According to a new survey by CareerBuilder.com and researchers at the Wharton School of the University of Pennsylvania, thirteen percent of employers said their companies outsourced work to third party vendors outside the country in 2007. The same amount said they would do so in 2008. Seven percent of employers offshored job functions to foreign affiliates in 2007; 9 percent plan to do so in 2008. Plans to offshore to third party vendors in 2008 are more prevalent in the Northeast and West at 15 percent compared to 12 percent in the South and 10 percent in the Midwest.
Looking forward, among employers who offshore, 44 percent estimate less than 5 percent of their jobs will ultimately be sent overseas while 39 percent project more than 10 percent of their jobs will eventually be offshored.
According to respondents who offshore, more firms are offshoring high-wage, high-skill jobs that were once thought to be immune to global competition. Twenty-eight percent of these employers reported more high-skill services positions are being sent overseas to third parties or foreign affiliates in need of management, technology and sales and marketing know-how. The majority of employers who offshore (69 percent) believe high-skill services positions are at equal or more risk of being offshored than low-skill jobs.
Examples of jobs companies plan to offshore:
-- Computer programmers - 32 percent
-- Software developers - 32 percent
-- Customer service - 25 percent
-- Systems analysts - 16 percent
-- Sales managers - 8 percent
-- Graphic designers - 8 percent
-- HR personnel - 7 percent
-- General managers - 6 percent
-- Marketing personnel - 5 percent
Among industries, technology services, telecommunications, insurance, manufacturing, engineering, banking & finance, oil, travel, utilities and communications all reported higher rates for offshoring.
Of all workers who reported being displaced by offshoring, one-in-five (21 percent) said they were reassigned within the company. Seventy-one percent were let go. Of those who were reassigned, 76 percent reported it was a lateral move while 7 percent reported they benefited from either a promotion, higher compensation or both. Of those who left the company, 81 percent went to another employer that was not aggressively offshoring.
While U.S. workers have lost jobs as a result of offshoring, companies are making the argument that offshoring is ultimately benefiting the American workforce. Twenty-eight percent of employers who offshored jobs said offshoring has already enabled them to create new, better jobs of different types in the U.S.
Cost-savings is the primary motivator for offshoring, according to 64 percent of respondents. Looking at information technology specifically, nearly half (49 percent) say they save over $20,000 per head on average by offshoring. Fifteen percent of employers say they are saving more than $50,000 per head.
Twenty-seven percent of respondents cited availability of skills and 19 percent pointed to plans for expansion in a particular market as their main reasons for offshoring.
Offshoring companies are predominantly drawn to South Asia with 44 percent of employers who offshore stating they sent jobs to India. Others key locations include China (24 percent), Mexico (12 percent), Canada (9 percent), Germany (8 percent), the Philippines (7 percent) and the U.K. (7 percent).
When respondents who don't offshore were asked why their companies chose not to, one-in-five (21 percent) said they felt it is important to keep jobs in the U.S. Fourteen percent reported their customers would not respond favorably and 10 percent said they work with sensitive data. Difficulty to build trust across borders, the cost associated with monitoring workers and shipping/materials, and the availability of a skilled labor pool abroad were also cited.
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