Offshoring of U.S. IT Jobs Continues to Increase

So does onshoring; you've got to pick your specialty

India's second-largest outsourcer reported a 29.6 percent increase in revenue for its most recently closed quarter, expects revenue in its current quarter to be almost 27 percent higher than last year and projects that revenue for the fiscal year that ends March 31, 2011 to be 25 percent higher than 2010.

Bangalore, India-based Infosys Technologies is the first of the big-three Indian outsourcers to report results for the quarter ended Sept. 30. The other two -- Tata Consultancy Services and Wipro are expected to show similar results.

Much of that increase in business for all three companies comes from U.S. firms -- two thirds of overall revenue in the case of Infosys. Ten or 15 years ago you could safely have assumed 1,000 new employees for a Bangalore outsourcer working for U.S. companies meant something close to 1,000 lost IT jobs in the U.S.

Globalization and technology (and the politics of trade) make that equation a lot more complicated. Infosys just announced it would create 1,000 new jobs in the U.S. -- some undoubtedly new immigrants using H-1B visas, but most, because of the shortage of H-1B visas, are going to have to be either U.S. citizens or foreign nationals already working here legitimately.

Computerworld's Pat Thibideau reports that Infosys has between 14,000 and 15,000 workers in the U.S., ouf of a global total of more than 122,000. When it lands a contract in the U.S. it divides projects so that 30 percent of each is accomplished in the country of origin, and the rest elsewhere.

In fact, it's not just Indian-national companies that are hiring more U.S. workers for outsourcing and other service jobs, according to Tom Kiblin, CEO of cloud- and location-hosting company Virtacore .

Data-center locations aren't the key; it's possible to build high-quality, reliable data centers almost anywhere these days, Kilbin says. The 87 or so Equinix has built around the world to support global telecoms and large multinationals is proof of that.

The real skills -- designing and building cloud and virtual infrastructures, adapting legacy applications to run well on them, training others to do the same and troubleshoot problems when they come up -- is a very rare skill set that even big service providers have to look hard to find.

"We hire a lot more of these guys than even a big user company, because that's what we do for a living," Kiblin says. "So, yeah, service providers are usually willing to pay a higher salary to get what we want, but having to look that hard and offer premiums means there aren't that many of those guys out there."

Quite a few U.S. nationals who moved overseas to supervise or work in outsourcing operations are moving back, in fact. It's too early to see numbers in census or BLS employment figures, but even in big outsourcing deals where a significant chunk of the work might go to India or some other offshoring haven, many of the best jobs stay in the U.S. and, what's more, stay at service providers rather than end-user customers.

"It's absolutely true, and it's been going on for a long time," Kiblin said. "What we're doing, and Rackspace adn Amazon, the skillset is so different that if you were at a Fortune 500 where you have a routing team, a load balancing team, a SAN team...

"Our guys have to be skilled in many areas -- OS, hypervisor, storage, routing, backups. You can't find that overseas, Kiblin said. "In three to five years people [at outsourcers and corporate IT] will realize people have to be cross-trained and multiplatform capable to be an asset to the organization.

Jacksonville, Fla.'s Enterprise Integration has been growing almost 30 percent per year and continues to staff up exclusively in the U.S., despite potential savings in India.

Part of the reason is customer service -- CEO Michael Locher believes he can give customers better service with people located in the same hemisphere.

With cloud and virtual computing, many companies just aren't ready to see their data and applications go up into the cloud, let alone overseas where another company's laws might restrict the parent company's use of them, or allow local representatives to misuse them.

Market share for U.S.-based IT service providers has increased from 8 percent last year to 11 percent this year, partly due to the types of service and security they provide, according to a study from accounting and IT consulting company BDO Seidman.

It's also a matter of perception completely separate from the chants to keep IT jobs in the U.s.

"Virtualization and cloud are helping the whole silo effect in IT to go away, and people in Fortune 500s are starting to see that. It's not that common to do much about it, though," he said.

That doesn't mean U.S. firms won't continue to ship IT jobs overseas, for the right functions and the right price. It does mean U.S. service companies have a chance to either bring some of that business back or keep it here in the first place.

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