Offshoring, also known as offshore outsourcing, is the term that is used to describe the practice among companies located in the United States on contracting businesses beyond U.S borders to perform services that would otherwise have been provided by in-house employees in white-collar occupations. The term can be applied to U.S. firms that are offshoring the jobs of blue-collar workers on textile and auto assembly lines, for example, which has been taking place for decades. The extension of offshoring from U.S. manufacturers to facilitate providers has heightened public policy concerns about the extent of job loss and foregone employment opportunities among American workers. This concern was especially relevant to policymakers because of the national unemployment rate persistently exceeding 9% despite the end of the Great Recession in June 2009 .
The outsourcing of service sector jobs from the United States was a response to the early 1980s recessions when employers narrowed their focus to the company’s core mission and contracted peripheral activities (e.g., janitorial duties) to other U.S. businesses. The 2001 recession caused employers to seek further efficiencies by tapping into the global supply of labor. U.S. businesses were able to outsource overseas the jobs of white-collar workers in some service providing industries as a result of widely disseminated technological advances that permit low cost, good quality, and high speed transmission of voice and data communications. Events, such as the education systems of moderately low-wage nations graduating large supplies of highly educated individuals, also occurred in the intervening years, which heightened the ability of other countries (e.g., India and China) to export services to the United States.
U.S. workers have increasingly become concerned about the security of their jobs, due to the increased global economic integration since the early 2000s. Offshore outsourcing, which is considered a manifestation of globalization, is reported to have unfavorably affected the employment situations of U.S white-collar workers in information technology jobs and IT-enabled jobs. Data that was collected from the U.S. Bureau of Labor Statistics’ Displaced Worker Survey suggested that the vulnerability to job loss of white-collar workers preceded the expansion of offshoring from jobs in manufacturing industries to jobs in professional and business services, administrative support services, and financial services industries. In addition, the data on displaced workers that include the latest recession suggest that macroeconomic conditions rather than offshoring have likely accounted for most of the increase in job losses within the recent years.
Congress has been historically trying to assist workers who lose their jobs without it being their fault, whether the job losses are caused by economy-wide downturns or by shifts in the industry composition of jobs performed in the United States. Some observers have expressed their concern that federal employment policies might not be up to the task of assisting displaced workers who must adjust to the up stir of U.S. jobs in order to become reemployed. The wide-ranging estimates that have been developed of the number of workers in jobs that are vulnerable to the effects of offshoring provide limited guidance to Congress in the deliberations about whether existing programs to assist displaced workers are sufficient or should be expanded.
The overseas relocation of manufacturing work predates by decades the recent wave of offshoring service-providing jobs. Major U.S. companies, at first responded to the heightened competition from Japanese and European multinational corporations, opened facilities abroad during the 1970s and 1980s that turned out goods formerly produced by comparatively well paid, often unionized U.S. factory workers. U.S. companies reacted to the back-to-back recessions of the early 1980s by focusing on their core missions and contracting out activities that specialized domestic enterprises could perform more efficiently. Firms also restructured their operations by outsourcing the jobs to employees of temporary help agencies, professional and business services establishments, and independent contractors. U.S. demand for employment services continued to increase during the 1990s. It is projected to be one of the industries experiencing the most job growth in future years, thus indicating that domestic outsourcing of formerly in-house functions is a permanent reorganization of how work is performed.
Events during the intervening decade of the 1990s enhanced the ability of other countries to export services, particularly IT services, to the United States and other developed countries (e.g., the United Kingdom). One such event was addressing the “Y2K crisis”: U.S. firms, in response to a tight supply of computer programmers in the late 1990s, turned to companies principally located in India to make the code fixes needed to avert problems with computer systems when the year 2000 arrived; the domestic firms that utilized these programmers reportedly were pleased with the quality of their work.
Concern about job security has grown due in part to increased global economic integration since the early 2000s, when offshoring started spreading from the jobs of blue-collar manufacturing workers to those of white-collar service sector workers. White-collar workers comprise the majority of all U.S. workers and most white-collar workers are employed in the service sector, which accounts for the vast mass total U.S. employment. In other words, many more people today may believe their jobs are at risk of being transferred overseas. The loss of U.S. jobs to offshoring has led people to ask what field is going to be the next generator of jobs for U.S. workers, and more particularly, of “good” jobs. Because the question is not easily answered, it may intensify people’s anxiety. The job-generating candidates that have been put forth, such as nanotechnology and biotechnology, may not provide as many new jobs as are thought to be moving abroad; further, life sciences jobs have themselves begun to be sent overseas. Although U.S. workers have been encouraged to upgrade their skills so they can perform the jobs expected to be created by further U.S. technological innovation, an oft-posed question in response to this advice is: in what occupations? The acquisition of IT skills had been strongly advocated for several years; however, these are among the jobs that appear newly at risk of being offshored. If both high-skilled and low-skilled work is vulnerable to offshoring, then one’s field of study may be as, or perhaps more, important than the level of education attained.
