Closer Look: ‘Reshoring’ Jobs Back To America

SAN FRANCISCO (CBS 5) – To the more than two million Californians who are out of work, the disappearance of jobs is discouraging. But, for the first time in fourteen years, manufacturing in the United States has added jobs.

Top corporate executives at companies like General Electric and General Motors are ranking product quality above labor costs, two signs that off-shoring, or shipping jobs outside of the United States, may be falling out of favor.

Manufacturing is not the only job sector that is seeing a re-shoring of jobs back home.

Other industries, like software development, are returning to the United States.

A software company called SourceBits is moving its headquarters to San Francisco. Like many high tech firms, SourceBits has its origins in a small garage. But SourceBits traces its origins to India, rather than Silicon Valley.

“I think this whole outsourcing concept has been a 20 year phenomenon in the I.T. industry. There has been a lot of discussion about this in the industry as to whether or not it is working. So, the jury is out in terms of what works and what doesn’t work from an innovation stand point,” said Sudhir Kulkarni, Vice-President of SourceBits. “We believe firmly that anybody that wants to be an innovative company and wants to build products and wants to bring products to market in markets that matter, needs to be in a place like San Francisco.”

SourceBits developed the first alarm clock app for the I-phone. It was downloaded six million times. The company has employees in India, the U.K. and Atlanta, Georgia.

It hopes to bring 500 more jobs to the United States as it expands its operation.

Still, other experts point to numbers that indicate job growth may not be as robust as hoped for. Attorney Michael Bernick, former head of California’s EDD, has been watching employment and unemployment trends for decades, including the off-shoring of jobs to other countries.

“California’s unemployment rate remains at 11.8%–second highest in the nation, behind only Nevada at 12.4%,” Mr. Bernick pointed out. “At the same time, California gained 28,000 jobs over the month (which is the) second highest in the nation behind only Texas (32,000). The California job gain was unexpected, as the job gain across the nation was only 18,000. Of course, we lost so many jobs during the Great Recession (1.4 million from 2007 through October 2010) that the job gains of the past year still leave us way behind.

Mr. Bernick also pointed out that “The job losses announced this week from two major California employers, Cisco and Borders, are not factored into these figures. Cisco, based in Silicon Valley…announced that it was cutting 6,500 jobs worldwide. Borders announced that it was closing its stores, threatening a loss of up to 10,700 jobs nationwide, including over 600 in California.”

For SourceBits, moving their global head quarters to San Francisco is the right choice to grow their business. Officials said the opportunity is here to find the best talent and make big profits.

On the other hand, the possibility of a national budget deal in the near future is very positive, as it does not include the major tax increases favored by many on the left, or the sharp cuts favored by the right. Job growth never works well in an economy of high taxes or one of scarcity.

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

  • Ben

    The last 2 companies I worked at opened facilities in Israel and hired hundreds of employees there, while laying off workers with the same skills and closing facilities here. Highly skilled engineers and managers are losing their jobs to offshoring as well.

  • Reshoring « Ben's Weblog

    […] here. Explore posts in the same categories: […]

  • Milan Moravec

    Sustainable employability by California’s 2,000,000 unemployed depends on employee employability in the employment market. As businesses, universities, states, counties, cities worldwide stumble through the recession some find themselves in a phase of creative disassembly. Hundreds of thousands of jobs are shed. World class University of California Berkeley Chancellor Birgeneau ($500,000 salary) and his $7 million outside consultants are firing employees via his “Operational Excellence (OE)”: 2,000 axed by end 2011. Yet many cling to an old assumption: the implied, unwritten management-employee contract.

    Management promised work, upward progress for employees fitting in, employees accepted lower wages, performing in prescribed ways, sticking around. Longevity was good employer-employee relations; turnover a dysfunction. None of these assumptions apply in the 21 century economy. Businesses, universities, public institutions can no longer guarantee careers, even if they want to. Managements paralyzed themselves with a strategy of “success brings successes” rather than “successes brings failure’ and are now forced to break implied contract with employees – a contract nurtured by management that future can be controlled.

    Jettisoned employees are discovering that hard won knowledge earned while loyal is no longer desired in employment markets. What contract can employers, employees make with each other?

    The central idea is simple, powerful: job is a shared partnership.
    • Employers, employees face financial conditions together; longevity of partnership depends on how well customers, constituencies needs are met.
    • Neither management nor employee has future obligation to the other.
    • Organizations train people.
    • Employees create security they really need – skills, knowledge that creates employability in 21st century economies
    • The management-employee loyalty partnership can be dissolved without either party considering the other a traitor.

    Sustained employability in the 21st century economy is not loyalty to management, company, university, public agency or union.

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