Study: Higher-Skills Jobs to Move Offshore

Ann All

Based on the wildly disparate numbers offered in a couple surveys released earlier this year, it's hard to know how many U.S. companies send work offshore.


Just 6 percent of respondents to a Robert Half Technology survey said their companies offshored at least some tasks. This number struck many industry observers as awfully low, with some folks suggesting that folks may not have accounted for the offshore activities of multi-national service providers like IBM, EDS and Accenture.


More than 40 percent of the respondents in two other surveys, conducted by CIO Insight and BDO Seidman LLP, said their companies were involved in offshoring. The latter survey, in which 49 percent of respondents mentioned offshoring, focused on the tech sector, which traditionally makes heavy use of offshore labor.


A new survey from and the Wharton School of the University of Pennsylvania offers a number somewhere in the middle of the others, with 13 percent of respondents saying their companies outsourced to third-party vendors outside the U.S. in 2007 and 7.5 percent saying they weren't sure. Four percent of these respondents said their companies planned to step up offshoring in 2008. Seven percent said offshoring would be maintained at the same levels, and 13 percent weren't sure.


The statistic that is getting the most media attention is the 28 percent of companies that say they are sending an increasing number of high-wage, high-skills jobs overseas. Sixty-nine percent of respondents say these types of jobs are at equal or greater risk of being offshored than low-skill jobs.


Leading the list of high-skills jobs companies plan to offshore: computer programmers and software developers (each mentioned by 32 percent), customer service (25 percent), system analysts (16 percent), sales managers and graphics designers (8 percent each).


Among the industries reporting the highest rates of offshoring: technology services, telecommunications, insurance, manufacturing, engineering and banking/finance.


In a more positive slant, 28 percent of the surveyed companies said offshoring had allowed them to create new and better types of jobs in the U.S. According to a Wharton School participant in the study, job displacement related to offshoring accounts for a "relatively small proportion" of annual U.S. job turnover.


It's easy to see why companies offshore, based on the cost savings many of them say they achieve. Saving money remains the top motivator for offshoring, say 64 percent of respondents. Offshoring IT yields annual savings of $20,000 per head for most companies, with savings rising to $50,000 for 15 percent of employers.


Other top reasons for offshoring: gaining access to needed skills (27 percent) and plans for market expansion (19 percent). Companies expanding their market presence were more inclined to send sales and support positions offshore, according to researchers.

Add Comment      Leave a comment on this blog post
May 9, 2008 10:03 AM Martin Buckland Martin Buckland  says:
Interesting comments. As a Career Management Professional I see jobs eliminated all the time due to offshoring, however, I think this tide is slowing. I sincerely hope so! Reply
May 12, 2008 3:13 AM Frits Bos Frits Bos  says:
When it comes to high-tech jobs and the experience we have had first hand with off-shore development there is that nagging question about how much is being saved. Of course, if you assume that doing the work in-house would have required exactly the same number of hours as charged by the vendor, and that your overhead in terms of SME involvement would be equal, then lower hourly rates reflect savings. If the job ends up taking a lot more time and/or resources, are companies that use outsourcing honestly reporting their folly or are they using euphemisms to strategically reconsider future major initiatives that may again be done in-house? It just seems that surveys might influence the answers and thus the conclusions without objective analysis... Reply
May 12, 2008 4:46 AM Jim from Atlanta Jim from Atlanta  says:
I work in the IT services industry where I have seen an ever increasing number of high tech jobs out-sourced at all levels. The number of outsourced jobs will multiply as the outsourcing business model matures. The global economy and committement to shareholder value has made it much easier for American companies to justify outsourcing jobs and operations. What hasn't been determined is the impact of the "brain drain" on America and the competivness of the American worker and ultimately American companies in the future. Reply
May 12, 2008 11:40 AM Ron Spring Ron Spring  says:
My high tech company continues to off-shore to India, escalating the support level to 2nd and 3rd tier groups. Unlike the article above, we have not experienced a resultant increase in 'new and better types of jobs in the U.S.' 35-40% of hour wages jobs have been outsourced by my Fortune 500 company. Ironically, not one management level position [re: salaried] was lost in all this transitioning. Leaves one to wonder. Reply
Jul 25, 2008 12:46 PM Jeff Zorn Jeff Zorn  says:
As an IT worker for the last 20 years, I have in many cases had to train East Indian workers to take my job. During the Christmas Pot Luck last December, I noted that 90 percent of the IT staff (over 260) was east Indian. I an american, lost my job shortly afterwards. Perhaps it was to awkward having an american work in IT. The fact remains it has been a horrible exploitation, and LOSS for American IT Workers. Currently there is one job in my area available, for the skill levels that I have...My area is a city of over 20 million. Reply

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