February 18, 2012, 7:45 AM — When you hear U.S. politicians railing this loudly against corporate outsourcing, you know it's an election year.
With job creation a prime campaign issue, the O-word is a hot topic across presidential primary debates, congressional committees and the president's State of the Union address. Setting aside the fact that those running for office really mean to rally against offshoring, not outsourcing -- after all, U.S. corporations are replacing American workers with direct hires overseas, and a company can theoretically outsource domestically without net job loss -- their proposed solutions would likely do little to stem the flow of IT jobs overseas.
Many of the suggested initiatives, including those put forward by President Obama, are focused mainly on manufacturing, rather than services such as IT. And those that could impact the IT services industry -- legislation to limit visas for foreign IT professionals or to compel U.S. corporations to report employment figures by country -- are hardly comprehensive cures for what ails the American tech sector.
When it comes to offshoring, "while politicians need to be seen to be against it, they do little to prevent it," said Phil Fersht, founder of outsourcing analyst firm HfS Research.
If government leaders really want to retain (or regain, depending whom you ask) America's competitiveness in the global IT service market, here are some changes that could actually make a difference:
Rebuild Brand USA
Much political hay has been made recently of select American companies repatriating their manufacturing operations -- not as a patriotic act, but because the cost of sourcing the work stateside had become competitive with overseas options. And that may be the case for some IT work as well: Boise's labor rates are coming in line with Bangalore's.
The problem, according to Fersht, is that India now the dominant IT services brand in the world. And government and industry groups in competing countries are all hard at work creating and promoting their own IT services identities. The United States? Not so much.
"We've even seen enterprises actually declining to use onshore U.S. IT services firms which underbid their Indian competition, because they are so invested in the Indian IT brand," Fersht said. "The Chinese and Indian governments, as examples, constantly invest in their local business to help them grow and be successful."
A stronger American IT services trade group would help, too. Monty Hamilton, CEO of Atlanta-based IT and BPO provider Rural Sourcing -- not generally a fan of government intervention in industry -- wouldn't mind a little NGO support. "There is a successful model that the U.S. can implement to better position us to compete for and win more technology jobs," Hamilton said. "The model is NASSCOM."
Become the (Data) Host With the Most
If you build it, they could come. "If the federal government wants to grow [IT] jobs, they should provide incentives for building data center capacity," said Mark Ruckman of outsourcing consultancy Sanda Partners. "Make the U.S. the place where international companies want to host their data."
That kind of initiative could boost not only the domestic IT services industry, but the hardware and construction sectors as well. But only if the United States doesn't scare off overseas outsourcing customers with data privacy concerns. Government leaders should consider "limiting the ability of the U.S. government to use the Patriot Act and other tools to access corporate data as desired," Ruckman added. "Many [foreign] companies that would bring IT services and data to the U.S. prefer to send IT services and data to Canada or Europe to [avoid] the long arms of the FBI, Justice Department, CIA and Department of Homeland Security."
Devise a Long-Term Plan for Resurgence
Some observers also argue that U.S. policymakers have been short-sighted in their planning.
"The U.S. government is not overly concerned with a long term-view of anything," said Adam Strichman, founder of Sanda Partners. "The farthest their eyes can see is four years, which is not enough time."
