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ABI/Trade and Industry. 2004. IT Outsourcing. The Controller's Report 14 (May).

This one-page article gives a useful overview of the hidden costs associated with IT outsourcing: evaluating vendors, managing the contract, enhancing security, traveling to offshore sites, and severance costs for laying off employees. In general, the cost for choosing a vendor and writing the contract is approximately equal to 3% of the contract cost. Average cost to manage an IT outsourcer is $300,000 per year. A hypothetical example of all the costs, prepared by Gartner, is given in a table.

Abstract from the National Library of Medicine PubMed.
This report on the pharmaceutical industry will be published in two parts. Part I begins with a summary of the study and its conclusions. The authors then provide an overview of the characteristics of the industry and current trends in its growth and structure: production and consumption, employment, research and development, capital investment, firm and product concentration and product competition, and pricing. A discussion of international trade follows, covering intra- and inter-regional, intra-firm, and intra-industry trade. The report will continue in the next issue of the Journal (Part II) with a look at foreign direct investment, inter-firm networks, and governmental policies.

ACCREDITATION BOARD FOR ENGINEERING AND TECHNOLOGY 2004. Criteria for Accrediting Engineering Programs (effective for evaluations during the 2005-2006 accreditation cycle 1 (Nov.).

From the ABET Web site. This document includes background information on the US accreditation body ABET and on the practice of accreditation, including all policies and procedures relating to the accreditation process such as appeals, complaints, and confidentiality.

AGGARWAL, A. 2004. Moving Up the Value Chain, From BPO to KPO. Evalueserve (Oct. 2). ACM Job Migration Task Force Meeting (Oct.) Chicago, IL.

This lecture provided definitions and statistics on current and future IT and business process outsourcing, the movement from low-end to high-end jobs, knowledge process outsourcing, and offshore destinations.

AGGARWAL, A. AND PANDY, A. 2004. India's Transformation to Knowledge-Based Economy - Evolving Role of the Indian Diaspora. Evalueserve (July 21).

The article provides insight on the role of the Indian Diaspora (emigrant population), particularly to the United States and the United Kingdom, in the growth of IT offshoring. The article provides a history of the Indian Diaspora since 1834, the size and distribution of the Diaspora, the success of the Diaspora in knowledge-intensive industries in the United States (and, in particular, in Silicon Valley) and, most importantly, the role that the Diaspora has played in the emergence of the Indian IT industry since 1970. Projections are made about the growth of offshoring knowledge-intensive services in the future and the opportunities this presents for India.

AGGARWAL, A. AND PANDY, A. 2004. Offshoring of IT Services - Present and Future. Eavlueserve Business Research (July 13).

This study reviews the drivers for offshoring in the United States and the United Kingdom and concludes that offshoring is going to grow in both countries. The impact of offshoring on "high-wage" countries as well as "low-wage" countries are discussed. The report also mentions that "low-wage" countries are moving away from generic low-value programming jobs to jobs with higher value such as design and analysis.

AGRAWAL. V. 2003. Offshoring: Is it a Win-Win Game? McKinsey Global Institute (Aug.)

This report is the first general report from the McKinsey Global Institute based on their work on IT outsourcing and BPO in India. Topics include: what drives offshoring, the economic benefits of offshoring, who is offshoring and where do they go, services that can be offshored, the impact on employment, the impact on the economy, the resilience of the US economy, why it is so difficult to offshore, and how to handle worker displacement.

AGRAWAL, V., FARRELL, D., AND REMES, J. K. 2003.Offshoring and Beyond. The McKinsey Quarterly 4.

Written by three McKinsey employees, the main focus is on the potential benefits of offshoring that will come through re-engineering business processes and not just by taking advantage of wage differentials while doing work the same way as at home. Approaches for developing nations might include round-the-clock shifts to get the most intensive use out of the relatively expensive capital infrastructure, using less expensive capital equipment that might be handcrafted in the country rather than using equipment from international market leaders, and reducing the use of automation to gain addition savings from low-cost labor. Although not directly pertinent, the paper includes an interesting analysis of cost savings that can come through internationalizing the automobile industry in new ways; this analysis can be applied to some IT industries. A number of other points about the nature of offshoring are made in passing.

ALPER, M. 2004. New Trends in Healthcare Outsourcing. Employee Benefit Plan Review (Feb.) 14-16.

This article surveys a number of the issues associated with outsourcing generally, not specifically offshore outsourcing, in the healthcare field. Administrative costs in health organizations are typically much higher than in other service organizations, such as in the financial industries, because of the low automation rates. There is a trend towards business process outsourcing in the health industries. It includes transaction processing, member management, provider network management, medical management, financial management and data reporting, capitation administration, and call center management. Some health organizations contract out these services; others subscribe to specialized application service providers who provide applications over the Internet. Key issues for health care organizations when outsourcing include whether the vendor utilizes electronic data interchange, leverages offshore outsourcing, achieves high levels of auto-adjudication, enables the organization to increase Internet connectivity with its key stakeholders, and has a good disaster recovery plan.

