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Offshore Outsourcing Issues

It's impossible to erect walls around the U.S. labor force short of dismantling the global economy we helped build.

As with any trend that threatens people's livelihoods, offshore outsourcing has become emotionally charged, with critics calling for laws and regulations to stem the tide. Democratic presidential candidate John Kerry is the latest populist to get hot under the white collar, saying he'd pull certain tax breaks from U.S. companies that move jobs overseas. There are rumblings among IT professionals about forming unions or even initiating class-action suits for unlawful termination. Groups representing displaced IT workers have organized protests.

Meantime, tech-company CEOs are standing firm, calling for unfettered access to global labor, not only to staff their multinational corporations, but also to head off protectionism abroad, where more than half their companies' revenue is generated. Likewise, enterprise IT execs say they have no choice but to outsource work abroad to reduce costs and stay competitive.

Reasonable people can disagree about the long-term ramifications of offshore outsourcing, but let's agree that this trend won't be legislated away. It's impossible to erect walls around the U.S. labor force short of dismantling the global economy this country has helped build over the past two decades--an economy that created more jobs and higher living standards than in any prior 20-year period. We must separate fact from perception, then figure out the best courses of action given harsh economic and business realities.

Not every U.S. company is looking to supplant domestic IT workers. Among the Fortune 1000, the most global of companies, 60 percent have yet to spend a dime of their IT services budgets with foreign firms, according to Forrester Research, while 25 percent to 30 percent have contracted foreign vendors for only small IT projects. Less than 5 percent have developed global IT sourcing as a core skill, Forrester says.

Displaced programmers and other personnel will find work in other IT positions that will remain in high demand domestically, IDC maintains, or they'll learn new skills for emerging technologies. Of course, these transitions won't come without pain and upheaval.

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