Panel: Offshore Outsourcing Is Here to Stay

BOSTON—The United States ought not to fear the move to offshore outsourcing, according to speakers at a panel discussion sponsored by the ITAA here.

“Offshoring will not mean the demise of the U.S. economy,” said Nariman Behravesh, chief economist of the consultancy Global Insight, in Waltham, Mass. “How do we deal with it? We dont stop it. That would be very costly,” he added. Behravesh maintained that the ebb and flow of technology jobs is a natural consequence of free trade, the benefits of which have been demonstrated time and again.

“This trend is not new.” Weve been going through globalization for some time,” Behravesh said. “The scary thing is we thought high tech was ours. It isnt.”

Bruce Mehlman, assistant secretary in the office of technology policy for technology administration of the Department of Commerce, moderated the debate, raising issues such as the impact of layoffs on individuals and communities.

In his remarks, he voiced the position of the Bush administration: favoring free trade. “As a trend, offshore outsourcing will continue,” Mehlman said. At the same time, the administration is attempting to aid U. S. businesses through research and development tax credits, higher funding for the U. S. Patent Office and aid to technology education, said Mehlman.

“Americas never going to compete to see who can pay their workers the least. Instead, we need to focus on innovation and an entrepreneurial culture,” Mehlman said.

The discussion was one of a series in different U. S. cities geared to raise awareness of ITAAs positions on employment in the information technology industry. ITAA, located in the Washington, D.C., area, represents the interests of some 400 IT companies.

/zimages/4/28571.gifFor more in-depth analysis on technology labor issues, check outeWEEKsspecial report, “Will Offshore Outsourcing Drain U.S. Tech?”

Absent from the discussion were speakers who may have suffered from the trend to import foreign technology workers under the H-1B visa program or to export technology jobs through offshore outsourcing.

Representing what some see as the Indian technology insurgency was Arup Gupta, president of Tata Consultancy Services America. TCS, headquartered in Mumbai, India, has some 6,000 technical consultants at client locations in North America and does $940 million in North American business annually. Gupta addressed fears of security breaches in sending vast amounts of corporate data and business procedures overseas for incorporation into technology systems. He maintained that because of its high dependence on work abroad, the Indian software and consulting industry is extremely diligent to assure the highest security levels. TCS, he said, carries out background checks on its employees.

He said TCS is building an office in Buffalo, N.Y., to handle work from Wall Street firms. Seventy percent of the Buffalo offices work is done in India, he said. The remaining 30 percent is done in Buffalo by TCS employees, most of whom are Indian. He said TCS is very well-known in India and attracts the top technology candidates, but is not so well-known here and has trouble attracting star U.S. technology graduates. “We can get the best students in India, but not in the U.S.,” he said. As for U.S. workers who might be displaced, he said, “Workers must continually evaluate their skills and add value.”

William Sweeney, vice president of EDS Global Government, said that U.S. programmers who find themselves out of work ought to look beyond their immediate situation to develop expertise in security technologies. “Were dealing with an issue that is extraordinarily emotional.” Sweeney and Behravesh both stressed that maintaining technical skills is a moving target.

“You need to be flexible and jump into opportunities. They will be different two to three years from now. There is no safe expertise or skill.” He praised certificate programs at such institutions as George Washington University, which are geared to train workers in skills that are in demand. “Too much retraining is after youre laid off. You need to stay on top of trends.”

Behravesh said, despite the trend to internationalize the technology labor pool, the United States will add technology jobs in the next decade, growing from some 10 million tech workers now to perhaps 15 million in 10 years.

“The economic situation now is a perfect storm. We dont know the new technologies that will come. I am not at all worried,” he said.

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