Thursday, July 28, 2005

Will Your Job Be Offshored?

Beginning in 1999, significant offshoring of manufacturing jobs marked the U.S. economy. In an effort to achieve lower production costs, U.S. manufacturers moved jobs and capital to low labor costs environments such as Mexico and countries in Central America. Most jobs that were threatened can be characterized as blue-collar requiring little formal education and training. As a result, the most vocal resistance to the offshoring trend came from U.S. unions representing manufacturing workers occupying jobs requiring few skills. Until recently, highly educated service workers felt safe from the loss of their jobs due to offshoring.

All of us in services, including university education, continued to advocate expanded trade assuming that this would provide lower cost imported goods, but with little threat to our jobs. However after the recession of 2001, companies began to offshore service jobs to English speaking countries such as India and the Philippines. Suddenly, we feel our blue-collar brethren’s job apprehension. The question becomes: Is your job apt to be offshored? What jobs are more likely to be offshored?

The factors that characterize a job that is at risk to be offshored include: (a) little social interaction on the job. (b) tasks reducible to set of instructions. (c) information as the major component of the product or output. (d) job is easily performed from home. According to Professor Kroll of the University of California-Berkeley, the following jobs are more likely to be offshored along with the share of jobs at risk to be offshored:

Computer Systems Design –66.4%
Accounting, Tax Preparation, Bookkeeping—63.5%
Software publishers—63.2%
Insurance carriers---59.0%
Data Processing & Hosting—57.6%
Internet Service Providers—55.7%
Agencies, Brokerages, & Other Insurance Related---45.0%

Unfortunately for many of us, the current wave of offshoring will not abate but will only escalate in the years ahead as firms and organizations (yes even education and government) seek lower costs.


1 comment:

Anonymous said...

"However after the recession of 2001, companies began to offshore service jobs to English speaking countries such as India and the Philippines."

I wouldn't call these "English-speaking countries"-- they do have many educated English speakers but in both cases, they're a tiny minority. (In India e.g., the vast majority speak Hindi, Telugu, Malayalam, Marathi, Bengali or a host of other Indian languages, and the "common"(-ish) tongue there is a sort of Hindi-based mixture with the other local languages that has a lot of dialectical variation. In the Philippines, the major language is Filipino, based mostly on Tagalog.)

Furthermore FWIW, in India and the Philippines they're starting to emphasize training in other languages like Spanish, Japanese, Chinese, German and French, so I guess at the very least, other countries will be competing for the US in the outsourcing biz.

Still, I do see your premise here and I share your concern. I used to be one of the gung-ho free trade types until I read an article by some very unsentimental economists who were nonetheless trashing the outsourcing phenomenon, saying that it's disastrously hindering the acquisition of skills by US workers and effectively sending talent and training abroad, while markedly decreasing the number of US students who enroll in engineering and computer science courses since they, understandably, doubt that they'll be able to secure a job when they graduate. The USA, therefore, is effectively outsourcing itself into bankruptcy and economic disaster, while American political elites are either beholden to the traitorous US companies or too weak to stand up to them instead.