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Friday, February 24, 2006

ACM On Offshoring & Impact On Jobs

ACM released a new report - methodically researched and compiled professionally – result of several months of efforts. The report focuses on issues and trends centered on tech job migration and how it relates to economies governments, funding and educational systems. The New York Times reported on it saying,” The study concluded that dire predictions of job losses from shifting high-technology work to low-wage nations with strong education systems,like India and China, were greatly exaggerated”. I have gone through the detailed set of reports published and the report finds four themes defining the contours of offshoring “ Technology, Work Processes, Business Models & other drivers like increasing global education levels,reduced trade barriers etc.

Some key findings in the comprehensive set of reports:

1. Globalization of, and offshoring within, the software industry are deeply connected and both will continue to grow. Key enablers of this growth are information technology itself, the evolution of work and business processes, education, and national policies.

2. Both anecdotal evidence and economic theory indicate that offshoring between developed and developing countries can, as a whole, benefit both, but competition is intensifying.

3. While offshoring will increase, determining the specifics of this increase are difficult given the current quantity, quality, and objectivity of data available. Skepticism is warranted regarding claims about the number of jobs to be offshored and the projected growth of software industries in developing nations.

4. Standardized jobs are more easily moved from developed to developing countries than are higher-skill jobs. These standardized jobs were the initial focus of offshoring. Today, global competition in higher-end skills, such as research, is increasing. These trends have implications for individuals, companies, and countries.

5. Offshoring magnifies existing risks and creates new and often poorly understood or
addressed threats to national security, business property and processes, and
individuals’ privacy
. While it is unlikely these risks will deter the growth of offshoring,businesses and nations should employ strategies to mitigate them.

6. To stay competitive in a global IT environment and industry, countries must adopt policies that foster innovation. To this end, policies that improve a country’s ability to attract, educate, and retain the best IT talent are critical. Educational policy and investment is at the core.

The report finds that thirty percent of the world’s largest 1000 firms are offshoring work, but there is a significant variance between countries. This percentage is expected to increase, and an increase in the amount of work offshored is consistent with the expected growth rate of 20 to 30 percent for the offshoring industries in India and China. The report does an assessment of various national policies towards offshoring and finds almost all are reasonably progressive except China, which the report finds as the most protectionist of the countries studied here in terms of trying to protect its emerging domestic IT market from foreign competition.The report concludes,” The future,however, is one in which the individual will be situated in a more global competition. The brightness of the future for individuals, companies, or countries is centered on their ability to
invest in building the foundations that foster innovation and invention”. While, I would have loved to see analysis on themes like real cost of offshoring, given the efforts invested, understandably the focus of the initiative is different

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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