Will President Trump Kill IT Outsourcing?

I have had many people ask me recently if I was worried about Donald Trump’s plans to stop outsourcing jobs to foreign countries and bring them back to the US. Since a significant portion of AccelOne’s custom software development services are provided via engineering teams in Argentina, it appears to many people that we could be at risk.

However, my answer is a resounding no, and here is why:

Services Offshoring vs. Manufacturing Offshoring

AccelOne is in the software services offshoring business, not the manufacturing offshoring business where Trump has expressed most of his aggression. There has been a steep decline in manufacturing and mining jobs in the US over the past several years, whereas there is no tech job shortage in the US. The problem with tech jobs here is not finding people to fill the openings.

Another thing is that we provide custom software services from Argentina to the US. According to the Office of US Trade there is a $5 billion dollar trade services surplus with the US, not a deficit. In contrast, India enjoys a $20 Billion trade deficit with the US, and China $300+ Billion deficit. So Trump would be barking up the wrong tree if he goes after Argentina on trade.

Applying Tariffs to Goods vs Services

It is also to keep in mind that it is much more difficult to monitor and track tariffs on services than it is on goods. Every commercial good including cars, oil cans, sweaters or shoes that are made offshore must come into this country through a port. The mechanics for applying tariffs for items that come over the border through a port is relatively easy. The port officers can see the goods, inspect the goods, determine the type or class of good, and tax it or put a duty on it.

Software services, on the other hand, are different. They don’t go through a port. Unless the software is in a physical package. Software development and IT services provided offshore are very challenging to inspect, monitor and tariff.

Trump and Argentina are on Good Terms

Another thing worth noting is Trump’s largely amiable relationship with Argentina. Trump has had a long-standing relationship with the father of the current president, Mauricio Macri. In the 1980s Trump played golf with their family on several occasions and Mr. Macri’s father sold some real estate he owned in New York to Trump. In fact, Macri was one of the first foreign dignitaries to call and congratulate Trump after his election win in November and one of the first to get a call back from Trump. Trump’s attitude toward Argentina and Macri appears good, if not preferential, undoubtedly resulting in an eventual meltdown of the icy tension between the two countries that has long characterized U.S.-Argentinian relations.