Offshoring and the Shifting Skill Composition of the It Workforce Draft – Please Do Not Quote or Circulate

We use new offshoring data and new workforce micro-data with occupational classifications to investigate how an increase in the global supply of IT workers has affected the occupational composition of the US IT workforce. Our estimates suggest that when firms open offshore captive centers for IT employment, domestic IT employment skews towards occupations requiring more “personal” inputs, such as network administration, project management, or sales, and away from jobs such as computer programming in which work output can be easily transferred over computer networks. At firms with offshore captive centers, the fraction of domestic workers employed in occupations requiring little personal input fell by over 8% during the last decade, although mean employment levels for these occupations was steady in firms that were not offshoring. We discuss implications for workers, policy makers, educators, and managers.