Outsourcing could hit IT jobs in some metro areas, study says

Computerworld - Offshoring may eliminate as many as one in five programming, software engineering and back office jobs such as data-key entry during the next several years in certain metropolitan areas where employment in those fields is the heaviest, according to a study (download PDF)by The Brookings Institution released this week.

Brookings, a Washington-based think tank, has attempted to put job loss numbers around one of the most worrisome issues for IT workers today, while also recommending steps the government can take to slow the trend.

Where this report, "The Implications of Service Offshoring for Metropolitan Economies," differs from others that have tried to assess the implications of offshoring is its analysis of how the trend will affect metro areas with high concentrations of IT-related jobs.

Overall, Brookings found that 28 metropolitan areas, with 13.5% of the nation's population, are likely to lose between 2.6% and 4.3% of their jobs to service offshoring. Those metro areas that could see the highest job losses, above 3.1%,, are Boulder, Colo.; Lowell, Mass.; San Francisco; San Jose; and Stamford, Conn.

Several other cities, including New York, Chicago, Philadelphia, Los Angeles, could lose between 2.1% to 2.5% of their service jobs.

Among the areas where workers could fare better are Las Vegas and Riverside, Calif. These two metropolitan areas with more than 1 million people are likely to see no more than than 1.5% of their jobs moved offshore. Indeed, Las Vegas in particular is in need of IT workers.

Although overall "a small share of all U.S. jobs will be lost to service offshoring in the next decade," the report said that some types of service jobs are more likely to go than others, including those that rely heavily on IT and routine or rule-based work.

Some occupations, "especially those in IT or back-office services, could lose up to 24% of their jobs in particular metropolitan areas by 2015 as a result of offshoring," the report said. Breaking its results down by occupation, Brookings found that at least 17% of computer programming, software engineering and data entry jobs are likely to be offshored [from] certain metro areas."

Areas that appear to be particularly susceptible to IT and back office job losses from offshoring,include Bergen-Passaic, N.J.; Boston; Boulder, Col; Danbury, Conn.; Denver; Hartford, Conn.; Minneapolis, Minn.; Nashua, N.H.; Newark, N.J.; Orange County, San Francisco and San Jose, all in Calif.; Stamford, Conn., and Wilmington, Del.

The message from the report, put together by Robert Atkinson, a senior fellow in economic studies at Brookings and Howard Wial, a senior research associate, is that ofshoring "does require attention and action."

While many service jobs -- especially those enabled by IT -- can be moved offshore, "not every IT-enabled service can be performed anywhere in the world; despite the popularity of the expression, the world is not 'flat,'" according to the report's authors. The authors also cite risks to businesses such as hidden costs, diminished quality of work and contract disputes.

In addition to job losses, offshoring could lead "to falling wages in service jobs exposed to international competition," the authors wrote.