This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

September 21, 2005

Is Offshoring Waning?

For years, the United States and some other developed countries have been sending jobs to less-developed countries. In most cases, the motivation has been cost-savings…almost always in labor costs. It was assumed that workers in the receiving countries would be able to perform the work at least as effectively as the workers who had held the jobs for years---sometimes for decades. Manufacturing jobs shifted overseas, along with administrative, back-office, coding and design, and information technology positions.

Recently, because of the difficulty of finding qualified workers in the home country, jobs have moved to other countries. Employers in the United States, the United Kingdom, Australia, Canada, and New Zealand, for a few examples, have found the task of hiring skilled workers increasingly difficult. When competent workers are not available in the home country, employers will seek workers with those abilities in other countries.

Thousands of jobs are moving overseas while there are still people in their home countries eager to take those positions. Unfortunately, it has become too expensive to train workers in the higher-wage home countries---especially when employers can easily hire people with the capacities they need. When people can not be found in the host country, employers will find a way to recruit workers from other countries. Host countries, obviously, have to educate and train their own workforces.

Many employers who have offshored jobs are having second thoughts. Cultural issues, quality problems, employee turnover, communications (language) difficulties, and competence problems are clouding the sunny skies of offshoring. Customer complaints are now joined by employee complaints in the host countries. Increasing challenges are pushing employers to slow the flow of jobs overseas and to begin bringing jobs back for efficiency and stakeholder satisfaction. Even stockholders are questioning whether the alleged cost savings justified.

As the jobs return, more employment opportunities will be created. Many will be filled by people who held them before; others not. What’s important is that we will create more jobs at home, competing for more qualified talent to perform the work. This growth will happen in the midst of a shortage of skilled labor.

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