Like the rest of the country, Rhode Island is coping with a staffing trend
that is sending some high-skilled technology jobs to low-wage workers in countries
like India and China.
But local businesspeople coping with the realities of doing business stateside said the practice of outsourcing may not be as clear-cut a business decision for the state’s smaller companies. For now, they said Rhode Island should be concentrating its resources on educating future students to be prepared for whatever technological innovation is next to arrive.
A study released last Wednesday by the Information Technology Association of America said the outsourcing of more than 100,000 jobs has put some skilled workers out of work in the short term, but the longer-term effects should be that the country sees lowered inflation, eventual job creation and higher productivity.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
The technology association said the movement of those jobs overseas is a drop in the bucket compared to the dot-com implosion in 2000 that eliminated twice as many positions. Four years later, the association said that the now approximately 104,000 jobs being performed by lower-salaried foreign workers don’t even account for 3 percent of the positions in America’s tech industry.
In Rhode Island, where a significant amount of small businesses (collectively, the state’s largest employer) are in the technology field, it’s less clear how deeply the effects of the staffing trend will be felt – whether for better or for worse.
Cliff Dutton, chief technology officer and senior vice president of Ibis Consulting, said that his Providence company considered outsourcing some jobs a little more than a year ago, but eventually decided “the balance economically was a wash.” For small companies, Dutton said he doesn’t believe outsourcing will ever make economic sense. Dutton said the practice does have overhead costs.
Alongside dealing with a host of communication issues that can go beyond those of simply culture and language, Dutton said, small businesses may not find it worth their while to devote time to establishing an operation overseas only to have to regularly assign management to deal with quality assurance concerns. And he said that delays in any stage of a tech company’s business are all the more costly in a marketplace where missing a single development cycle might mean the loss of a business opportunity.
The trend of outsourcing, which has seen more companies sending IT jobs overseas as a way of cutting worker costs, has led to heated political and economic debates around the country as skilled tech workers struggle to find employment. Outsourcing can cut some labor costs dramatically, allowing companies to sell goods competitively at a cheaper rate or with a wider profit margin.
A round-table discussion last week on sending technology jobs overseas, where Dutton was a panelist, drew more than 125 professionals, even if the session’s participants remained hesitant to either support or attack the cost-cutting tactic.
Raymond Fogarty, director of the Rhode Island Export Assistance Center at Bryant College, provided a global perspective of outsourcing and said his group began its activities in the late 1980s with the goal of increasing the state’s international trade. From exporting a few hundred million dollars 15 years ago, Fogarty said Rhode Island now exports more than $1 billion of goods, a large segment of which is computers and computer components.
He said the current debate of outsourcing IT jobs to China and India has echoes of a similar discussion surrounding Japan and Korea in the 1980s. Fogarty said the reality of the situation is that again, the market shift has given the country the “stimulus to look at ourselves and be much more efficient.”
U.S. Sen. Jack Reed, the discussion moderator, agreed that education is key to discovering the next big thing. He said he’s felt that outsourcing is almost becoming a code word for productivity, and his sense was that the country needs more technological innovation, which takes time and goes hand-in-hand with improved education.
“Becoming a math or science engineer is not a decision that’s made in college,” Reed said. “It’s a decision that starts when a second- or third-grader realizes they have a facility with numbers and are then hopefully encouraged by good teachers.”
Other audience members asked if the United States was “reaping what we sow,” and now was burdened with finding it difficult to compete with lower salary structures in other countries. Reed said the country can’t stop wage growth and a solution to the rising costs of health care doesn’t appear to be around the corner.
Originally scheduled for Amica Mutual Insurance Company’s Lincoln headquarters, the March 29 event was moved to Bryant College’s George E. Bello Center after a strong response from attendants. The round-table discussion – titled, “Globalization of Information Technology: A Rhode Island Perspective” – was sponsored by the Rhode Island Technology Council.
