Communications - October 2010

or “personal” services to describe tasks requiring customer contact or physical presence and “impersonal” services to describe tasks requiring neither of these characteristics. Higher values on this scale indicate workers in these jobs provide fewer personally delivered services, or “ impersonal” jobs, and are therefore more likely to be offshored, all else being equal.

We also included additional variables in our regressions to control for other factors that might affect an employee’s chances of being displaced due to offshoring. Since the relative benefit of offshoring a particular worker depends on the cost of the worker to the firm, we included a measure of employee salary (coded in discrete levels). Employees are less likely to be displaced if they have more firm-specific knowledge or experience with the firm. Though we did not have access to organizational tenure variables, we included the individual’s job level, coded in discrete levels. We included demographic variables for employees, as there is evidence that such factors as race, age, and gender influence displacement; see Kletzer12 for a review of the job-displacement literature. We also included the number of employees at the firm to control for firm size, as well as a dummy variable indicating the industry in which the firm competes. Finally, in some regressions, we also included the state within the U.S. in which the firm operated in 2007, to control for regional differences.

The figure here shows that offshoring
rates vary significantly by job type.
Over 30% of respondents reported off-
shoring computer programmers and
software developers, but only about
half of them, or 15.5%, reported off-
shoring systems analysts. About 24%
of employers offshore customer ser-
vice, and a smaller percentage (less
than 10%) offshore management,
sales, and marketing functions. A
test of the hypothesis that employers
offshore IT workers more than other
types of workers is significant at the
.01 level (X2( 1)= 86. 6). Among IT work-
ers, the hypothesis that computer
programmers and software develop-
ers are offshored in greater numbers
than systems analysts is significant at
the p<.01 level (X2( 1)= 30. 9).

table 1. Percent of surveyed firms by industry reporting offshoring work.

Results

Here, we present some statistics and results from the regression analyses aiming to identify the factors that most affect offshoring:

Employer statistics. Table 1 reports the overall incidence of offshoring by industry in 2007. The proportion of firms that reported offshoring any type of work across all industries was 15.2%. However, within technology-services and telecommunications industries, over 40% of firms in the sample reported offshoring some type of work. The hypothesis that offshoring is more common in high-tech industries than in other industries is significant at the p<.01 level (X2( 1)= 100. 5).

industry Technology services Telecommunications Insurance Manufacturing engineering services banking and finance Oil Travel utilities communications Advertising/Marketing research services Transportation and warehousing Administrative-support services Automotive services Wholesale trade Arts, entertainment, recreation Agricultural/Forestry/Fishing/Hunting Printing trade Other retail trade construction Other services Waste Management and remediation Services Legal services Accommodation and Food services Health care and Social Assistance real estate religious/nonprofit education Gas Mining total