270,000 More IT Jobs Headed Offshore - InformationWeek
IT Leadership // IT Strategy
08:06 AM

270,000 More IT Jobs Headed Offshore

Offshore outsourcing will continue at brisk pace for next four years, then ease up as automation replaces offshoring as a way for companies to save money, a new study says.

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Mounting political pressure will do little to stop the flow of technology and other jobs moving offshore to low-cost destinations like India and China, new research indicates.

Some 750,000 jobs in IT, finance, and other business services will be offshored from the U.S. and Western Europe to developing nations between now and 2016, according to a study released this week by the Hackett Group. Among the positions going overseas will be 270,000 IT jobs.

"In the U.S. and Europe, offshoring of business services and the rapid transformation of shared services into Global Business Services have had a significant negative impact on the jobs outlook for nearly a decade," said Hackett Group chief research officer Michel Janssen, in a statement. "That trend is going to hit us hard in the short term."

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Even more stunning is the researchers' assertion that only about half of the 8.2 million services jobs that existed in the U.S. and Western Europe as of 2002 will exist in four years. A total of 2.3 million business services jobs, including 1.1 million IT jobs, will have gone offshore in by 2016 since the trend started in the 1990s.

Offshore outsourcing is a boon to regions like Asia, South America, and Eastern Europe—but only for so long, the Hackett Group said. While jobs that have gone offshore won't be coming back to the U.S., many of them won't exist at all, anywhere, in a few years, as automation increases and corporations get better at doing more with fewer workers.

"After the offshoring spike driven by the Great Recesssion in 2009, the well is clearly beginning to dry up. A decade from now the landscape will have fundamentally changed, and the flow of business services jobs to India and other low-cost countries will have ceased," said Janssen.

By 2016, the majority of all the jobs that can go offshore will have gone offshore, the group said. And a good portion of those jobs, such as transaction processing, will eventually be eliminated altogether through technology and efficiency improvements. New jobs created domestically through economic growth and innovation in Western economies, such as business analysis, will not be suitable for offshoring.

Despite predictions that the offshoring of hundreds of thousands of more jobs is inevitable, political opposition to offshore outsourcing is heating up as job growth remains sluggish in the U.S. and the November Presidential election draws near.

In an effort to encourage more businesses to locate or keep their customer service operations in the United States, U.S. Rep. Tim Bishop (D-N.Y.) last month introduced a bill in Congress that would penalize companies that place customer call centers offshore. On Tuesday, Bishop said the U.S. Call Center Worker and Consumer Protection Act is gaining momentum and now has 80 co-sponsors in the House, including seven Republicans.

"The most powerful argument for my bill has been an absolutely remarkable lobbying effort taking place on Capitol Hill from particularly the Filipino government but also the government of India," Bishop said on a conference call with reporters. "What it says to me is if U.S. call center jobs going offshore is that big a component of the Filipino economy or the Indian economy, then we're losing a ton of jobs over there. We know we've lost at least 500,000 over the last four years."

Bishop's bill would prohibit companies that place call centers offshore from receiving federal grants or guaranteed loans. The bill also requires the Department of Labor to maintain a publicly available list of companies that operate offshore call centers. And it forces offshore call center workers to disclose their location to consumers and transfer them to a U.S.-based agent on request.

Many similar bills introduced in the past have failed to even make it to the House floor for a vote. Asked by InformationWeek if he was confident his bill could succeed, Bishop said, "I didn't say I have confidence … It's just a matter of putting the issue before my colleagues and the American people and maybe someday wisdom will prevail."

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User Rank: Apprentice
9/4/2012 | 6:58:27 PM
re: 270,000 More IT Jobs Headed Offshore
Who stands to lose? American Consumers.

Why? Companies will pass the buck of the cost of an American salary.

The American workers should find a niche, if needed, go back to school and stop whining about outsourcing. During the heydays of WallStreet, an average American would want to work in finance and cocktails afterwork playing with Other People's Money. NOT in manufacturing, production, I.T. or even healthcare. The backbone of a country IS production. What is there America REALLY producing now? Almost NADA, all in China!

This a clear case of the bully got bullied
User Rank: Apprentice
3/25/2012 | 2:21:29 PM
re: 270,000 More IT Jobs Headed Offshore
I think there is something else that should worry the hell out of both business and government. What happens when relations between the outsourcing country (US for example) and the outsourcer (India as an another example) go sour. Surely such things as banking and IT have strategic significance?
User Rank: Apprentice
3/23/2012 | 9:37:58 PM
re: 270,000 More IT Jobs Headed Offshore
Paul, are you finally ready to admit that the whole shortage claim by industry - at least if we are talking a "general shortage" was all BS? How many jobs need to go offshore until you can finally acknowledge that the shortage shouting was a hoax by the IT industry to increase the H-1b cap and reduce regulations on guest worker programs?

Hoax is a kind word. It was a fabrication and a lie. Anyone tracking the BLS numbers - not projections but actuals - knew that 10 years ago.
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