Here’s a comforting bedtime story: Offshoring won’t just save companies money. It will also create jobs. And reduce inflation. And grow the economy. Those are the top-line conclusions of a new report from the Information Technology Association of America, the IT vendors’ lobbying group.
Just don’t read very far past that top line — at least, not if you want to get any sleep tonight.
See, the report says those new jobs won’t be IT jobs. And that reduced inflation will come in part from lower pay — “wage compression,” as it’s charmingly dubbed by the report’s principal author, Global Insight Inc. chief economist Nariman Behravesh.
And that economic growth depends on the willingness of the foreign employees who get our offshored jobs to spend their paycheques on U.S.-made exports.
Don’t take my word for it. It’s all in the report, brought to you by the people who, just a few years ago, were saying that the U.S. desperately needed to increase its IT workforce. Yes, really. Since early 2000, the ITAA has predicted the creation of more than four million new U.S. IT jobs — 1.8 million of which would go begging because there just wouldn’t be enough IT people to fill them.
How many new U.S. IT jobs have actually been created since 2000? According to the ITAA’s own annual jobs report, maybe 400,000.
But wait — according to this new report, since the dot-com bubble burst in 2000, a total of 372,000 software and IT services jobs have been lost in the U.S. (Only 104,000 were lost to offshoring; the rest went because of the recession, productivity gains and an end to what the report calls “overhiring.”)
The new report also predicts that “in the software and services area, the economy will create 516,000 jobs over the next five years in an environment with global sourcing but only 490,000 without it. Of these 516,000 new jobs, 272,000 will go offshore and 244,000 will remain onshore. Thus the U.S. IT workforce will continue to grow.”
So, let’s do the math: Without offshoring, the U.S. gets 490,000 new IT jobs in the next five years, a net increase since 2000 of 118,000 U.S. IT jobs. With offshoring, the U.S. gets 244,000 new IT jobs — a net loss since 2000 of 128,000 U.S. IT jobs. Some growth, eh?
Yes, there will be new jobs — in education, health services, transportation, utilities and construction, all areas where the work can’t easily be shipped overseas. They just won’t be jobs in IT.
At least that’s what the ITAA’s offshoring report says. Is it true? Well, remember that this report is driven by politics every bit as much as the ITAA’s wildly optimistic job-growth estimates of a few years ago.
Back then, the ITAA was lobbying for more H-1B visas, and its jobs survey miraculously showed a spectacular increase in the number of U.S. IT job openings about to be created. Now the ITAA is lobbying against restrictions on offshoring. And, amazingly, its new report concludes that offshoring will do everything but whiten teeth and freshen breath.
So if you’re a techie, you may be able to sleep a little easier. After all, you already know what you need to do in order to dodge the offshoring bullet: build up your business skills, increase your face time with users and generally become the kind of IT person whose job can’t easily be shipped overseas. And if you’re an IT manager or CIO? Then it’s not so easy. See, some people will take this report seriously. Like your best techies, who may decide to bail out of a shrinking IT job market. Or the brightest students, who may conclude that IT is a dead end and opt for business or law or medicine instead.
That could leave you with the loss of your best people and not enough new kids coming in to replace them — a staffing nightmare, courtesy of the ITAA’s fumbled efforts to hype the benefits of offshoring.
Frank Hayes, Computerworld’s senior news columnist, has covered IT for more than 20 years. Contact him at email@example.com.