Labor consultants say US companies, responding to labor shortages and rising wages, are outsourcing jobs overseas, expanding on pandemic remote work policies
Companies respond to labor shortages and rising wages by moving some positions abroad, labor consultants say
Wall Street JournalKonrad Putzier
Context & Ripple Effects
This report closes a loop that opened with pandemic-era remote work. When the WSJ first examined remote-work policy in 2021, the open questions were who pays taxes on distributed staff and whether to cut salaries of staff leaving high-cost cities — location arbitrage was an internal, employee-level question.
What changed since: US firms first went abroad for talent via nearshoring in Latin America, and the H-1B visa suspension already showed how immigration restrictions push work offshore instead. Labor consultants now say offshoring is being driven by something more mundane — domestic labor shortages and rising wages — meaning the move is a cost response, not just a visa workaround.
First-order effects
US workers in the affected roles now compete directly with lower-paid overseas hires for jobs that pandemic remote-work policies made location-flexible.
US employers gain a wage-pressure release valve: instead of raising domestic pay to fill openings, they can staff the same functions abroad at lower cost.
Second-order effects
The Latin American talent pool that US tech firms have been tapping since the nearshoring wave is already showing regional staffing shortages, so broader offshoring intensifies competition for the same time-zone-aligned workers.
Indian outsourcing firms, positioned as beneficiaries when the H-1B suspension pushed work abroad, stand to absorb additional demand as offshoring broadens beyond tech hiring.
Third-order effects
If remote work has permanently decoupled jobs from location, wage-setting shifts from national labor markets toward global ones for white-collar roles — with domestic wage growth itself becoming a driver of offshoring.
Offshoring joins automation as a parallel response to the same labor shortage; companies facing tight labor markets now have two structural substitutes for raising domestic wages.
The trend: Remote work is turning white-collar labor markets global, with domestic shortages and rising wages accelerating a structural shift of US jobs toward lower-cost offshore and nearshore locations.
This is a perplexing article: — 1. Offshoring as noted existed for decades — 2. The whole point of remote is that people can be hired anywhere — Companies that did not hire from everywhere but “remote only within country” weren't using remote work in full. …
Employee: So I've been thinking, my job can be done from anywhere, would it be OK if I moved to North Carolina? Boss: Actually that's a great point, your job *can* be done from anywhere. But I'm thinking more of a Bangalore sort of vibe? https://www.wsj.com/... https://twitter.co…
Although this story makes it seem like the CEO made a smart decision, the reality is that outsourcing labor often only saves costs on paper. The distance and language/cultural barriers often mean that 1) work takes much longer to complete; 2) there are fewer quality controls;... …
https://www.wsj.com/... “companies are responding to lingering labor shortages and rising wages by sending jobs overseas. In August, 7.3% of U.S. senior managers surveyed by the Federal Reserve Bank of Atlanta said they were moving more jobs abroad as a result of remote work.”
American and European remote working trends looking slightly different here, though I don't know how representative the data is https://www.wsj.com/... https://twitter.com/...
Yep we mentioned this with the undertaker meme. You're celebrating that your job can be done anywhere. Meanwhile, some intense young people across the globe are staring at your job and will do it for 1/2 the price. Thanks for playing. https://twitter.com/...
An uncomfortable truth: if you work full remote in a high cost region, you are far more replaceable with another full remote person (with the same skillset, but willing to do the job for less). Forced return to the office X days/week is inconvenient: but also more job security. h…
That lightbulb light goes the distance... “Then a lightbulb went off,” said Mr. Taylor, the association's CEO. Instead of having the employee work in another state, he outsourced her job to India, where his organization is saving ~40% in labor costs. https://www.wsj.com/...