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America needs a plan, not a debate on offshoring

By William Mougayar
March 2, 2004 12:00 PM ET

Computerworld - The U.S. needs a plan that clearly describes the risks, rewards, opportunities and challenges of offshoring. The national debate over this highly visible phenomenon is escalating, but it seems deadlocked. To get past this impasse, the White House should commission an unequivocal report that defines the benefits and drawbacks of offshore outsourcing, describes its full impact on the U.S. and world economies, and provides very specific details on how to cope with it with minimal stress and disruption.
Without a national plan, the issue will remain undefined and be allowed to meander. Statements made by the Federal Reserve or President Bush's chief economic adviser don't add up to a policy. If the U.S. government wants to adopt a laissez-faire attitude, that's OK, but we need a clear statement that says so. The current uncertainty surrounding the official government position makes it look as if the victims and beneficiaries of offshoring are having a debate of their own, without real arbitration to judge what's right or wrong.
Precedent exists for issuing such White House reports. In 1997, President Clinton released a significant policy report titled "A Framework for Global Electronic Commerce," which was compiled under the direction of Ira Magaziner. In 2002, President Bush published "The National Security Strategy of the United States of America." Globally, the issue of international competition has given rise to comparable reports. In the U.K., the Department of Trade and Industry has commissioned a study to look at the competitiveness of British call centers, with an emphasis on the impact on the overall U.K. economy. And Amicus, the largest manufacturing union in the U.K., has launched a campaign to influence the European Parliament to consider enlarging the offshoring debate to all member states, with the aim of producing a pan-European industrial policy and a comprehensive report that looks at the pros and cons of offshoring.
A White House report on offshoring could tackle a long list of outstanding questions on the issue, including the following:

  • Is there an endpoint to the offshore-outsourcing phenomenon? What happens once the rate of outsourcing stabilizes? Is this part of a fundamental change to the U.S. economy, or is it a cyclical trend? Is this trend really unavoidable and unstoppable?

  • What sorts of companies are taking advantage of outsourcing? Which ones are initiating layoffs? How much has this benefited them? Has it produced higher earnings or significant savings? What have they learned from this process? Who are the real victims? Which states are the most affected?

  • What is the long-term prospect for American economic power? Which countries are the real beneficiaries of offshoring? How is the practice affecting their relationships with the U.S.? Are there geopolitical and socioeconomic benefits to recipient countries? Does the U.S. gain more political influence on these countries, and does that help to prevent further terrorism?

  • Is the scope of the offshore craze limited to the IT industry? Which industry sectors are the most affected?

  • How many jobs have been lost? Will a growing economy create more jobs than have gone overseas? What needs to be done in the areas of education and training to ease the transition into new jobs? Might newer technology make these offshore services obsolete? Will these services then be repatriated?

Somany questions. To answer them, the administration must step up. Like other high-level policy reports, this one would be initiated by the White House and include the participation of cross-governmental departments and agencies. The most obvious contributors would be the departments of Labor, Commerce and Education, plus the Office of Science and Technology Policy.
William Mougayar is an author and consultant investigating the impact of IT on globalization. Contact him at

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