Outsourcing Laws Introduced in the US

By Gurk Mann

Do you think that Outsourcing legislations which had been introduced in 2005 almost in all 50 US states have been useful in securing the jobs of the citizens? The Congress had to pass this legislative act as to curb down the outsourcing trend which has gained the momentum in the present times. It was been said that some of the Bills have actually become laws but they actually lack control. In some cases, it has cost states millions of dollars by forcing them to pay contractors in various knowledge centers and call centers within the US. But lobbying is existent for strengthening the legislation is also exists in a large way. There are two groups of lobbyists involved in this business of offshoring or outsourcing -groups of service and blue-collar workers which have tried to support laws restricting offshoring on the one hand, and Legal firms, IT companies on the other which try to highlight the utility of outsourcing. For example, the group which has been in support of outsourcing tries to give the idea that the number of jobs lost to offshoring is only a small fraction of the total workforce.

Have Anti-offshoring laws really benefitted the US economy?

Bills related to offshoring or outsourcing were introduced in the US with the view to limit or stop these practices. In some cases the bills that have actually become laws which later on have had negative consequences by costing states millions of dollars to pay more for contracts with firms in the US rather than other countries. But there also has been lobbying efforts to pass stronger legislations which have appeared to be intensifying. Groups of service and blue-collar workers have held various campaigns all over the country in support of laws restricting offshoring. On the other hand there are professional firms like large U.S law firms, IT companies like Dell, Intel, IBM, and Motorola. The US jobs outsourced have been rising every year and are bound to touch 3.3 million by 2015, which comes to around 250,000 job losses in the US annually. If seen in a broader context it is a small relative to total U.S. employment of 137 million and accounts for less than 2 percent of the roughly 15 million Americans who involuntarily lose their jobs each year.

It is seen that there have been continued efforts by the lawmakers to curb offshoring and outsourcing by introducing amendments to pending legislation. As expected the legislators had turned to data-privacy and identity-theft issues in an attempt to cut down the amount of work and the job losses which have occurred due to outsourcing. There have been cases that in states like New Jersey and Indiana where they have ended up paying $900,000 for not outsourcing or offshoring their work. Other analysts noted that in Indiana if outsourcing happened it was thought that there would be a rise in unemployment among residents. We all know that assessing all the statistics is difficult, policy analysts both for and against offshoring note, because there are many big companies who just don't want to say what effect has been there of offshoring, which has had job cuts or even provide a full picture of how jobs are being handled outside of the U.S.

Whole scenario is shifted to the issue related to the visas for non-U.S. workers employed in the U.S. in highly skilled areas at higher levels. There was news that the U.S. government has recently approved an increase in the number of H-1B visas available to foreign workers. In that period there was also a report that the U.S. firms who have been hiring workers with the visas and paid them even less than U.S. employees with the same job profile in the company. With this kind of news it started a debate on the merits of H-1B visas. The market trend seen by some people is such that if the allotted number of H-1B visas are used up then the companies work through offshoring. For some smaller companies dealing with visa related issues is a big problem as they don't have the resources, so the best quick solution they find is to outsource the work. So for the larger companies they can still do without outsourcing or offshoring but for the smaller firms it is the best way to get the work done and earn profits.

But on the other hand lawmakers had still continued to introduce new legislations even after what the market experts had to say about the advantages of offshoring and outsourcing. With the impact of offshoring in the US the need of the hour is to improve educational setup and bring in new programs as to help the employees who have lost their jobs rather than bringing out more and more legislations. As we all know offshoring is likely to grow rapidly in the future and presently it already has affected the U.S. economy in the sectors such as Information Technology. Nowadays, the outsourcing market is picking up such a pace that a time might come when the total U.S. GDP [gross domestic product] would be raised by offshoring. U.S. workers might loose their jobs at the expense of corporate profits. Then I fully agree that workers are wholly justified in resisting offshoring only till the time they receive adequate compensation for their losses.

Gurk Mann

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