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Offshoring: What You Already Know

Not everyone agreed with last week's editorial, which warned of long-term economic peril from offshoring. In this rebuttal, DevX contributor Eric McMullen tells why offshoring is good for the world, good for the U.S., and even good for domestic programmers.


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he typical programmer wears clothes made in Honduras. He drives to work in a Korean car while he sips Mexican coffee. He sits down at his Chinese-made desk, and turns on his laptop that was assembled in Indonesia with parts from Japan, Taiwan, Singapore, Brazil, and a dozen other countries. Nearly every second of his day, some product manufactured in some other country makes his life easier or more agreeable and his lifestyle more affordable. And all the while, his 401k hums away inaudibly, growing in fits and starts with the profits of a global marketplace.

He seems like a nice enough guy. Then he opens his mouth and complains about the Indians and the Russians and the Vietnamese and the Philippinos, all bent, it seems, on taking American jobs.

My anonymous programmer is grumbling about offshoring—or offshore outsourcing—of programming and IT jobs. There's so much fear of outsourcing within the software and IT community that we're losing our good sense. And just for the record, I'm not an economist; I'm a programmer. I've been laid off before, and I know that it sucks. But I'm also a shareholder and a consumer; you probably are too.



This will be a tough crowd, I know. Last week, DevX Executive Editor Russell Jones wrote a commentary "Offshoring: It's Not Too Late to Change," which accurately reflects many of the issues, fears, and concerns of the anti-offshoring faction. Reading it, I was reminded of a commentary I wrote several weeks ago that only just touched on outsourcing. In response, I received a slew of misinformed emails from irate programmers criticizing my failure to unambiguously condemn outsourcing, offshoring, and developing nations in general.

Well, I won't. In fact, I believe the opposite: The available evidence indicates that offshoring creates American wealth while giving a leg up to some of the most desperately poor countries on earth, creating new markets and more American jobs in the process. But I suspect that you already know that. You might even call yourself a "fiscal conservative" (that seems to be a popular identification among programmers) but you're hoping for some kind of special exception for you own industry.

Chicken Little?
Despite a good deal of blog-fueled hysteria, the numbers just aren't there to justify too much hand-wringing. In fact, there's very little evidence that the offshoring trend has actually contributed significantly to unemployment among programmers. Of course, there's an increasing amount of software being written overseas by American companies as well as contractors. There are even companies closing (or drastically scaling back) their domestic programming operations. But numbers from the Bureau of Labor Statistics suggest that these layoffs are very small indeed compared to standard business cycle reductions in force.

Our industry is based on change. More than anyone, we should resist the temptation to demand special treatment because, more than anyone, we know that the world keeps right on moving. And so does the world economy.
What about the future? It's not hard to find alarmist projections, if that's what you want to read, but here too there's little evidence of massive job flight. Some of the most dire predictions come from the Forrester Research Group, which claims that up to 3 million jobs will be lost to offshoring by the year 2015.

Sounds bad, I admit, but put it in context. According to remarks made in March 2004 by economist Ben S. Bernanke, a governor of the Federal Reserve Board, in an average year around 15 million Americans lose their jobs—and another 18 million start new ones. With a net of 30 million jobs created in the next 10 years, 3 million is not calamitous.

Moreover, many of the most alarming studies are overly simplistic in their assessments. According to a Government Accountability Office (GAO) report to congress released last month, "Many of these studies of job losses do not take into account other economic effects of offshoring that may offset the job losses … For example, Forrester does not try to estimate any other effects from offshoring, such as potential expansion of employment in other sectors."

And this makes sense. Though our roles may change, let me assure you that many—even most—programmers can't possibly be replaced outright by an Indian or Russian counterpart. Building software is hard, but rarely so for technical reasons. The hardest part lies in assessing business needs in sufficient detail to start development, and that gives an incredible advantage to the technical experts physically close to the business and the customer.

Editor's Note: The author wishes to acknowledge Amy Flynn-McMullen's contribution to this article. Her research on the related subject of "Re-Insourcing and the L1 Visa” has framed and informed many of the arguments herein.


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