Can Outsourcing Save Jobs?

By John Moore  |  Posted 2005-03-25 Print this article Print

Opinion: One expert says offshoring some work may save or add jobs here.

Fear of job loss has always clouded the reputation of outsourcing, going back to the days when the practice was known as "doing the Kodak." In 1989, Eastman Kodak Co. outsourced its data centers to IBM and later cut deals with Digital Equipment Corp. and Businessland for networks and desktops, respectively. Kodak outsourced to focus on core business lines.
But outsourcing took on a different flavor when it got popular with other companies in the early 1990s.
After a binge of leveraged buyouts during the 1980s and the 1991 recession, many firms went on a cost-cutting track: Outsourcing IT emerged as one more way to cut expenses. For the most part, outsourced IT personnel ended up with jobs at various systems integration and outsourcing companies. But still, any job change is unsettling, and in some cases, the personnel shifts were massive. Electronic Systems Corp.s 1994 outsourcing pact with the United Kingdoms Inland Revenue involved the transfer of thousands of employees. Last year, 2,800 workers were relocated once again when Capgemini won the competition for a renewal of the Inland Revenue deal. Job loss worries these days focus on outsourcers and integrators moving operations offshore. Service providers, looking to become more cost-competitive, have moved tech support and software development functions to India and other nations with lower labor costs. The resulting press coverage and congressional interest have generated considerable attention—most of it negative. The backlash may have influenced some companies to open software development centers in mid-tier U.S. cities with lower real estate and personnel costs. Click here to read more about how a major U.S. bank used offshore outsourcing in an effort to thwart money laundering. David Andersen, a partner and outsourcing specialist in the Los Angeles office of Bryan Cave LLP, believes outsourcing critics have taken a narrow view of the practice. He contended that different flavors of outsourcing exist and not all of them result in a flurry of pink slips. Read the full story on CIO Insight: Can Outsourcing Save Jobs? Check out eWEEK.coms for the latest news, reviews and analysis on IT management from CIO Insight.
John writes the Contract Watch column and his own column for the Channel Insider.

John has covered the information-technology industry for 15 years, focusing on government issues, systems integrators, resellers and channel activities. Prior to working with Channel Insider, he was an editor at Smart Partner, and a department editor at Federal Computer Week, a newspaper covering federal information technology. At Federal Computer Week, John covered federal contractors and compiled the publication's annual ranking of the market's top 25 integrators. John also was a senior editor in the Washington, D.C., bureau of Computer Systems News.


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