Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of

RESEARCH TRIANGLE PARK, N.C. – With U.S. unemployment at nearly 10 percent, a new report from Duke University is likely to cause many people to scratch their heads in disbelief.

Offshoring of jobs is not cutting jobs in the U.S. and cutting costs is no longer the primary reason for moving some positions outside the U.S., the Fuqua School of Business says.

The study runs counter to the previous report issued in August 2009 which found that  not only were more companies implementing offshoring, they also are sending offshore research and development in addition to manufacturing.

North Carolina’s economy has been ravaged in manufacturing as hundreds of thousands of jobs have been shipped to foreign lands. High-tech hasn’t been spared, either.

Dell’s mammoth PC manufacturing plant in Winston-Salem shut down and IBM having shifted thousands of jobs overseas in recent years are just two examples that spring to mind.

Perhaps the trend is shifting.

However, one troubling finding for the high-tech sector is just how many software related jobs are now located overseas. The report, released on Wednesday, found that software development is the largest sector where the ratio of foreign-to-domestic workers is highest at 13 per 100.

A lack of qualified workers in the U.S. apparently is a reason, researchers say.

A good sign for U.S. workers could be this: Companies report that cost savings from offshoring have declined.

The study is the sixth such offshoring report from the Duke University’s Offshoring Research Network at Fuqua. The Conference Board, a major business group, also participated.

“Over half of the participants in our survey say offshoring has resulted in no change in the number of domestic jobs in most functions,” said Fuqua Arie Lewin, a professor of Strategy and International Business at Fuqua.

“The finding that the U.S. software sector has the highest ratio of offshore to domestic employees – almost 13 offshored jobs per 100 domestic jobs – may be a reflection of a scarcity of domestic science and engineering graduates in the U.S.,” he added.

Businesses looking to expand their geographic footprints also are not driven primarily by costs, the researchers found.

“The potential for cost reduction alone is no longer reason enough to move operations,” Ton Heijmen, a senior advisor to The Conference Board, pointed out.

“One survey respondent noted it has taken his company several years to discover that the impact of labor arbitrage disappears in fewer than three years. Companies are now shifting from cost-driven offshoring implementations to a multidimensional value proposition in creating a global footprint.”

Key findings in the report::

  • Most companies say offshoring of jobs has not resulted in higher unemployment domestically
  • The desire to cut costs is not the primary motivator for companies moving some job functions to overseas locations
  • Firms shifting jobs overseas may be responding to a shortage of skilled domestic employees
  • Manufacturers and high-tech/telecommunication companies are less likely to use captive offshore operations – owned by the company and located on foreign soil – and are moving increasingly toward the use of third-party providers of offshore labor

Not all the data in the report was reported in a press release. The Conference Board offers the full study online at a cost to non-members of the organization.

For more details about the report, read here.

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