- A desire for cheap labor is not the primary reason technology
companies are turning to offshore workers, according to a new report by
the American Electronics Association, the United States' largest high-tech
trade association.
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- The American school system, which AeA researchers charge
is failing to provide strong science and math education to students, is
largely to blame for lost jobs, according to the AeA's report, "Offshore
Outsourcing in an Increasingly Competitive and Rapidly Changing World."
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- "Companies aren't outsourcing only in order to obtain
cheap labor; they are also looking for skilled technology workers that
they increasingly can't find in the U.S.," said Matthew Kazmierczak,
senior manager of research at AeA, and one of the authors of the report.
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- Lack of government funding for technology research and
development, the high cost of providing health insurance to workers, an
increasingly litigious industry and competition -- once a competitor outsources,
then other companies are almost forced to do so -- were also cited as reasons
for seeking offshore labor.
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- But AeA researchers also state in the report that the
effects of offshore outsourcing on technology workers have been exaggerated,
and that no hard numbers are being gathered by government or independent
entities that cite exactly how many jobs have actually been lost to outsourcing
over the past few years.
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- "Figures cited in news reports are normally predictions
of what will happen, not an analysis of what is happening," Kazmierczak
said.
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- Predictions do abound. Research firm Gartner produced
the most recent figures, estimating that one in 10 information-technology
jobs at U.S. IT companies, and one in 20 at non-IT companies, will move
offshore by the end of 2004.
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- And as more companies move jobs outside the United States,
the AeA warns that other companies will be forced to follow in their footsteps,
just to remain competitive.
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- "Many of the companies that outsource jobs overseas
usually have no alternative, as that is exactly what their competitors
are doing," said William T. Archey, president and CEO of the AeA.
"Failure to outsource will result in an even greater loss of jobs
than would be lost to offshoring alone."
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- Kazmierczak acknowledged that AeA members are all business
owners, not employees, but says this had no effect on the report's findings.
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- "Yes, we do represent the interests of businesses,"
said Kazmierczak. "However, we believe our report is a fair and balanced
look at the entire scope and context of the offshore-outsourcing issue.
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- "It's understandable that offshoring is a very emotional
discussion, but this paper attempts to bring some common sense and reality
to the situation," Kazmierczak said. "AeA does acknowledge that
some people are being hurt by offshoring, and the report includes recommendations
on how to keep jobs here in the U.S."
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- Among the recommendations to help staunch outsourcing,
the AeA called for tech businesses to support math and science education
in schools, with donations of both money and time.
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- Businesses and universities should send their skilled
programmers, engineers and scientists into public schools to mentor and
teach, to help ensure that children are getting the best possible education
in these fields, AeA researchers urged.
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- "We'd welcome scientists and computer people in
schools -- I think it would really spark interest in these fields,"
said New York middle-school teacher Keri Carnen. "Despite our best
efforts, our kids really have a hard time understanding why they might
need advanced math or science in their adult lives."
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- The federal government should also increase research
and development budgets to help keep jobs in the United States and ensure
the country remains competitive in technical and scientific fields. Past
technologies stimulated by federal R&D funding and tax credits include
the Internet, super and personal computers, and integrated circuits, according
to the AeA report.
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- Noting that roughly 50 percent of all engineering, math
and science degrees awarded by U.S. universities now go to foreign nationals,
AeA researchers also called on the federal government to give green cards
to all foreign nationals upon their graduation with master's and Ph.D.
degrees, in an effort to keep these people -- and their skills -- in the
United States.
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- The report also strongly suggested that the government
explore ways to reduce the cost of doing business in the United States,
specifically citing health insurance and litigation costs as issues that
need to be addressed through universal government-provided health care
and litigation reform.
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- The AeA report strongly condemned any efforts to pass
"protectionist" legislation aimed at making offshore outsourcing
less attractive to U.S. businesses by increasing taxes for companies that
outsource offshore or providing tax breaks for those that don't outsource
work.
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- On its latter recommendation, the AeA is in line with
Federal Reserve chairman Alan Greenspan, who said at Boston College's recent
Finance Conference that any government efforts to discourage overseas outsourcing
could damage the U.S. economy instead of helping American workers.
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- "Time and again through our history, we have discovered
that attempting merely to preserve the comfortable features of the present
-- rather than reaching for new levels of prosperity -- is a sure path
to stagnation," Greenspan said at the conference, where he also recommended
increased emphasis on math and science education for children, as well
as more job-retraining programs for adults.
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- The AeA's report also suggested that worker-retraining
programs should be expanded to include software programmers and other high-tech
workers. Most current federal and state programs are limited to those working
in the manufacturing industry.
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- But some say that politicians must find ways to clamp
down hard on offshore outsourcing soon, or risk losing votes in the next
election.
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- "What exactly am I going to retrain for, a job in
some fast-food joint?" said unemployed software developer Bob Jern,
who's been out of work for 15 months.
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- "About the only job these profit-hungry, blood-sucking
corporations aren't going to be able to outsource is the kind that requires
you to physically be there in order to serve up those burgers and fries
to customers."
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