One in 10 U.S. Tech Jobs May Move Overseas, Report Says

Reuters ^ | July 29, 2003 | Eric Auchard

[demlosers]

NEW YORK (Reuters) - One out of 10 jobs in the U.S. computer services and software industry could shift to lower-cost emerging markets such as India or Russia by the end of 2004, a top computer consultancy said on Tuesday.

Gartner Inc., the world's biggest high-tech forecasting firm, said in a report entitled "U.S. Offshore Outsourcing: Structural Changes, Big Impact" that 500,000 of the 10.3 million U.S. technology jobs could move just in 2003 and 2004.

While professionals in the computer industry itself are likely to bear the brunt, the report predicts that one in 20 tech jobs in industry-at-large also could be moved overseas.

This is especially true in industries with high concentrations of knowledge workers such as banking, health care and insurance, the author of the survey said.

"Suddenly we have a profession -- computer programming -- that has to wake up and consider what value it really has to offer," Diane Morello, a Gartner vice president and research director who studies work force issues said in an interview.

"Offshore outsourcing" is the euphemism the computer industry uses to describe the transformation of software development, computer services and customer call-center work.

As a global economic recession has hit hard over the past two years, U.S. companies have embraced as never before a decades-old trend to hire educated workers overseas who can be employed for a fraction of the cost of U.S.-based programmers.

Just last week, software maker Siebel Systems Inc. SEBL.O of San Mateo, California said it would cut 9 percent of its work force, or 490 jobs, and planned to move some operations overseas.

Executives of the world's largest computer and services company, International Business Machines Corp. were quoted recently as saying they had no competitive choice other than to expand software and semiconductor development overseas. The comments came to light in a recording supplied by a union seeking to organize IBM workers and supplied to Reuters. IBM now employs 5,400 workers in India out of a total work force of 316,000.

A JOBLESS TECH RECOVERY?

The debate by economists over whether the United States may now be experiencing a jobless economic recovery echoes disputes over high-tech job losses that heated up during the last technology recession a decade ago. These petered out quickly in the Internet boom of the late 1990s.

The recent acceleration of job losses actually began during the late 1990s when shortages of qualified U.S.-based workers led companies to turn overseas to countries such as India, Ireland and elsewhere for computer and Internet project work.

The mounting job losses are heating up as a political issue, with bills put forward by legislators in five U.S. states that would require workers hired under state contracts be American citizens or fill a special niche citizens cannot fill.

Morello said her study did not speculate on where such jobs were moving. But she indicated that India, Russia and other countries in Southeast Asia were the most likely locations.

She also pointed to how Canada has moved recently to position itself as a "nearshore" alternative to companies who have trouble shifting jobs to more distant "offshore" locales.

Electronic Data Systems Corp. EDS.N of Plano, Texas, the world's second largest computer services provider, has already reached into Canada and many points beyond. EDS has begun promoting its "Best Shore" strategy of positioning software and customer service work in what it says are the most cost-effective locations around the globe.

EDS has 16 centers that range from New Zealand to India to Egypt, Poland, Brazil, and Canada.

The Gartner analyst said that based on her preliminary calculations that one in 10 software services jobs are at stake at computer vendors and 5 percent of technology jobs in the wider corporate world, at least 500,000 jobs will be moved. (Additional reporting by Caroline Humer)

[just_living]

Good for business owners. If Americans have priced themselves out of the market, they deserve to be punished by the market. We need to get better or different skills that blow away our competition, or lower our prices. I am all for the market deciding what is right. And in this case our overfeed programmers are going to have to figure out how to make themselves attractive to our top corporations once again.

[CedarDave]

One out of 10 jobs in the U.S. computer services and software industry could shift to lower-cost emerging markets...

I wish it was the trial lawyers that were subjected to "offshore outsourcing".

[Monty22]

Yeah, this will teach those dirty Americans right for not wanting to live in mud huts and slave wages.

[Notforprophet]

Welcome to FR.

NFP

[Paul Ross]

I see another troll has re-surfaced under a new moniker, Viking Kitties ALERT!

[Paul Ross]

I see another troll has re-surfaced under a new moniker, Viking Kitties ALERT! Just registered today.

[RightWhale]

If Americans have priced themselves out of the market, they deserve to be punished by the market.

IT is not all programming. Most of these jobs would be data entry, keystrokes per minute. The economy is going global, though, and this is just the beginning. America is fine, though, just needing some adjustment to priorities, somethng that is well underway since WTC911.

