Offshoring Debate Lacks Hard Numbers - Page 1

Apr 5, 2004

Allen Bernard

At Sierra Atlantic, a small IT offshoring company, business is good. The company is on track to make its revenue projections for yet another quarter and Executive Vice President Marc Hebert thinks the company will end the year meeting growth expectations.

Yet Hebert, who is in the offshoring business every day, has no idea just how pervasive the trend is. Yes, Sierra has added 150 employees in the past year and expects to end this year with between 750-800 employees, 83% of whom work offshore in India, but the company is targeted at a small slice of the American economy, manufacturing and distribution companies.

"The motivation for CIOs that hire us is a combination of doing more with less, but it's also freeing up scarce resources in the U.S. so that they can work on new projects by offloading more routine things to the offshore model," he said.

While no one disagrees that anecdotal evidence suggests large numbers of IT jobs -- particularly coding and routine application maintenance work -- are heading offshore, there are two primary forces really driving the debate right now: election-year politics and the emotions upon which it preys.

"If this were not a year of major political debate," said Tom Kucharvy, president of investment consulting firm Summit Strategies, "I contend the issue would not have achieved anywhere near the level of publicity it currently has. Would it be important? Absolutely. Would it be as emotionally charged and high profile? I doubt it."

Just What Is IT?

Dave McCurdy, a former U.S. congressman and now president of the Electronic Industries Alliance, which represents 80% of global high-tech manufacturing and service providers, agrees with Kucharvy, adding that in-sourcing, another offshoot of the same open-trade policies sending jobs overseas, has for years reshaped the American economy and continues to do so today. German manufacturer Siemens, for example, employs more people in the U.S. than Microsoft. Yet the total number of jobs in-sourced by foreign-based companies is as elusive as the offshoring figure.

Also, there are so many more "IT companies" around than in days past it may just seem like a larger proportion of jobs are being offshored. For example, because of its reliance on technology to issue 20 million payroll checks per month, Ceridian, a payroll processing and business process outsourcing company, basically is now an IT company. McCurdy doubts this company's outsourcing numbers are recorded in any category related to IT.

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