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Patrick Thibodeau

D.C.

Can Obama reverse job offshoring?

41 comments

TAGS:Affiliated Computer Services, H-1B, Obama, offshore
IT TOPICS:Development, Government & Regulation, Management

ACS offshore plan

The chart above, prepared by IT services firm Affiliated Computer Services Inc. for investors, illustrates how this company is shifting jobs overseas. (Chart PDF) In the span of a few years, the offshore headcount has increased from about 25% to 35% of the company's workforce, now at about 63,000.

And this Dallas-based company isn't moving low-level jobs overseas. It's going much deeper. "To have a greater financial impact, we will be moving a higher percentage of more complex, higher paying jobs offshore, including management and application development roles," ACS President and CEO Lynn Blodgett said during an investors call last week.

Other IT vendors are doing the same thing. The only difference is that most of the other vendors don't produce charts for public consumption as detailed as the one above. Outsourcing vendors across the board are moving jobs overseas to cut their own costs and stay competitive with the Indian outsourcing firms.

The tools that President-Elect Barack Obama has to change this trend, especially during a recession, aren't clear. All the outsourcing vendors have government contracts. And even if state, local and federal agencies bar the use of offshore development in some of their contracts, government agencies are using the same offshore developed software modules as the private sector. Any government agency that has a support contract today with a major vendor is getting support, in one form or another, offshore.

Ending tax breaks for companies that move jobs offshore has been one of Obama's strongest campaign messages. But IT vendors don't get tax breaks for doing work offshore, especially work sent over a network. Obama, instead, may look more to incentives to encourage expansion here.

What will Obama do about the H-1B visa? Obama has supported an H-1B visa increase and comprehensive immigration reform. But it is unclear whether he wants to shift from the temporary H-1B visa to permanent residency, Green Cards, for foreign graduates of U.S. universities. And what impact will the recession have on his views?

As the above chart illustrates, Obama faces a difficult task in increasing high-paying tech jobs in the U.S. at the same time firms are moving those jobs overseas.

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I hope that Obama do

Submitted by Anonymous on November 7, 2009 - 11:51 P.M.

I hope that Obama do something to reverse the trend, but I doubt that he will be able to do it or for that matter any one can do it, now that the CEOs of the big corporations have tasted the blood (i.e, paying less for outsourced jobs). The companies are looking to offshore as much as they can to make the bottom line green(er). But I am not sure once people won't be able to buy their products what will happen to all the outsourced jobs, may be they know this and are just racing each other so that they can leave with loads of money and live in private islands somewhere in the world.
I have a noble idea to reverse the outsourcing trend, since the aim is to save the money, outsource two upper management jobs with big bonuses and save a 100-200 regular jobs. Enough companies will do that and we can see 100-200 K back in the offices. Man who am I fooling, noone :(.

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Generally speaking, if your

Submitted by Current ACSer, with both govt and non-govt contracts on July 26, 2009 - 7:08 P.M.

Generally speaking, if your ACS contract says "domestic labor only", you get exactly that.

How ACS still plans to offshore more and more workers, and still service the govt contracts, is by increasing the offshore staff leveraged to the clients who don't have a "domestic labor only" clause.

So if you're a corporate client, expect the % of offshore labor to continue to increase, while the US workers shift to govt contracts.

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The same should be extended

Submitted by Anonymous on April 7, 2009 - 7:53 P.M.

The same should be extended to export goods from us to other nations. The countries can reduce tax credits and see how the companies in US responding. We are all one world. everyone is dependent on each other.

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We need to make the BLS measure the offshoring that is going on

Submitted by Alex U on February 6, 2009 - 11:01 P.M.

the problem is that we really don't know the extent of the problem because as the author says, most firms won't publish the % of work which is being offshored. And we know it goes beyond IT, and is increasing every day. How can the Obama administration or anyone even have an opinion of this issue if there are no numbers being published by our government on this activity? The BLS.org does not publish numbers on this despite urging from major economists on the need to monitor this activity. Each month we learn of another 600,000 jobs lost but we don't have a clue as to how many jobs were offshored. I am working on a data mining project where we are going to figure out a way to estimate this number until our government actually decides to report it. Please join the project USUP below:

http://usuprojects.ning.com/forum/topics/project-idea-a-study-on

I can use all the help I can get.

