Offshoring has become an attractive labor option for US design firms as it addresses two significant issues: the domestic labor shortage and wage inflation. However, US jurisdictions are now increasingly adopting laws and policies to limit the use of offshore talent, particularly for large, publicly funded projects that these design firms often rely on for financial solvency.
It has become crucial for firms to strategize in a way that allows them to benefit from offshore talent while still maintaining eligibility for public projects.
Anti-offshoring laws restrict the use of foreign labor. Although constitutional protections typically limit their application to government-funded projects, this possesses significant implications for the design industry. Public contracts account for more than a third of all non-residential construction projects and almost all infrastructure projects.
Design firms need to understand the laws, not only at the federal level but also at state and local levels, which are often challenging to discern. State restrictions are usually adopted by executive order or statute, but occasionally appear in agency-specific regulations. Local restrictions may be imposed by an ordinance but may also be buried in the policy manuals of municipal utilities and transit authorities.
To strategize effectively, design firms must understand the primary motivations behind these laws – that is, money and security. Monetary rules are protectionist measures meant to keep firms from employing people and spending public dollars outside a given jurisdiction. However, security-motivated rules, aimed at restricting the transfer of sensitive information outside the US, are quickly gaining momentum in response to high-profile terrorist attacks and the constant threat of cyberattacks.
For money-motivated restrictions, firms should differentiate between bans and preferences. For instance, Massachusetts requires that public procurement agencies give preference to Massachusetts-based vendors. To address this type of restriction, a firm can adopt a government affairs approach, informing decision-makers about the benefits of working with them, or a business-led approach, emphasizing the practical and substantive benefits of using their services over a less-qualified domestic firm.
If the restriction is a full ban, such as in New Jersey, firms will need to shift their strategies. Importantly, firms need to comprehend exactly what the restriction prohibits and devise a strategy to achieve compliance. Moreover, checking for published exceptions to the ban can be beneficial, like in Ohio, which enforces a ban but allows exceptions for emergency use and executive approval waivers.
By understanding the motivations driving these rules and developing tailored strategies, design firms can still benefit from foreign talent when delivering on domestic projects.
For updated information regarding offshoring design talent, check here.