US panel debates outsourcing pros and cons

The US government has no plans to block companies from moving IT jobs to India or other countries, opting instead to focus on...

The US government has no plans to block companies from moving IT jobs to India or other countries, opting instead to focus on developing an economic climate which helps create jobs in the US.

"The answer to economic challenges is growth and innovation," said Chris Israel, a deputy assistant secretary at the US Department of Commerce, speaking at an Information Technology Association of America (ITAA) panel on IT services outsourcing in New York.

Israel cited the administration's support for increased investment in research and development, education and expanded trade authority for the president as part of its efforts to improve growth. 

While Israel said he understood the ramifications of offshore outsourcing, such as downward pressure on salaries in the IT industry and the potential for a "reverse brain drain", where highly skilled and talented IT workers choose to work overseas instead of in the US, he noted that offshore development could have positive effects, such as driving down prices and productivity gains. 

Although the Bush administration may be uncertain about the move to outsourcing and what it means for the IT industry, Phil Friedman, chief executive officer of Computer Generated Solutions, is not.

Friedman, who was also a panelist at yesterday's event, said his company, a systems integrator and managed services provider, recently opened a technical services centre with 300 jobs to fill. 

The company got 3,000 applications in three days. 

"That tells me the story," said Friedman. "We have plenty of talent. So we are not moving jobs because we cannot find talent or we don't have the quality of talent in this country. But I'm wondering if in the rush to send jobs offshore, we, in some respects, are neglecting the moral responsibility we have with our employees. 

"We need those technology skills. This country is making productivity gains only because of the technology we've been able to implement, and all of a sudden, we are abandoning those employees, and it's bothersome." 

Friedman said the offshore trend could also affect national defence. "One morning we will wake up 10 years from now and we will not have the skills needed to support the infrastructure of this country." 

Gordon Coburn, senior vice president and chief financial officer at offshore provider Cognizant Technology Solutions, said the impetus behind IT offshore work parallels what has happened in manufacturing. Pointing to companies that tried to keep all their manufacturing in the US, "a lot of them don't exist anymore", he added, saying that offshore work allows firms to remain competitive, freeing up money for research and development and marketing "to grow their business faster and hire more people in the US". 

Israel said it was difficult to separate out the number of IT jobs lost because of outsourcing from those lost because of the industry downturn. He said there was no "statistical data that shows one-to-one correlations". 

ITAA president Harris Miller said that while the amount of offshore work remains relatively small given the size the industry, several analyst studies are predicting a sharp rise in offshore development.

Priscilla Tate, director of the Technology Managers Forum, a group representing IT executives of large companies, argued that offshore development is taking a toll on US workers.

"Higher-skilled jobs are going away," said Tate. "There are people who will not get jobs in the IT industry again - they just have been replaced."

Patrick Thibodeau writes for Computerworld

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