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Where is the Indian and Chinese H1B Program?

Submitted by Anonymous on February 5, 2009 - 12:01 A.M.

China recently issued a statement that Americans need to create higher quality jobs for themselves. I wonder what they meant since IT is high-tech. How much higher can you go?

If American votes do not carry weight with government in disciplining corporations, then sooner or later it will be better to emigrate to lower cost countries where outsourced jobs pay enough to have someone come and do your laundry, clean the house, and cook.

That will be one inevitable option when the number of outsourced positions in any company begins to exceed 50%.

Unfortunately, neither India or China has a H1B program for Americans, so we are out of luck.

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Why do you buy a Japanese or

Submitted by Anonymous on March 5, 2009 - 3:26 P.M.

Why do you buy a Japanese or German or Chinese car? Why do you source your components from South East Asia? Why are hard disks, motherboards, laptops, iPods and iPhones assembled in Taiwan and Malaysia? The simple answer is Cost reduction. You create a global product, everyone buys. Sourcing it cheap is a great way to compete. Why source work from India or the Philippines? Reduce Costs and you create a global service, everyone buys.

Take away the ability or a corporation to compete and you might as well get used to the soviet lada cars and the tea flasks.

Corporations do not have an obligation to employ you, they have an obligation to make a profit and survive. Opting out of the globally competitive sourcing system is sure to ensure the rise of a new industrial and brand power.

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H1-B in China

Submitted by Menno Aartsen on February 6, 2009 - 2:25 A.M.

I guess you have not been to India and China. H1-B is a particularly American invention, if you go to India and China you will find plenty of Americans and Europeans all happily working away. You find a job there - they have plenty that require Western expertise - you'll normally have your work visa in 48 hours. Both India and China make it a lot easier to visit there, or to work there, than the United States does.

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India is one of the most closed economies

Submitted by Anonymous on February 6, 2009 - 11:32 P.M.

Sure to work there... But, to do business in India is horrible. They are one of the most closed economies. And I don't blame them because they are trying to reverse colonialism. However, they are also insulated more than China with the global crisis. In fact they are profiting while everyone else is losing out. Can't see this as a good thing for the US. But then again, the so called patriotic people who support multinational freedom of reign, really don't give one damn about our economy otherwise they would do something to stop this insanity. You know its funny I know a lot of Indians in America who came here to be coders. They are just as outraged with the outsourcing as us American citizens. I can't tell you the many times I have heard these people who risked so much to come out to the USA and make a better life for themselves, now having the same problems. Getting laid off, while their job gets shipped off to India. This is not an Indian thing or a "globalization" thing.. Its a human thing and a game which is being played by the richest men in the world at the expense of everyone else.

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Come to India, you will have a job

Submitted by Hemant Kumar on February 6, 2009 - 1:27 A.M.

I doubt if you really have exposure to jobs in a business. IT services are a very lower category jobs. It is just working on computers while main thinking goes much above in business planning, strategy and Management. Does MBA word sounds any familiar? Any idea how much an MBA gets paid compared to a software engineer? Try googling it.

One don't need a H1-B type of visa to work in India. But who will give up a luxurious like to work in a developing country where having AC in house means you are rich. Also it is a daily competetion to proove yourself, so better be ready for it or job is gone like..splash..

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Your english grammar is

Submitted by Anonymous on February 6, 2009 - 11:13 P.M.

Your english grammar is terrible. You are obviously not a proofreader by trade. You are telling us that everyone should have an MBA? Those jobs are also being outsourced to india. I seriously doubt you could get through an MBA program with the kind of loose writing you do. I am finishing one right now and believe me there is no way you will pass until you learn how to write more clearly. This is posting is a clear example of "you get what you pay for". Taking an American with many years of real experience and giving his job to someone who can barely put together a sentence - most likely never went to college - is a joke. I've worked with folk like this and they often misunderstand requirements documents, get instructions wrong, because they are throwing everyone who has read a java book at these jobs. Sending out H1B visa holders who are very green - usually never seen the software they are supposed to support - to replace seasoned consultants is a joke. The service is usually substandard and does nothing for our economy.

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