By Ed Frauenheim, 19 March 2004 10:15
NEWS A major association of technical professionals believes that the outsourcing of high-wage jobs to low-wage countries poses a serious, long-term challenge to the United States' technological leadership, economic vitality and military security.
IEEE-USA, the US wing of the Institute of Electrical and Electronics Engineers, said Thursday that the 'offshoring' trend also contributes to high unemployment among US techies.
"We must develop a coordinated national strategy to maintain US technological leadership and promote job growth in the United States," IEEE-USA president John Steadman said in a statement. "But it's going to be difficult to remain technologically competitive, if we continue offshoring the jobs of our innovators at rates currently projected."
In a policy statement, IEEE-USA said US government procurement rules should favour work done in the country and should "restrict the offshoring of work in any instance where there is not a clear long-term economic benefit to the nation or where the work supports technologies that are critical to our national economic or military security."
The group, which boasts more than 225,000 electrical, electronics, computer and software engineers, also wants the government to collect data on offshoring, create new work force assistance programs, and reform the controversial H-1B and L-1 guest visa programs.
So-called offshoring has become a hot election issue, as white-collar workers - including computer programmers - worry that their jobs may be shipped to low-wage countries such as India and China. In a November 2002 report, Forrester Research predicted that 3.3 million US service jobs will move offshore by 2015.
That figure is a small fraction of total US employment. But IEEE-USA said offshoring is contributing to "unprecedented" unemployment rates for US electrical and electronics engineers, along with other information technology professionals.
The joblessness rate for electrical and electronics engineers rose in 2003 to a record 6.2 per cent, compared with 4.2 per cent in 2002, according to IEEE-USA. The 2003 unemployment rate for computer scientists and systems analysts reached an all-time high of 5.2 per cent, the group said.
Industry leaders and some economists have defended the flow of high-tech work abroad, arguing that it leads to more competitive US companies and ultimately creates jobs here. N. Gregory Mankiw, chairman of President Bush's Council of Economic Advisers, backed offshore outsourcing in a recent report. "When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically," Mankiw wrote.
Likely Democratic presidential candidate John Kerry has said that federal contracts, when possible, should be performed by US workers. He has called for an end to tax credits that give corporations breaks for moving jobs offshore.
Defenders of offshoring, however, say limiting global trade in services could backfire in the form of a trade war or decreased innovation in the United States. Technology industry leaders have instead suggested measures such as a permanent tax credit for research and development, more federal R&D funds related to IT, improved education and expanded efforts to help displaced workers.
IEEE-USA backs better education and additional worker assistance. For example, it wants to expand the federal Trade Adjustment Assistance (TAA) programme to cover all workers whose jobs move offshore. The TAA programme, which offers income support and training for workers adversely affected by trade, currently does not apply to all technology professionals.
IEEE-USA also called for both increased federal investments in and a permanent tax credit for R&D. But the group wants to ensure that the resulting activity generally takes place in the United States.
"Federal investments and tax credits for research and development should be limited to work performed in the US," IEEE-USA said.
The professional group also said the H-1B and L-1 visa programmes are frequently used to bring in cheaper labour and can lead to the displacement of US professionals, exploitation of foreign workers, and "accelerated offshoring of engineering and other high-tech jobs."
Use of guest worker visas by India-based companies has been seen as fuelling the shift of technology work abroad.
Backers of the visa programmes say severely restricting them would lead to more work shipped overseas.
Comments
There are 7 comments. Join the discussion
1. Chet Polwin
And to compound this issue, we continue to allow millions of illegal and legal immigrants into this country every year. The USA Today had reported that between 38 and 52 million arrived here in the past decade alone with thousands arriving every day. Common sense dictates that these masses are flooding our schools, labor markets and health care system with new people and needs.
I think it is unfair to Americans of all races, creeds and ethnicities to have to continue to compete with a flooded job market or pay taxes for hundreds of billions of new school construction costs and health care for our new arrivals. Congress knows this is an issue, but refuses to act as they seek the new immigrant vote.
