NEW YORK - U.S. corporations are picking up the
pace in shifting well-paid technology jobs to India, China and
other low-cost centers, but they are keeping quiet for fear of
a backlash, industry professionals said.
Morgan Stanley estimates the number of U.S. jobs outsourced
to India will double to about 150,000 in the next three years.
Analysts predict as many as two million U.S. white-collar jobs
such as programmers, software engineers and applications
designers will shift to low cost centers by 2014.
The problem is that companies aren't sure if it's
politically correct to talk about it. Nobody has come up with a way to spin it in a positive way.
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
"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 U.S. presidential election
year, job losses are a hot button issue. A company that
highlighted a major job transfer could wind up in the campaign
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 U.S. offices about U.S. job losses.
Offshoring companies "are paying Chinese wages and selling
at U.S. prices," said Alan Tonelson, of the U.S. Business and
Industrial Council, a trade group for small business. "They're
not creating better living standards for America."
The U.S. 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 U.S. business such
as Infosys Technologies Ltd., Wipro Ltd.
and Satyam Computer Services Ltd. have stopped identifying new
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@IBM, 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 U.S. 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 U.S. 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 U.S. 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 U.S. 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
© 2003 Reuters Ltd