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How to save the IT industry in 4 (not so easy) steps

Stephanie Overby | Feb. 14, 2012
If government leaders really want to save U.S. IT jobs, here's what they should do.

When you hear U.S. politicians railing this loudly against corporate outsourcing, you know it's an election year.

With job creation a prime campaign issue, the O-word is a hot topic across presidential primary debates, congressional committees and the president's State of the Union address. Setting aside the fact that those running for office really mean to rally against offshoring, not outsourcing -- after all, U.S. corporations are replacing American workers with direct hires overseas, and a company can theoretically outsource domestically without net job loss -- their proposed solutions would likely do little to stem the flow of IT jobs overseas.

Many of the suggested initiatives, including those put forward by President Obama, are focused mainly on manufacturing, rather than services such as IT. And those that could impact the IT services industry -- legislation to limit visas for foreign IT professionals or to compel U.S. corporations to report employment figures by country -- are hardly comprehensive cures for what ails the American tech sector.

When it comes to offshoring, "while politicians need to be seen to be against it, they do little to prevent it," said Phil Fersht, founder of outsourcing analyst firm HfS Research.

If government leaders really want to retain (or regain, depending whom you ask) America's competitiveness in the global IT service market, here are some changes that could actually make a difference:

 

Rebuild Brand USA

 

Much political hay has been made recently of select American companies repatriating their manufacturing operations -- not as a patriotic act, but because the cost of sourcing the work stateside had become competitive with overseas options. And that may be the case for some IT work as well: Boise's labor rates are coming in line with Bangalore's.

The problem, according to Fersht, is that India now the dominant IT services brand in the world. And government and industry groups in competing countries are all hard at work creating and promoting their own IT services identities. The United States? Not so much.

"We've even seen enterprises actually declining to use onshore U.S. IT services firms which underbid their Indian competition, because they are so invested in the Indian IT brand," Fersht said. "The Chinese and Indian governments, as examples, constantly invest in their local business to help them grow and be successful."

A stronger American IT services trade group would help, too. Monty Hamilton, CEO of Atlanta-based IT and BPO provider Rural Sourcing -- not generally a fan of government intervention in industry -- wouldn't mind a little NGO support. "There is a successful model that the U.S. can implement to better position us to compete for and win more technology jobs," Hamilton said. "The model is NASSCOM."

 

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