An Indian Civilizational Perspective

Outsourcing does not Cost American Jobs: US Software Companies

It is finally out! The reason why companies are outsourcing is more because of Growth, Increasing Speed to Market and Improving Productivity. These are the replies of the 114 American software companies.

Offshoring of software development by software companies is not costing Americans jobs, according to a report being announced Thursday by the Software & Information Industry Association (SIIA).

The association is releasing its Global Software Development Survey Report, which surveyed 114 American-based software companies last year. In a conclusion that stateside developers probably would not find surprising, SIIA found that software companies are increasing offshore software development efforts. However, companies are not looking to displace American workers, said David Thomas, executive director of SIIA.

“[Offshoring] was used almost entirely as a form of expansion, not as a replacement,” Thomas said.

“There’s a lot of negative talk,” that is particularly political, about offshoring costing American jobs, Thomas said. “That’s not really the case.”

The biggest challenge for software companies was they could not build development teams fast enough in the United States because of a shortage of both engineers and H-1B visas, Thomas said. Offshoring provided a way to leverage existing developer teams, he said.

SIIA found that 57 percent of offshore participants have significantly increased offshore work in the past 18 months. Many plan to continue to do so.

Sixty-eight of the companies surveyed had offshore operations while 46 did not.

Growth was cited as an important or critical driver for 84 percent of respondents doing offshoring; increasing speed to market and productivity were the next most important drivers.

SIIA said respondents claim to be meeting 80 percent to 100 percent of cost-saving goals. But gains in productivity appear to be less-than-expected.

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