US seeks to turn back offshore outsourcing tide

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US seeks to turn back offshore outsourcing tide

US lawmakers are accelerating efforts to stem offshore outsourcing, chiefly by setting restrictions on the use of foreign labour in government contracting.

Last month, Senator John Kerry introduced legislation requiring call centre employees to disclose their location at the start of each call. Kerry cited a Gartner estimate that one in 20 IT jobs at user companies will move overseas by the end of next year.

There are at least nine bills pending in the US Congress aimed at barring foreign workers from government contracts, and four states - North Carolina, New Jersey, Michigan and Indiana - are considering similar legislation.

Many IT workers who have lost their jobs as a result of offshore outsourcing, such as William Stolting, a former director of technology for a major financial services firm in New York, stress that lawmakers need to take action to help people in their position.

One step legislators can take is to ensure that government contract work remains in the US, even if it costs taxpayers "an extra dollar", Stolting said. "I think people understand there is cost involved with being a citizen and protecting what we have here."

In a Capitol Hill forum on offshore outsourcing, Rolf Lundberg, a senior vice president at the US Chamber of Commerce, said legislation that seeks to impede offshore outsourcing "will undermine efforts to open new markets overseas" and invite "some form of response and retaliation" by foreign nations.

Lundberg and representatives of other trade groups argue that US job protectionism prevents companies from investing in new areas and ultimately hurts innovation and job growth.

But those arguments will not stop the efforts of workers who have lost their jobs. IT activists such as James Pace, legislative director for the Rescue American Jobs Foundation, said IT professionals are beginning to get involved with groups representing blue-collar workers. "We are trying to make this as big an issue as we can," he added.

Some bills seek to make it mandatory for government contracts to be awarded only to US citizens, and others aim to set limits on the use of visas.

Among the supporters of those efforts is Bob Baugh, executive director of the AFL-CIO Industrial Union Council. "Anything in the digital age that can be moved . . . will be moved," he said.

Erica Groshen, an assistant vice president at the Federal Reserve Bank of New York, said the US is in a recovery with respect to output, "but we're not in a recovery in terms of jobs."

Still, Groshen said she did not consider the movement of jobs overseas to be negative for the US economy, because the country's competitive advantage is its ability to innovate. "Constantly shipping jobs abroad signals our success as innovators," she added.

Robert Atkinson, senior vice president of the Progressive Policy Institute in Washington, said there are policy changes the government can make to help the IT industry. He cited examples such as investing in IT projects, boosting training and giving affected workers the tools they need to adjust to the new environment, including assistance with medical coverage and expanded unemployment insurance.

Jeff Lande, a vice president of industry trade group Information Technology Association of America, said there are limits to what can be outsourced. For instance, eight out of 10 IT workers are employed by small companies that do not have the scale or capacity to send work overseas, he claimed.

More than 500,000 jobs, by some estimates, have been moved to India. But Lande said improvements in the standards of living in other countries enable their consumers can buy more products.

"This is a battle that's going to be won on innovation and quality," Lande added.

Patrick Thibodeau writes for Computerworld

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