CEOs defend moving jobs offshore at tech summit

Moving IT jobs outside of the U.S. is necessary if technology companies want to remain competitive in a world market, a group of software vendor chief executive officers (CEOs) said last week.

Most of the 11 CEOs defended moving some IT jobs outside of the U.S. during a panel discussion on “the next wave of innovation” at the Business Software Alliance’s Global Tech Summit in Washington, D.C. Moving low-level IT jobs outside the U.S. doesn’t take away jobs from U.S. workers, argued Tom Noonan, chairman, president and CEO of Internet Security Systems Inc., because outsourcing allows cost savings and drives companies to focus their U.S. workforces on higher-paying IT jobs.

“The economic advantage is created by accelerating more jobs here in the U.S. because you move the day-to-day labour offshore,” Noonan said. “This is not a displacement of jobs, in our mind, this is an enabler of good jobs.”

Panel moderator Lou Dobbs, a CNN anchor, questioned whether moving IT jobs offshore was simply about companies trying to pay the lowest possible wages. Art Coviello, president and CEO of RSA Security Inc. said he worried about the political fallout over moving jobs from the U.S. to other countries.

“I absolutely think it’s driven by the short-term profit margin,” Coviello said. “But I think the unintended consequence is innovation.” As low-wage jobs go overseas, the U.S. has been forced to invest in higher-wage, more innovative industries such as biotechnology and health care, Coviello added.

Moving IT jobs offshore, and the number of visas allowed to IT workers coming into the U.S., are becoming a hot debate in Washington this year, as Congress considers whether to raise the number of H-1B visas allowed for 2004.

Driven by a stagnant economy and concerns over security, some state legislators across the U.S. have also tried to stop the relocation of jobs by introducing bills prohibiting state governments projects from using offshore IT workers.

But the CEOs on the panel said the offshore moves provide several benefits, including access to highly skilled employees who want to work. “Those of us who are first in India, for instance, are seeing masters degreed engineers that will do call-centre work,” said Carol Bartz, chairwoman, CEO and president of Autodesk Inc. “We’re seeing people eager to have these jobs, not just showing up. Sure, it’s cost cutting, but we are seeing very high-quality labour, let’s not diminish that.”

Other IT CEOs on the panel argued that moving IT jobs is necessary in a global market, where 50 percent or more of some software companies’ sales are outside the U.S. The biggest fear that some IT CEOs have is that foreign markets will close their borders to U.S. products, said Gregory Bentley, CEO of Bentley Systems Inc. U.S. companies hiring workers in countries outside the U.S. encourage those countries to be open to U.S. products, he said.

While about two-thirds of his company’s 1,500 jobs are in the U.S., jobs in Pakistan help create a stable and U.S. friendly economy there, Bentley added. “There are some jobs that can’t be done at U.S. wages,” Bentley said, “All those (U.S.) jobs are at stake if we lose foreign markets. The long-term view is that it’s essential for the growth of software to have global markets remain open markets.”

The outsourcing debate was among the most lively during the innovation panel discussion, with most of the rest of the discussion centering around the CEOs’ optimism about the future of IT. Moderator Dobbs also raised questions about cybersecurity, asking what responsibility tech CEOs have to ensure security.

The panel agreed that security needs to be a top priority for all companies deploying IT systems. A series of cyberattacks in August should have served as a wake-up call to CEOs and government leaders, said George Samenuk, chairman and CEO of Network Associates Inc.

“The security business is in a revolutionary period right now, not an evolutionary period, a revolutionary period,” Samenuk added. “It’s no longer OK to put out antivirus software, security software that reacts to attacks. You have to be proactive.”

After launching the security discussion, Dobbs took the software CEOs to task for not stopping spam from reaching his e-mail in-box. Spam is a bigger issue for him than other cybersecurity debates, Dobbs said.

“We need to deal with that issue, and frankly … you’re disappointing the hell out of me,” Dobbs told the software CEOs. “You guys told me the Internet was great.”

The CEO panel suggested a combination new legislation creating criminal penalties for sending some spam, digital signatures that credential Internet users, and other technologies could solve the spam problem. At least two of the panelists suggested some kind of fee for sending e-mail would discourage spammers. Fees for sending bulk e-mail wouldn’t have to be legislated, but could be charged by corporations receiving the e-mail, said William Conner, chairman, president and CEO of Entrust Inc.

“If California would impose a 10-cent tax per e-mail, and they collected the fees, that would actually then almost (free) them from their deficit,” said Dale Fuller, president of CEO of Borland Software Corp., apparently joking.

Later in the day, Tom Ridge, secretary of the U.S. Department of Homeland Security, suggested that it may be time to require public companies to report their cybersecurity efforts in filings with the U.S. Securities and Exchange Commission. All companies need to be made aware of the benefits to their businesses if they improve cybersecurity, Ridge said.

“I believe the marketplace is ready to reward security in a big way,” he said. “Security means reliability. How much is this reliability worth to a customer who buys software or hardware from your companies?”

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Jim Love, Chief Content Officer, IT World Canada

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