US firms to move 3 mn jobs abroad

Under increasing pressure to cut costs and build global networks, American corporate giants are planning to move about 3.3 million jobs, including highly-paid white-collar ones, to countries including India by 2015.

Forrester Research, a high-technology consulting group, estimates that the number of service sector jobs newly located overseas, will climb to 3.3 million in 2015 from about 400,000 this year, The New York Times reported.

Two top IBM officials recently told their corporate colleagues around the world during a conference call that the company needs to speed up efforts to move white-collar jobs overseas even though that might create a backlash among politicians and its own employees, the paper said.

"Our competitors are doing it and we have to do it," Tom Lynch, IBM's director for global employee relations, said.

Oracle to double headcount in India
Microsoft may move some US jobs to India
Outsourcing and India: Complete Coverage

The shift of 3 million jobs represents about two per cent of all American jobs.

"It's a very important, fundamental transition in the IT service industry that's taking place today," said Debashish Sinha, principal analyst for information technology services and sourcing at Gartner Inc, a consulting firm. "It is a mega trend in the IT services industry."

Forrester also estimated that 450,000 computer industry jobs could be transferred abroad in the next 12 years, representing 8 per cent of the nation's computer jobs.

Oracle plans to increase its jobs in India to 6,000 from 3,200, while Microsoft plans to double the size of its software development operation in India to 500 by late this year. Accenture, a leading consulting firm, has 4,400 workers in India, China, Russia and the Philippines.

Executives at the IBM and many other companies, the report said, argue that creating more jobs in lower cost locations overseas keeps their industries competitive, holds costs down for American consumers, helps to develop poorer nations while supporting overall employment in the US by improving productivity and the nation's global reach.

"It's not about one shore or another shore," an IBM spokeswoman, Kendra R Collins, was quoted as saying. "It's about investing around the world, including the United States, to build capability and deliver value as defined by our customers."

But in recent weeks many politicians in Washington, including some in the Bush administration, have begun voicing concerns about the issue during a period when the economy was weak and the information-technology sector remained mired in a long slump.

At a Congressional hearing on June 18, Bruce P Mehlman, the Commerce Department's assistant secretary for technology policy, said, "Many observers are pessimistic about the impact of offshore IT service work at a time when American IT workers are having more difficulty finding employment."

Phil Friedman, chief executive of Computer Generated Solutions, a 1,200-employee computer software company said once those jobs leave US, "they will never come back."

"If we continue losing these jobs, our schools will stop producing the computer engineers and programmers we need for the future," he said.