Offshoring and You

By Marty Nemko

The implications of offshoring US jobs are likely to be even greater than most people think. Clyde Prestowitz, president of the Economic Strategy Institute, a Washington think tank said, “It’s almost as if you had 100 million people show up in San Francisco one day saying, ‘We can do these jobs for a lot less than you.” For example, the average American computer programmer earns $70,000 a year. The average one in India: $7,000.

Companies, large and small, are offshoring everything from accountants to x-ray readers, clerks to software engineers. Basically, most jobs done at a desk can be offshored. For example, my publisher, Wiley, now has many of its books’ editing, proofreading, and indexing done in India. Top Bay Area CEOs including HP’s Carly Fiorina, Intel’s Paul Oteliino, and Oracle’s Larry Ellison have publicly warned they will be offshoring ever more jobs. The quintessentially American company, Levi Strauss, has closed its last plant in the US. A survey conducted by the International Data Corporation predicts that offshoring will double next year and triple by 2007.

Don’t be reassured by the UC Berkeley Haas School of Business report that 89 percent of jobs are not at-risk of being offshored. You don’t want many of those jobs. Those are the low-paying janitorial, food service, and other poorly paid positions that aren’t worth offshoring. Of the jobs that pay a middle-class salary, my guess is that 30 percent of US jobs are at-risk of being offshored, 40 percent in the white-collar-job rich Bay Area.

And among the remaining desirable jobs, salaries will continue to decline. Already, according to Joint Venture Silicon Valley’s 2004 Index, salaries in Silicon Valley have, since 2000, declined by 24 percent.

Solutions for individuals

Some good jobs are less likely to be offshored:

Senior management. Most senior positions require so many sensitive in-person interactions that it would be impossible to offshore these positions.
Journalism. Many stories require an on-location visit. Others require an understanding of American culture difficult to acquire if you’re not an American.
Health care, for example, nursing. You can’t insert an IV from India. There’s such a shortage of registered nurses in the US that hospitals are importing RN’s from overseas.
Law. Attorneys must know both American law and culture. Paralegal work, however, is increasingly being offshored.
Counseling and social work. These careers also require cultural understanding difficult to obtain offshore.
K-12 teaching. Decent salary, great benefits, the sense you may make a difference. The downsides: the job is especially tough in urban schools and there are few openings in suburban areas.
Sales reps to US businesses. Success in those jobs usually requires building relationships with customers. It’s easier to do that if you live in the US.
Marketing to US customers. This generally requires an understanding of US culture that is easier to acquire if you’re a US resident.
Training. But as the quality of online training paradigms continue to improve, training jobs will be increasingly offshoreable.
Intrapreneurs. This isn’t a formal job title. It describes any employee with the ability to see a new way to build the bottom line, create a blueprint for implementing that idea, develop the necessary political support, and make a persuasive case for the idea. Such jobs require an understanding of a company’s culture that is hard to develop offsite, let alone offshore.
Government jobs. Government is less likely to offshore jobs. To boot, government jobs pay surprisingly well and are more likely than private sector jobs to offer job security. Don’t insist on the perfect first job. Just get into the system. Once in, you get preference in applying for many other openings. Sixty percent of federal job openings are on www.usajobs.opm.gov; the other 40 percent are on individual agency websites. A portal to those is at www.federaljobs.net. And don’t forget about state and local openings. Check out www.spb.ca.gov for state jobs, and www.abag.ca.gov for a portal to local municipalities’ and agencies’ websites.
If you can stomach it, work for a company that helps US companies offshore jobs. Players include: Accenture, Affiliated Computer Service, Bearing Point (the former KPMG Consulting), Cognizant, Convergys, Cymbal, EXL Service, Infosys, Office Tiger, Wipro, and WNS Global Services.
Entrepreneurs of non-offshoreable businesses: I’m particularly bullish on low-status businesses, for example, plumbing, machinery maintenance, and warehousing. (The Bureau of Labor Statistics projects the latter to experience high demand.) Many people in these businesses do not possess savvy management and computer skills, so it’s easier to compete successfully. Some of the most successful people I know own such businesses. Indeed, the book The Millionaire Next Door found that many of the 750 multi-millionaires surveyed were owners of “dull-normal” businesses. Not only were these people successful, they liked their careers. But many of us insist on a high-status career even though we all know people who worked long and hard to get into one and are unhappy. For example, I work with a heckuva lot of unhappy lawyers. I truly believe that status is often an enemy of happiness.

Solutions for America as a whole

Despite what vote-seeking presidential candidates say, nearly all economists, from Fed Chair Alan Greenspan on the Right to Robert Reich on the Left, agree that the solution is not protectionism, for example, to penalize US corporations for offshoring jobs. That would protect US jobs in the short-run, but end up costing many more jobs than were saved. Why? Because it would increase the cost of American-made products and services. Not only would that make us all pay more for what we here in the US buy, it would make would make US products less competitive worldwide which would make corporations downsize, go out of business, or move headquarters offshore.

A wiser solution: teach entrepreneurship and intrapreneurship to workers displaced by offshoring and to high school and college students. We require nearly all high school graduates to know quadratic equations and the halide series of chemical elements even though few students will ever need such knowledge. Yet we allow nearly all high school and college students to graduate without entrepreneurial skills. Prioritize the teaching of entrepreneurship and we will more quickly create good jobs in the US, just as we did when the tech revolution created good jobs to replace the millions of menial manufacturing jobs that went overseas in the 1970s and ‘80s.

A human note

Lest we be too resentful about offshoring, remember that people are people, whether they live in the US or elsewhere. And there are people in India, China, etc., who, thanks to offshoring, are being lifted from a depth of poverty unknown in the US—the average per capita income in India is $480 a year! The average Indian recipient of an offshored American job earns $6,000 a year. That can mean that a human being, for the first-time, can afford a refrigerator, a vehicle other than a bicycle, and to live without having to share a hot bedroom with four other people. No matter how much offshoring companies do, we in the US will always be relatively fortunate.