A rough passage to India

THE tide of British jobs flowing to India is unstoppable. Insurer Aviva is the latest to announce that it is exporting 2,350 posts to the sub-continent. It has found it can hire eager, university-educated Indians who speak excellent English at about one-fifth of the cost of an employee in this country.

Some groups, including Royal Bank of Scotland and Alliance & Leicester, have taken a commendable stand against 'offshoring' and are committed to hiring in Britain. They are concerned, not only about UK employment, but also about service levels and the security of customer accounts being processed thousands of miles away.

But whatever the moral outrage, many companies find the financial incentives to outsource to the Third World are simply too great to be ignored.

There is little the Government or trades unions can realistically do to prevent companies exporting jobs. But in private, several chief executives have acknowledged that it is a serious public policy issue.

The loss of employment to India arouses strong emotions, as shown by the furious response when Trade Secretary Patricia Hewitt appeared to give it the green light at the CBI conference last month.

At the moment, many of the jobs that are migrating are low-level posts. But professionals could soon find that they too are being handed their P45s.

A report this summer by Deloitte Consulting found that up to two million financial sector posts could move from the West to the developing world in the next five years.

There is no shortage of impoverished countries keen to take on the work. India has led the field, largely thanks to its 1.5m English-speaking graduates. China and eastern European countries are also trying to attract footloose jobs.

Other, less developed locations could also enter the field. A study by the United Nations recently argued that even countries such as Cambodia, with low educational levels and minimal telecoms infrastructure, can offer basic business process outsourcing.

The movement of jobs can help poor countries, but what about the UK economy? Some economists argue that we benefit too. The theory is that reducing costs should lead to higher profits, which in turn can be invested more productively elsewhere.

It is true that Britain's future prosperity does not lie in competing for call-centre jobs. We need to use our intellectual capital to compete in innovative, high-growth fields.

The problem for the Government is that our education system is creaking and failing to motivate many young people. The Indian graduates recruited by UK firms will almost certainly have a better grasp of the English language than some British-born speakers.

To make matters worse, companies here are bogged down with costly red tape and ever-rising tax bills. That is hardly a recipe for how to thrive in a global market.

Honest John

EXECUTIVES at Barclays bank are getting into the habit of making extraordinarily frank public statements about the drawbacks of their products.

John Varley, heir apparent to the chief executive's job, correctly warns that some people are now facing 'financial Nemesis' because they have been too enthusiastic about taking out bank loans.

His red flag about the dangers of debt echoes boss Matt Barrett's free admission that it is ruinously expensive to borrow on credit cards for long periods.

Despite the dire warnings of a looming consumer debt crisis, Barclays has been doing very nicely.

The borrowing boom has helped boost its profits, which are now expected to exceed the £3.7bn previously forecast by analysts.

Loan volumes have grown without a corresponding rise in debt provisions because Varley has been scrupulous in his efforts to shun high-risk borrowers.

He prefers what he calls 'the better quality risk range'. Translated from bankspeak, he means the chronically indebted middle class who have relatively secure incomes and are unlikely to default. Barclays has also steered clear of 'unpalatable' risk in the mortgage market.

The City is already looking beyond the current gloom to the next upturn. But as Varley clearly implies, the perils facing vulnerable borrowers, and the banks that lent to them, may be only just beginning.

The recent quarter-point rise in interest rates did not seem like much. But with up to three million people already balancing their debts on a knife edge, it could be enough to tip them over.