Computing Research Policy Blog

What about "insourcing"?

Another perspective on the outsourcing issue, from an editorial in The News & Observer on February 2nd. Makes the point that even as some computing programming jobs have headed offshore, a large number of "heavy industry" jobs, including the manufacturing of vehicles, computers, electronics and other machinery have actually been "insourced" because "U.S. is still an attractive location for the siting of plants matching advanced technology and equipment with highly skilled labor and modern research."

Click below for the full editorial....

The News & Observer (Raleigh, North Carolina)
February 2, 2004 Monday, FINAL EDITION
SECTION: EDITORIAL/OPINION; Pg. A13; Point of View

HEADLINE: A potent 'insource' of U.S. jobs

BYLINE: Michael L. Walden,

RALEIGH -- Recent headlines have raised concerns about
"outsourcing," or the movement by U.S. companies of jobs to
foreign countries. Some prominent tech companies are considering
moving thousands of well-paying programming positions overseas,
and we've also heard about customer service jobs being sent to
India.

While outsourcing has captured current attention, it is not a
new phenomenon. If the term is defined as jobs operated by U.S.
companies in foreign countries, the current total is 10 million
positions, or 7 percent of domestic U.S. employment. Further,
there's been an upward trend in the number of outsourced jobs
since the mid-1990s, when trade barriers were significantly
reduced following the signing of the NAFTA and GATT agreements.

What is less well publicized and understood is that
"insourcing" also occurs in our economy. Insourcing happens when
foreign companies establish jobs in the United States.

The latest statistics show insourcing accounts for over 6.5
million jobs nationwide. Although this is less than the number of
outsourced jobs, the gap has actually narrowed in the past
quarter century. That is, there's been a recent trend of foreign
companies adding jobs in the U.S. faster than U.S companies have
increased jobs in foreign countries.

Consider what's happened in heavy manufacturing, which
includes the manufacturing of vehicles, computers, electronics
and other machinery. Since the mid-1990s, foreign companies have
added 400,000 jobs in these industries in the U.S. Over the same
time period, U.S. companies moved 300,000 jobs to foreign
countries in the same sectors. The insourced jobs in these
industries are also high-paying, with average compensation per
employee of over $ 65,000.

Insourcing also plays an important role in the North Carolina
economy. The most recent data show 240,000 insourced jobs in
North Carolina, with 100,000 in manufacturing. And the total
number of insourced jobs in North Carolina has risen in recent
years.

With an increasingly globalized economy, more and more jobs
will be candidates for both outsourcing and insourcing. The jobs
most vulnerable for outsourcing are those performing routine
tasks, not requiring close supervision, and where lower-cost
foreign labor is readily available.

For example, 20 years ago computer programming was a new and
cutting-edge job. Today, many programming tasks are
straightforward and routine, and millions of workers worldwide
have been trained to do them. These are the kind of technical
jobs that can go to foreign nations with lower costs.

But as the recent experience with heavy manufacturing
indicates, the U.S. is still an attractive location for the
siting of plants matching advanced technology and equipment with
highly skilled labor and modern research. Foreign companies
looking for such ingredients know they can be found in the U.S.
and, I might add, in North Carolina.

The scorecard on job outsourcing versus job insourcing has
actually moved in the favor of the U.S. in recent decades, and
policy-makers must consider both when evaluating the worldwide
movement of jobs. Jobs increasingly are up for grabs in a new
world without economic borders.

Yet the implication for American workers is the same as my
father gave me years ago: to get a good-paying, you must get an
education. The updated version is: to get and keep a good-paying
job, you must get more and more education.

(Michael L. Walden is a William Neal Reynolds distinguished
professor in the department of agricultural and resource
economics at N.C. State University.)