Offshoring's Impact on Silicon Valley

Ann All

With Silicon Valley's high concentration of IT jobs (7 percent of the workforce, compared to 2.2 percent nationwide), it's not too surprising that the Brookings Institution predicts the high-tech mecca will likely lose more jobs to offshoring than any other U.S. region over the next decade.


The projected numbers sure sound scary: At least one in every five computer programming, software engineering and data entry jobs that existed in the Valley in 2004 will vanish by 2015. As bad as that sounds, however, the researchers characterize the stats as "moderate" in the context of annual loss of jobs due to all factors.


Part of the problem could be the high costs of doing business in Silicon Valley. Tech workers there earned an average wage of $126,700 in 2004. That's pretty steep in comparison with the national average compensation of $72,400 for U.S. tech workers the same year -- and sky high when compared to salaries in India.


Other areas that the Brookings Institution says will be hit hard by offshoring's impact: Boulder, Colo., Lowell, Mass., and Stamford, Conn.


The Brookings Institution researchers say their intent isn't to rile people up about offshoring, but rather to influence public policy decisions that could help stop some of the job losses. (A tall order, perhaps, considering the government's recent difficulties with its own outsourcing activities.)


Even without job losses, there's no question globalization has a huge impact on Silicon Valley. In a study released earlier this year, researchers from Duke and Cal-Berkeley found that 52 percent of Silicon Valley start-ups had at least one foreign founder.

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