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Report: Most Outsourced Jobs Stay in US

By Keith Regan
Jun 11, 2004 9:43 AM PT

The vast majority of jobs lost to outsourcing stay within the U.S., with a small percentage actually ending up filled by overseas workers, according to a Department of Labor study.

Report: Most Outsourced Jobs Stay in US

The agency's Bureau of Labor Statistics said in a report that just 4,633 of the 239,361 jobs lost in large-scale layoffs it tracked in the first quarter of 2004 were actually moved overseas.

That represents just 2 percent of the total. By comparison, 9 percent of the layoffs were deemed to be the result of a company deciding to outsource some function, meaning jobs were far more likely to be relocated within the United States as a result of outsourcing.

"In more than seven out of 10 cases, the work activities were reassigned to places elsewhere in the U.S.," the report said.

The report seems to contradict a study released last month from Forrester that predicted the number of white-collar service jobs shipped overseas would rise more this year than earlier forecast, with some 588,000 jobs at risk. Earlier this year, leading computer maker Dell acknowledged that most of the new jobs it was creating were coming in overseas locations as well.

Still Happening

Offshoring is still taking place, the report suggests, but the numbers might indicate the problem is not as significant as has been portrayed in the media and during the Presidential election campaign.

Unions and others have hit offshoring as the latest example of corporate greed at the expense of the American worker. Last month, workers at SBC Communications walked out in a contract dispute that stems in part from offshoring concerns.

But the data suggests far more workers were laid off due to bankruptcy or other financial difficulties at businesses. And layoffs involving relocation of work were smaller, on average, than those involving a company closing or related event, the agency said.

Missing Pieces

The BLS acknowledged that the numbers don't tell the whole story, because they include only layoffs involving 50 or more people and do not include any research from companies with fewer than 50 workers.

Because small businesses make up a large percentage of the nation's economy, that gap in the research might be significant. Still, the report backs others that argue that outsourcing is not an immediate dire threat to the U.S. workforce.

John A. Challenger of Challenger, Gray & Christmas, which tracks employment data independently, told the E-Commerce Times that offshoring still represents a risk to the employment portion of the ongoing economic recovery in the United States.

He also expects some half-million jobs to leave the country by the end of this year and said the fact that the United States has added payroll jobs at a faster-than-expected clip in recent months indicates that the recovery is very strong.

"Longer-range, offshoring is not going to go away," Challenger said. "If anything, the appeal of moving jobs to lower cost centers is going to grow as overseas economies become better qualified to handle more complex tasks."

Hype or Spin?

Others have not disputed that offshoring is taking place, but have said that the development is not necessarily a bad one. The Information Technology Association of America (ITAA), for instance, recently issued a report saying that offshoring helps the American economy by enabling companies to cut costs and boost profits which can then be re-invested into the company.

ITAA President Harris Miller told the E-Commerce Times that the public's perception of offshoring is skewed by media coverage of the topic.

"There is so much hype, and most of it focuses on the examples, which are out there," Miller said. "The fact is the U.S. workforce, including the technology workforce, is growing and will continue to grow."


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