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Politics Aside, Congress Won't Slow Offshore Outsourcing Growth

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These views are countered by the Center for Immigration Studies, which states that there is no cause and effect relationship between H1-B visas and U.S. job creation, saying that, on the current trajectory, the U.S. will approve enough H1-B visas for computer workers to fill nearly 80 percent of the computer jobs it creates each year. But even with similar statements and increased political rhetoric (e.g., Sen. Chuck Schumer’s reference to Indian IT outsourcers as “chop shops”), President Obama himself seems to be recognizing the value provided by the offshore outsourcing industry. Upon returning from a trip to India in November, he stated that the relationship “is not just a one-way street of American jobs and companies moving to India. It is a dynamic, two-way relationship that is creating jobs, growth, and higher living standards.”

Outsourcing Industry Rises Above Political Pressures with Little Impact

Ultimately, recent political activities have had a marginal impact on the outsourcing industry and have mostly signified a growing discontent with the inability of the U.S. government to generate enough jobs to meet the expectations of its citizens. The reality is that U.S. companies have grown too accustomed or dependent on the high-quality, low-cost technology support that these visas enable. And despite statements suggesting that the industry is feeling the pinch, outsourcing service providers’ 2010 revenue grew at the fastest pace in recent years—more than 10 percent—and is expected to continue, according to the Industry Association of Outsourcing ProfessionalsGlobal Outsourcing 100 data. A recent Gartner survey also found that up to 85 percent of companies expect to maintain or increase their spending on outsourcing services.

As the dust settles from the recession, companies will continue to be mindful about how they utilize their limited resources. Outsourcing has the potential to do more for less, by more efficiently leveraging resources than trying to support outsourced functions in-house. Beyond economic efficiencies, companies who outsource tend to realize productivity gains as employees concentrate on their core objectives and outsourced resources provide best-in-class support. Until a model develops that can deliver more value with less resources, outsourcing will remain a fixture of the U.S. business environment, despite political interference.

David Rutchik is a Partner with outsourcing advisory firm Pace Harmon, where he represents multiple Fortune 500 clients in their outsourcing, offshoring, strategic sourcing and other critical business transformation initiatives. Tim Taylor, an Analyst with the firm, contributed to this article.

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  • dolorescruz dolorescruz 3 years ago

    Globalism and outsourcing are management fads, whose muliple failures cast doubt on their wisdom every day.




  • wakjob wakjob 3 years ago

    Wait until this smug clown faces Chinese PLA troops on American soil. We’ll see who’s Xenophobic then.

  • jake_leone jake_leone 3 years ago

    The H-1b and L-1 visa are products of U.S. law. If the U.S. wanted to get rid of these visas, we could at any time.

    Other countries are far more restrictive than the United States. In India, for example, a U.S. citizen must be making 12x the per capita income of the average Indian citizen, before being allowed to come to work in India.

    Further, India requires that all projects (IT or otherwise) be manned by 99% Indian citizen.

    The U.S. has only begun to explore its options when it comes to preventing job-loss in the United States.

    I know CPAC and others would like no government involvement and have unlimited numbers of visas, but they must realize that the freeway they took to their convention, was bought and paid for by other working citizens.

    Either we all hang together on the employment of U.S. citizens, or surely we will all hang separately.

  • benson0087 benson0087 3 years ago

    Firstly, the author is obviously biased. Secondly, the pressure against outsourcing will be commensurate with the length of time unemployment stays high. These are facts.

    I am exposed to outsourcing in my job on a daily basis. Prior to the economic crisis friends and relatives I talked to about outsourcing had no input at all and really didn’t even understand the topic. Now, the difference is big, I am not the one bringing up the subject anymore. Friends and relatives are now aware of what outsourcing means and all of them do not like it. Expect this sentiment to eventually break through to government if unemployment stays high.

    The author also failed to mention the internet shutdown in Egypt and the instability issue that has been introduced to the equation. Wonder if his firmed placed customers in Egypt?

  • usvoter usvoter 3 years ago

    Mr. Rutchik is “a Partner with outsourcing advisory firm where he represents multiple Fortune 500 clients in their outsourcing, offshoring, strategic sourcing”.

    There is in fact no cause and effect relationship between H1-B visas and U.S. job creation… except that far more tech jobs that ARE created in the U.S. are taken by Indian nationals that would otherwise be the case.