The single most important tactical reason for outsourcing is to reduce or control operating costs and increase profits. Access to an outside provider's lower cost structure is one of the most compelling short-term benefits of outsourcing. Foreign countries offer the talents of a college-educated workforce at a fraction of U.S. salaries. Partnering with an organization with world-class capabilities can offer access to new technology, tools and techniques that the organization may not currently possess; more structured methodologies, procedures and documentation, and a competitive advantage through expanded skills. Competing corporations are outsourcing operations offshore to have the cost advantages over the market and to free up management resources. Although outsourcing has achieved cost savings and has been used to enter key foreign markets, these benefits may not outweigh the long-term impacts on U.S. industries and the economy. Large companies such as American Express, Microsoft, Dell, IBM and SAP all offshore outsource to India. All of these companies are very successful and all have excellent profits. When searching on offshore outsourcing India, there are thousands of articles that claim there is a reduction of at least 40% or more in cost and great quality. There are three main reasons that can be accountable to offshore outsourcing to India: Wages are much lower than American wages, infrastructure costs are lower in India then America, offshoring outsourcing enables companies to do-away with the expenses on bench labor, as the outsourcing vendor allocates the bench employees to projects for other clients or bears the cost of inefficiency.
International Business Machines (IBM) is well known for off-shoring their American jobs and helping other American companies to find employees overseas. IBM provides offshore consultants to deliver highly quality services with lower hourly costs, which reduces operating costs and increases profits for the American company. Although the American company is benefiting from this service, the American people are losing their employment to other countries providing the same services an American provide the company. IBM has laid-off approximately 10,000 jobs in Americans in the beginning of 2005. According to IBM's annual reports, IBM employed the following in the US: 2006 - 127,000, 2007 - 121,000, 2008 - 115,000, and 16,000 in 2009. While Americans are losing jobs, other nations such as India employment has been increasing. According to IBM's annual reports in 2007 to have 98,000 employees in Brazil, China, India and Russia, in 2008 employment overseas increased by 15% to 113,000, mostly in India.
According to United States Department of Labor, from 2006 - 2016 employment for computer programmers will decrease by 4 percent. In 2006, computer programmers held 435,000 in American, by 2016 the projected jobs to be held is 417,000. One factor that will cause 18,000 jobs to be lost is offshore outsourcing. Computer Programmers are at much higher risk of having their jobs because this job function can be done from anywhere in the world. With today's technology, companies can transmit their programs digitally to anywhere in the world and take advantage of foreign countries lower wages.
“Every year India produces around 2.5 million university graduates, including 400,000 engineers and 200,000 IT professionals. It is estimated that India has 28% of the world's IT offshore talent. The cost of an Indian graduate is roughly 12% of that of an American one.” These are just a few of the advantages that India brings to the market, which is why the offshore outsourcing boom continues to grow. This is one of the reasons why American students are not majoring in these fields. Young adults have the assumption that IT jobs are sooner or later going to be sent overseas, so there is not point on getting an education in these fields. The fear of offshore outsourcing is striking a chord with America's future employees. Recently, the education system has seen shifts in college enrollment, as college students have begun to shun high-tech fields like computer science and even engineering. With the lack of stability in these fields students are concerned that their jobs could eventually be outsourced internationally and are therefore deciding to focus on their business skills. The war for talent is at its fiercest in high-tech industries, which poses a threat to the future of the American technology industry and the overall economy. American companies may be forced to consider outsourcing not only to save costs, but due to lack of local talent. Studies have shown that the proportion of incoming undergraduates planning to major in computer science is now 70% below its peak in the early 1980s. High-tech, white-collar jobs are being transferred to foreign countries, which limit opportunities for highly educated Americans. The U.S focuses so much attention on higher education yet people cannot put their skills to use if their job is outsourced. “When manufacturing jobs started moving overseas in larger numbers, American workers were told by free trade ideologues not to worry, that the U.S. comparative advantage was in services—especially high-tech and other knowledge-based industries. Displaced workers were told to simply acquire better skills and more education in order to succeed in the changing American economy. Many workers did, but now they find that knowledge and talent can't compete against the chase for higher profits and cheaper labor in the new global marketplace.” If Americans decide not to invest in their education, companies will mitigate their chances of sustaining a strong knowledge base within the U.S. and induce the risk of international spillovers.
36 percent of employees who lost their jobs to outsourcing found jobs that matched or increased their wages, according to the Bureau of Labor Statistics between 1979 -1999. Although twenty-five percent of workers were able to find employment, their wages were thirty percent or more decrease in wages. “These concerns are real and need to be addressed,” says Diana Farrell, the director of the McKinsey Global Institute. But she argues that rather than trying to stop offshoring, a practice that she argues increases wealth in the U.S. economy, “leaders should focus on its distribution and help workers who are disproportionately hit.”
“The $50 billion-a-year offshore outsourcing business was growing at a 29 percent annual rate until the credit crisis hit last fall, but it can be can be forecasts growth in 2009 to be about 10 percent.” According to Forrester Researcher Inc., offshore outsourcing will increase 17 percent annually from now through 2012. That is a possible 10-17 percent increase in the already high unemployment statistics. With the possibility of more companies looking at offshore outsourcing, the better chance the unemployment rate will stay around 9%, or even increase in the next few years.
Corporate America should start “thinking outside the box” and finding alterative ideas to offshoring. It is true companies are saving money and having an increase in profits by offshoring, but this does not help the average person needing to pay the bills. By looking at colleges in the area and hiring newly graduated students. Graduated students are inexperience and do not require a high wage, they are looking for experience. By hiring a graduate, this provides the person experience, the company is paying a low wage, and the job is staying in America. People who are on assistance are another area to look into. By teaching a person a new skill, this takes them off assistance, provides them experience, and again keeps the job in America.
Extensive growth in the practice of offshore outsourcing has raised a number of political and social concerns. On one hand, it helps in creating new employment opportunities within offshore country but on the other hand, it results in cutbacks for white-collar jobs within America. In addition to this, it also raises issues pertaining to the quality and confidentiality of specialized and sensitive work that gets outsourced to a foreign country. Offshore outsourcing of jobs, especially white-collar jobs to countries overseas, has emerged as one of strongest issues in United States.

