Communications of the ACM
IT Jobs on the Rise
Credit: That's The IT Guys
As growth returns to the world economy, outsourcing returned to favor in 2011 and will continue to post gains in 2012 as well, according to a report by Morrison & Foerster. Although the macro-trend is continued growth in the use of IT outsourcing, it's not all going overseas. "Labor arbitrage" — the difference in wage rates between the United States and other countries — is decreasing, particularly in China. As it becomes more attractive to "insource" and "rural-source" to U.S.-based providers, the Chinese are now emphasizing competitive advantages beyond cheaper labor costs. Although many, and perhaps most, of the companies shifting to rural America are still small, large companies are also packing up and moving parts of their operations to places like North Dakota.
The U.S. outsourcing market is recovering, with the financial services segment leading the way. For all industry sectors, however, last year's activity was essentially at or above the five-year average, which can be taken as an indication of a broad-based increase in overall economic strength. During the worst of the recession, companies balked at the high upfront costs of outsourcing, and they weren't willing to wait the years it would take to recover their initial outlay through subsequent savings. The firm's report reveals other key findings. Today, the Chinese outsourcing industry is roughly a $20 billion business, and the Chinese government is intent on growing that number. Despite public opposition, U.S. state governments — faced with the conflicting demands of shrinking budgets and the need to revamp aging IT infrastructures — are beginning to look at outsourcing as a solution.
Election-year politics complicates any discussion of outsourcing. Politicians know they can attract voters by railing against foreign companies that take away jobs from Americans. The talk mostly peaks during presidential-election years, then fades. Politicians, with an eye out for campaign contributors, listen hard to businesses that want to outsource or keep the tax breaks they receive by earning profits overseas. Still, a recently proposed bill, the U.S. Call Center Worker and Consumer Protection Act, may indicate whether political sentiment has shifted in employees' favor. This bill would make it difficult for companies to get federal loan guarantees if they offshore call centers. If passed, the bill would also require companies with offshore call centers to register with the Labor Department.
From InfoWorld
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