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The rise of strategic global outsourcing and implications on American talent

Talent shortages have unleashed a new wave of global outsourcing. Slowness in adapting to this new reality could result in major repercussions for future American tech talent.

The rise of strategic global outsourcing and implications on American talent
[Gorodenkoff/Adobe Stock]

By 2025, the global IT outsourcing market will be worth $397.6 billion. That money is not spread equally across the globe, however. When you dig deeper into which countries this money is concentrated in, you’ll find most outsourcing service providers are in India, China, Eastern Europe, and South America. In places of the world that don’t necessarily have America’s best interests in mind.

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Several questions must be asked. Does outsourcing IT to those overseas put the United States at risk? With U.S. talent embedded in companies being outsourced globally, does this hurt the growth of talent within the United States? Will the talent level in the U.S. become jeopardized, leaving us at the mercy of foreign workers?

HOW WE GOT HERE

COVID-19 accelerated digital transformation strategies by an average of six years globally and 65% of the world’s GDP is set to be digitized by 2022. This has, in turn, caused seismic market shifts, such as an exponential increase in remote employment and the need for talent to fill those roles, and increased reliance on connectivity and access to reliable, secure, and strong internet access.

As technology progresses, larger swaths of the population increasingly rely on more digital connections for all facets of their life in everything from work, home and buying their daily coffee to simply connecting on a social basis. The digital world will likely be fully embraced and the adoption of “remote” processes—telework, telemedicine, virtual life—will become omnipresent. The main obstacle: There isn’t enough talent to fill the current need.

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Talent shortages have unleashed a new wave of global outsourcing. Slowness in adapting to this new reality could result in major repercussions for future American tech talent. Finding and hiring tech talent is getting harder and taking longer. To win, companies need to fundamentally evolve recruitment and HR. Within the first six months of 2021, an average of 13,000 positions per month were added to the IT employment market. This was an increase from the previous average of 5,000 to 8,000 per the Bureau of Labor Statistics. The high point of this trend came last July when there was a peak of 8.7 million unfilled positions.

WORKPLACE TRANSFORMATION AND THE REMOTE ENVIRONMENT

It is expected that by 2025, 22% of Americans will be working from home. This experience of working remotely during the pandemic has put more jobs at risk. Employers are starting to cut costs with ‘anywhere jobs’. Firms may move jobs overseas to cut costs and recruit from larger talent pools.

With enterprises accelerating digital adoption, global spending on tech and digital transformation is estimated to total $6.8 trillion between 2020 and 2023. This is in large part fueled by 96% of companies stating that they expect to increase speed on their transformation projects. We all have been forced into increased reliance on digital tools to communicate and collaborate online securely.

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To ensure any talent we outsource from foreign countries can be trusted, there should be a public and private sector teaming of the minds as to what is acceptable and what is not. The two parties must work together and keep each other informed as to what they are seeing from outsourcing that could be cause for alarm.

WHAT US COMPANIES CAN DO TODAY

To ensure the talent they are outsourcing overseas will not hurt America in the long run, U.S. companies should take these steps.

The largest companies in the U.S. need to reach out and work with Congress to pass the End Outsourcing Act. This new legislation would call for “reforms to the tax code that would ensure companies can no longer benefit from tax incentives when they ship jobs overseas and provide a tax credit for companies that bring jobs back to America, and create other incentives for investment in domestic industry.”

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Enterprises need to implement strategies to create new, more strategic jobs inside the United States. Currently, they leverage lower-cost, offshore tech talent to support day-to-day work, but with 56% of W2 workers having the ability to work from home if their employers allowed it, businesses could save on brick and mortar overhead and come closer to equaling the savings of off-shoring.

Companies should make an investment to retain strategists and architects who are mapping digital transformation in the U.S. as permanent employees of the company. Employees with that much in-depth and proprietary information cannot be offshored responsibly and securely.

Enterprises should invest in the latest AI and automation technology that could advance how work gets done. The future of work in America will be based upon the harmony of AI and human intelligence. U.S. businesses need to catch up to our adversaries in accepting this coming reality and deploy intelligent agents and automation as well as train talent in automation, AI, and emerging technologies.

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Next, recruit talent from across the globe to find a new home in the United States. Invite global talent to permanently join the American workforce. We should encourage our scouting and recruitment firms to discover the leading brains in the world and work with them to move their family to U.S. shores.

Finally, U.S. companies need to invest in high-quality leadership and create world-class talent hubs, or Centers of Excellence, that hire top professional talent from the U.S. We should always develop and prepare our greatest minds born here in the United States to secure our future.

If the United States government and the private sector work in concert toward this goal, Americans will be safer, more secure, and more set up for personal and professional success. In turn, every business and every division of the government, from local municipalities to the highest offices of the United States, will be more secure.

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There is a road map to follow to secure the United States from ill-willed foreign actors while simultaneously creating jobs and a more prosperous future for the American worker. We just need to be willing and courageous enough to accept this future and act accordingly.


Mark Minevich is the Chief Digital Strategist, International Research Center on AI / UNESCO, Sr. Advisor, BCG & UN, investor, member of WEF GFC on AI,  B20/G20 

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