Perils of Going Offshore

Vaas: The slow economy isn't the only cause of the shrinking IT job market in the United States.

Its no secret the United States has been hemorrhaging IT jobs. The American Electronics Association reported recently that the United States lost 560,000 high-tech jobs between January 2001 and December 2002. That works out to a 20 percent shrinkage in high-tech manufacturing positions and a 9 percent drop in communications services employment. All in all, the AEA found, the U.S. IT work force shrank by 9.8 percent during the past two years. And, as the economic slowdown continues, the domestic IT work force is still shriveling, and layoff announcements keep coming.

But the slow economy isnt the only cause of the shrinking IT job market in the United States. Offshore outsourcing accounts for a sizable portion of this loss. Analysts say that, during the next 10-plus years, more than 3 million U.S. white-collar jobs will be lost to offshore outsourcing. Many will be IT jobs. The loss in wages is forecast by some analysts to reach as high as $100 billion.

Now some IT professionals—and even some politicians—are beginning to ask how this offshore job flow can be stopped. Do we hold legislators feet to the fire until they agree to forge protectionist measures? Do we try to talk business leaders into reinvesting in the U.S. work force? Some individuals are trying both.

Basheer Janjua, CEO of Integnology, a service design house that handles hardware and software design for clients such as Hewlett-Packard, Intel and KLA-Tencor, is one of those individuals. Indeed, Janjua—who is a U.S. citizen—is on a mission to talk clients out of going offshore.

Mind you, Janjua isnt motivated by fears of competing with offshore outsourcers. His 35-person company is growing just fine, thank you. In fact, Integnology hired 12 workers between December and January. The current glut of top IT talent in the United States, in fact, makes it easier for him to recruit. Integnology gets up to 70 résumés per day. Janjua received 150 résumés from Stanford University MBA holders last year. According to Janjua, most unemployed engineers are now being "extremely flexible" in terms of employment packages and reduced salaries. It goes without saying that in these times, theres not even a whisper of stock options, sign-on bonuses or relocation bonuses.

Janjua is standing up to offshore outsourcing because he has seen firsthand the devastating effect it has had on people. Talented IT workers are breaking down in tears during job interviews because they havent been able to find jobs in six, nine, 11 months and more, Janjua said. "When you have a 6-foot-tall U.S. grad sitting in your office and literally breaking down into tears because he cant find a job in 11 months, what are you going to do?"

Janjua was contacted by one engineer, a former U.S. Air Force pilot, who could not find a position after one year of looking. As the story goes, somebody from the engineers church gave him $50, enabling him to buy his daughter a birthday cake.

Obviously, there are bargains to be had in the U.S. work force—bargains that offset lower overseas wages. At the same time, using U.S.-based outsourcers can eliminate the frustrations of remote project management that overseas outsourcing entails. By using U.S. companies, for example, businesses can maintain tighter control over security and can more easily hold companies accountable. After all, as Janjua points out, do you really want to try to sue an offshore outsourcer in offshore courts?

After listening to clients demand proposals where the bulk of the work was to be done overseas, Janjua started to argue the case for sourcing to domestic providers. About two months ago, he managed to talk one client (which he declined to name) out of overseas outsourcing. The project in question was a software design contract in which security was a critical issue. After hearing too many tales of credit card theft and after carefully scrutinizing the projects crucial time window, the client opted for U.S.-based outsourcing.

If more companies—and more service providers such as Janjua—took the initiative to lay out the substantial benefits of using domestic IT resources to their clients, a movement could be born. Between efforts such as Janjuas and initiatives in states where lawmakers are struggling to pass new legislation aimed at curbing the loss of jobs, the tide can be turned. The U.S. high-tech work force has suffered more than enough.