Business Process Outsourcing News and Information

I was reading an article by Lary Dignan on how H-1B reform bill may push more work offshore. Ron Hira, a professor at the Rochester Institute of Technology, an economist, an author and expert on issues like offshore outsourcing has a dispassionate and analytical look at this.

Pretty interestingly he talked about “lumps of labor’ fallacy. In this scenario it is being perceived that only some fixed number of work exists in the economy. This perception leads to misperceptions like more jobs moving to overseas and there will be no new jobs available.   

Now read how wonderfully he explains the business logic of offshoring,

Companies are not moored to the U.S. If a set of tasks are offshorable, and companies can save money doing so, then you better believe that companies are doing it. If they didn't, they would be irresponsible to their shareholders. The Boards do not compensate managers and executives based on how many U.S. workers are employed. I don't say this as a criticism, simply as a fact.

So, companies are offshoring everything they can, and I see few political constraints. Microsoft isn't keeping work in the U.S. because it is "patriotic", nor should it. The real constraints are technical. The nature of the tasks are such that they require physical presence in the U.S. They are "geographically sticky". See for example, Alan Blinder's recent foray into the offshoring discussion