Concern Grows in Connecticut About Overseas Outsourcing of White-Collar Jobs

“Everything that can go digital, wireless or Internet is going overseas: computer software development, financial analysis, copy-editing, architecture, engineering, human resources, even payroll and other back-office functions.” That is the view taking shape in Connecticut and many other states as local and state officials see a growing number of companies exporting information and knowledge jobs to places like India, China and other low-wage countries.

Nationally, more than 3.3 million jobs and $136 billion in wages will be lost to offshore outsourcing in the next 15 years, according to the Forrester Group, a consulting firm in Cambridge, Mass. Some think that could actually be a conservative estimate of these losses to the economic development upstarts sprouting across the world.

According to the Washington-based Economic Policy Institute, the job exporting problem is likely to get worse in the future as educational levels and skills rise in developing countries.

There is a growing awareness of this problem among U.S. economic development officials, although most are not sure what, if anything, they can do about it. Lowering wages and other business costs to match the cheap labor deals abroad is not the answer. Many communities, regions and states are pinning their future economic hopes on clusters and other knowledge economy development strategies. How much will they help? That remains unclear as most of these efforts are only in their early stages of development.

I would hold out “stability” as part of the answer for U.S. communities. Despite our recent challenges and uncertainties, the U.S. remains the most stable place on the planet from an economic, social and political perspective. While many international locations may be cheaper places to do business and offer many other business advantages, political risk remains a much greater issue.

We need new strategies. A second possible part of the solution could lie in developing new types of economic development strategies that confront the international division of labor issue directly by offering companies with networked labor strategies that connect work activities in the U.S. with those abroad. This suggests that most U.S. business locations must increase their “globally connectivity” to link jobs in let’s say Connecticut with those in India.

One thing is certain. The knowledge economy is no longer bound to the U.S. and other developed nations. American economic developers will need to become international economic developers if they are to find true solutions to this problem.

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