How Offshoring Affects IT Workers

Communications of the ACM, Vol. 53, No. 10, pp. 62-70, 2010

21 Pages Posted: 26 Aug 2008 Last revised: 18 Oct 2010

Prasanna Tambe

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences

Lorin M. Hitt

University of Pennsylvania - Operations & Information Management Department

Date Written: October 16, 2010

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

Suggested Citation

Tambe, Prasanna and Hitt, Lorin M., How Offshoring Affects IT Workers (October 16, 2010). Communications of the ACM, Vol. 53, No. 10, pp. 62-70, 2010. Available at SSRN: https://ssrn.com/abstract=1259323

Prasanna Tambe (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

New York University (NYU) - Department of Information, Operations, and Management Sciences ( email )

44 West Fourth Street
New York, NY 10012
United States

Lorin M. Hitt

University of Pennsylvania - Operations & Information Management Department ( email )

571 Jon M. Huntsman Hall
Philadelphia, PA 19104
United States
215-898-7730 (Phone)
215-898-3664 (Fax)

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