"From Outsourcing To Onshoring"

George Winner

November 07, 2007

There are going to be a number of hot-button issues dominating the 2008 presidential election. The war on terror. Health care. Illegal immigration. These are just a few of the more prominent debates promising to take front and center stage as we move toward next November. There’s no question that our candidates for president will need to stake out very decisive positions on these issues, and more often than not what they have to say will strike a chord throughout individual regions across the nation, including our own.

For example, one of the most heated public policy debates in America today focuses on the future of this nation’s economy and work force. Central to this debate is a phenomenon commonly known as "outsourcing" -- in other words, moving American jobs to India, China, Mexico and other foreign nations. The debate continues to rage over the long-term effects of outsourcing on the American economy. The short-term reality is that millions of American manufacturing and technology jobs will be shipped overseas where corporations believe they can conduct business less expensively. It’s been estimated that more than 3 million American jobs could be lost in the next decade.

In short, outsourcing will have an enormous impact on our workers and communities. So the question becomes, How do we respond? That will continue to be discussed in places well beyond New York government -- ultimately, I believe, it requires a concerted federal response -- but that doesn’t prevent individual states from taking action.

Toward that end, one new law approved in New York this year directs the state Labor Department to study the potential economic fallout from the outsourcing of information technology jobs. A report’s going to be issued by February 1, 2008 that examines trends in offshore outsourcing of information technology jobs, including customer services and technical employees; existing state and federal policies regarding the outsourcing of technology jobs; and policy recommendations for enhancing New York's competitiveness in this marketplace.

It’s very possible that rural New York could draw some special attention in the forthcoming analysis. That’s because a new business trend is emerging in America that, in some places, is being called "onshoring." Some American high-tech corporations, for instance, that established customer service call-centers overseas are now seeking to reestablish these centers in America in response to customer complaints. Corporations are finding rural regions attractive for these relocations because they offer opportunities to reduce costs and remove some of the legal, cultural and time-zone obstacles that can arise with overseas outsourcing.

It’s not likely in the short run that onshoring can fully offset the losses associated outsourcing, but it can have a very positive impact on our economy and provide valuable opportunities for American workers.

As chairman of the Legislative Commission on Rural Resources, I can tell you that the Commission is tuned in to this trend. It signals the possibility of a new economic development strategy to help bring the excitement and prosperity of a high tech future to rural New York. But in order to make New York’s rural regions fully competitive in the quest for these new economic opportunities, one issue that we have to address is the availability of high-speed Internet. I sponsored a new law in 2006 that directed several state agencies to examine strategies for expanding high-speed Internet access to rural and other underserved areas. That long-awaited report is out now (you can view a copy of it on my web site, www.senatorwinner.com), and we believe it can help guide future efforts to aggressively advance specific state and local strategies for the deployment of broadband infrastructure.

The report examines New York’s digital divide, surveys the state’s existing broadband infrastructure, shares case studies from other states, and offers a series of recommended actions. These actions include the provision of financial and technical assistance to communities and service providers; establishment of a statewide franchise for Internet service provision; increased availability of public access through libraries, school and local government facilities; and encouragement of the use of satellite-based broadband. I hope it lays the groundwork for future legislative actions, beginning next year.

This year’s state budget included $5 million for initial steps to more clearly identify underserved areas, compile a map of existing state and local infrastructure that could be used to expand access, and examine existing state policies and regulations that stand as obstacles to expansion. That’s a good first step. Now we have to keep at it, especially since technology companies are turning to rural communities as prime places to do business and provide employment and other economic opportunities to workers, their families and entire communities.