Maybe Offshoring Really Isn't That Bad?

Maybe Offshoring Really Isn’t That Bad?

            As I have mentioned before, offshoring has this horrible reputation of sucking away American jobs. How true this is, I cannot say wholeheartedly, however it seems like a very quick conclusion to jump to. If it really was as bad as popular media says it is, how is it still existent? Chew on that one for a minute. Last year, the Washington Post distributed an article attempting to give offshoring a better reputation than the one the U.S. populace has constructed thus far.

            Derived from the London School of Economics Center for Economic Performance, this article suggests that offshoring brings about an increase in productivity in America per the study of 58 manufacturers between 2000 and 2007. A 1% increase in offshoring, according to this study, created a 1.72% growth in overall U.S. employment. Additionally, it had what they call a “neutral” effect on job security because the difference was less than 1% (Khimm 2012). As we are seeing now, what kind of jobs are being offshored? Are they the difficult jobs that require cooperative team effort or minute, repetitive tasks that could be done for wages less than the U.S. has to offer? I will pick the latter. This opens up the market for more skilled and complex jobs in the U.S. that will most likely pay more than the unskilled work. The rub occurs when a large unemployed number of Americans who may not be skilled enough to be project managers are left jobless because the simpler tasks are offshored. Who wins here? You tell me.

            Before we get ahead of ourselves, let us not forget to read the small disclaimer at the bottom of the article: This study occurred before the terrible recession of 2008. I bet you the tables are turned quite a bit now.

            Couto et al from the Duke School of Business approach this subject from a slightly different angle. Offshoring is a detriment to sectors depending on the task that is being offshored. In their terms, offshoring is not a “zero-sum game”. Encouraging huh? According to the team’s 2006 survey, 106% cases of Research and Development jobs were not lost onshore during times of offshoring enactment. Marketing and Sales job remained at a solid 87%; the lowest ranking was 47% of cases of back office functions, the area that is most often offshored (Booz et al 2006). Essentially the findings suggest that when higher skilled jobs are offshored, such as Research and Development, the same jobs are not jeopardized on native land. It just broadens the scope in which this function is being completed, but not necessarily acting as a detriment to U.S. laborers.

            What I particularly like about the Cuoto et al piece is their view of laborers across the globe. Pessimists tend to view laborers in other countries with similar skill sets as competition—possibly an enemy to contend with. These researchers view skilled workers as a “supply of laborers”. Instead of competing with them, more laborers simply give businesses more options to work with—optimistic to say the least. I assume most pessimists are the working class that have to compete to be in the talent pool that Booz et al consider full of options.

            Think what you will about how the scarlet letter offshoring has, but consider evidence such as the Duke study before assuming jobs are diminishing left and right in the U.S. Thanks guys! See you next Tuesday!

Works Cited

Couto, V., Mahadeva, M., Lewin, A. Y., & Peeters, C. (n.d.). The globalization of white collar work: The facts and fallout of next-generation offshoring. Offshoring Research Network, Retrieved from https://offshoring.fuqua.duke.edu/pdfs/gowc_v4.pdf

Khimm, S. (2012, July 12). Offshoring creates as many u.s. jobs at it kills, study says. The Washington Post. Retrieved from http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/12/study-offshoring-creates-as-many-u-s-jobs-as-it-kills/