December 19, 2003, 4:18 PM — While there is little disagreement in the IT industry that offshore outsourcing is likely to grow, there is little agreement on what to do about it.
Though some European workers associations have put pressure on legislators to re-examine labor policies, friction among politicians, labor leaders and IT industry insiders caused the controversy to flare especially brightly in the U.S., making it one of this year's most public IT-related debates in the country. As more work gets outsourced abroad, the controversy is bound to grow in 2004.
Outsourcers themselves say that as they try to offer better and higher-end IT services, they run into more resistance from the U.S. than elsewhere.
"We have tried to add more value, but we are more successful in Europe. There is also this vocal movement against outsourcing there (in the U.S.) because they say we are stealing their jobs," said Marian Hanganu, marketing manager for TotalSoft, a software company in Bucharest.
As U.S. politicians in state and federal legislatures attempt to deal with the issue by proposing laws that would restrict offshoring, most businesses reject this legislative approach.
Among efforts in Congress to curb offshore outsourcing is an amendment to the appropriations bill for independent agencies and the departments of transportation and treasury. The proposal would prohibit the offshoring of some private contracts with those agencies. The amendment, sponsored by Republican Senators Craig Thomas of Wyoming and George Voinovich of Ohio, could become law when Congress returns from its holiday break, and it's similar to legislation introduced or debated this year in several states, including New Jersey, Maryland, North Carolina, Indiana and Michigan.
"The bills as they're currently written are unworkable," said Rolf Lundberg, senior vice president of congressional affairs for the U.S. Chamber of Commerce, a business alliance. "They place undue restrictions on trade."
For IT vendors, offshoring is an opportunity to cut costs and maintain business agility, bringing development teams closer to various markets around the world, and to engage in 24-hour-per-day development and maintenance.
"We look to use selective outsourcing to help build a more variable cost structure. It has allowed us to maintain services levels and capabilities to make sure internal users can focus on strategic things rather than other internal functions," said Drew Prarie a spokesman for financially ailing Advanced Micro Devices Inc. (AMD).
The big question is, if legislation is not the answer to increased competition from abroad, what is?
Congress should work on cutting the cost of health care in the U.S. and on limiting lawsuits against U.S. companies; those changes would encourage U.S. companies to hire U.S. workers, the Chamber of Commerce's Lundberg said.
U.S. legislators also should focus on improving the country's education system and investing more money in IT research and development, said Doug Comer, director of legal affairs for Intel Corp., during a December forum in Washington, D.C., sponsored by the Center on the Global Information Economy.
However, while improving the U.S. education system and getting U.S. workers to work harder and be more productive may sound worthwhile, it's unlikely that computer programmers with 20 years of experience will go back to college for in-demand occupations like nursing, said Ron Hira, chairman of the research and development committee for the Institute of Electrical and Electronics Engineers-USA (IEEE-USA).
"How do you make these people more agile?" Hira said. "How do you help the people who are 40 years old with tort reform or money for K to 12 (education)?"
Some companies do offer programs designed to ease displaced workers through a transition to another job.
Michael Stubbs, a 41-year-old father of four and a software quality assurance engineer who worked in Boxboro, Massachusetts, at the Development Test Group facility of Cisco Systems Inc.'s Content Networking Business Unit (CNBU), is generally pleased with the severance package and career transitioning services he was offered when the company fired him, he said. Management at the facility said the work he was doing would continue to be done by a team in India, Stubbs said.
He would have preferred his department try to avoid firing him, by moving him to another job or cutting his pay. "I basically begged and pleaded with them ... I would have been more than willing to take a pay cut and more, but they had absolutely no response, they had made up their minds," he said.
