To capture more of the potential benefit from offshoring, France must focus on creating the jobs of tomorrow and increasing the flexibility of its labor market.
Compared to the United States, United Kingdom, and Germany, offshoring of services is still a nascent phenomenon in France. Nevertheless, the trend is creating waves of anxiety among white-collar workers who fear losing their jobs to lower-priced labor abroad and sparking protectionist sentiment.
MGI research has shown that offshoring has the potential to create wealth not only for offshore locations, but also for the countries that send the jobs. In the United States, MGI found that every dollar of corporate spending on back-office and IT services offshored to India generates more than $1.14 of new wealth for the US economy.
But in Germany, every euro of spending on such jobs moved offshore returns on average less than €0.80 of value. France falls between the two. For every €1.00 of spending on corporate service jobs that is moved offshore, France earns back €0.86.
To capture more of the potential benefit from offshoring, France must focus on creating the jobs of tomorrow and increasing the flexibility of the labor market to help workers make the transition.