Contents
Foreword by Lou Dobbs ix
Preface xiii
Acknowlegments xvii
Chapter 1: What Outsourcing Means for America 1
Outsourcing Cannot Be Ignored 2
What Actually Happens with Outsourcing 5
The Outsourcing Debate Is Misleading 6
Is Outsourcing Inevitable? 7
The Potential Impacts Are Far-Reaching 8
Why Outsourcing Is Fool’s Gold for Companies 9
What the U.S. Can Do About Outsourcing 10
Conclusion 12
Chapter 2: Outsourcing in a Larger Context 15
Free Trade Is Not Really “Free” 16
The Effects Can Vary Greatly 16
Understanding Historical Developments 18
Trading Jobs for Competitive Advantage 19
How Other Nations Handled Trade Competition 20
Conclusion 22
Chapter 3: The Public Debate on Outsourcing Is Misleading 25
What Experts Say About Outsourcing 26
Open Proponents of Outsourcing 30
Critics of Outsourcing 35
Conclusion 41
Chapter 4: Outsourcing of High-Wage Jobs 43
How Much Outsourcing Is Happening? 43
How Outsourcing Snowballs 48
A Lack of Government Monitoring 52
The Upward Trends in Offshore Outsourcing 54
Offshore Outsourcing in Other Developed Countries 59
Where the Jobs Are Heading 61
Chapter 5: Why Companies Are Moving Jobs Overseas 67
Reason #1: Cost and Salary Differences 67
Reason #2: Domestic Outsourcing as a Strategy 72
Reason #3: Better or Unique Talent Overseas 75
Reason #4: No Penalty for Destroying U.S. Jobs 76
Reason #5: U.S. Tax Incentives 80
Reason #6: Technological Change 81
Reason #7: Access to Emerging Markets with Proactive Policies 85
Reason #8: Easier with Experience 86
Reason #9: U.S. Immigration Policies 86
Reason #10: Corporate Strategy That No Longer Includes Workers 88
Conclusion 90
Chapter 6: The Far-Reaching Effects of Outsourcing on the U.S. Economy 95
The Long-Run Impacts on Economic Efficiency 96
The Impacts on U.S. Labor Demand 100
The Impacts on Types of Occupations and Education 109
The Threats to U.S. Technological Capacity 116
Conclusion 121
Chapter 7: The Human Face of Outsourcing: The Impact on Individual
Workers and Communities 125
The Immediate Impact on American Workers 126
The Long-Run Impact on American Workers 129
The Impact on Individuals 130
The Impact on Communities 135
The Indian-American Community: A Special Case 140
Conclusion 142
Chapter 8: How Our Dysfunctional Immigration Policy Fuels Outsourcing 147
Introduction 147
Some Immigration Basics 148
How Guest Workers Promote Outsourcing 150
Three Fundamental Design Flaws in the H-1B Program 151
Shutting Out the Best and Brightest 162
What We Should Do? 163
Chapter 9: How Developing Countries Attract American Jobs 167
Why Software Companies Move Overseas 168
Outsourcing to India 170
The Rise of Indian Software 173
The Indian Diaspora Brought High-Tech Home 175
Why Bangalore? The Development of the Indian
Software Cluster 176
The Indian Government’s High-Tech Policies 177
An Overview of China’s Proactive IT Policy 181
The Implications for Other Developing Countries 184
What’s Down the Road? 186
Conclusion 187
Chapter 10: Outsourcing in Europe and Canada 193
Introduction 193
Europe Is on Fire 193
European Outsourcing: The Irish Miracle and the
Eastern Frontier 195
Canada: Keeping Quiet—for the Moment 197
Light at the End of the Tunnel? Why Offshoring
Does Not Have to Mean a Race to the Bottom 199
Chapter 11: Ten Policy Recommendations 205
1. Acknowledge That a Problem Exists 207
2. Gather the Right Data to Study the Problem 208
3. Reform U.S. Visa Policies That Encourage Offshore
Outsourcing 210
4. Adopt More Pragmatic Approaches to Government
Procurement 211
5. Overhaul Assistance Programs for Displaced Workers 213
6. Establish Better Protections for Workers 215
7. Train the Next Generation of Workers to Have Lifelong
Marketable Skills 218
8. New Institutions Are Needed to Represent the Interests
of Workers 220
9. Maintain Our Technological Leadership 221
10. Institute Trade Policies in the U.S. National Interest 223
Conclusion 227
Appendix A: Defining Outsourcing 231
Outsourcing 231
Offshore Outsourcing 233
Offshoring or Offshore Sourcing 233
On-Site Offshore Outsourcing 233
Insourcing 234
Global Sourcing 235
Best-Shore, Near Shore, All-Shore, etc. 235
Appendix B: Analysis of Key Outsourcing Studies 237
ITAA Study 237
Mann Report 238
McKinsey Report 241
Appendix C: Legislation Introduced Related to Outsourcing 243
Federal Legislation 243
State Legislation 246
Bibliography 247
Index 263