Could Your Job be Offshored

Research by Sunil Mithas

Is your job a candidate for global offshoring? It’s a concern for millions of Americans these days, as more and more companies move their IT and professional service jobs out of the U.S. to take advantage of global talent, reduce costs and cycle time, and spur innovation.

So is your job at risk? Maybe, says Sunil Mithas, assistant professor of decision and information technologies. Mithas and co-author Jonathan Whitaker, University of Richmond, studied patterns in U.S. employment and salary growth from 2000 to 2004 in more than 300 service occupations. They were interested in figuring out which occupations were the most vulnerable to global outsourcing. Mithas and Whitaker identified several factors that make an occupation easier to offshore:

Can it be codified? Activities that can be codified, or completely described by written instructions, are easy to transfer from one worker to another. Activities or occupations that involve a high proportion of tacit rather than explicit knowledge are not easy to codify, so it is more difficult to transfer those activities to another worker outside the organization or country. If you are developing software for your firm, for example, the requirements-definition stage is probably not easy to outsource, but once those requirements are defined and made explicit, the actual programming could be outsourced.

Can it be standardized? Process standardization is also an important factor in what can be successfully outsourced or offshored. For example, General Motors has worked to standardize complex design-related business processes across far-flung business units and organizational members. This allows different parts of the process to be broken into pieces and moved electronically between the people who perform them.

Can it be modularized? A job is “modularizable” if it can be broken into components so that each component can be performed independently by separate people or business units and then later integrated. Take a technical manual, for example: several different people could each write one chapter of the manual, and each chapter could then be combined and assembled into the final manuscript.

So what kinds of occupations are safe from offshoring? Jobs that require higher information intensity and skill levels are safer than others, says Mithas. And so are those jobs that require a physical presence and these vary significantly in terms of their skill requirements, like doctors—and plumbers.

The news isn’t completely dismal, however. Mithas also found that contrary to popular perception, employment growth and salary growth for high information intensity occupations were not adversely affected during the time period he studied. And many high-skill and information-intensive jobs were added to the U.S. economy, even if they are subject to forces of globalization and show some downward wage pressure.

“Is the World Flat or Spiky? Information Intensity, Skills, and Global Service Disaggregation” was the lead article in the September 2007 issue of Information Systems Research. For more information, contact smithas@rhsmith.umd.edu.