ITAA panel debates outsourcing pros, cons

Learn-Fast Guide: It's All About You Sign up to receive Security Resource Alerts

September 25, 2003 (Computerworld) -- NEW YORK -- Although the Bush administration sees good and bad in the recent trend toward offshore outsourcing, it has no plans to block companies from moving IT jobs to India or other countries. Instead, it plans to focus on developing an economic climate that helps create jobs in the U.S., an administration official said yesterday.
"The answer to economic challenges is growth and innovation," said Chris Israel, a deputy assistant secretary at the U.S. Department of Commerce, speaking at an Information Technology Association of America (ITAA) panel on IT services outsourcing in New York. He cited the administration's support for increased investment in research and development, education and expanded trade authority for the president as part of its efforts to improve growth.
But Israel said he understands the ramifications of offshore outsourcing, such as downward pressure on salaries in the IT industry and the potential for a "reverse brain drain," where highly skilled and talented IT workers choose to work overseas instead of in the U.S. But he also noted that offshore development could have positive effects, such as driving prices down and productivity gains.
Although the Bush administration may be uncertain about the move to outsourcing and what it means for the IT industry, Phil Friedman, CEO of Computer Generated Solutions Inc., is not. Friedman, also a panelist at yesterday's event, said his New York-based company, a systems integrator and managed services provider, recently opened a technical services center with 300 jobs to fill.
The company got 3,000 applications in three days.
"That tells me the story," said Friedman, "We have plenty of talent. So we are not moving jobs [offshore] because we cannot find talent or we don't have the quality of talent in this country. But I'm wondering [if] in the rush to send jobs offshore, we, in some respects, are neglecting the moral responsibility we have with our employees.
"We need those technology skills. This country is making productivity gains only because of the technology we've been able to implement, and all of a sudden, we are abandoning those employees, and it's bothersome," said Friedman.
He said the offshore trend could also affect national defense. "One morning we will wake up 10 years from now and we will not have the skills needed to support the infrastructure of this country," said Friedman.

Chris Israel, a deputy assistant secretary at the U.S. Department of Commerce

Countering that view was Gordon Coburn, senior vice president and chief financial officer at Cognizant Technology Solutions Corp., a Teaneck, N.J.-based offshore provider, who said the impetus behind IT offshore work parallels what has happened in manufacturing. Pointing to companies that tried to keep all their manufacturing in the U.S., "a lot of them don't exist anymore," he said.
Offshore work allows firms to remain competitive, said Coburn, freeing up money for R&D and marketing "to grow their business faster and therefore hire more people in the U.S."
"For a U.S. company to take the approach that 'No, I have to do it all here because I have to protect the jobs, in the end, it's going to cost more jobs here because they're not going to survive, because they won't be price-competitive," said Coburn. "On a long-term basis, I think that by our clients leveraging the offshore model, they are actually protecting American jobs."
Congress and the Bush administration could have an effect on offshore work in a number of ways: by using their power over regulated industries, such as financial services, to push companies to keep jobs in the U.S.; by passing legislation that sets "buy American" standards for federally purchased IT products; and by raising national security issues. The U.S. General Accounting Office is already examining some of those issues.

	Phil Friedman, CEO of Computer Generated Solutions Inc. Photo credit: Patrick Thibodeau

Israel said it's difficult to separate out the number of IT jobs lost because of outsourcing from those lost because of the industry downturn. He said there isn't "statistical data that shows one-to-one correlations."
Harris Miller, president of the Arlington, Va.-based ITAA, said that while the amount of offshore work remains relatively small given the size the industry, several analyst studies are predicting a sharp rise in offshore development. "The trends are getting a lot of attention," he said.
Priscilla Tate, director of the Technology Managers Forum, a group representing IT executives of large companies, argued that offshore development is taking a toll on U.S. workers. "Higher skilled jobs are going away," said Tate. "There are people who will not get jobs in the IT industry again -- they just have been replaced."
See more coverage of this issue in our Outsourcing Center.

Print this Story

Send Us Feedback

E-mail this Story

Digg this Story

Slashdot this Story

"Today's US college business professors, hopefully, aren't all like the one who is teaching a Florida university's business major. Maybe..." Read more... "For the first time in 30 years, there were no public offerings from a venture backed company. Look for more..." Read more... Read more Management posts or See all Blogs

Google gives away home-cooked Web application security scanner HP eyes move of support facilities out of Colorado Springs Microsoft trumpets security additions in upcoming IE8 More top stories...

How much is too much? Upgrade your notebook without going over the line French ruling on counterfeit goods could have far-reaching effects for eBay Apple cuts price of high-end SSD MacBook Air by $500

