If you're in IT, customer service, accounting or finance, should you worry about offshoring -- the corporate practice of shifting US jobs, and increasingly white-collar jobs, to low-cost, but well-educated, employees in countries such as India?
Not yet, say the experts. The offshoring trend is real, but its influence on American compensation levels is more hype than fact.
"It's definitely something that's happening, but the effect is not as great as people think," says Keith Fortier, CCP, director of compensation for Salary.com. "It's become an issue, because people have perceived that they've lost pay because of offshoring."
Note that Fortier says “perceived” loss of pay. Currently, about 250,000 US jobs have been offshored. That may sound like a lot, until you put the numbers in perspective. There are 145 million jobs in the American economy, so those 250,000 jobs represent roughly 0.13 percent of the job market. "Compensation follows the rules of supply and demand. The amount of jobs we're losing doesn't equate, in compensation terms, to anything substantial. It's diminutive," says Fortier.
A widely circulated report from Forrester Research, published in November 2002, predicts that by 2015 our economy will lose 3 million jobs to offshoring, mostly in labor-intensive functions such as data entry, programming and back-end processing. "If Forrester's projections are accurate, that's roughly 2 percent of the US job market," says Fortier.
Even if the offshoring trend continues over the next decade, Fortier suspects that compensation levels for positions in the US won't decrease; if anything, the rate of salary increase might slow somewhat.
What's Going Where?
Technology jobs aren't the only jobs that could end up overseas. Consulting firm A.T. Kearney predicts US banks, brokerage firms, insurance companies, mutual funds and other financial service firms will move a half-million jobs overseas over the next five years.
Raja Gopalakrishnan, head of US operations for Indian business process outsourcer ICICI OneSource, says Indian companies are selling US companies on outsourcing various finance jobs, including:
- Asset Management: Back-office processes, unit record keeping, 401k pension administration and equity research.
- Consumer Lending: Credit card transaction processing (billing and collecting) and customer care and telemarketing.
- Insurance: Policy administration and claims processing.
- Retail Banking: Customer care, account opening and customer acquisition
Despite the data, some job seekers in technology services, operations and administration are worrying too much about offshoring and not enough about their own skills.
"One very interesting recurring theme that I see is that job seekers have a tendency to see all labor moving to China, India, the Philippines and other low-cost labor communities," says David R. Cape, principal in Clew, LLC., a competitive-intelligence consulting firm. "Their pessimism is seeping into their communications during the job search. And others have thrown in the towel altogether, leaving behind promising careers in technology after long job searches to work in cellular-phone sales or auto-parts retailing to stop the hemorrhaging in their bank accounts."
Plan to Succeed
If you're working in a field that's outsourcing jobs offshore, check the past practices of potential employers and track current company news so you'll know who's considering offshoring your position. And, to make yourself more competitive at home and abroad, complete any certifications or advanced-degree programs your industry values.