Offshore Casualties Speak Out

Is offshore outsourcing creating new opportunities for IT workers, or is it ruining the lives of hundreds of thousands of Americans? It depends on whom you ask, of course, but clearly it is an emotionally charged issue that will only intensify this year. Perhaps it's because the presidential campaign is now in full swing, but tensions are picking up.

Case in point: A recent offshore outsourcing conference in New York held by the Strategic Research Institute was met by demonstrators from the Communications Workers of America, United Steel Workers and the IEEE, among others, who have found themselves out of work when the companies they were employed by moved their IT jobs overseas.

One such protester was James Pace, a former programmer and systems analyst at Cigna. Pace says he lost his $120,000-per-year job eight months ago because Cigna moved 200 IT positions overseas. Unable to find a similar position elsewhere because the trend has become so pervasive, Pace now sells cars and earns an annual income of $40,000.

Proponents of offshore outsourcing--customers and systems-integration firms alike--say that moving functions such as application development and maintenance to countries where labor is cheaper can save an organization up to 30 percent in labor costs. Management consulting firm McKinsey & Co., in a report released last year and presented at last month's offshore outsourcing conference in New York, says that for every dollar spent on offshore outsourcing, $1.14 in economic benefits is generated for the United States.

Moreover, those who advocate moving programming tasks offshore say doing so gives employees here the opportunity to take on higher-level roles, such as becoming business analysts, design experts, systems architects and database managers.

"There are a lot of things that are very difficult to [send] offshore today," says Chris Brown, vice president of technology services at Cap Gemini Ernst & Young.

Pace, however, begs to differ.

"I don't see where it's creating more jobs," says Pace, who volunteers his time as a legislative-affairs director for the group Rescue American Jobs (rescueamericanjobs.org).

And John Bauman, president of The Organization for the Rights of American Workers (www.toraw.org), points to another wrinkle in the plan: While he doesn't refute the legality of using overseas solution providers, the problem, he says, is that corporations are bringing employees to the United States on L-1 visas, which are considered intercompany transfers and are meant for companies actually doing business back and forth.

"They are now using third-party vendors that only use those employees, and they pay no taxes to the United States. The real problem is that doesn't show up anywhere," says Bauman, who lost his job as a project team leader at Northeast Utilities in 2002 and has yet to find a position in the IT industry, given that so many other potential employers are moving work overseas. He held down a job as a FedEx driver during the holidays.

"I know people who are selling insurance or even working at the supermarket just to make ends meet," he says.

Still, most pundits agree offshore outsourcing will continue to accelerate this year and into the future. Citing research by Forrester Research and the Bureau of Labor Statistics, Cohen also said 3.3 million jobs will go offshore by 2015. That's a rate of 211,000 per year.