Many people confuse the terms outsource and offshore. They are not the same. When you outsource you are giving your work to another entity. Offshore is a location.

One fundamental business principle needs to be kept in mind. Never outsource your core competency. If you find a partner that has your core competencies, that partner can very easily become your competitor. If you don’t think that can happen, I would ask you to study the Business Week article on H1B’s. It is far too easy for these partners to gain entry to your customers and then take over the relationship. It is happening now.

The short term answers to the challenge can be seen in what large multi-national companies like IBM are now doing. They are filling skill shortages with offshore resources (in countries such as India, China, Brazil, and others), but they employ the resources. This model keeps work and profits with US companies, helping to maintain and build the tax base we need to fund future strategies.

Critics might say, "But IBM, is a large company. That strategy only works for large companies. What about the small or medium sized US companies?" With the changes that have taken place in technology, the same strategy and model is available to small and medium sized companies as well.

Many are unaware of the fact that these strategies and models are available to US companies. Furthermore, they are unaware these models can be provided through other US companies. Models exist that can drastically reduce the bureaucratic, cultural and labor risk associated with these strategies, with the result being low risk expansion opportunities and control.

The answers are available. We, as a country, need to wake up now and start to take action on both the short and long term strategies. If we do, we can retain - and even grow our leadership in the IT space.

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