I found some interesting insights in a Booz Allen paper concerning the growing trend in outsourcing white-collar work.

First, companies will increasingly go offshore for talent, not for lowering costs. The current thought process is that the main reason to outsource is to reduce costs. That may be true for more rote activates, but as outsourcing becomes more white-collar, companies will be looking for specific skills and talents.

Another interesting finding is that off-shoring does not necessarily mean “replacing current jobs” – it may mean enhancing a current workforce. According to Booz Allen research, most implementations of off-shoring do not necessitate a reduction in the on-shore workforce.

The chart below shows that many offshore implementations do not lead to job loss. This chart breaks down by job function.

I notice that R&D, Marketing/ Sales, Product Design, and Engineering Services have the most percentage of implementations that do NOT reduce on-shore jobs.

This makes me think that many companies are going offshore to enhance their capabilities on-shore and not replacing people for the most part.

For example, if you have hired some great people in R&D and product design. People who are technical enough to understand technology and creative enough to produce new ideas, you probably want to keep them. If you want to expand their capabilities, you can get offshore workers to enhance your existing employees capabilities to perform. You create more bandwidth and perhaps lower your per-product-produced costs even if your overall costs went up incrementally.

I have written before about the need for people that can understand the technology but also be creative. It looks like the more creative thinking jobs in companies are “more safe” from replacement according to this data. This is interesting and somewhat encouraging, although after all is said and done, this expansion of work-force may still have downward wage preassures to some degree.

These and other insights can be found in this Booz Allen paper.

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