UK offshoring may reverse as wage gap falls

WITH the gulf in wages between the world’s advanced and developing economies getting smaller, a new report suggests that UK companies could re-shore some operations which were moved offshore.

Research released today by PwC suggests that within two decades, wages in emerging economies will make up a huge amount of ground, while those in developed countries will only grow slowly.

Following the trend in the US, PwC suggests that UK firms could return operations closer to home as wages begin to converge. While wages in the UK are expected to increase by 35.9 per cent between 2011 and 2030, PwC projections suggest that wages in India and China will nearly quadruple.

Chief economist John Hawksworth commented: “The direction of change is clear. The large wage advantages enjoyed today by many emerging economies will shrink as their productivity catches up with those in advanced economies.”

The report adds that middle-income countries, like Poland and Turkey may see their own offshoring, as firms move to low-income countries like Vietnam and the Philippines.