Outsourcing has become a popular business tool for companies across the U.S. looking for ways to ... [+]
Johnny Taylor Jr., CEO of the Society of Human Resource Management, offshored the job of a tech employee to India, saving 40% in the labor-cost arbitrage, when she asked to relocate from Arlington, Virginia, where the HR membership group is based, to North Carolina, according to the Wall Street Journal.
Companies are accelerating their efforts to send jobs to lower-cost countries in response to the challenge of finding workers and inflation driving up wages. A recent Federal Reserve Bank of Atlanta survey found that 7.3% of leadership in the United States plans to move more jobs offshore as the next step from remote work within America.
Richard Baldwin, an economics professor at the Graduate Institute in Geneva who studied the “offshoreability” of teleworking jobs, gave a warning at the European-based Center for Economic Policy Research last year, “If you can do your job from home, be scared.” Baldwin added, “Be very scared because somebody in India or wherever is willing to do it for much less.”
Nicholas Bloom, an economist at Stanford University and an expert in workplace matters, told the Wall Street Journal, “About 10% to 20% of U.S. service support jobs, like software developers, human-resources professionals and payroll administrators, could move overseas in the next decade.”
Cutting Costs And Jobs
Outsourcing has become a popular business tool for companies across the U.S. looking for ways to increase profit margins and cut costs. According to Zippia, about 300,000 U.S. jobs are outsourced yearly, and 66% of businesses in America outsource at least one department. Moreover, roughly 30 million jobs are vulnerable to outsourcing.
Highly industrialized countries, like the U.S., offshore to developing countries to curtail operational costs, receive tax benefits and access cheap raw materials.
Information technology is the most outsourced industry and business division. The average IT department allocates 13.6% of its budget to offshored roles, and roughly 37% of IT tasks are outsourced. The top five jobs most vulnerable to offshoring include computer programmers, data entry keyers and other computer and information personnel.
This Has Been Going On For A Long Time
The trend began in the late 1970s at large manufacturers, including General Electric. Jack Welch, GE’s chief executive at the time, argued that public corporations owe their primary allegiance to stockholders, not employees. Welch said that companies should seek to lower costs and maximize profits by moving operations wherever is cheapest.
In 2011, Forbes reported that U.S. companies, like GE, Caterpillar, Microsoft and Wal-Mart, employed 20% of all U.S. workers. In the 2000s, these corporations reduced their workforces in America by 2.9 million, while increasing their outsourced roles by 2.4 million. In 2009, large corporations employed 21.1 million American workers and 10.3 million employees outside the U.S.
Startups Are Focused On Offshoring White-Collar Professionals
The offshoring movement is gaining even more momentum in well-funded startups focused on making it easier for jobs to move around the world.
Startups, like Remote.com and Deel, make it easy for companies to hire personnel worldwide. These organizations have established the mechanisms and systems for global corporations to hire, onboard and manage the taxes and compliance for remote workers in countries throughout the world.
AngelList Talent scours the globe to find job hunters who want to get hired remotely. Job seekers can share what kind of remote work culture they want, time-zone preferences and other important factors. They then take assessments to demonstrate their skills. For example, engineering candidates can take assessments for frontend, backend, iOS, Android and more and display their scores for recruiters to see.
In Addition To Offshoring Jobs, Workers Need To Worry About AI
If generative AI lives up to its hype, the workforce in the U.S. and Europe will be upended, Goldman Sachs recently reported. The investment bank estimates 300 million jobs could be lost or diminished by this fast-growing technology.
Office administrative support, legal, architecture and engineering, business and financial operations, management, sales, healthcare and art and design are some sectors that automation will impact.
