Moving U.S. White Collar Jobs Offshore
(Adapted from International Business by Charles Hill)

Economists have long argued that free trade produces gains for all countries that participate in a free trading system. As the next wave of globalization sweeps through the U.S. economy, many people are wondering if this is true. During the 1980s and 1990s, free trade was associated with the movement of low-skill, blue collar manufacturing jobs out of rich countries such as the United States and toward low-wage countries—textiles to Costa Rica, athletic shoes to the Philippines, steel to Brazil, electronic products to Thailand and so on. While many observers bemoaned the “hollowing out” of U.S. manufacturing, economists stated that high-skill and high-wage white-collar jobs associated with the knowledge-based economy would stay in the United States. Computers might be assembled in Thailand, so the argument went, but they would continue to be designed in Silicon Valley by highly skilled U.S. engineers and software applications would be written in the United States by programmers at Microsoft, Adobe and the like.

Developments over the past several decades have people questioning this assumption. Many American companies have been moving white collar “knowledge-based” jobs to developing nations where they can be performed for a fraction of the cost. During the long economic boom of the 1990s, Bank of America had to compete with other organizations for the scarce talents of information technology specialists, driving annual salaries to more than $100,000. However, with business under pressure, the bank cut nearly 5,000 jobs from its 25,000-strong, US-based information technology workforce. Some of these jobs were transferred to India, where work that costs $100 an hour in the United States can be done for $20 an hour.

One beneficiary of Bank of America’s downsizing is