How Offshoring May Be Hurting U.S. Technology Employees

Cost cutting is the name of the game. But at what price for the country?

That appears to be the central argument of public policy professor Ron Hira from the Rochester Institute of Technology. Hira is an outspoken opponent to major offshoring trends in higher-paying technology and financial jobs. His argument? It's not only about low-paying manufacturing and distribution jobs.  In the long run--it's about a shift from becoming a rich to poor nation.

Hira details his views in an article in the Rochester Democrat and Chronicle:

"The narrative is offshoring doesn't affect the total number of jobs in the U.S., what happens is the change in the mix," said Hira, who wrote a chapter about the offshoring of research and development for Manufacturing a Better Future for America, published in July by the Alliance for American Manufacturing. "The problem with that is it's not clear it's only low-level jobs moving offshore. What it doesn't talk about is the fact trade can be win/lose. When China gets better at the things the U.S. is good at, the U.S. can get poorer."

Professor Hira also discusses specific trends in offshoring and explains the challenges they present:

"Hewlett-Packard, when it took over Electronic Data Systems, announced it was going to lay off about 24,000 workers as part of the restructuring plan. That work is not going to disappear. At least half of those jobs will end up in low-cost countries somewhere. They'll be basically offshored."

IBM has gone from a 6,000 headcount in 2003 in India to, they won't say exactly how many, but estimates are more than 90,000. That's a 16-fold increase in six years.

People say these are kind of the lower-wage, lower-level jobs within IBM, within EDS. But that's not true, either. There are a number of R&D centers that are being opened up in India and China. Boeing just recently announced an R&D center opening in Bangalore (India). Google has a facility in Bangalore. Microsoft has cutting-edge basic research being done in China. The offshoring of R&D and innovation is clearly happening. Clearly, high-skill, high-wage jobs are moving offshore.

Despite Hira and objections from groups such as WashTech, offshoring is increasing at a steady pace, says an annual report. From the Kansas City Star (kansascity.com) on the report:

"The Duke Offshoring Research Network’s fifth annual report on offshoring, issued this month in collaboration with The Conference Board, found that 50 percent of U.S. companies have an offshoring strategy, and 60 percent of those currently offshoring said they have “aggressive plans” to expand. The researchers said “very few” plan to relocate offshored functions back to the United States."

WashTech is a Washington-state based workers' rights organization founded on protecting the needs of high technology workers and is affliated with the Communication Workers of America-- a telecommunications union.