Outsourcing Back to the U.S.

By Deb Perelman  |  Posted 2007-09-07 Print this article Print

Indian software firm Wipro has laid plans to open a big software development center in Atlanta, it announced Sept. 6. The Bangalore, India-based firm expects to hire more than 500 computer programmers over the next three years and set up a training center to provide technical and soft-skills training to its employees in Georgia.

This unusual turnabout from the much more familiar story of a U.S. software company creating jobs in India sounds on the surface to be good news: The United States is being seen once again as a leader in IT development and jobs are coming back.

But a closer analysis tells a different story.

Although most big foreign companies have sales and project management offices here, the Wipro Atlanta facility is not one; in fact, it's the exact type of development center that has left U.S. shores in the last seven years.

These software development centers ended up in places such as India, where dull, routine programming tasks that didn't require the most brilliant software engineers could be done for one-tenth of the price. Despite reports that the cost advantage of outsourcing has slipped, U.S. programmers still make far more than their Indian counterparts.

So why would an Indian company want to hire pricier techies in the U.S.?

"The center will help Wipro in hiring a certain profile of skilled workers and domain experts who will be critical to Wipro's business growth plans in the U.S.," read the statement.

This "certain profile" is U.S. cultural immersion, something that can't be offshored. But it is also defense contracts, which require that all workers are located in the U.S. Wipro says that justifies the extra salary cost.

But others beg to differ. At a time when many in Congress are highly critical of U.S. jobs moving overseas, moves like this allow Wipro and any other offshoring company that follows its lead to point out that they also create jobs in the U.S, Lori Kletzer, who teaches International Economics at University of California at Santa Cruz, told NPR on Thursday.

Odds are that this justifies the extra cost of U.S. workers more than their unique knowledge of Pac-Man and tree-lined suburbs.

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