    The H-1B visa program is primarily used to bring in younger, cheaper foreign labor for technical and engineering work; and it has displaced many U.S. citizens from their professions, or prevented them from entering their chosen profession. The program also is plagued by rampant fraud. It is used far less as “a critical tool in their arsenal to remain globally competitive” than as a crutch to obtain cheap tech labor and make IT managements’ jobs easier: they no longer have to recruit people or train people: the outsourcing racket company does all that for them. No need for U.S. corporations to worry about the U.S. undergraduate educational system either: because they’re not even using it any more!

    Suggested reading:

    U.S. Government Accountability Office, January 14, 2011:
    H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program

    Economic Policy Institute, October 14, 2010:
    H-1B & L-1 visa programs harm American workers & accelerate outsourcing

    BusinessWeek: Work Visas May Work Against the U.S.:

  • snadeem snadeem 3 years ago

    I’ve written a few things on this:
    Dead Ringers: How Outsourcing is Changing the Way Indians Understand Themselves:

    And a related piece in the Guardian:

  • dolorescruz dolorescruz 3 years ago

    He must not have heard about this: http://www.latimes.com/news/columnists/la-fi-hiltzik-20110215,0,1160131.column

  • wileyboy wileyboy 3 years ago

    America needs fair trade not free trade. WE need to get out of these job killing trade agreements and have fair trade. You buy a billion from us, we buy a bililon from you. Make exceptions for some products like oil. If we get out of balance with a country slap a 25% tariff on them. We are outsourcing are future away. It gets to point where it doesn’t matter how cheap you can produce a product if no one can afford to buy it. Uneployed people and poeple making minumal wage don’t stimulate the economy.

  • mashtoe mashtoe 3 years ago

    The corporate communist are at it again. Its no surprise this guy worked at Goldman Sachs, poster child for federal bailouts.

    H-1B is simply federal interference in the US labor market. Its command economics pure and simple. If there is any upward wage pressure these executives seek federal help. Gone are the days of hard work by business leaders. These are the days of more and more federal help.

    Its no surprise that today’s executives look to communist China as the model for success. The communist in China give corporations everything they want. If workers are demanding pay…send in the troops to crush them. Now that’s a business model Forbes readers can appreciate!

  • mashtoe mashtoe 3 years ago

    There are two entitlement groups in the US. Baby boomers who demand low taxes and Medicare and secondly we have Wall Street types who demand the government provide low wage help. The former group lobbies congress for H-1B wage suppression for workers and then acts like it was someone elses idea. Hilarious.

    Mr. Rutchik is one of these people who feels entitled to low wage labor. He himself has no idea how to program or couldn’t explain the difference between a breadth first search and a depth first search if his life depended on it. Yet, he feels entitled to lobby congress on issues of IT and technology.

    I think we should have a pro-competitive regulation that says all executives must have PhDs in engineering. If an executive can’t get a PhD in 5 years then the US government will find a replacement for them and if we have to import an engineer from China then so be it. We have to stay competitive right?

    If its good enough for American engineers then this type of heavy handed federal regulation for executive positions should be where we start!

  • varun87 varun87 3 years ago

    Unfortunately, the author of this comment completely misses how equations have changed over the past decade or so. The paradigm of “our…jobs” and “nations that don’t like us very much” don’t hold in the modern era.

    1. How many in America actually understand information technology well enough and are willing to do the cheap enough?

    2. America is not just sending jobs abroad, but actually creating jobs at home by doing so. The logic is simple. If you send some jobs that require less skill and are less sensitive to countries that can do it better and cheaper due to economies of scale, you enable that economy to grow. India today has a 300-million strong middle class, as big as America. Guess where they get their planes from? Their defense from? Their agriculture fertilizers, cars, machinery from? Outsourcing allows countries to develop areas of specialization and develop economies of scale and scope, leading to efficiencies. The trade deal that India signed with the US actually created 50,000 US jobs.

    3. The additional benefit of having people work closer with one another is a more prosperous, and safer world. If its always an us vs. them mindset, we cannot grow the size of the pie, but can have a larger piece of the pie we do have. India today, for instance, is a close US ally in the region providing stability to a region otherwise scarred with violence in AfPak, Sri Lanka, Maoist uprising in Nepal, Burma to name a few.

    Since when did a stable business partner with benefits thats the largest democracy in the world become a bad thing?

  • benson0087 benson0087 3 years ago

    This author is a tool.