How Offshoring Affects IT Workers

Abstract

Despite significant public, media, and academic interest in offshoring, there has been very little data available through which to assess how offshoring has affected US-based information technology workers. In this study, we use data from two new, nationally representative surveys to examine how offshoring has already affected the US based IT workforce, and to test the hypothesis that offshoring is making interpersonal skills more valuable for US-based IT workers.

Our survey results show that 40% of high-technology firms offshore work, and about 30% of all firms that offshore send IT work overseas. Among the IT workers surveyed, about 8% report ever having experienced offshoring-related job displacement, double the average offshoring-related displacement rate across all other worker types, but still implying an annual offshoring-related displacement rate of only about 1% per year.

We also provide evidence that workers in jobs that require face-to-face contact or physical presence are at smaller risk of offshoring-related job displacement, implying that interpersonal skills are becoming relatively more valuable among IT workers. A one standard deviation increase in our skills measure increases the likelihood of having one's job offshored by about 25% above the base rate. Our findings imply that IT workers in functions that involve cross-divisional communication or hands-on support are less likely to be affected by offshoring.

Keywords: offshoring, IT workers, turnover, skills, globalization