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Opinion

Offshore outsourcing is less of a threat than you think

By Ward Larkin
August 7, 2003 12:00 PM ET

Computerworld - There is a view making the rounds that the U.S. IT employment picture won't brighten even with the return of a growing employment marketplace.

The proponents of this view argue that the growth of offshore outsourcing will remove any new employment demand in the IT sector from the U.S. to other countries such as India. The logic is simple: Application programs can be written anywhere since they're not geographically dependent, and the cost of development (labor) is much cheaper overseas.

On the surface, this argument appears to make sense, and that raises pessimism regarding the future of the U.S. IT marketplace. However, the argument is wrong.

To begin with, the IT employees of India, Russia and other nations can't all be assigned to serve U.S. needs. Europe and Asia have growing business sectors of their own and will be consuming much of the available talent. It's not just U.S. demand that will grow; inevitable worldwide growth will create intense, escalating worldwide competition for the available talent.




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Prior to the IT crash of 2001, it was necessary to import overseas talent to simply attempt to keep up with demand in the IT marketplace, and there was continuing pressure to keep increasing H-1B visa quotas. The influx of those H-1B employees didn't lessen the demand for American IT professionals. In fact, it added to their value.

One reason IT employment hasn't picked up steam is that, since the end of the 1990s, there haven't been significant technology advances spurring industry acquisitions of new systems, hardware or software. Make no mistake about it, those technology advances will occur, and industry will invest. It's just a matter of time -- a short time. U.S. demand will go up, and offshore outsourcing won't satisfy that demand.

Security is another important factor. Many systems, both those of corporations and government, won't be outsourced offshore because of security concerns. Companies and government alike will be keenly aware of the need to protect and keep safe critical software data as well as hardware and chip advances.

Then there are demographics. In 2004, the youngest of the baby boomers turns 40, the oldest 58. There are 76 million baby boomers. Generation Xers, born between 1965 and 1978, number about 46 million, so there's a population shortfall of 30 million in the coming generational transition. Clearly, as baby boomers continue to age, the supply-and-demand situation will turn more dramatically in favor of the American


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