New survey reveals reasons behind Maltese businesses’ outsourcing decisions

Maltese businesses were the second most likely to outsource core business functions, after Portugal, according to the results of a recently published survey providing insights into the what, where and why of outsourcing decisions.

Outsourcing is the movement of certain jobs from one country to another, often to counter high labour costs or to gain access to specialised knowledge.

IT was the function most likely to be outsourced by Maltese businesses, with India being the single largest destination for such jobs, although no other function was outsourced to it.

In general, however, over 30 per cent of all tasks outsourced from Malta went to other European Union countries, almost 19 per cent to other European countries, and over 16 per cent to the UK.

Technical and engineering services and management and administration were the second and third most likely functions to be outsources.

This is the first time that Malta is being included in the survey, which is conducted by Eurostat.

It reveals that between 2018 and 2020, 3.5 per cent of enterprises employing 50 employees or more relocated a business function abroad.

Across the EU, international outsourcing is especially found in small, open economies with high labour costs.

Contrary to the experience of businesses in other EU countries, the COVID-19 pandemic seems to have little effect on local enterprises’ decisions in this regard, despite its heavy impact. In fact, although 15.5 per cent of businesses had their international sourcing plans disrupted, just 3.3 per cent planned to engage in it.

In total, Malta ‘lost’ 173 jobs between 2018 and 2020 due to international outsourcing, with 134, or 77.5 per cent of these, being of a high skilled nature.

Altogether, the 14 EU countries surveyed were found to have lost an estimated 42,808 jobs, while 15,166 were created.