ALPERT, A. AND AUYER, A. 2003. Evaluating the 1988-2000 Employment Projections. Monthly Labor Review (Oct.) 13-37.

In the study presented in this article, several different measures were used to assess the accuracy of the US Bureau of Labor Statistics projections for both major occupational groups and detailed occupations. Some of those measures included a comparison of actual with projected employment growth, calculation of absolute error, and a comparison of actual and projected directions of change.

ALTBACH, P. G. 2005. Higher Education in India. The Hindu 12 (online edition) (April).

This opinion piece, written by the director of the Center for International Higher Education at Boston College, describes the state of Indian higher education and recommends a set of changes if India wants to have the educational support it needs to modernize itself based on high-tech industries. Seven problems are identified: (1) the higher education system has not been differentiated well enough to form a system with a few elite, research-oriented schools and others focused more on basic education; (2) the underinvestment by the state government in higher education; (3) India only provides higher education to 10% of its young people, compared to 15% in China and more than half in developed nations; (4) the politicization and bureaucratization of the education system; (5) the lack of accountability in the higher education system, providing faculty and administrators with few incentives to perform well; (6) student, and occasionally faculty unrest, which disrupts education; and (7) a large portion of students who leave India for their graduate education, most of whom never return to India. There are some advantages of the Indian higher education system. It has the third largest number of students (after China and the United States); English is the primary language of instruction and research; academic freedom is respected; and there are some quality institutions and departments, notably the Indian Institutes of Technology and the Indian Institutes of Management.

AMERICAN CHAMBER OF COMMERCE IN RUSSIA (ACCR). 2001. White Paper on Offshore Software Development in Russia (March).

This white paper discusses the positive and negative aspects of offshoring software development activities to Russia. Russia's greatest advantage is its highly skilled and educated workforce. Russia ranks third in the world for per capita number of scientists and engineers. Other advantages are labor costs and proximity to Europe and Asia. Some disadvantages include a lack of experience in project management, language barriers, high telecommunications cost, and legal and regulatory challenges.

AMITI, M. AND WEI, S. 2004. Fear of Outsourcing: Is It Justified? NBER Working Papers 10808. National Bureau of Economic Research 1 (Oct.).

This is a careful and thoughtful analysis of the economics of offshoring. It has a useful and up-to-date review of both the empirical and theoretical literature. A number of calculations based on IMF data make for interesting consideration. Most developed nations are not more outsourcing-intensive when adjusted for economic size than many developing nations. A study of the United Kingdom found that sectors with higher levels of services outsourcing did not have a slower rate of job growth. In conclusions cited from a companion paper, service outsourcing did not cause a fall in aggregate employment and had the potential to increase efficiency enough to create a sufficient number of jobs in that sector alone to offset jobs lost to outsourcing.

ANDERSON, C. 2005. Transistors Don't Have Sex on the Roof. The Long Tail 7 (Feb.) (Available at www.longtail.typepad.com).

The article describes the limitations that the author believes offshoring will face in India because of the traditional society. The author argues that the supply of qualified young people who live with their parents in the cities that have concentrations of offshoring companies is already relatively exhausted. Thus, the companies are having to draw their workers from across the country, which separates young people from their families. There are already strong concerns about preventing these young people, who are living on their own, from working with people of the other sex, and working night shifts. To prevent young people from having sex at work companies have locked roofs and guarded parking lots, not to avoid theft, but to avoid sex in the cars. As the cultural backlash becomes stronger, it is expected to limit the supply of workers. There are numerous postings in response to this article.

ANDERSON, S. 2003. Creeping Protectionism: An Analysis of State and Federal Global Sourcing Legislation. The National Foundation for American Policy, Washington, DC (Dec).

Stuart Anderson is executive director of the National Foundation for American Policy. He formerly worked at the Cato Institute and the Immigration and Nationalization Service. The National Foundation for American Policy, founded in 2003, is a "non-profit, non-partisan organization dedicated to public policy research on trade, immigration and other issues of national importance." This policy analysis argues that state and federal legislation to restrict outsourcing "stifles innovation, reduces the competitiveness of U.S. firms, and cost American taxpayers money." The most interesting part of the report is the analysis of anti-outsourcing efforts in three states: in Indiana, where the government cancelled a contract awarded to Tata America International Group, the low bidder to install an unemployment insurance claims system; in New Jersey, where the state assembly has introduced legislation based on consumer fraud laws to make it difficult for US companies to maintain call centers in foreign countries; and Michigan, which has introduced legislation to prohibit state agencies from contracting or subcontracting with organizations that employ any people who do not hold US citizenship, legal alien residency, or a valid visa. The paper criticizes the campaign pledges of presidential candidate John Kerry, analyzes some of the federal legislation (especially the Thomas-Voinovich Amendment), and provides an appendix with information about various federal and state legislation on outsourcing.