IMO, they are pursuing the wrong tact for ALL Americans, incldung the new arrivals. We must petition to stop massimmigration now.
2. Matt Gordon
Better learn to accept a lower standard of living.
Perhaps we can get retrained in the restaurant or janitorial business.
Welcome to the NWO
How about Mac Donalds or Taco Bell.
Lets all adjust to life in post American America
3. Raymond Golich
It all comes down to whether or not it hits home. If your job/profession is not impacted, off-shoring and/or the importation of foreigners on H-1B/L-1 visas, is not a big deal. If it is your line or work, it's very bad. Just like the related issue of immigration, mass immigration and zero immigration are both wrong philosophies. Simply reducing off-shoring, work visas and immigration by modest amounts can be beneficial. But will it be done? Neither Bush nor Kerry (no Gore, no Clinton) have ever down anything to reduce these things most Americans want reduced. The result? We Americans are losing jobs, our culture, language, customs, etc. All for the glory of 100%, pure, "free trade". Free trade is fine as a general guideline but taken to the nth degree, it is now hurting us.
4. SF guy
I find the issue more fundamental one, rather than an economic one.
I find that offshoring is one more disingenious way for the CFO to make their numbers and please wall street and subsequently their own pockets.
American politicians are in cahoots with the corporate MNC's much like the rest of the world including China , India and Nigeria and will do nothing to stop this flow of profits which swell their coffers.
The soldiers in the armed forces are no different than the consumer programmers who are dispensable @ will to make quick profits to the company bottomline.
I think its time for the American's to kick out the politicians who think they are invincible and go the way Spain did.
if it causes a 15% reduction is obese fortunes of the overwealthy all over the world, it will be the antidote to spur further progress.
5. anonymous
The issue is a lot deeper then companies just saying – “No” to offshore labor.
In order for big businesses to compete against India, China and Russia whilst keeping their competitive edge, then they will have to start to pay their staff an extremely low wage or use offshore skills at that wage. If they won’t use offshore labor then some other company will and force them out of the market unless they become leaner and more competitive.
It’s a hard lesson to swallow but the consumer wants the same technology that we produced yesterday at an even more competitive rate today.
In order for our businesses to stay afloat in the current economic situation we either have to embrace ways of lowering costs, thus passing savings on to our consumers and keeping them happy, or watch our rivals or the so called “developing countries” start to produce the same goods at a lower price thus driving us totally out of the market whilst our consumers buy their goods.
I agree that contracts for certain government areas, including defense, should still follow the high level of security and vetting that exists at the moment, however other areas will have to become economically competitive just to stay viable in the market place.
Ultimately the 'Asian' offshore development centers are highly competitive, very well educated and extremely dedicated to providing quality solutions to the US and European markets.
Why wouldn’t a CEO or IT manager want to take advantage of that simple fact?
Globalization is here to stay, regardless if we like it or not!
6. anonymous
While it was blue collar workers, nobody did anything. Now its the white collar workers, we recognise how unfair it is. The only way to make a change is to vote with your money. Refuse to do business with companies who are outsourcing jobs. Otherwise you will run out of unemployment checks before you get another job. By the way, outsourcing won't bring them the savings they are telling their investors. If they are smart they will have sold their stocks and disappeared over the horizon before the yoghurt hits the fan.
7. anonymous
The UK is also suffering from offshoring and the fear of offshoring. The US projects itself as the epitome of free trade, free speech and democracy. Free trade allows a consumer to purchase their goods anywhere and if they can get it cheaper and at a similar quality in India or China then the consumer benefits. You shouldn't advocate free trade and be protectionist. European and North American governments need to decide which one they want to be.
As developers and IT service providers if you can't compete on price because your overheads are too high and can't be reduced you need to compete elsewhere, like quality, turn around, innovation.
It's a tough world but that's what the future holds. Wait 20 years until China and India are as wealthy as the West and there are 2.5 billion middle class consumers there! By then we can sell our cheaper products back to them.