First In-Depth Regional Study Assesses Impact of Offshoring

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, July 16, 2004 Share this on FacebookTweet thisEmail this to a friend

Legislative proposals in 37 states, including California, seek to ban or severely limit the practice of outsourcing (offshoring). But a recent study shows that efforts to prevent offshoring won’t be successful and are likely to come with significant economic costs.

The study was conducted by the global management consulting firm A.T. Kearney and sponsored by Joint Venture: Silicon Valley Network, the Bay Area Economic Forum and the Stanford Project on Regions of Innovation and Entrepreneurship.

The study indicates that "the accelerating globalization of the job market is being driven by improvements in telecommunications, the entry of large developing countries into the global economy and growing capabilities in other countries to provide quality services and manufacturing and undertake increasingly advanced research and development." Five specific trends are identified as driving the current job market change – globalization, productivity improvements, the shift from a manufacturing to a service economy, the modularization and segmentation of the value chain, and demographic shifts. These trends are changing the nature of the Bay Area’s business function as well as those in other parts of the world.

The study makes it clear that the practice of outsourcing is not at all a new phenomenon for manufacturing. What is new is the global competition for jobs in services such as software, computer programming, and business support functions. The trend of offshoring cannot be reversed and global trends will force the continued creation and destruction of jobs in the Bay Area and other regions of the state.

The report contains some specific actions that policymakers can and should take to encourage investments directed towards helping the region (and state) strengthen core capabilities to compete in the global marketplace for manufacturing and services.

To see the full report, "The Future of Bay Area Jobs: The Impact of Offshoring and Other Key Trends," click here:
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