Offshoring poses 'serious challenge to US leadership'

A major association of technical professionals believes that the outsourcing of high-wage jobs to low-wage countries poses a serious, long-term challenge to the United States' technological leadership, economic vitality and military security.

IEEE-USA, the US wing of the Institute of Electrical and Electronics Engineers, said Thursday that the 'offshoring' trend also contributes to high unemployment among US techies.

"We must develop a coordinated national strategy to maintain US technological leadership and promote job growth in the United States," IEEE-USA president John Steadman said in a statement. "But it's going to be difficult to remain technologically competitive, if we continue offshoring the jobs of our innovators at rates currently projected."

In a policy statement, IEEE-USA said US government procurement rules should favour work done in the country and should "restrict the offshoring of work in any instance where there is not a clear long-term economic benefit to the nation or where the work supports technologies that are critical to our national economic or military security."

The group, which boasts more than 225,000 electrical, electronics, computer and software engineers, also wants the government to collect data on offshoring, create new work force assistance programs, and reform the controversial H-1B and L-1 guest visa programs.

So-called offshoring has become a hot election issue, as white-collar workers - including computer programmers - worry that their jobs may be shipped to low-wage countries such as India and China. In a November 2002 report, Forrester Research predicted that 3.3 million US service jobs will move offshore by 2015.

That figure is a small fraction of total US employment. But IEEE-USA said offshoring is contributing to "unprecedented" unemployment rates for US electrical and electronics engineers, along with other information technology professionals.

The joblessness rate for electrical and electronics engineers rose in 2003 to a record 6.2 per cent, compared with 4.2 per cent in 2002, according to IEEE-USA. The 2003 unemployment rate for computer scientists and systems analysts reached an all-time high of 5.2 per cent, the group said.

Industry leaders and some economists have defended the flow of high-tech work abroad, arguing that it leads to more competitive US companies and ultimately creates jobs here. N. Gregory Mankiw, chairman of President Bush's Council of Economic Advisers, backed offshore outsourcing in a recent report. "When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically," Mankiw wrote.

Likely Democratic presidential candidate John Kerry has said that federal contracts, when possible, should be performed by US workers. He has called for an end to tax credits that give corporations breaks for moving jobs offshore.

Defenders of offshoring, however, say limiting global trade in services could backfire in the form of a trade war or decreased innovation in the United States. Technology industry leaders have instead suggested measures such as a permanent tax credit for research and development, more federal R&D funds related to IT, improved education and expanded efforts to help displaced workers.

IEEE-USA backs better education and additional worker assistance. For example, it wants to expand the federal Trade Adjustment Assistance (TAA) programme to cover all workers whose jobs move offshore. The TAA programme, which offers income support and training for workers adversely affected by trade, currently does not apply to all technology professionals.

IEEE-USA also called for both increased federal investments in and a permanent tax credit for R&D. But the group wants to ensure that the resulting activity generally takes place in the United States.

"Federal investments and tax credits for research and development should be limited to work performed in the US," IEEE-USA said.

The professional group also said the H-1B and L-1 visa programmes are frequently used to bring in cheaper labour and can lead to the displacement of US professionals, exploitation of foreign workers, and "accelerated offshoring of engineering and other high-tech jobs."

Use of guest worker visas by India-based companies has been seen as fuelling the shift of technology work abroad.

Backers of the visa programmes say severely restricting them would lead to more work shipped overseas.