In global IT markets, group suggests steps to stay competitive

By Gail Repsher Emery

| August 6, 2003

Trade association says U.S. firms must be more competitive to maintain the lead in world information-technology marketplace.

According to a survey published May 5 by ITAA, 22 percent of large IT companies have moved work offshore, and 15 percent of IT firms said they will, or are undecided about, moving jobs overseas within a year.Companies already outsourcing IT work overseas said the jobs most likely to be moved offshore are programming or software engineering positions, followed by network design and Web development jobs. The telephone survey was conducted among 400 hiring managers from IT and non-IT companies nationwide. According to the May 5 survey, the U.S. IT work force numbers 10.3 million.

For the United States to remain the world leader in information technology, its companies and workers must be more competitive, according to a position paper published Aug. 6 by the Information Technology Association of America.

"A recent ITAA study shows that many U.S. companies have already or will consider moving IT jobs offshore. This is the new global reality for U.S. IT companies and workers, and we must meet it with a new spirit of competitiveness," said Harris Miller, president of the Arlington, Va., trade association, which represents more than 400 U.S. IT companies.

The paper, on global outsourcing and offshore development, says the U.S. IT industry must take several steps to maintain its competitive advantage.

First, it must produce overall best value IT solutions by performing research, developing innovative new products and services and improving quality, the paper said.

"While the low cost of labor is driving some companies now to seek better margins by sending IT services work offshore, others question whether this approach is likely to produce sustainable economies and overall 'best value' for the customer," the paper said. "In addition to cost, the best value determination must consider business factors such as innovation, quality, productivity, total cost of ownership, suitability and customization."

In some cases, offshore product development may be required, ITAA said, because overseas customers may need their products to be "localized," or adapted for language, style and other factors. Many U.S. IT companies generate 50 percent or more of their revenue in overseas markets, according to ITAA.

The association also said companies and the U.S. government must:

encourage education, training and constant retooling of future and current U.S. workers in technology-related subjects;

strive to level the playing field internationally, including opening restricted foreign markets, to create new opportunities for the sale of American IT products and services; and

avoid protectionist actions that could shrink global markets. For example, while classified government work should not be performed offshore, but "national security" should not become a catch-all to avoid the outsourcing of government work, ITAA said.

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