Outsourcing Limits Could Hurt Carriers

The political debate over offshore outsourcing is growing more intense as the November elections edge closer. Democratic presidential candidate John Kerry has unveiled a plan that would end some investment tax credits for companies sending jobs overseas.

Meanwhile, a group representing leading technology industry CEOs released a position paper arguing that the computer industry needs unfettered access to global labor markets. And insurance IT leaders also have concerns that limitations could impact their bottom line.

In his "workers' bill of rights" that was presented in January, Kerry charged that current policies give companies "special treatment while they ship American jobs overseas." A paper released the same day by the Computer Systems Policy Project, a lobbying group that includes Dell's Michael Dell, Hewlett-Packard's Carly Fiorina, Intel's Craig Barrett and IBM's Sam Palmisano, argues that legislative efforts to limit offshore outsourcing would hurt the U.S. economy.

"With the winds of protectionism blowing in Washington, it seemed timely to us to reach out to policy makers on both sides," says the group's executive director, Bruce Mehlman, who previously served as assistant secretary of commerce for technology policy in the Bush administration.

The group's paper claims that 60 percent of revenue for U.S. technology companies originates outside the country. "Any trade barriers created by the United States in an attempt to avoid global competition could lead to retaliation from our trading partners and even an all-out trade war," the group warns.

Outsourcing limitations also promise to affecct insurers' service delivery. (Editor's Note: See related article on pg. 35.) "We are an extremely competitive business where the bar for delivering high quality, cost-effective products and services is being raised everyday," relates Shelley McIntyre, second vice president, business technology services, Guardian Life (New York). "Offshore outsourcing is not just a necessity specific to Guardian. We obviously can't ignore it."

The Computer Systems Policy Project suggests that a more practical alternative to protectionist measures would be an increase in government investment in research and development at the university and high school levels so that U.S. graduates could be prepared for advanced training.

"As the U.S. workforce ages and the economy grows, there will be many good jobs in many industries. Who will land these jobs? Not the millions of Americans who graduate from high school without basic skills," the report says

EDITOR'S NOTE: This article, written by Paul McDougall with contributions from Julie Gallagher, originally appeared in InformationWeek, a sister publication of Insurance & Technology.