The loss of jobs may not be the only impact of offshore outsourcing on the U.S. workforce. It could also hurt the employee benefits of U.S. workers, according to Stephen W. Skonieczny, a partner in the employee benefits and executive compensation group of law firm Dechert LLP.

Because offshore outsourcing usually causes a decrease in a company’s U.S. workforce, there will be any accompanying decrease in employee benefit costs for the company as U.S. law does not require benefit plan coverage for foreign employees, said Skonieczny.

“For example, employees sponsoring insured health plans might see an increase in per-employee premiums for their remaining U.S. employees due to smaller and perhaps older U.S. employee populations,” said Skonieczny.

The smaller employee pool may also have an impact on some of the qualified retirement benefit plans for the employees.

While the employer will save on costs related to sharing of profits with its employees, the remaining U.S. employees may see a decrease in retirement compensation. That happens because the retirement benefits are calculated with the average compensation of the all the employees, said Skonieczny.

“The U.S. law requires that the benefits given to the high-paid people cannot be too far numerically to the benefits of the relatively low-paid employees,” he said. “If you strip away 10 percent of your workforce, you may be disturbing the equation.”

Skonieczny believes that if more white-collar jobs are shifted offshore, the average for lower-paid people will come down, thereby hurting the overall retirement benefits for all the remaining U.S. employees.

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http://www.indusbusinessjournal.com/news/2004/06/15/Outsourcing/Experts.Argue.Outsourcing.Could.Hurt.Employee.Benefit.Plans-688789.shtml