[Zathras]

Follow the money!
The same people who conned people into the .com are now doing start-ups to outsource jobs to India.

This time, they are going directly to companies to finance their operations instead of VC's.

[just_living]

The only troll I'm into is made by Russ. I'm saying this. What's the point, what can we do about this? Nothing. These prgrammers started get huge salaries, and they priced themselves right out of the market. There is no fix to that, and I'm tired of hearing these guys complain as if there is. They should of invested some of that money. End of Story.

(Why did you post twice, new to the Internet, hit the button too many times. I only bring it up because I think it's rude of you to call people names.)

[dfwgator]

Your attitude is pretty much what the rest of the non-IT thinks. And as far as the rest of the world, they want to see our standard of living knocked down a peg a two. Face it, we are going to get little sympathy, don't expect it.

[samuel_adams_us]

If find it odd that these american companies enjoy the freedom provided to them by the armed forces of the United States which is paid for and comprised of members of the citizenry of the United States and yet they won't hire citizens of the United States. As far as I am concerned they are comitting treason and every corporatation founded and based in the United States who doesn't want to hire United States citizens while enjoying the freedom and security should move their HQ offshore and get the hell out of here.

[just_living]

"America is fine"
You said it, and that was kinda my point. We will figure it out, we always do. There is no sense in fighing market forces (it is nonsense actually). America is no good at legislating solutions to issues like this, we are good at coming up with whole new industries that will employ the clever people who were formally programmers.
My other point is that as a business owner am I supposed to feel some moral obligation to hiring overpriced Americans when I can get the same product cheaper by outsourcing? That makes no sense to me.

[CedarDave]

Hey, I don't know if he's being sarcastic or not, but what he says about being good for corporate business is true or else they wouldn't be doing it. And yes, new and better skills are needed, because I don't see government jumping in (nor should they necessarily) to cut short the job losses.

As for being a troll, I don't know. If he is, he is subtle about it. I have no problem discussing his premise.

[RightWhale]

as a business owner am I supposed to feel some moral obligation to hiring overpriced Americans when I can get the same product cheaper by outsourcing?

No. The business environment is evolving. A business must always look to find cheaper sources of office supplies without compromising quality, one example. Adapt or eventually take down the sign over the storefront. There is a moral obligation to succeed in business so long as it benefits the society that supports it. The society is becoming worldwide thanks to modern communications, so there is the community, it's worldwide.

[just_living]

No sarcasm Dave. What I am saying is that business has every right to do what is best for profits (some would argue that offshore programmers are not as good as Americans, they might be right, but I am operating under the premise that they are, or the wouldn't be accpeted by the market). The only solution here is to innovate. But we are Americans and we will.

[RaceBannon]

http://www.freerepublic.com/focus/news/954156/posts?page=342

[CedarDave]

A little severe maybe, but high tech was supposed to be the replacement for the manufacturing industries that went overseas earlier and now it too is departing. Solutions are not easy to come by and I don't know if our technical innovation is going to stay ahead of the rest of the world. The third world is becoming more technically educated while our young adults are dumbed down by public schools which are more worried about "self-esteem" than the 3-R's.

[just_living]

Sad to say, about our public schools you are right. Do you know why India is getting so many of our programming jobs? Good schools. That's right India is producing better educated (okay maybe not better, but competitively educated) graduates. How in the world does that happen?
HHTY!

[superloser]

My other point is that as a business owner am I supposed to feel some moral obligation to hiring overpriced Americans when I can get the same product cheaper by outsourcing?

Since most of your customers will be here, if they have no jobs, you have no customers, therefore no income and finally, no business.

No offense intended, but expand your horizons slightly and look at a bigger picture and you will see things beyond your nose that will affect you down the road.

Picture an economy dominated by people working at Wal-Mart for $5 an hour selling foreign-made goods.

Now picture your business operating in that setting where the vast majority of people are minimum-wage workers and your business is being taxed up the wazoo to cover "entitlements."

While I agree most union shops and fresh grads who think they can demand dot-com wages in a sagging economy need to think again -- look at the overall picture and you'll see that an economy that produces nothing will not survive.

On the flip side, if the American Consumer, who has been propping up the global economy stops consuming, well....we know where that will lead (1931) don't we?

Hence, I'm concerned about the overall picture as opposed to the minutia, but even that starts to add up after a while.