Haw companies".

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