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Outsourcing Report Blames Schools

Ohanian Comment:
Here's something new: Corporate America blaming the schools for the nation's economic condition. I wonder how many employees of the corporations belonging to the American Electronics Association think the outsourcing of their jobs represents a failure of their own education. And how many think this outsourcing represents corporate greed.

Just asking.

When a corporate association such as the American Electronics Association shouts that the schools are failing and outsourcing has been greatly exaggerated, then it's useful to find out something about that association. Here's how they describe themselves--on their website. It gives you a glimmer of why they want to shift the discussion away from outsourcing and back to complaining about the schools.

Clearly, AeA represents corporate power, not the needs of employees. They are strongly behind the global economy.

AeA: Advancing the Business of Technology Advancing the business of technology, AeA is the nation's largest high-tech trade association. AeA represents more than 3,000 companies with 1.8 million employees. These 3000+ companies span the high-technology spectrum, from software, semiconductors, medical devices and computers to Internet technology, advanced electronics and telecommunications systems and services. With 17 regional U.S. councils and offices in Brussels and Beijing, AeA offers a unique global policy grassroots capability and a wide portfolio of valuable business services and products for the high-tech industry. AeA has been the accepted voice of the U.S. technology community since 1943.

You can read the report at http://www.aeanet.org/Publications/id_OffshoreOutsourcingMain.asp

Good for this reporter for giving unemployed software developer Bob Jern, who's been out of work for 15 months, the last word.

A desire for cheap labor is not the primary reason technology companies are turning to offshore workers, according to a new report by the American Electronics Association, the United States' largest high-tech trade association.

The American school system, which AeA researchers charge is failing to provide strong science and math education to students, is largely to blame for lost jobs, according to the AeA's report, "Offshore Outsourcing in an Increasingly Competitive and Rapidly Changing World."

"Companies aren't outsourcing only in order to obtain cheap labor; they are also looking for skilled technology workers that they increasingly can't find in the U.S.," said Matthew Kazmierczak, senior manager of research at AeA, and one of the authors of the report.

Lack of government funding for technology research and development, the high cost of providing health insurance to workers, an increasingly litigious industry and competition -- once a competitor outsources, then other companies are almost forced to do so -- were also cited as reasons for seeking offshore labor.

But AeA researchers also state in the report that the effects of offshore outsourcing on technology workers have been exaggerated, and that no hard numbers are being gathered by government or independent entities that cite exactly how many jobs have actually been lost to outsourcing over the past few years.

"Figures cited in news reports are normally predictions of what will happen, not an analysis of what is happening," Kazmierczak said.

Predictions do abound. Research firm Gartner produced the most recent figures, estimating that one in 10 information-technology jobs at U.S. IT companies, and one in 20 at non-IT companies, will move offshore by the end of 2004.

And as more companies move jobs outside the United States, the AeA warns that other companies will be forced to follow in their footsteps, just to remain competitive.

"Many of the companies that outsource jobs overseas usually have no alternative, as that is exactly what their competitors are doing," said William T. Archey, president and CEO of the AeA. "Failure to outsource will result in an even greater loss of jobs than would be lost to offshoring alone."

Kazmierczak acknowledged that AeA members are all business owners, not employees, but says this had no effect on the report's findings.

"Yes, we do represent the interests of businesses," said Kazmierczak. "However, we believe our report is a fair and balanced look at the entire scope and context of the offshore-outsourcing issue.

"It's understandable that offshoring is a very emotional discussion, but this paper attempts to bring some common sense and reality to the situation," Kazmierczak said. "AeA does acknowledge that some people are being hurt by offshoring, and the report includes recommendations on how to keep jobs here in the U.S."

Among the recommendations to help staunch outsourcing, the AeA called for tech businesses to support math and science education in schools, with donations of both money and time.

Businesses and universities should send their skilled programmers, engineers and scientists into public schools to mentor and teach, to help ensure that children are getting the best possible education in these fields, AeA researchers urged.

"We'd welcome scientists and computer people in schools -- I think it would really spark interest in these fields," said New York middle-school teacher Keri Carnen. "Despite our best efforts, our kids really have a hard time understanding why they might need advanced math or science in their adult lives."

The federal government should also increase research and development budgets to help keep jobs in the United States and ensure the country remains competitive in technical and scientific fields. Past technologies stimulated by federal R&D funding and tax credits include the Internet, super and personal computers, and integrated circuits, according to the AeA report.

Noting that roughly 50 percent of all engineering, math and science degrees awarded by U.S. universities now go to foreign nationals, AeA researchers also called on the federal government to give green cards to all foreign nationals upon their graduation with master's and Ph.D. degrees, in an effort to keep these people -- and their skills -- in the United States.

The report also strongly suggested that the government explore ways to reduce the cost of doing business in the United States, specifically citing health insurance and litigation costs as issues that need to be addressed through universal government-provided health care and litigation reform.

The AeA report strongly condemned any efforts to pass "protectionist" legislation aimed at making offshore outsourcing less attractive to U.S. businesses by increasing taxes for companies that outsource offshore or providing tax breaks for those that don't outsource work.

On its latter recommendation, the AeA is in line with Federal Reserve chairman Alan Greenspan, who said at Boston College's recent Finance Conference that any government efforts to discourage overseas outsourcing could damage the U.S. economy instead of helping American workers.

"Time and again through our history, we have discovered that attempting merely to preserve the comfortable features of the present -- rather than reaching for new levels of prosperity -- is a sure path to stagnation," Greenspan said at the conference, where he also recommended increased emphasis on math and science education for children, as well as more job-retraining programs for adults.

The AeA's report also suggested that worker-retraining programs should be expanded to include software programmers and other high-tech workers. Most current federal and state programs are limited to those working in the manufacturing industry.

But some say that politicians must find ways to clamp down hard on offshore outsourcing soon, or risk losing votes in the next election.

"What exactly am I going to retrain for, a job in some fast-food joint?" said unemployed software developer Bob Jern, who's been out of work for 15 months.

"About the only job these profit-hungry, blood-sucking corporations aren't going to be able to outsource is the kind that requires you to physically be there in order to serve up those burgers and fries to customers."

— Michelle Delio




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