Yeah I don't get UK. And I work for a company that is setting up remote offices in India, while having facilities in S. America and several places in Europe. Nothing against the UK, it's just that, software programming, I would have thought India first.
All comes down to cost, although I think some are learning that cost and quality are sometimes at odds with one another. Not always. There's also the time zone problem. The other day I was having a quick chat with someone in India, when I wished them a good... morning? afternoon? they told me it was 1245am. I get it, some are night owls but I'm starting to think that being a part of a global company means there is an expectation that you are willing to work global hours (aka 'round the clock).
That is behind a firewall. Got a synopsis?
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LONDON—When Margot Robbie hosted a pool party at the Barbie Dreamhouse in
last year’s hit film, she was thousands of miles away from sunny Malibu, on a soundstage in a commuter town about an hour outside of London.
“Barbie” was mostly filmed at Warner Bros.’ U.K. studios, the flashiest example yet of Britain’s rising role in global film production. “I want Hertfordshire to be the next Hollywood,” U.K. Treasury chief Jeremy Hunt told a newspaper here last year.
It isn’t just films. American businesses are sending all types of work across the Atlantic, drawn by depressed U.K. salaries, tax incentives and a weak currency. This isn’t the traditional outsourcing model of the 2000s, which saw the mass relocation of American manufacturing jobs to China, or call centers to India and other parts of the developing world.
Instead, the U.K.’s cost advantage has collided with the
rise in remote work to allow high-skilled jobs—software developers, consultants, lawyers, film producers—to be done by people in Britain.
“In the old models of outsourcing you’d give the outsourcing company the boring work. But there’s the new breed of outsourcing that is cheaper but also often creative,” said Matt Buckland, who spent two decades as a tech recruiter in the U.K. for companies including
. “You might still give your team in Hyderabad basic Python code. In the U.K. you might give them AI.”
Surging wages and
staff shortages in the U.S. are further incentives to look across the pond.
The average salary for a back end software developer in the U.S. is near $130,000, though closer to $175,000 in cities such as San Francisco and New York, according to data from global recruitment agency Robert Half. In the U.K., a developer’s average salary is about $66,000.
The cost of living explains only part of the gap. Software developers in Cleveland—one of the poorest major U.S. cities—can outearn peers in London by about $40,000, according to Robert Half’s data. Roles in finance, accounting and marketing have similar trans-Atlantic pay gulfs.
“The strength of the [U.S. economy] over the last 15 years has pushed wages up and made it more attractive to offshore,” said Nick Bloom, a Stanford University economics professor who studies outsourcing. “If you’re based in New York or San Francisco it’s now going to be cheaper to offshore to northern England than to Mississippi or Alabama.”
JPMorgan Chase says it is the largest tech employer in Scotland and recently built a new hub in Glasgow to house thousands of employees working on technologies including machine learning. Asset-management giant
BlackRock is in the process of expanding its office space in the Scottish capital of Edinburgh, which houses tech-support teams and an artificial-intelligence lab.
Danny Lopez, chief executive of cybersecurity software firm Glasswall, said nearly all of his software engineers are based in the U.K. even though 90% of the company’s revenue comes from the U.S. Having a cheaper U.K. cost base makes his business more competitive in the U.S. market, he said.
“It is exponentially more expensive to hire in the U.S.,” said Lopez. “It really wouldn’t be realistic to move 50 engineers to the U.S. For a company of our size, it would have a huge financial impact.”
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“This U.S. is such an exciting economy for us because it’s the largest consulting market in the world,” said Adrian Bettridge, a managing partner at Baringa. “We can develop so much expertise in the U.K. on things like payments, climate change, risk modeling and go and share it with a market that’s 20 to 30 times bigger than ours.”
The pound’s sharp drop in value has played a crucial role by making it cheaper to hire U.K. companies, according to Deutsche Bank strategist Shreyas Gopal. Sterling has lost 15% of its value against the dollar since the 2016 Brexit referendum.
To be sure, U.K. wages have also climbed amid the inflation surge and
chronic labor shortages, but off a lower base.
Edward East runs an influencer marketing firm, Billion Dollar Boy, with 150-plus staff between offices in London, New York and New Orleans, and a client list that includes
Amazon.com, Meta Platforms and
L’Oreal. The company’s U.S. billings surged 88% in its last financial year and now make up nearly half of its global revenue. Its U.S. contracts are on average six times larger than those in the U.K., he said. Despite the booming American business, he continues to focus on hiring in the U.K., where labor costs are cheaper by about half compared with New York. “It definitely helps us offer a more cost-effective solution to clients than our U.S. peers,” he said. Cost is just one of many factors that makes the U.K. attractive as an offshoring hub. The time zone, common language and similar education system are bonuses, business owners say.
Structural trends also play a role: The insurance industry, for example, has been boosted by the restructuring of global supply chains and demand for specialty policies covering natural disasters or pandemics, areas in which the London insurance market has expertise.
The U.K. studio where “Barbie” was filmed, originally an aircraft-production site during World War II, stayed busy last year with shooting for a “Beetlejuice” sequel, set to be released this year. Amazon and
Netflix are also expanding studio space in the U.K.
Jay Rosenwink, an executive at Warner Bros. in the U.K., said salaries in the country are lower and labor contracts aren’t as strict as in the U.S., where many film-industry workers are part of powerful unions. The country’s appeal also includes a tax credit, which allows film productions to claw back around 25% of their budget. Warner Bros. plans to add 400,000 square feet and 10 new sound stages to its studio outside of London by 2027. “The U.K.’s competitive edge is that it is fundamentally cheaper than the U.S. That’s a fact,” Rosenwink said."
