Compelled by the pressure to cut costs and compete globally, there is no turning back for the American companies on offshore outsourcing, according to the latest issue of US magazine Forbes.
"Offshore outsourcing burst into the mainstream in 2003. Despite concerns in the US about unemployment and lost innovation, there is no turning back. The pressure on US companies to cut costs and compete globally is too compelling, Forbes said.
It said that in the United States, the number of students graduating with computer and information science degrees have grown more than 70 per cent since mid-nineties, but are still outpaced by business, social science and education degrees.
"India with a population topping one billion, turns out 75,000 IT graduates annually, by far the most popular area of study," the magazine said.
Forbes quotes Nasscom President Kiran Karnik as saying: "We are helping US companies tap into talent that is scarce in the US."
It is the 'scarce' path that grates on some American captains of the industry like Intel's Andrew Grove and IBM's Sam Palmisano, Forbes said while adding that both have pointedly expressed fear that US is losing its technical edge to other countries.
"Palmisano says IBM will pledge $200 million to train employees for jobs that might otherwise leave the country," it said.
Experts predict that by 2015, three million US white collar jobs will be farmed out to other countries, up from 3,00,000 today.
"Whether that is good or bad news for the US economy in the long term, is a matter of considerable debate, but it could already be having an impact," it said.
Consider that in the third quarter, US GDP grew by 8.2 per cent but the unemployment rate dropped only two-tenths of one per cent, Forbes said, while adding that a backlash may already be beginning.
"Both Dell and Lehman Brothers recently elected to bring back some jobs to US," it said.
According to Forbes, Dennis McGuire, president of Houston-based consultancy focussing on outsourcing deals, TPI, said that there is protectionism but US companies will search the world for whatever makes them more competitive.
"Companies need to outsource commodity process so they can focus on their own competencies. Does it matter when you have world class accounts payable," McGuire asked.
But there is competition too on the outsourcing front, the magazine said while adding that India needs to be aware of the growing competition from professionals in China and Russia.
Skilled labour there is equally cheap, plentiful and hungry, Forbes said and added that India may probably continue to receive the lion's share of outsourced jobs from US companies.
"China has seen the Indian miracle and they want a piece of it," McGuire said.
