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The vast majority of businesses based in the European Union have moved jobs abroad, with India being the most favoured destination outside the bloc.
Outsourcing is a way for tens of thousands of entrepreneurs to save money — and perhaps to survive. However, it also means slashing positions domestically, which, in most cases, don’t get replaced.
In fact, the trade balance is negative.
Due to outsourcing, EU countries lost around 150,000 jobs, roughly three times more than those created through the same process between 2021 and 2023, a recent Eurostat report says.
Which countries have the largest outsourcing-driven job losses?
Some of the largest deficits were recorded in central Europe.
In Poland and Hungary, outsourcing eliminated round ten times more jobs than it created, according to a Europe in Motion analysis of Eurostat data.
Excluding Malta, only Finland recorded a worse imbalance, with 15 times more roles lost than created.
In absolute numbers, however, Germany stands out with the largest net job loss — 50,000 — far above similarly large economies like France (around 5,000) and Italy (just over 1,000).
There are just three exceptions in the EU where the number of jobs created through relocation is higher than those lost.
Ireland is by far the leader here with a net balance of nearly 5,000. Its followed by the Czech Republic with just over 800, and Spain at nearly 300.
Nonetheless, Ireland is also the country with one of the highest proportion of businesses sourcing abroad.
“The highest share of sourcing internationally is found in small, open economies with high labour costs”, says Eurostat.
Slovakia tops the list at 11%, followed by Ireland at 10% and Denmark at 9%.
What are the hardest-hit sectors by job relocation?
The hardest-hit sector is manufacturing — production of goods and materials — with more than 53,000 jobs gone in those two years alone, followed by administrative and management work with nearly 34,000.
But, proportionally, it’s IT that suffers the most — losing over 15,000 roles, or around 0.5% of total employment, followed by research and development jobs with 0.4%.
In general, the main reason for relocation is to save on labour costs (34%), followed by reducing other costs (28%) or focusing on core business (20%).
As for where those jobs go, the top destination outside the EU is India, followed by the United Kingdom, Canada and the US combined, and China, according to Eurostat.