Half of international businesses surveyed by the Association of Bermuda International Companies (ABIC) have outsourced operations to other jurisdictions over the past five years with an estimated 600 jobs impacted by the move.

Those were the findings of ABIC's second membership survey, which was released yesterday, also revealing that the number of new work permit holders declined precipitously in 2008 — indicative of the economic climate.

CEOs' concerns were topped by the state of public education and the possibility of independence .

Meanwhile the survey, which included 52 large and medium-sized companies, 50 of their CEOs and 635 employees — representing half of the employees in the international business sector, and was concluded in late 2009, found that while Bermuda remained a generally desirable offshore domicile, CEOs were uncertain about the short and medium-term prospects for their companies here.

Most — 68 percent — did not expect their companies to grow here in the upcoming year, with another 20 percent predicting small reductions in staff.

The detailed survey, which focused on numerous aspects of doing business in Bermuda, offering a snapshot of the Island's international business sector, was last conducted in 2004 and provides some key information on the industry's direction in the near future.

"The good news is that the financial contribution of international business to the Bermuda economy continues to grow substantially," said ABIC chairman David Ezekiel.

"Bermudians are progressing in managerial positions with a significantly greater proportion of senior management and middle management positions being held by non-work permit employees.

"CEO's are also slightly more positive than they were five years ago about the availability of qualified staff and work permit procedures and they remain satisfied with Bermuda as a place to live and work. On the negative side, the quality of the public education system, crime levels, and prospects for independence are concerns."

The survey showed that the relatively high cost of doing business in Bermuda and the difficulties in recruiting qualified staff have prompted the transfer of business operations and outsourcing of functions — mainly IT, accounting and administration — to other jurisdictions, with almost all of the companies surveyed already having operations elsewhere.

"The survey indicates that the profile of the international companies located in Bermuda has changed over the last few years," said Mr. Ezekiel. "Whereas previously Bermuda used to be the predominant, and often only, location for these companies, nowadays they have operations in various domiciles and can choose where to house the different operating units.

"It is our job to ensure that the various attributes that got Bermuda to where it is — great infrastructure, sensible regulation, tax efficiency, speed to market and quality of life — remain in place, in which case we will retain the senior management and core functions of these companies."

At the CEO level, the indications are that company leaders are leaving their families behind when they come to work in Bermuda, while the average leader tends to be older, more likely not to relocate his/her children to the Island, and less likely to have children schooled here.

"There's good news and bad news in there," said Mr. Ezekiel. "Whilst this may lessen the strain on the infrastructure, it may also signal that the CEOs do not see a long-term future for themselves in Bermuda, and that is a real cause for concern."

Other highlights of the survey revealed that work permit employees were generally more highly qualified than their non-work permit counterparts, reflecting the importance of education and training to produce suitably skilled and experienced workers for the international business sector.

Elsewhere, the pattern of employment was similar to 2004, with work permit employees largely in managerial positions and non-work permit employees in non-professional and professional technical positions. Nonetheless, there was a trend towards increasing numbers of non-work permit employees in managerial positions.

Employment levels in middle management levels, meanwhile, have fallen compared to six years ago, with a corresponding rise in professional technical positions.

The nature of employment opportunities was also changing, with employment at non-professional level static and a greater potential for employment at technical/management levels, again highlighting the importance of education and training.

One surprising aspect of the survey was that expenditure on training appears to have decreased since 2004, possibly as a result of the maturation of many companies in the sector or lower level functions being outsourced. ABIC said this area would be a focus for its follow-up on the survey.

In general, however, CEOs and employees were positive about international business in Bermuda, while housing remained the main concern for employees, but less so than in 2004.