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Outsourcing May Soon be Stymied

By Martin A. David

After years of pulling jobs out from under the feet of the American employees who had been doing them, and giving the work to workers on foreign shores, technology giants IBM and Microsoft are among the companies who are taking a second look at their outsourcing policies. Labor groups, consumers, state and local governments, and politicians all the way up to presidential candidate John Kerry, have condemned the outsourcing trend as everything from unpatriotic to just plain dumb.

Runaway Shops Are Not New

The practice of outsourcing, it was called “runaway shops” in its early days, began with the manufacturing industry. The textile mills, shoe manufacturers, and garment factories of the northeastern United States started it decades ago. They shut their gates in the faces of workers who had worked in them for decades and ran away to southern states where wages were lower, laws were looser, and unions were weak or non-existent. Other manufacturers followed, and then huge industries such as steel took their operations overseas—leaving behind a corridor of dying American towns known as the “rust belt.”


The next industry to be damaged by the runaways was information technology (IT) and the entire high technology industry. Massive computer programming contracts were sent to India, China, Russia and other countries. American engineers with years of computer training were left unemployed and searching for new careers.

Some Jobs Return

One of the first signs that the U. S. economy is struggling to regain its health and balance, is a very slight upturn in the job market. That upturn will continue. Microsoft and IBM are not the only companies who are beginning to reverse the outsourcing or off-shoring trend. Other members of the high tech sector are following as well. This has become an ideal time for people with computer training to enter the job market. As a result, there has been a noticeable rise in the number of people seeking online computer degrees in computer programming, database administration and systems architecture and other IT careers. These graduates will be in an excellent career position when the jobs reappear.

Why Is It Changing

There are numerous reasons for this reversal. Among them are:

• The Economy
  Companies, especially those who sell high-end goods such as technology items, have begun to realize that it’s hard to sell expensive products if you’ve taken away your customers’ jobs and made them poor.
• Issues of Quality
  It might have been cheaper to create computer programs in faraway lands, but the quality was never as good as the work done in the Silicon Valley, the Pacific Northwest, and the East Coast’s technology corridor. In addition to the expensive bugs that were found in the off-shore products, there were also security problems. The theft of source code has been a common problem, and many U.S. products hit the market at the same time as the stolen, bootlegged counterparts went on sale around the world.
• Changing Political Climate
  Presidential candidate John Kerry has declared undoing the loss of American jobs through outsourcing as a number one priority in his campaign. Other politicians, including the incumbent president, have begun hear the reverberations of that battle cry and pay attention to it. The large IT companies are realizing that, regardless of who is president, outsourcing cannot go on forever. The tax incentives they received for their offshore operations may soon dry up.