Deloitte Says 2 Million Jobs Moving Offshore

Datamation ^ | April 24, 2003 | By Sharon Gaudin

[Risa]

Deloitte Says 2 Million Jobs Moving Offshore April 24, 2003 By Sharon Gaudin

The world's 100 largest financial-services companies say they expect to transfer about $356 billion of their operations and 2 million jobs offshore over the next five years in an attempt to reduce costs.

Moving jobs and business offshore is expected to save the companies approximately $1.4 billion each by 2008, according to a report from Deloitte Research, an arm of Deloitte Consulting, a global management consulting firm. Financial services companies from North America, Europe and Asia say they plan to send work to low-cost centers such as India.

''Offshoring is gaining momentum at a rapid pace,'' says Christopher Gentle, a director at Deloitte Research. ''India stands to be the major offshore hub because of its combination of low-cost and high-tech expertise. But there's no guaranteed bonanza for India unless it continues to deliver improved services at globally competitive wage rates. Competition from other countries around the India Ocean rim -- from South Africa to Australia -- will be fierce.''

Deloitte analysts predict that more than 1 million jobs -- or about half of the estimated relocations -- will move to the Indian Ocean rim over the next five years. Today, nearly half are targeting India, which has a huge market of IT professionals who earn much lower wages than in other countries. South Africa and Ireland are two other attractive offshore locations, with China, Malaysia and Australia growing in popularity.

The survey of 27 of the world's largest financial institutions shows that the shift in operations already is well underway.

Thirty percent of the respondents say they currently have existing offshore operations. That percentage is expected to jump to 75 percent within two years, according to Deloitte analysts. The survey also notes that the companies can achieve a 39 percent cost savings by moving work to areas where salaries and other costs are much lower.

The survey also shows that banks and insurance companies are transferring offshore functions like application development, coding and programming, accounting and finance, contact support and call-center operations.

Deloitte reports that its analysts estimate that 2 million out of the 13 million people now employed in the financial services sector in North America, Europe and Asia will lose their jobs because of offshoring.

[Risa]

Our President and the people we elected to make the laws have been telling us for years that this phenomenon is inevitable, like gravity.

They lie.

These circumstances are the direct consequence of laws and policies supported by our presidents and our federal legislators, the people for whom we voted and who we trusted to protect American jobs and heritage.

This extreme form of trade liberalisation was initiated with George Bush, Sr.'s administration. And since then all the financial transactions and dealings with the WTO and multinational corporations have been concealed from the American people, who I believe should have had some voice in the matter, with all the evidence before them, considering the drastic consequences for the American way of life.

To my mind, the republicans and democrats have sold out the American people for personal profit.

risa

[RLK]

Yup.

[ex-snook]

The Bush "tax cuts" will prevent this from happening. [Wanna buy a bridge?]

[sarcasm]

Maybe we could move Congress to India - just think of the savings.

[HoundsTooth_BP]

It only takes common sense to figure that we cannot continue to buy high priced goods if we do not have jobs to make enough money to do so.

The only thing I can figure out is our Congress and Presidents do not have the nerve to cut regulations and taxes which would lead to reductions in salaries.

Therefore, if high wages and costs continue, a day of reckening will surely come, and we will be in the same boat as the third world countries. Then, we will be glad to work for small salaries and few benefits.

To hasten all this Dems and Repubs alike will spend like crazy and make policies to this end.

[Arkinsaw]

Its interesting, that when manufacturing and steel jobs moved overseas they told us that this was because the US was moving into a new age, the information age, and that all our jobs would be hi-tech and that those old economy jobs were not worth having. We just had to retrain people.

Well, no we have an information economy, we have retrained a bunch of those people. The info jobs are now going overseas?

What new age are we moving into this time I ask?

[mlmr]

What new age are we moving into this time I ask?



The welfare-state age.

[sarcasm]

What new age are we moving into this time I ask?

The United States as a third-world nation.

[doosee]

When enough people are unemployed in the USA, and the rest who are working get tired of selling life insurance and flipping burgers, things could get interesting here. I wouldnt predict civil unrest but it could come to that. We cannot let this country become the haves and have nots. For an example, look at Brazil, Venezuela, and many others.

[bybybill]

Time to grow up--Companies are moving because they can make more $$ for their owners[stockholders], period. That is why people invest their money. The problem is that lawyers, unions, and regulations embosed by various governments have raised the cost of doing biz. in the US to such a point that icompanies are forced to move.

[yankeedame]

Time to grow up--Companies are moving because they can make more $$ for their owners[stockholders], period. That is why people invest their money. The problem is that lawyers, unions, and regulations embosed by various governments have raised the cost of doing biz. in the US to such a point that icompanies are forced to move.

Amen, brother, and preach on!

[txzman]

This from the same hotshot legal companies who found legal ways for their clients to not pay taxes, reward executive incompetence, hide losses, pay exhorbitant bonuses and generally put a blind eye to what they knew was wrong.

[sinkspur]

The problem is that lawyers, unions, and regulations embosed by various governments have raised the cost of doing biz. in the US to such a point that icompanies are forced to move.

Lots of hostility to "big corporations", too, even on Free Republic.

So, the "evil corporations" will just move their operations to a friendlier climate.

Fiber optics enable these kinds of moves. The only way to turn things around is to make it more profitable to leave operations functions here.

[sarcasm]

How much do you make outsourcing jobs to India?

[NoControllingLegalAuthority]

The argument on this site is academic. The working people of America thrown out of work, however, are not going to confine their actions to friendly debate. If you want a Hillary Clinton to become president, keep throwing millions more Americans out of work. This situation is going to get ugly and it won't be an academic discussion.

It is not an economic textbook when YOU can't find a job.

Massive unemployment of Americans will have serious political consequences for generations.

[yankeedame]

The world's 100 largest financial-services companies say they expect to transfer about $356 billion of their operations and 2 million jobs offshore over the next five years ...

Fine....now,let's take a deep breath and look at this once again:

-"The world's 100 largest financial-services companies say they expect to ..." Notice the word "expect". It doesn't say they will, it doesn't say its written in stone that they will, it merely says the expect to transfere these jobs. And, let's face it, in today's fast paced world 5 years is a long, long time.

- "The world's 100 largest financial-services companies ..." Are all these 100 companies US owned and/or based? No, they're not. So we're not talking about 2 million US only jobs.

- Now, let's say the figures are right: 100 companies tansfers ("cans") 2 million workers over five years. That works out to what? 20,000 workers per company, over five years. That, in turn, and assuming all things are equal, works out to 4,000 workers per company, per year.
Now, in the normal ebb and flow of corporate life, what is the usual annual turn over rate for employees for companies that size? How will these additional 4,000 dismissed workers add to that figure? Will the usual figure be boosted by 10%? 60%? 3%? What?

Finally, as another freeper pointed out, the fact that these companies are moving jobs off shore is a very real sign of something amiss in the US job climate. People vote with their feet, and so do companies. As the old saying goes:"You can hide the fire, but where are you going to hide the smoke?"

[Captain Shady]

Massive unemployment of Americans will have serious political consequences for generations.

Time to rebuild the USA .Without us,the world will go to hell and that can't br good for business.

[ex-snook]

"The only way to turn things around is to make it more profitable to leave operations functions here. "

You're right sink but it ain't gonna happen. The government(s) needs (wants) too much tax money.

[Loyalist]

Articles like this make me doubt the wisdom of free trade.

I am starting to think that Western economies may have to turn protectionist in order to preserve the economic power on which rests military power and liberty.