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This is an archive article published on May 3, 2004

Now, the debate in US turns to ‘insourcing’

By now, nearly all US workers have heard about offshoring, the growing practice of sending jobs — especially in the high-tech services ...

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By now, nearly all US workers have heard about offshoring, the growing practice of sending jobs — especially in the high-tech services sector — to India, China and other countries.

But business leaders are frustrated by what they say is a lack of appreciation for ‘‘insourcing’’, their term for Americans working in the US offices and factories of foreign companies. They point to statistics showing 6.5 million US workers get paychecks from employers headquartered in Asia, Europe, Canada and elsewhere. And they argue that legislative efforts to thwart offshoring could backfire and discourage foreign employers from creating high-paying US jobs. “The fact is,” said Thomas Donohue, CEO of the US Chamber of Commerce “that foreign companies send work here, legal, financial and high-tech.’’

But many facts are elusive in this debate. No federal agency collects data on how many US jobs have been sent overseas. It’s easier to tally US workers who answer to bosses based overseas, but even those numbers can be slippery.

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For example, about 94,000 US workers are employed by DaimlerChrysler AG, based in Stuttgart, Germany. Before the company was purchased in 1998, most of those workers were employed by Chrysler Corp., a US company. So should they now be included in the insourcing statistics?

Rep Sander Levin, D-Michigan, is skeptical about many of the auto-related statistics that suggest foreign companies are generating US jobs. He said that economists should consider how many US jobs might have been killed off by those same foreign employers.

Toyota offers an example. Business leaders often point to the Japanese company as a provider of more than 30,000 high-paying US jobs. But Levin said Toyota became an auto giant in part because it was protected from competition while growing up in Japan. ‘‘One reason Toyota can be so aggressive in this country now is because they closed off their markets to us in Japan and made immense profits while we lost jobs because of those policies,’’ he said. Perhaps if Toyota had been competing more fairly with US auto makers in the last century, the Americans working at Toyota plants today would be making Ford Navigators or General Motors Pontiacs, he argues.

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The facts get murkier when considering the movement of service jobs. With the help of low-cost telecommunications and Internet connections, employers in one country can now get sophisticated work done in other countries. Many US companies are rushing to hire cheaper foreign workers to perform tasks involving computing, radiology, architecture, etc. The phenomenon is so recent that no one can accurately estimate its scope. The most widely quoted source on offshoring is a 2002 study by Forrester Research Inc, which projected shifting of 3.3 million white-collar US jobs by 2015.

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Offshoring defenders say such losses would have little impact — by 2015, the US economy will have created 22 million other jobs, more than making up for offshoring losses, they predict. They also maintain that companies such as German-based Siemens and British-based GlaxoSmithKline will become even more willing to employ Americans in the new century because its got one of the world’s largest internal markets.

—NYT

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