Tuesday, February 20, 2007

previous entry | main | next entry | TrackBack (0)

One anti-offshoring advocate changes his mind

Via Greg Mankiw, I find this Andrew Cassel column in the Philadelphia Inquirer pointing out that, around or about three years ago, everyone was freaking out about offshore outsourcing. Yeah, what happened there?

[T]his month marks the third year since the Great Offshoring Scare of 2004.

Remember? It was this month three years ago that Americans woke up to the shocking realization that many of the voices on the other end of the tech-support help line were in India, or Ukraine, or the Philippines. The news hit like a rock, and life was never the same again.

OK, I'm exaggerating. A lot of us actually knew about offshoring before then. And as for life never being the same... well, you decide.

That month, Wired magazine, which keeps its finger on the pulse of the information-technology community, published a cover article about the spreading revolt of American tech workers against firms that filled programming and other jobs overseas.

One of Wired's key interviews was with Scott Kirwin of Wilmington, who had lost his job doing back-office tech work for a bank in Delaware. The experience had shaken Kirwin's faith in American business and prompted him to start a grassroots activist group to lobby for protection against offshoring....

And what happened next? Nothing.

Nothing, that is, like the massive outflow of jobs that many feared. Employment growth, which had been notably slow after the 2001 recession, picked up in the United States. (We've gained more than five million jobs since early 2004.) Recruiters who specialize in information-technology workers say they have more openings than they can fill.

And as a hot-button headline issue, offshoring appears to have gone the way of Y2K and the Red Menace. File it under N, for Not as Big a Deal as We Thought.

Yes, some still see offshoring as a threat, sort of. A Brookings Institution report last week said some metropolitan regions with lots of high-tech employment could see as many as 4.3 percent of their jobs go overseas. (Philadelphia isn't so vulnerable - the Brookings report estimates our potential losses at 2.5 percent at the most.)

But most economists who've looked at the issue rate the long-run economic impact of offshoring as either (1) minimal, or (2) positive. Using overseas workers to save money or boost productivity generally results in better or cheaper services, which in turn leads to more competition, more innovation, and growth.

But you don't have to take my word for it. Listen to Scott Kirwin, who made a return appearance in December to Wired magazine. Things have changed. He shut down his anti-offshoring Web site in 2006 and has since found himself a better job in the software business. "I don't view outsourcing as the big threat it was," he told the magazine. "In the end, America may be stronger for it." (emphasis added)

Gee, that sounds familiar....

UPDATE: Whoops!! The original title to this post read "anti-offhoring" rather than "anti-offshoring," which takes the conversation to places I do not want to go.

Fixed now.

posted by Dan on 02.20.07 at 04:42 PM


Um, might want to edit the title - not sure what offhoring is or whether it has anything to do with killing prostitutes...

posted by: Drew on 02.20.07 at 04:42 PM [permalink]

"Offhoring": taking trips to Thailand for, uh, business purposes.

posted by: Norman Pfyster on 02.20.07 at 04:42 PM [permalink]

Apparently people are drawing these conclusions by looking at the national unemployment data and drawing the sweeeping conclusion that offshoring is not a problem.

Sloppy thinking, sophomore thinking.

Not only are many American workers being hurt by offshoring, there is a significant UNDERemployment issue in both white collar and blue collar jobs that must be considered. There are regional issues, there are industry issues, etc.

If a college sophomore made this kind of sweeping generalization we would saturate the paper with red ink.

posted by: save_the_rustbelt on 02.20.07 at 04:42 PM [permalink]

"..and life was never the same again."

At least one thing is the same: rustbelt is still trolling his unsubstantiated claims of underemployment.

posted by: kwo on 02.20.07 at 04:42 PM [permalink]

Tech employment remains substantially below where it was in 2000, and in fact has barely budged off it's lows of 2004. No doubt they can't fill these openings, but that is because no one wants them anymore. The pay is not that good and the employment is extremely cyclical and temporary. The writing has been on the wall for a long time. If you want a career, you need to enter a field not subject to offshoring. You can call that progress at least.

posted by: Lord on 02.20.07 at 04:42 PM [permalink]

Lord said...
"Tech employment remains substantially below where it was in 2000, and in fact has barely budged off it's lows of 2004. No doubt they can't fill these openings, but that is because no one wants them anymore."

Where are you getting your data from? As the article pointed out, tech recruiters have more openings than they can fill. That directly contradicts your suggestion. My own personal experience (I'm a 15-yr software engineer) is that the recruiter is correct: there aren't enough skilled engineers/technicians to fill the openings.

posted by: kwo on 02.20.07 at 04:42 PM [permalink]

I ran a IT services firm for many years, and I can tell you (only from my experience) that there are many IT jobs that are difficult to fill, and yet there are lots of un-employed IT people. How can that be? One way to look at it is that the un-employed choose to be un-employed because they won't work for the salary that's offered. I guess that's their own fault. But there is no doubt that salaries have fallen for people in a wide range of skill levels. Who can blame them for feeling angry about needing to learn a new field, when they thought their livelihood was safe as long as they stayed current in their skills?

PS, I got out of the business because I couldn't compete with the Asians.

posted by: EX-IT-Guy on 02.20.07 at 04:42 PM [permalink]

more openings than they can fill

There are always more openings which for any number of reasons cannot be filled. The pay or benefits may be bad, the conditions or environment may be intolerable, the duration or tenure may not be worthwhile, the location may be unacceptable. The criteria is not unfilled openings but openings that are created to be filled. The days of posting openings to be filled are long past. No one ever filled them anyway. Rather, they network to find the people they want and create the positions to be filled. Recruiters without networks have largely been made obsolete.

posted by: Lord on 02.20.07 at 04:42 PM [permalink]


The un-and-under employed techies I know are almost all over the age of 50 - seems turning 50 marks the end of a career, despite competence.


Try a Google search, or just skim a dozen newspaper a day as I do, and read economics incessantly. Lots of data.

posted by: save_the_rustbelt on 02.20.07 at 04:42 PM [permalink]

Several replies, and still no data to back up the claims of IT unemployment due to offshoring.

I don't have any data either. But I'm a working professional in the field whose personal experience is that there are more good jobs than good applicants. That's anecdotal evidence and unpersuasive I know, but that's where I'm at. You wanna convince me otherwise, you're gonna need something more than "search google".

Ex-IT: There was a point four or five years ago where engineering jobs were a bit scarce. I know of a couple skilled engineers that went several months without a good offer and thus switched careers at that point. That was quite a while ago. I'm currently not hearing of anyone having to switch careers because there's no good openings for skilled engineers. Maybe it's happening and I'm not seeing it, but I've got plenty of friends in the business in my area, they don't seem to be seeing it either.

And for the record, my company currently outsources some of our programming and testing. I expect by the end of the year that the programming will come back in house, because the offshore programmers aren't getting the job done.

posted by: kwo on 02.20.07 at 04:42 PM [permalink]

Actually it bottomed three years ago. I agree, there are more jobs than applicants since seekers have long since realized applying for them is for the inexperienced or uninformed. No one is hired on that basis anymore and it is a pointless waste of time.

posted by: Lord on 02.20.07 at 04:42 PM [permalink]

Post a Comment:


Email Address:



Remember your info?