Can Obama reverse job offshoring?

ACS offshore plan

The chart above, prepared by IT services firm Affiliated Computer Services Inc. for investors, illustrates how this company is shifting jobs overseas. (Chart PDF) In the span of a few years, the offshore headcount has increased from about 25% to 35% of the company's workforce, now at about 63,000.

And this Dallas-based company isn't moving low-level jobs overseas. It's going much deeper. "To have a greater financial impact, we will be moving a higher percentage of more complex, higher paying jobs offshore, including management and application development roles," ACS President and CEO Lynn Blodgett said during an investors call last week.

Other IT vendors are doing the same thing. The only difference is that most of the other vendors don't produce charts for public consumption as detailed as the one above. Outsourcing vendors across the board are moving jobs overseas to cut their own costs and stay competitive with the Indian outsourcing firms.

The tools that President-Elect Barack Obama has to change this trend, especially during a recession, aren't clear. All the outsourcing vendors have government contracts. And even if state, local and federal agencies bar the use of offshore development in some of their contracts, government agencies are using the same offshore developed software modules as the private sector. Any government agency that has a support contract today with a major vendor is getting support, in one form or another, offshore.

Ending tax breaks for companies that move jobs offshore has been one of Obama's strongest campaign messages. But IT vendors don't get tax breaks for doing work offshore, especially work sent over a network. Obama, instead, may look more to incentives to encourage expansion here.

What will Obama do about the H-1B visa? Obama has supported an H-1B visa increase and comprehensive immigration reform. But it is unclear whether he wants to shift from the temporary H-1B visa to permanent residency, Green Cards, for foreign graduates of U.S. universities. And what impact will the recession have on his views?

As the above chart illustrates, Obama faces a difficult task in increasing high-paying tech jobs in the U.S. at the same time firms are moving those jobs overseas.

Copyright © 2008 IDG Communications, Inc.

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