Remember when all those US manufacturing jobs were offshored to cheap labor markets like China, Mexico, and Vietnam, leaving millions of blue-collar Americans without options or useful skills? Remember how they were supposed to learn to code? Well, the same thing is now happening to white collar jobs – including those who code.

After the huge wave of industrial offshoring that followed the end of the Cold War, Americans were told by their politicians and talking heads that they’d be left with a ‘service economy’ – and that this was a good thing. We would get cheap goods from overseas which we’d be able to afford by way of a strong dollar and our employment in work requiring a more cerebral or personal touch. This left much of the US workforce in corporate services roles like HR, IT, accounting, finance, procurement, market intelligence, data analysis, etc. With English language, educational, and deep technical requirements, these jobs were presumably safe. Not anymore.

Today, the corporate services jobs are going the same way manufacturing did in the ‘90s and ‘00s. Just this time to India and the Philippines. You are already familiar with the offshoring of customer support call centers to these markets, but that was just the seed of what was to come. Fortune 500 companies (and even small to midsized companies) based in the US are finding that they can now find native English speakers, with equivalent credentials and experience to American university graduates, to do most corporate services jobs at a quarter of the cost in Bangalore or Manila.

Although this trend has been building for years, the Covid pandemic has massively accelerated it. As onshore workforces continue to work remote, many executives are asking why the same work can’t be done overseas. In many cases the answer has been that it can.

I’m a strategy consultant, working with c-suites at many of America’s largest companies, giving me a bit of an inside view to how white-collar offshoring decisions are made. In general, I’ve seen clients reduce their onshore corporate services teams by anywhere from 25% to 80%, depending on the function and corporate culture. While this covers more mundane corporate functions such as purchasing and accounts payables, it also extends into what most people think of as deeply technical knowledge work like data analytics, market intelligence, financial planning and analysis, and sales and operations planning. These jobs are usually cut from wherever in the world a company has operations (since almost any country is higher cost than India and the Philippines), but I’ll focus on how it applies to the US.

What does this mean for your job?

To better understand how the offshoring decision is ultimately made, we typically look at types of work rather than roles when determining whether a job can be done overseas or not. To decide if an activity should remain onshore, it must typically receive a ‘yes’ answer (and be able to strongly defend why) to at least one of these questions:

· Is onsite presence or close proximity to the product required (i.e. moving boxes in the warehouse, quality checking, in-person prototyping, etc.)?

· Does the work require frequent in-person interaction with customers or stakeholders (i.e. in-person sales activities, supplier site inspections, etc.)?

· Are there any legal or regulatory requirements restricting movement of the work (i.e. state licensing, union agreements, etc.)?

· Is Spanish required (it is difficult to find this skill in India or the Philippines)?

If none of these questions receive a ‘yes’ answer, we typically apply one more filter to determine if the work should be consolidated regionally or would best be fully offshored. These questions can be more subjective but occasionally result in an American job being saved. Below are a couple examples.

· What is the volume work/frequency of the task (the higher volume/frequency, the more attractive is offshoring)?

· How much variation is there in the work (the less variation, the easier it is to offshore)?

Can the trend be stopped and what happens if it isn’t?

At a quarter of the cost of onshore white-collar labor, this is a tough train to stop. There are only two ways to make it happen: 1) trade or labor regulation discouraging the offshoring of American jobs, or 2) the devaluation of the US dollar to the point where the labor arbitrage is no longer worth the effort. The latter is a whole other can of worms. So, regulation seems like the best option.

If we don’t stop this trend soon, and reverse it in the manufacturing sector, America will be left with very little to justify itself as the dominant global economy. We produce very few goods and we are offshoring or automating much of our knowledge work. In reality, the American economy is surviving on the diminishing hegemony of the US dollar. If the USD loses its dominance, what does America have left to trade?