This old laptop: Revitalizing an aging notebook on the cheap All it takes is a couple hours and about $125 to breathe new life into an old laptop. Here's how. Bill Gates moves on Is Microsoft's Golden Age over? What are Gates' most memorable quotes? Find out in Computerworld's complete coverage of the end of the Bill Gates era at Microsoft. Five things you should never tell your boss There are some things your CIO definitely doesn't want to hear. Also don't miss the flipside, Five things you should always tell your boss. Hands-On: Firefox 3 fixes what's broke and keeps what's right With its latest version, Mozilla's browser continues to raise the bar for what Web browsers should be. Windows Vista A to Z Reviews, analyses, how-tos, visual tours, hot issues and predictions about Microsoft's new OS. More Continuing Coverage After 9/11: Homeland SecurityAsk a Premier 100 IT LeaderBlackBerry Legal BattleData Security BreachesElectronic VotingFirefoxH-1B VisasHP's Boardroom ScandalHandheld DevicesHurricane Katrina AftermathMicrosoft Legal IssuesMicrosoft's VistaOpen SourceRFID TechnologySCO's Linux FightSarbanes-Oxley ActSpamVoice Over IPWi-FiWindows Meta File VulnerabilityWindows XP Service Pack 3 IT Careers 2010 Four years from now, the IT field will be a vastly different place. Will you be ready? More Special Reports Premier 100 IT Leaders 2007 Best in Class2006 Computerworld Horizon Awards2006 Premier 100 IT Leaders2006 Salary Survey2007 Best Places to Work in IT2007 IT Forecast2007 Premier 100 IT Leaders40 Years of ComputerworldASPs, Take TwoBest Places to Work in IT 2003Best Places to Work in IT 2004Best Places to Work in IT 2005Best Places to Work in IT 2006Business Intelligence Home RunsBusiness Intelligence: Smarter BIBusiness Intelligence: The Future of BICRM Goes VerticalCRM: Sober CRMCareer Planning Guide 2005Careers: IT Profession 2010Computerworld Horizon Awards 2005Data Management: Mining for GemsData Management: Taming Data ChaosDevelopment: Hard-Workin' Web SitesDevelopment: New Tools New ChoicesDevelopment: The New World of Application DevelopmentDevelopment: The Web Services TsunamiDevelopment: Web Services HurdlesDisaster Recovery: Preparing for the WorstE-commerce Grows UpE-mail/Groupware: Big DecisionsFaces of Mobile ITForecast 2006Global MobileHardware: Multiple Cores, Multiple ChallengesHardware: On-Demand Un-HypedHardware: The Shape of Things to ComeHorizon Awards: 10 Cool Cutting Edge TechnologiesIT Management: Guide to Managing VendorsIT Management: Navigating Global ITIT Management: Recovery AheadIT Management: The Future of ITIT Management: The Resourceful Project ManagerInnovative Technology Awards 2004Management: Reinventing ITMicrosoft in TransitionMobile/Wireless Leaders and LaggardsMobile/Wireless: The Untethered WorkerMobile/Wireless: Tiny Gadgets, Huge CostsNetwork Management: Taking ControlNetworking: Turbulence Ahead!Networking: VoIP Goes MainstreamOperating Systems: In the Slow LaneOperating Systems: Linux Goes GlobalOperating Systems: Should You Nix Unix?Outsourcing: Offshore Buyer's GuideOutsourcing: Outsourcing DangersPremier 100 IT Leaders 2004 Best in ClassPremier 100 IT Leaders 2005 Best in ClassROI: Do the Math!Salary Survey 2003Salary Survey 2004Salary Survey 2005Security Action PlanSecurity: Compliance HeadachesSecurity: Proactive SecuritySecurity: Risk and RewardSecurity: Tips From Security ProsSouped-up SecurityStorage: Battling ComplexityStorage: Cheap & Secure Data StoresStorage: Stretching Your Storage DollarsStorage: The Lean Storage MachineStorage: The New Rules of StorageStorage: The Ultimate Backup GuideSupply Chain: Missing LinksSupply Chain: RFID Reality CheckThe Business of SecurityWeb 2.0 SecurityWireless: Wireless At Work All Zones Application Performance Zone Business Continuity Zone Data Center Management Zone Enterprise-Class Security Zone The File Data Management Zone Grid Computing on Windows Zone Security Management Zone ITIL Best Practices Zone The SAS Zone Storage Virtualization Zone Business Intelligence and Analytics Zone See your link here

Achieving World-class IT Management Managing people and projects in a global landscape requires leadership, diplomacy and heart. (Source: Computerworld) IT managers have to stay on top of the latest and greatest management theory as well as the latest and greatest technology trends. This Executive Brief focuses on the tools needed to maintain and assess the business value of IT resources: managing a diverse work-force in a global environment, overseeing projects that are succeeding as well as those aren't, negotiating software deals, and much more. Download this executive briefing  Cost Effective Scaling with Virtualization and Coyote Point Systems Download this white paper, free, compliments of Coyote Point Systems. (Source: Coyote Point Systems) Learn more about the industry trend toward virtualization, how server consolidation has increased the importance of application uptime and the steps being taken to integrate load balancing technology with virtualized servers. Download this white paper  Why SaaS is Vital to Email and Web Security Why SaaS is Vital to Email and Web Security Download this webcast, free, compilments of Webroot Software Go to the webcast  White Papers Read up on the latest ideas and technologies from companies that sell hardware, software and services. Deploying Virtualized NetWare on Linux Whitepaper Toward More Flexible, Next-Generation Collaboration Solutions Driving Business Success Through Workgroup Choice and Flexibility View more whitepapers

• Google gives away home-cooked Web application security scanner
• HP eyes move of support facilities out of Colorado Springs
• Microsoft trumpets security additions in upcoming IE8
• More top stories 

XenServer FREE trial Citrix XenServer is the simplest and most effective way to virtualize and provision servers. XenServer combines comprehensive server virtualization capabilities with unparalleled scalability, performance, economics, and ease-of-use. Based on the open source Xen hypervisor, XenServer delivers fast performance, easy management, and advanced features such as live migration. Request free trial now

Creating Tiered Storage Architecture This paper shows how Brocade StorageX enables tiers of storage across Windows and NetApp storage to align storage practices with organizational objectives. Download this white paper now!