Offshoring Fails to Buoy a Sinking Job Market

Opinion: Some say it's a fairy tale to think that companies can recycle the money they've saved from outsourcing to keep jobs in the United States; the reality is less black-and-white.

A recent column of minediscussed how one outsourcing expert believes tech companies that offshore some IT functions may boost their competitive posture, increase financial stability, and, so the notion goes, save jobs at home.

There's little controversy on whether offshoring lets IT services firms become more cost-effective.

The wage disparity between the United States and countries like India is well documented, and brand-name integrators and even some mid-tier players have benefited from cost cutting via the outsourcing route.

If companies have the "choice of whether to save money by outsourcing or spend more money by keeping U.S. workers, it's pretty obvious they are going to save money," noted Ronil Hira, assistant professor of public policy at Rochester Institute of Technology.

Hira also is vice president of career activities at the Institute of Electrical and Electronics Engineers-USA.

Click here to read about how "second-generation" outsourcing is more selective than the original flavor.

And saving money on outsourcing should allow some companies to keep some jobs in the United States that they might otherwise have had to eliminate.

Marcus Courtney, president of the WashTechCWA union, said that scenario may indeed occur in the case of smaller, financially ailing companies.

But, overall, "very few companies are actually in that position," he said. "Most companies into offshore outsourcing aren't companies that are on the brink of collapse," he added, citing Microsoft as an example.

The premise that outsourcing - regardless of flavor or variation - can preserve jobs at home generates plenty of reaction.

Readers responding to the previous column branded this assertion a fantasy - among other things.

Next Page: A grim outlook.

This article was originally published on 04-01-2005
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