ANDREWS, S., CAVANAUGH, J., HARTMAN, C., KLINGER, S., AND CHAN, S. 2004. Executive Excess 2004. Institute for Policy Studies and United for a Fair Economy.

This report is issued by two progressive organizations, the Institute for Policy Studies and United for a Fair Economy. Most of the report is not relevant to offshoring. However, in a section on correlations between executive salaries and various other factors, the report shows that the top executives at the 50 largest outsourcers earned an average of $10.4 million in 2003 which is 46% more than the group received on average in 2002 and 28% more than the average large-company CEO. These 50 companies have been heavy supporters of political action committees in the 2004 election. The report notes similar positive correlations of executive salaries to those who make political contributions, take an active role in political fundraising, and have high levels of corporate political contributions. There is no effort to untangle cause and effect.

ANG, S. AND STRAUB, D.W. 1998. Production and Transaction Economies and IS Outsourcing: A Study of the U.S. Banking Industry. MIS Quarterly 22, 4 (Dec.), 535-552.

This article investigates the economic determinants of IS outsourcing (not offshoring) in the US banking industry. The article uses financial indices from the Federal Reserve Bank and information from senior IT managers in 243 US banks. The authors found that IS outsourcing in US banks was strongly influenced by production cost advantages and slightly by transaction cost advantages. Financial slack ("financial resources in excess of what is required to maintain the organization") was not found to be an explanation of outsourcing.

AREDDY, J., KING, N., KESSEL, M., AND DEAN, J. 2005. Behind Yuan Move. Wall Street Journal( July 25) A1.

Summary from Wall Street Journal. Opponents feared the impact a change would have on China's booming exports. A stronger yuan would tend to make China's exports more expensive relative to other countries' exports. And some were chafing at what was already becoming a drumbeat of American criticism of China's currency policy.

ARORA, A. AND GAMBARDELLA, A. 2005. From Underdogs to Tigers: The Rise and Growth of the Software Industry in Brazil, China, India, Ireland, and Israel. Oxford University Press.

This volume is edited by economists from Carnegie Mellon and Universita Commerciale Milan. It provides chapters on five countries that produce offshore software services. These chapters describe the rise and growth of the software industries in each of these countries and explain the forces shaping their growth. There are also three cross-cutting chapters. One draws lessons from the histories of the US automobile, tire, television, and laser industries to explain these software industry developments. The second looks at the role of multi-national corporations. The third examines the migration of human capital to and from these five countries.

ARORA, A., GAMBARDELLA, A., AND TORRISI, S. 2004. In the Footsteps of Silicon Valley? Indian and Irish Software in the International Division of Labor. In T. Bresnahan and A. Gambardella Eds. Building High-Tech Clusters. Cambridge University Press, 78-120.

Summary of the book from the publisher. National economic growth is fueled by the development of high technology clusters such as Silicon Valley. The contributors examine the founding of ten clusters that have been successful at an early stage of growth in information technology. Their key finding is that the economics of starting a cluster is very different from the positive feedback loop that sustains an established cluster. While "nothing succeeds like success" in an established cluster, far more difficult, risky, and unlikely are the initial conditions that give rise to successful clusters. The contributors find regularities in the start of the successful clusters studied, including Silicon Valley 40 years ago. These cases contain "old economy" factors such as competencies, firm building capabilities, managerial skills, and connection to markets, more than the flamboyant "new economy" factors that have been highlighted in recent years.

ASPRAY, W. 2004. (Offshore) Outsourcing Overview, ACM Job Migration Task Force Meeting, Chicago, IL. (Oct.).

This lecture presented an overview to the ACM Job Migration Task Force at its first meeting. Topics included data, companies and nations that send IT work across their borders, companies and nations that do this work, a case study of India, and economic and political considerations.

ASSOCIATED PRESS 2005a. 400K+ High-Tech Jobs Lost. (Sept. 15) Seattle, WA. (as reproduced on CBSNEWS.com April 4).

Researchers Snigdha Srivastava and Nik Theodore compiled numbers using the Current Employment Statistics survey and the Current Population Survey and found that there was a loss of 403,300 IT jobs between April 2001 and March 2004. Reasons for continuing job losses in the IT sector were attributed to an insecure economy and outsourcing.

ASSOCIATED PRESS 2005b. Microsoft Censors Chinese Blogs. (June 21). Available at www.wired.com .

