National offshoring study says Nashua jobs at risk

A study released Wednesday lists Nashua among 28 US cities most vulnerable to experiencing significant job losses over the next 10 years because of the practice of offshoring work to lower-wage countries.

In “The Implications of Service Offshoring for Metropolitan Economies,” researchers at the Washington, D.C.-based Brookings Institution studied the 246 metropolitan areas in the country and found that the Nashua area was among 28 that could lose 2.6 percent or more jobs to offshoring between 2004 and 2015.

The five most vulnerable metropolitan areas, estimated to lose between 3.1 percent and 4.3 percent of their jobs, are Boulder, Colo., Lowell, Mass., San Francisco, San Jose, Calif., and Stamford, Conn.

The researchers also estimated that Nashua is among 14 cities where at least 17 percent of computer programming, software engineering and data-entry jobs “are likely to be offshored.”

Offshoring — or the movement of jobs from the United States to other, especially low-wage, countries — is not a new phenomenon. But what is different about the current offshoring phase, according to the study, is the types of jobs leaving cities like Nashua: largely information technology-based services, such as call centers or claims processing, with duties not limited to workers with just a high school diploma, but others requiring a bachelor’s and even a graduate degree.

Also in New Hampshire, the Manchester and Portsmouth-Rochester MSAs were estimated to lose between 2.1 percent and 2.5 percent of their jobs over the next decade, said Howard Wial, an economist with the Brookings Institution Metropolitan Policy Program and one of the study’s authors.

Despite painting a bleak picture for some jobs, the researchers pointed out that the projections were subject to criticism and carry a certain amount of personal judgment. They also pointed out that not all jobs that are good candidates for offshoring will, in fact, be offshored.

Nevertheless, said Chris Williams, president and chief executive officer of the Greater Nashua Chamber of Commerce, “it’s not surprising that Nashua is listed among the nation’s top high-tech centers that will be facing potential offshoring concerns in the future. Nashua has long been the leading high-tech hub of New Hampshire. With that source of pride comes a responsibility to protect our high-tech companies and workers who live within the greater Nashua region. Any industry that is both successful and competitive realizes that it must continually adapt in order to continue its success.”

The researchers based a metropolitan area’s offshoring vulnerability on whether:

• A large share of its employment consists of service occupations that do not deliver services locally, have necessary skills available abroad, are highly IT-enabled, are highly rule-based, and require routine skills
• A large share of its employment is in occupations that pay high wages relative to their productivity
• Its jobs follow relatively straightforward routines compared to those in the same occupations nationwide
• A small share of its employment is in the public sector, since government positions have “political constraints” that make them less likely to be sent overseas

The Brookings study estimates that 12 million to 15 million jobs, or 9 to 12 percent of all U.S. jobs, could potentially be offshored by 2015.

To mitigate issues such as job loss, Williams said the Nashua chamber will be launching a three-part series this summer that “will explore the future of the high-tech industry in our region, raise awareness of specific concerns such as offshoring, and address solutions to combat these concerns while finding creative ways to help foster the continued growth of our high tech companies.”

The chamber also will be joining with the city of Nashua in playing host to a “High Tech Summit” in November, focusing on issues including working with groups in New Hampshire’s high-tech industry to present specific programs and ideas that the state’s high-tech companies can adopt to counter the offshoring trend.

“Despite the popularity of the expression, the world is not ‘flat.’ Some IT-enabled service work will continue to be performed more economically in the United States, even in large, high-cost metropolitan areas,” the researchers said.

To view a copy of the report, visit brookings.edu/metro/pubs/20070131_offshoring.pdf. — CINDY KIBBE