The Rise of Upscale Outsourcing: A Boon to the US Economy?

Strategic Insights -

Executives from big-name corporations, including Procter & Gamble, Motorola, and Cisco Systems, gathered at the Westin New York hotel in Times Square to discuss the trend of offshoring higher-paying white-collar jobs to countries with eager, well-educated, and lower-paid workers. The conference, titled "Offshore Outsourcing: Making the Journey Work for Your Corporation," aimed to bring executives up to speed on the hot new thing in corporate America, with experts like Atul Vashistha, the CEO of NeoIT, promoting the benefits of outsourcing IT and business process functions. However, the trend has sparked controversy, particularly in the context of a presidential election year, with many participants showing reluctance to publicly discuss the issue.

Key Takeaways:

  • The outsourcing of white-collar jobs is becoming increasingly popular among corporations, with several big-name companies, including Procter & Gamble, Motorola, and Cisco Systems, participating in the conference.
  • NeoIT, a California consulting firm, has helped clients ship about a billion dollars' worth of projects offshore last year, with CEO Atul Vashistha advocating for the trend.
  • Intel's CEO, Craig Barrett, believes that the increasing global talent pool, particularly in India, China, and Russia, will accelerate the trend toward upscale outsourcing.
  • Barrett estimates that even if 90% of the population in these countries is uneducated, the remaining 10% would still provide a large pool of well-educated workers, exceeding the US workforce.
  • Intel's CEO warns that the trend is not just about low-cost labor but also about well-educated labor that can perform high-skilled jobs, making it difficult for the US to compete.
  • The trend has sparked concerns about job growth and wage rates, with Barrett predicting a "lowered expectation" for individuals entering the job market.

Statistics:

  • Intel's CEO, Craig Barrett, estimates the combined population of India, China, and Russia to be approaching three billion people.
  • The educated population in these countries, excluding 90% of uneducated farmers, is estimated to be around 300 million people, surpassing the US workforce.
  • NeoIT has helped clients ship about a billion dollars' worth of projects offshore last year.

Sources:

  • The New York Times
  • The San Jose Mercury News (interview with Intel's CEO, Craig Barrett)