Offshoring of IT Jobs Only Beginning

By the end of this decade, analysts predict, one-quarter of U.S. technology jobs will be offshored. Can (and should) this runaway trend be slowed?


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Posted September 15, 2004

Sharon Gaudin

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About 30 years ago, Jim Pace was a hard-working steam fitter at General Electric. When G.E. started to ship work overseas, he was laid off, becoming just one of the many manufacturing workers whose job was sent to foreign shores.

Unemployed and looking for a new start, friends and peers told Pace to get into the high-tech field. ''Pick yourself up. Go back to school. Computers are the wave of the future.'' So that's exactly what he did. Pace went back to school and in 1979 he got his first job in IT. Over the next 23 to 24 years, he would work as a programmer, a system designer and a team leader.

But a year and a half ago, Pace's future started to look an awful lot like his past.

Like countless others in the IT field, Pace -- once again -- saw his work being shipped overseas. And once again he was unemployed. Pace had the misfortune to be caught up in two giant offshoring waves -- the first which struck manufacturing, rendering it a nearly obsolete industry in the United States, and the second which is striking the high-tech industry today.

''I can't go back to manufacturing. I can't find a job in IT,'' says Pace, who today is selling cars for a third of the salary he made two years ago. ''It's rough. It's really rough. I've tried for an IT job... but everybody is vying for the same job so they have a lot to choose from. You're lucky if you even get an interview anymore.''

Pace is just one of the many faces caught up in the offshoring of U.S. high-tech jobs. At first, only base-level jobs, like call centers and programming, were being shipped to countries like India, China and Russia. Now mid-level jobs seem to be finding the same path out of the country. Only top-tier jobs, like CIOs and team and administrative leaders, seem to be swimming against the current.

And it's not a current that is showing any signs of slowing.

Ominous Forecasts

Six years from now, one quarter of traditional U.S. IT jobs will be done offshore, according to new predictions from researchers at Gartner, Inc., one of the top industry analyst firms. Today, an estimated 5 percent or fewer of U.S. IT jobs have been offshored. By 2010, 25 percent will be situated in emerging countries.

Similarly, industry analyst giant IDC is predicting that by 2007 nearly one out of every four (23 percent) IT jobs in America will have been moved offshore and performed by non-US personnel. This year that figure is 5 percent.

Gartner's study also shows that not all of those offshore jobs will have laid-off American counterparts. Some of those jobs in places like the Philippines and Malaysia will be created by U.S. companies opening IT operations in those countries, bypassing the middle man of outsourcing companies and, at times, avoiding layoffs here by starting brand new IT programs there.

That's not a lot of solace for Pace, and the thousands, if not hundreds of thousands, of IT workers like him, who can't find an IT job here in the U.S.

Four or five years ago, during the golden age of the IT industry, there were more high-tech jobs than skilled American workers could possibly fill. Using the H-1B visa system, companies were bringing in hundreds of thousands of foreign workers, and were just beginning to ship a few jobs offshore -- a trickle of employment. But few squawked. After all, there were more than enough jobs to go around.

But that all changed when the dot-com bubble burst, starting a major slide in the tech industry.

To save money, companies began to accelerate their offshoring. A U.S. programmer might earn $45,000 while a foreign worker might only take home $5,000 in the same year. The savings, especially during a down-turn in the economy, was too much for the industry to resist.

That means today, Americans trained and experienced in high-tech are looking for jobs while H-1B visa workers are still brought into the country and low- to mid-level jobs are still being shipped out.

''The government doesn't even have the numbers. They don't know how many high-tech jobs have been shipped overseas,'' says John Bauman, president and co-founder of The Organization for the Rights of American Workers (TORAW). ''They didn't track them because there were no special benefits for IT people getting laid off.''

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