NBR Commentary – Outsourcing – 20 Jul 06
Perhaps the most controversial workforce issue these days is the outsourcing of jobs, especially to other countries. Start by recognizing two things. One, outsourcing is overwhelmingly a domestic activity – one U.S. company performing work on behalf of another. Two, outsourcing is so commonplace that we often don’t even call it that – we call it something like “contract services.”
Outsourcing gets disruptive to employees when whole departments or facilities, such as a manufacturing operation, are moved. And it gets controversial when that move is “offshore” (a term which, somewhat illogically, includes Mexico and Canada).
But offshoring is not the exodus that many seem to assume. Since 2000, the U.S. has seen a bit over 1 million jobs move offshore, half of them in the service sector. That sounds like a lot, but it represents less than 1% of the total workforce, and job creation has more than compensated. Some 2.7 million factory jobs disappeared in the first half of this decade, but less than one-tenth of those went offshore.
Offshoring is a tricky proposition. On the one hand, it’s hard to blame global corporations for behaving globally in locating operations and sourcing labor. On the other hand, they can be blamed if they abandon employees and communities that have long supported them. The most disturbing trend in outsourcing is that U.S. employers are starting to look elsewhere not just for less expensive labor, but for skills that they can’t find enough of at home. When that becomes commonplace, we have more to worry about.
Perhaps the most controversial workforce issue these days is the outsourcing of jobs, especially to other countries. Start by recognizing two things. One, outsourcing is overwhelmingly a domestic activity – one U.S. company performing work on behalf of another. Two, outsourcing is so commonplace that we often don’t even call it that – we call it something like “contract services.”
Outsourcing gets disruptive to employees when whole departments or facilities, such as a manufacturing operation, are moved. And it gets controversial when that move is “offshore” (a term which, somewhat illogically, includes Mexico and Canada).
But offshoring is not the exodus that many seem to assume. Since 2000, the U.S. has seen a bit over 1 million jobs move offshore, half of them in the service sector. That sounds like a lot, but it represents less than 1% of the total workforce, and job creation has more than compensated. Some 2.7 million factory jobs disappeared in the first half of this decade, but less than one-tenth of those went offshore.
Offshoring is a tricky proposition. On the one hand, it’s hard to blame global corporations for behaving globally in locating operations and sourcing labor. On the other hand, they can be blamed if they abandon employees and communities that have long supported them. The most disturbing trend in outsourcing is that U.S. employers are starting to look elsewhere not just for less expensive labor, but for skills that they can’t find enough of at home. When that becomes commonplace, we have more to worry about.