We live and work in a global economy. In most cases, the signs of a global workforce are so integrated in our day-to-day lives that we don’t even notice them, such as when we buy products that have been made overseas (whether from Wal-Mart or Gucci), or when we sign a tax return that was actually prepared by an accountant in India. Increasingly, however, the signs of a global workforce become so apparent that they force their way into our consciousness, such as when we struggle to understand an Indian customer service rep or when jobs in our community fall victim to Chinese manufacturers. Occasionally, global workforce practices become high political drama, as around immigration laws, NAFTA, U.S-Chinese economic relations and the staging of protests and riots around international trade and economic summits.

The Globalization of Knowledge Services

But for all the attention, one rapidly growing and ultimately much more critical aspect of workforce globalization has largely escaped broad public attention—the globalization of knowledge jobs. Although most U.S. IT workers have seen how Indian IT jobs are migrating steadily up the value chain (from basic application testing to complex development and even application architecture), this is only the first and most advanced of offshore entries into high-value, knowledge-based services. Consider, for example, that:

• China (followed by the U.S.) and India are now the most popular locations for multinational corporations to establish research and development laboratories, with China alone housing more than 700 such facilities;
• “Medical tourist” hospitals in countries such as Thailand and Indian boast world-class surgeons already operate on close to 1 million American patients per year. Some U.S. insurance companies not only cover such procedures, they now offer financial incentives for patients to use these hospitals; and
• India graduates about 10,000 Chartered Financial Analysts (CFAs) per year, more than any country other than the U.S.—and this is despite the fact that the cost of obtaining the certification is almost as high as likely first year salaries.

The list goes on and on. Accounting, financial analysis, architectural, market analysis and legal research jobs, once the exclusive province of developed country professionals, have all begun to move to offshore providers. And as shown in the figure below, emerging country knowledge jobs are pushing rapidly up the value chain, from those that require relatively rote process-based skills, to analytical, conceptual and, increasingly, to high-level innovative tasks.

Portent or ParanoiaGiven the relative lack of public attention to this phenomenon, one may be tempted to dismiss the examples as isolated incidents. Tempting, but not likely. Consider, for example, the findings of two separate studies, a 2007 study by Princeton Economics Professor Alan Blinder and a 2008 project by the Harvard Business School. Each concluded, using very different methodologies, that a minimum of 21%—and up to a potential of 42%—of U.S. jobs have the potential of being “offshoreable.” (Not that they actually will be offshored, mind you, but that they have the potential.)

As scary as the numbers may be, the trends behind the numbers provide even greater pause. While manufacturing jobs used to face the greatest threat of being offshored, knowledge jobs—those that generally require college degrees and that pay moderate to high wages—are now the most vulnerable to offshoring.

So what can a country—much less a company or an individual—do?

• Fight the trend by prohibiting it, imposing punitive penalties or by publicly pillorying companies and executives that engage in offshoring? Yet this can ignite a firestorm of inflationary price increases, invite the enmity of countries that have already bought into U.S. championed vision of free and open trade, reduce the competiveness of U.S. corporations and chase many of our most successful businesses to reincorporate in other countries.
• Ignore it and hope that it will go away—or wait until the problem becomes so acute that we are forced into immediate reaction? This is certainly a time-honored approach to difficult problems. And it may work, at least if we are willing to sit and watch as millions of previously secure jobs disappear, and families and communities are disrupted. Then, we will need to wait for the market to eventually come up with its own solutions, for our educational institutions to adjust and for society and governments to foot the bill.

Surely, there’s a better way. What do you think?