May 17, 2004

Offshoring is taking off, Forrester reports

Author: Robin 'Roblimo' Miller

ORLANDO, Fla. -- Forrester
Research's
latest estimates of anticipated job offshoring, released
today at the consultancy's annual GigaWorld
2004
conference, are somewhat higher than earlier figures indicated. The
new projections say we can expect 3.4 million jobs (and $151.2 billion
in payroll) to leave the U.S. by 2015.Despite some recent highly publicized "pullbacks" from offshoring,
including Dell Computer's enterprise customer service operation,
Forrester's analysts say offshoring is going nowhere but up. Indeed,
Dell has increased its offshoring efforts this year even as the company
trumpets the fact that it's bringing a few positions back to the U.S.

Dell and other major companies are learning one lesson, though: When you
send jobs out of the U.S. you should do it as quietly as possible.
Because of potential marketplace and political backlash, stealth
offshoring is becoming more common, to the point where Forrester analyst
Stephanie Moore says she knows of one company that won't allow its
employees to use the word "offshore" at all, ever, in any context.

One interesting note brought up by Forrester people during a casual
disucussion of the topic is that media attention to offshoring is a
large cause of increased interest in the idea by corporate managers.
While Forrester did not say how many of the 1,300+ articles they say have
been written about offshoring in the last year were negative, it looks
like even a negative article about foreign workers taking American jobs
and doing them for 1/5 of an American's pay tend to provoke a "Whoa! I
got to get me some of that!" reaction from many executives.

It's only just begun

There is plenty of room for offshoring growth. According to Forrester,
about 58% of the 139 companies it surveyed on the subject this year
are not offshoring any jobs and don't plan to in the future, with only
6% saying, "We use offshore wherever possible." But the percentage of
"Full Bystanders" (Forrester's term for companies that do no offshoring)
is declining, while the percentage of "Full Exploiters" (companies that
offshore as much as they can) is increasing at an accelerating pace.

While the overseas movement of IT jobs is the one that usually gets the
most press in IT-oriented media, it is not the only affected field.
Forrester claims that by 2015 we can expect 542,000 U.S. IT jobs to move
overseas, but at the same time 618,000 management and business jobs will
go with them, along with close to 200,000 architectural jobs, nearly
80,000 in the legal field, 30,000 art and design positions, 218,000
sales positions, and 39,000 in the life sciences field.

Politicians can't stop thinking about offshoring

The glossy report Forrester handed out to media attendees at GigaWorld
titled "Near-Term Growth of Offshoring Accelerating" is the source of
most numbers in this article. That report also contained this paragraph:

The growth in offshoring, coupled with slow economic growth, will mean
that job losses will remain a political lightning rod. While no onerous
legislation will come from the debate, the potential for bad PR will
force more companies underground and into an offshore "witness
protection program."

The debate will rage, in other words, but the jobs will keep going
offshore no matter what political officeholders and candidates do or
say. It is an unstoppable trend, one that might eventually sweep up some
of the analysts who wrote the report we're quoting here. While Stephanie
Moore says that only "a few early adopters" in the business and
technology research industry are sending work overseas, and that the
work they offshore is "low-level number-crunching" rather than high-end
analysis, neither Moore nor her coworkers have any guarantee that some
or all of their jobs won't be offshored one day, right along with the
programmers' and architects'.

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