Offshoring and the Future of Work

Offshoring, like outsourcing, though already an accepted norm of doing business, many business owners still shun the idea. In fact, there are many arguments hurled against this business practice. And one of which is depleting the job opportunities to the citizenship of a country, in this case, particularly of the United States. Lately, I have even a lengthy discussion with a CEO of one of my client companies regarding this issue. This prompted me this post. But then, as much as I want to post a full treatise on the subject, allow me instead to share an excellent excerpt below from J. Schramm's Workplace Visions -Offshoring:

The topic of offshoring has become a sensitive one. Numerous U.S. manufacturing jobs were sent overseas to lower wage countries such as Thailand, Malaysia, and China during the 1980's and 90s. However, advances in telecommunications and information technology have resulted in more 'white-collar' jobs being sent overseas as well. It began with call centers, and quickly evolved into software engineers and other information technology jobs moving primarily to India (becasue of high levels of both technical and English language skills there). With the economy exhibiting a sluggish rebound in 2004 and more and more firms sending white-collar work overseas, the issue has become quite political.

Critics of offshoring suggest that moving jobs overseas will result in a net loss of jobs in the United States, will depress U.S. wages, and will undermine the employment base. However, advocates argue that multi-national companies can take advantage of high skills and lower wages (usually between 50 percent and 80 percent lower than in the United States) to reduce their cost base while maintaining or even improving the quality of the work. Global companies such as IBM maintain steadfastly that over 50 percent of their sales are from outside of the United States, so they are merely globally sourcing their talent to mirror their customer base. Other companies have used outsourced suppliers such as Wipro on Infosys, both located in India, to perform the work on a contract basis. In addition, advocates argue that if one criticizes U.S. Based companies for moving owrk outside the UNited States, then one must also criticize companies such as Sony, ABB, Philips, BMW, and Toyota for locating manufacturing or service centers int he United States (referred to as reverse offshoring).

Given these cost advantages and the increasingly global nature of organizations, the trend will continue. Forrester Research estimated that the United States could offshore 3.3 million jobs by 2015. Another recent study looked at the types of occupations that are most at risk of being offshored. These researchers estimated that the maximum figure of offshored jobs would be 14 million, or 11 percent of the workforce, and while they acknowledge that this is the maximum, they believe the 3.3. million figure is an underestimate. (Source: Society for Human Resource Management, 2004: Arlington, VA)