U.S. IT Industry Robust Despite Offshoring

By Katherine Manuel

A recent study released by the Association of Computing Machinery shows a robust information technology (IT) industry in the United States, despite IT jobs being moved to workers in other countries, also called “offshoring.”

The study confirmed the United States now has more IT jobs available than at the height of the dot-com boom, and the IT industry will be among the fastest-growing over the next decade. However, the United States already faces intensifying global competition for higher-skill-level jobs and, according to the study, must foster innovation to keep its current edge.

“The key message of the study is that the fear that offshoring will ‘suck away’ all IT jobs in developed countries has so far shown to be unfounded,” says Moshe Vardi, the Karen Ostrum George Professor in Computational Engineering and professor of computer science, who co-chaired the study. “At the same time, software has become a truly global market. To be successful in software requires being able to compete globally.”

The goal of the yearlong study was to explain the causes and effects of the globalization of software development and research. The study noted several forces behind the offshoring trend: the creation of low-cost and high-bandwidth telecommunications, the standardization of software platforms and business applications, and worldwide improvements in technology education. Simply put, businesses can cut costs using offshoring strategies, and many already are doing so. The study found that 30 percent of the world’s largest 1,000 companies currently send work offshore, and that percentage is expected to increase.

Still, the study found that the trend is not as threatening to the U.S. economy as is widely perceived. In fact, only 2 to 3 percent of IT jobs are lost annually in the United States due to offshoring. The study also cited data from the U.S. Bureau of Labor Statistics that shows IT employment in the United States in 2004 was 17 percent higher than in 1999.

The key to remaining competitive in a global economy, the study states, is to adopt policies “that improve a country’s ability to attract, educate, and retain the best IT talent.” Countries must continue to strengthen educational systems, increase investment in research and development, and create government policies that allow the free flow of talent.

“Traditionally, computer science educators focused on technical skills, with a particular emphasis on programming,” Vardi says. “We also need to consider nontechnical skills, for example, communication skills, and broaden the curriculum beyond its emphasis on programming.”