A significant number of companies based in the European Union have moved their jobs abroad. Meanwhile, India is the most preferred destination outside the bloc.
Outsourcing is a way for tens of thousands of entrepreneurs to save money and sometimes stay afloat. But the practice leads to the loss of tens of thousands of jobs within a country. And it also leads to the reduction of positions in the staff, which in most cases are not replaced.
Between 2021 and 2023, EU countries will lose about 150,000 jobs to the practice. This is about three times as many as were created with its own help, Euronews notes, citing a recent Eurostat report.
In Poland and Hungary, outsourcing has eliminated ten times more jobs than it has created. This was shown by Europe in Motion’s analysis of Eurostat data. In Finland, the situation is even worse – the number of jobs lost is 15 times higher than the number of jobs created. In absolute numbers, however, Germany had the largest job loss – 50,000. By comparison, France lost 5,000. Italy lost just over 1,000.
There are only three exceptions in the EU where the shift to outsourcing has led to an expansion of the labor market. The leader is Ireland with a positive balance of almost 5,000 jobs. It is followed by the Czech Republic with just over 800, and Spain with almost 300.
“Smaller countries with open economies and high labor costs have the highest share of foreign suppliers,” Eurostat notes. Slovakia tops the list with 11%, followed by Ireland with 10% and Denmark with 9%.
The manufacturing sector has been hardest hit, with more than 53,000 jobs eliminated in two years alone, followed by administration and management with almost 34,000.
But proportionally, it is the IT sector that has lost more than 15,000 jobs or about 0.5% of total employment, followed by research and development at 0.4%.
In general, the main purpose of outsourcing is considered to be saving on labor costs (34%), followed by reducing other costs (28%) or focusing on key business areas (20%).
According to Eurostat, the top destination for outsourcing outside the EU is India, followed by the UK, Canada and the US combined, as well as China.
