White-collar jobs moving abroad
A spate of new studies points to an exodus of skilled labor, from high-tech to financial services.
For decades, Americans watched as manufacturing plants set up shop overseas to capitalize on cheap labor. Ross Perot immortalized the anger many workers felt, vividly terming the potential exodus of jobs to Mexico that "giant sucking sound."
Now a growing number of US firms are sending coveted high-tech and service jobs "offshore" in a move that's reviving a debate about the future of the American workforce.
No longer is it just Disney toys and Nike shoes made in Haiti and Indonesia. It's software engineering, accounting, and product development being "outsourced" to India, the Philippines, Russia, and China.
The result is a growing backlash from unionists, contract workers, and erstwhile techies with time on their hands. More broadly, the trend raises a pointed question in an age of globalization: Is sending certain jobs offshore - even high-tech ones - better for the US economy, or does it just amount to more pink slips for American workers?
"Manufacturing is a small slice of the economy, and when people saw globalization creating instability there, a lot said, 'It's not my problem,' " says Josh Bivens, an economist at Washington's Economic Policy Institute. "Now white-collar workers are feeling it."
The number of such jobs now outsourced - from information technology (IT) to architecture - is less than half a percent of the US workforce. But it may grow fast:
• Half a million IT jobs - roughly 1 in 20 - will go abroad in the next 18 months, according to Gartner, a research firm in Stamford, Conn.
• Nearly 5 percent of human- resources jobs have moved offshore in the past year, and by 2007 that number will climb to at least 15 percent, says Jay Whitehead, publisher of HRO Today magazine, which tracks outsourcing.
• By 2015, 3.3 million US high-tech and service-industry jobs will be overseas, according to Forrester Research in Cambridge, Mass. That's 2 percent of the entire workforce, and $136 billion in US wages. Oracle, for instance, already has 2,000 employees in India and expects to move 2,000 software-development jobs, plus accounting, payroll, and customer-service positions.
Granted, projecting to 2015 is risky. And even if these numbers pan out, some say there's no reason to panic: By staying competitive, the theory goes, companies will strengthen their positions in the new global order.
"If you look at history, we create new jobs in new areas to make up for what is outsourced," says Richard Hundley, lead author of a recent report by RAND's National Defense Research Institute. North America will still lead the technology revolution, the report says, partly because of a willingness to engage in "creative destruction" to stay on the innovative edge.
But others - particularly those whose jobs are lost - see overseas outsourcing as a zero-sum game, with US workers sacrificed for corporate profits. "America's leading companies are sending our best-paying jobs to cut labor costs.... I don't buy the idea that new jobs will be created," says Marcus Courtney, organizer of the Washington Alliance of Technical Workers (WashTech) in Seattle, an affiliate of the Communications Workers of America.
In the past six months, as his union has led protests against offshoring plans at Microsoft and elsewhere, its e-mail list has grown from 2,000 to more than 15,000. Last week, the group publicized a recording - received from an IBM employee - of IBM senior executives on a conference call in March, talking of the need to send more jobs overseas, though acknowledging that it would upset domestic workers.
It's unclear how much offshoring contributes to job cuts, despite anecdotes of techies who now work at Starbucks, pouring lattes with the precision of an engineer's eye. Mr. Hundley of RAND attributes job loss to the current economic doldrums, and says it will ebb. But Gartner's July 15 report estimates that through 2005, fewer than 4 out of 10 IT workers whose jobs go overseas will be redeployed by their own companies.
And the potential that some jobs are gone for good raises the question of how the economy can weather what seems, in turns, a boon and a blow.
Critics caution that while executives are under extreme pressure to cut costs, some of them may be too quick to outsource jobs higher up on the spectrum of creativity and skill. Companies are training developing nations' workforces to become America's competitors, says Basheer Janjua, CEO of Integnology Corp in Santa Clara, Calif., which offers domestic IT outsourcing.
"What's going to be the incentive for our future generations to get a degree in electrical engineering?" he asks. "We have to ask if we're ready to give up our pioneering position in the world."
Even offshoring's proponents agree that its real effects on US jobs need to be analyzed. WashTech recently persuaded two of the state's US representatives to call for a study by the General Accounting Office.
But people shouldn't be concerned about the best jobs leaving the country, says Mary Jo Morris, president of the Global Transformation Solutions Group at Computer Sciences Corporation (CSC), an IT outsourcing firm in Falls Church, Va. Offshoring, she says, is an irreversible trend, but "roles that create a lot of value will not go overseas, and more of those will develop as the industry matures."
Corey Goode, for one, has become a self-proclaimed thorn in Microsoft's side. Since June, when he watched his $40-an-hour contracting job sail to India and learned that the jobs of permanently employed colleagues in Las Colinas, Texas, would probably do the same, he's launched a website to protest offshoring and the use of skilled foreign labor in the US through special visas. Mr. Goode insists he's not out to stir up xenophobia. But he wants companies to see American employees as more than numbers. "Globalization is here to stay, and we're experiencing the growing pains," he says.
His is just one voice in a chorus gaining strength - and numbers - as offshoring gains steam. About half a dozen states are considering laws to make sure state contract work is performed within US borders. "If you want to enjoy the benefits of an unfettered free market, you can try to cushion the downside as well," says Mr. Bivens of the Economic Policy Institute. Goode - and plenty of others - will clamor for government to do just that.