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Trump’s plan for protecting IT jobs raises hopes, fears

Patrick Thibodeau | Dec. 7, 2016
Incoming administration may be setting up a three-pronged attack on offshore outsourcing

President-elect Donald Trump is showing a willingness to wage an economic battle with firms that move jobs offshore. He's threatening tariffs and promising H-1B visa reform, but may be offering carrots as well, namely tax incentives.

These actions may be raising hopes among some IT employees who have lost jobs, or are losing them, that the incoming Trump administration is serious about keeping IT jobs in the U.S. But Trump's proposals -- particularly the tariff -- are also raising much uncertainty.

Trump, in a series of tweets this weekend, reaffirmed plans to impose a 35% import tariff on "cars, A.C. units etc," on goods made by offshore U.S. firms but sold in the U.S.

Trump has left analysts guessing whether these tariffs will apply to offshored IT services, such as application support and maintenance.

Trump also demonstrated interest in using incentives to retain jobs. Carrier's $7 million, 10-year tax break, engineered by his incoming administration, saved about 800 of the 1,400 jobs in the plant. Carrier last week dropped its plan to close Indianapolis plant and move all the jobs to Mexico.

Meanwhile, there are 500-plus IT employees awaiting layoff at Healthcare Services Corp. (HCSC) who may welcome a Trump intervention as well. An India-based IT services contractor, HCL, is taking over their work, and employees are training replacements. The layoffs are scheduled for the first two quarters of next year.

"I'm sure a bunch of us would be very appreciative if President-elect Trump would reach out to HCSC leadership to try to save our jobs," said an IT employee at the insurer, who asked that his name not be used because he is still employed at the firm.

"Even if half of the 540 were saved, that would have a big impact on 270 American families. We're thrilled for the Carrier folks -- we really are," said this employee.

But not everyone agrees the deal is a worthwhile model. "The Carrier deal sets a dangerous precedent for companies to threaten to move offshore in order to request such money," said David Rutchik, executive managing director for business transformation and outsourcing advisory firm Pace Harmon.

At its "ultimate conclusion," said Rutchik, this policy "will encourage companies to say they will move everything offshore unless they get all kinds of government benefits to do otherwise," he said. This gets "the government involved in the private sector to an unprecedented degree for this country," he said.

Marco Pena was one of about 150 IT employees who lost his job at Abbott Laboratories earlier this year after the firm outsourced work to India-based IT services firm Wipro. Pena said he doesn't know if the Carrier deal is a good model that for saving IT jobs, as well as manufacturing jobs, from moving offshore, "but I do know that it worked and it's a good example that something could be done if there is a real sincere effort behind it."

 

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