The Offshore Exodus

Six months later, the subject has become a subject of considerable controversy. So much so that New Jersey lawmakers are considering a bill to limit the use of foreign workers by companies doing business for the state. As for the federal government, David Muzio, procurement policy analyst for the Office of Electronic Government and Information Technology, recently said it will not tap offshore operations for outsourcing projects and is likewise seeking to prevent its subcontractors from doing so.

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HEATHER CLANCY

Can be reached via e-mail at [email protected].

That said, research firm IDC predicts that by 2007, 23 percent of spending related to IT services will be tied to foreign providers. And Forrester Research issued a report late last year forecasting that by 2015, 3.3 million jobs would move offshore, led by IT services. Consider that India's IT services market posted a 56 percent compound annual growth rate between 1997 and 2002 and will likely expand 22 percent for last year, according to the National Association of Software and Service Companies, an industry association in India.

This is a big dilemma for U.S. solution providers, particularly those that provide development services. The fact is, it has become cheaper to pay foreign labor for certain tasks such as coding or handling call-center duties. According to The Yankee Group, savings can range from 20 percent to 70 percent depending on where the job is based and the type of skill required.

We need to put the whole offshore thing into perspective. Why should we mess around with a VAR's ability to control costs simply because it is doing work for the government? Sure, it's appropriate to seek ways to curb the flight of jobs to places outside the United States, but the reality is that the IT services workforce in India is still less than 10 percent that of the United States, as Yankee Group notes. As the economy improves, solution providers should focus on creating higher-value services, which in turn will create new positions to replace those that have moved offshore. After all, isn't this sort of ebb and flow what free market capitalism is all about?

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What's your position? HEATHER CLANCY, Editor at CRN, welcomes your letters to the editor at [email protected].