Microsoft cooperated with the Chinese government to censor the blog spaces provided by MSN on a newly launched Web portal. The censorships forbid certain terms such as "democracy", "human rights", and "Taiwan Independence". The Chinese government recently demanded that Web site owners register with authorities or face a fine. The government also scours the Internet bulletin boards and blogs for sensitive material and blocks access to violators. Sites that let the public post comments are told to censor themselves or face penalties.

ATHREYE, S. S. 2003. Multinational Firms and the Evolution of the Indian Software Industry. East West Center Working Paper #51.

Abstract from paper. The Indian software industry appears to provide a startling confirmation of the benefits of multinational investment in a fledging industrial sector. The main question explored in this paper is how and why this happened. We find that multinational firms had an important catalyzing effect on the industry's evolution even though foreign firms established by expatriate Indians probably exerted more competitive pressure. We do not accept a popular view which ascribes this benign influence to the development of human capital. We argue it was tight labor markets due to foreign competition which induced domestic firms to both acquire unique organizational capabilities and to improve the value-adding strategies of multinational firms.

ATKINSON, R. 2004. Meeting the Offshoring Challenge. Progressive Policy Institute (July).

Atkinson is vice president of the PPI and director of its Technology & New Economy Project. The article takes a strong stance against the policies that have been enacted by the Bush administration to respond to job loss in the United States caused by offshoring. The article criticizes protectionist measures by both political parties: these measures raise cost for taxpayers, might have unintended consequences such as harming procurement reform efforts in Pennsylvania, and might start a trade war with other countries. The article encourages a path that enables the United States to adapt and innovate better so that it can take advantage of the economic benefits of outsourcing and manage the risk to American workers. It outlines a number of specific objectives in three areas: helping US companies become more productive, reducing distortions to global trade, and assisting workers displaced by offshoring. A collection of progressive policy initiatives are recommended, including (among a number of others) increasing federal investment in R&D, expanding the R&D tax credit, enhancing federal support for small business start-up companies, improving math and science education, easing the process for foreign science doctorates educated in the United States to become US citizens, reducing currency manipulations that affect trade, enhancing international intellectual property protection, increasing funding for trade enforcement, eliminating tax loopholes that encourage companies to rein in corporations in countries that are offshore tax havens, requiring companies to give three-month notice when eliminating jobs for outsourcing reasons, applying the Trade Adjustment Assistance Act to IT workers, and providing wage insurance to workers in threat of having their jobs outsourced.

ATKINSON, R. 2004. Understanding the Offshoring Challenge. Progressive Policy Institute (May 24). Available at www.ppionline.org.

This is an excellent overview article. The author is the vice president of the Progressive Policy Institute and head of its Technology and New Economy Project. The report discusses four responses to offshoring: ignore and do nothing, protectionism, subsidizing companies through tax and regulatory relief, and innovation and adaptation to being part of a world economy. He discusses offshoring trends: which countries, what kind of work, how many jobs, factors working against large-scale migration of jobs, and the threat from automation. He discusses the increase in technology by identifying multiple enablers of outsourcing and advantages and disadvantages to companies that outsource. He considers whether offshoring is destroying good middle-class jobs. In an interesting historical perspective not found in many other outsourcing studies, he considers claims made in the 1940s, 1950s, and 1960s of a new economy that does not play by the old rules as a way to evaluate recent claims about structural changes in the economy. In the most politically partisan section of the paper, he debunks eight myths about outsourcing (three by pessimists, five by optimists).

AUSTRALIAN COMPUTER SOCIETY. 2004. ACS Policy Statement on Offshoring. (Available at www.acs.org.au)

From Web site. "The ACS (Australian Computer Society) has released a policy on ICT offshoring, calling for Australian enterprises and Government departments to take a considered approach to the practice. The professional body has developed a template - the ACS Offshoring Cost-Benefit Checklist - which is designed to help organizations assess the potential benefits and risks associated with offshoring before they commit themselves. The ACS Policy document calls for: 1. The Federal Government to develop guidelines for Commonwealth departments and agencies which take into account the ACS Offshoring Cost-Benefit Checklist; 2. The Federal Government to publicly endorse the ACS Offshoring Cost-Benefit Checklist as appropriate for major Australian companies; 3. The Federal Government work with the ACS and other bodies to improve and enhance access to existing schemes for re-skilling and re-training of 'displaced' ICT employees; 4. The Federal Government work with the local ICT industry to encourage the development of onshoring opportunities and to provide an agency dedicated to marketing Australia's ICT capabilities; and 5. The development of industry policies (including R&D) which will enable Australian ICT SMEs to produce new products and services that build Australia's capacity to share in the economic gains of ICT sector growth industry." (www.dcita.gov.au).