WASHINGTON (01/07/2004) - U.S. IT companies need to hire foreign workers in order to stay competitive in the global market, but the U.S. government could also help by passing laws that improve the country's education system and encourage spending on IT products, says a report released by the Computer Systems Policy Project (CSPP).
The 20-page report, titled "Choose to compete," calls on U.S. lawmakers to avoid "protectionism" through limits on international trade and collaboration, and instead to form a partnership with U.S. companies to improve how the nation competes globally. "Because U.S. companies are operating globally, they must hire qualified workers around the world to meet customer demands and expand their capabilities -- a business model that makes sense, given that increasing corporate revenues come from abroad," says the CSPP, representing chief executive officers (CEOs) at eight U.S. IT companies.
Jobs moved offshore return benefits to U.S. companies and, by extension, U.S. workers, the report argues. "Much of the substantial revenue earned abroad cycles back to Americans in the form of jobs and wages for workers, investment in research and development, profits for shareholders and taxes for the U.S. economy," the report says.
The report counters growing criticism from some worker organizations and politicians who have questioned why U.S. companies hire foreign workers or move jobs overseas when the latest U.S. unemployment rate stands at 5.9 percent.
"Thousands and thousands and thousands of white-collar jobs are going overseas, chasing the cheap dollar in India, China, Malaysia and the Philippines," U.S. Rep. Don Manzullo, an Illinois Republican, said at a congressional hearing on offshore outsourcing in October. "That's the reason for this hearing, because of the incontrovertible evidence that the United States is on the verge of adopting the economies of Third World nations."
But the CSPP's goal isn't to be defensive about hiring foreign workers, said Bruce Mehlman, executive director of CSPP. Instead, the group wants to spark a conversation about how the U.S. can stay competitive, with the CEO members "interested in protecting the national interest."
"There is a sense from these CEOs that their companies are competitive and will stay competitive," Mehlman added. "They want to make sure there are good, thoughtful debates happening in Washington."
The CSPP report argues that the U.S. IT industry has raised worker productivity and helped raise the standard of living in the U.S. CSPP members, including chief executives of Dell Inc., IBM Corp. and Hewlett-Packard Co., said they will counter arguments against offshore hiring with a package of legislative proposals outlined in the report, released Wednesday. The group of CEOs will present the proposals to Congress and members of the Bush administration during CSPP's annual meeting in February.
"As the U.S. encounters new global realities policy makers face a choice: we can compete in the international arena or we can retreat," said Craig Barrett, CEO of Intel Corp. and chairman of CSPP, in a press release. "America can only grow jobs and improve its competitiveness by choosing to compete globally, and that will require renewed focus on innovation, education and investment."
The report, available online at http://www.cspp.org/reports/ChooseToCompete.pdf, includes proposals for Congress to:
-- Create a permanent, improved research and development tax credit.
-- Substantially increase federal spending for university-based research in science and engineering.
-- Shorten tax depreciation schedules for IT equipment.
-- Pass a permanent moratorium on Internet-only taxes.
-- Set goals and fund a program to improve math and science skills among U.S. students.
The report warns of attempts to put up trade barriers and limit hiring of foreign workers. "These measures often backfire," the report says. "Countries that resort to protectionism end up hampering innovation and cripple their industries, which leads to lower economic growth and, ultimately, higher unemployment. Furthermore, any trade barriers created by the United States ... could lead to retaliation from our trading partners and even an all-out trade war."
But organizations representing IT workers, including the Institute of Electrical and Electronics Engineers-USA (IEEE-USA) have questioned how moving jobs offshore helps unemployed IT workers in the U.S. In late 2003, U.S. the unemployment rate for electrical and computer hardware engineers was near 7 percent, according to the IEEE-USA.
"Their interest is in profits," Ron Hira, chairman of the IEEE-USA's research and development committee, said of offshoring defenders during an interview last month. "They don't feel a responsibility to their workforce."