Bibliography
Jensen, J. Bradford. Global Trade in Services: Fear, Facts, and Offshoring.
Washington, DC: Peterson Institute for International Economics, 2011. Print.

Feenstra, Robert C. Offshoring in the Global Economy: Microeconomic Structure and
Macroeconomic Implications. Cambridge, MA: MIT, 2010. Print.

Urry, John. Offshoring. N.p.: Polity, 2014. Print.

Bhagwati, Jagdish N., Alan S. Blinder, and Benjamin M. Friedman. Offshoring of
American Jobs: What Response from U.S. Economic Policy? Cambridge, MA: MIT, 2009. Print.

Khimm, Suzy. "Offshoring Creates as Many U.S. Jobs as It Kills, Study Says."
Washington Post. The Washington Post, 12 July 2012. Web. 03 Dec. 2014.

Annett, Tim, Yu Wong, and Deborah S. Creighton. "Understanding Outsourcing: An
Online Journal Roundtable." Wall Street Journal. Wall Street Journal, 1 Mar. 2004. Web. 03 Dec. 2014.

Schieberl, Jeffrey, and Marshall Nickles. "Outsourcing U.S. Jobs Abroad: Why?"
International Business & Economics Research Journal 13.2 (2014): 253-58. Mar. 2014. Web. 29 Nov. 2014.