OffShoring Engineering

 

US Corporations Moving More Jobs To India, But Quietly
author: David Zielenziger


US corporations are picking up the pace in shifting well-paid technology jobs to India, China and other low-cost centres, but they are keeping quiet for fear of a backlash, industry professionals said.

Morgan Stanley estimates the number of US jobs outsourced to India will double to about 150,000 in the next three years. Analysts predict as many as two million US white-collar jobs such as programmers, software engineers and applications designers will shift to low cost centers by 2014.

But the biggest companies looking to "offshoring" to cut costs, such as Microsoft Corp., International Business Machines Corp. and AT&T Wireless, are reluctant to attract attention for political reasons, observers said this week.
US companies moving more jobs to India but quietly

David Zielenziger (Reuters)
New York, December 24

US corporations are picking up the pace in shifting well-paid technology jobs to India, China and other low-cost centres, but they are keeping quiet for fear of a backlash, industry professionals said.

Morgan Stanley estimates the number of US jobs outsourced to India will double to about 150,000 in the next three years. Analysts predict as many as two million US white-collar jobs such as programmers, software engineers and applications designers will shift to low cost centers by 2014.

But the biggest companies looking to "offshoring" to cut costs, such as Microsoft Corp., International Business Machines Corp. and AT&T Wireless, are reluctant to attract attention for political reasons, observers said this week.

"The problem is that companies aren't sure if it's politically correct to talk about it," said Jack Trout, a principal of Trout & Partners, a marketing and strategy firm. "Nobody has come up with a way to spin it in a positive way."

This causes a problem for publicly traded companies, which would ordinarily brag about cost savings to investors. Instead, they send vague signals that they are opening up operations in India and China, but often decline to elaborate.

Moreover, on the threshold of a US presidential election year, job losses are a hot button issue. A company that highlighted a major job transfer could wind up in the campaign debate.

Multinationals find that when they trumpet expansion overseas, they cause problems at home. When Accenture Ltd. executives in India this month announced plans to double their staff to 10,000 next year, they triggered a flood of calls to the company's US offices about US job losses.

Offshoring companies "are paying Chinese wages and selling at US prices," said Alan Tonelson, of the US Business and Industrial Council, a trade group for small business. "They're not creating better living standards for America."

The US sales director for one of India's top computer services providers said his company has won business from customers such as Walt Disney Co., Time Warner Inc.'s CNN and the Fox division of News Corp. -- none of which want public disclosure.

In India, some technology companies have recently adopted lower profiles. Microsoft Corp. has been removing its name from minibuses used to ferry engineers on overnight shifts. Major Indian beneficiaries of US business such as Infosys Technologies Ltd., Wipro Ltd. and Satyam Computer Services Ltd. have stopped identifying new customers.

While there have been reports that IBM intends to ship 4,700 high-end jobs to India and China next year, they mark a rare instance when figures "have been reported in black and white," said Linda Guyer, president of Alliance zIBM, a union that has tried to organize IBM employees.

Those numbers were not released by IBM, but rather disclosed by the Wall Street Journal, which had obtained an internal memo. The company has declined to comment.

Guyer believes as many as 40,000 of IBM's 160,000 US jobs will be transferred overseas by 2005, a figure she says was gathered from phone calls by IBM employees.

Previously, IBM has pointed to a report by the McKinsey Global Institute that concludes the US economy ultimately will benefit. The report was commissioned by Nasscom, a group made up of Indian tech companies as well as IBM's Indian services unit -- showing an effort by those invested in offshoring to sway public opinion.

Recently, AT&T Wireless told the US Securities & Exchange Commission that it would lay off 1,900 employees this year. Communications Workers of America members obtained an internal memo prepared by Tata Consultancy Services of India that discussed how it would assume those US jobs.

Subsequently, AT&T Wireless officials acknowledged it was exploring the job shifts but didn't offer details.

While some companies, such as Electronic Data Systems Corp. , CAP Gemini Ernst & Young and Sapient Corp., acknowledge they shift jobs abroad to exploit cost advantages and around-the-clock work, IBM asserts that it is not moving jobs but creating new ones.

"It's a business strategy, period. You cut costs. You revamp. You look at what your mission statement says and try to turn a profit," said Sylvia Thomas, who was laid off by chipmaker Agere Systems Inc. after declining offers to relocate to headquarters in Allentown, Pennsylvania or to Singapore.