Offshoring backlash in high tech

There's nothing like rising unemployment to stoke the debate about offshoring. This EE Times (WSJ for tech) article reports that over one million tech jobs were lost to offshoring in 2008. The question is whether this is a net benefit or cost. Generally, it is agreed that investors and consumers benefit and that dislocated jobs are forever lost. However, offshoring can also mean the difference between having a profitable business or not, or even being able to start a new one.

The offshoring of knowledge workers is not new. Yourdon, for example, discussed the offshoring of software development in great detail in his book "Decline and Fall of the American Programmer." Consider the case of a small software company with $5 million in sales and 40 employees, including 20 software engineers. In round numbers, a fully loaded software engineer costs around $7,500 per month here while in China a similarly qualified engineer costs $750 per month. By offshoring, the small company adds $1.6 million in gross profit. The company employs 10 people here in the US who were it not for offshoring, would not have jobs. And no, we didn't loose 20 software engineering jobs, they were never in the running.