For those following the outsourcing issue, here's the forecast on what's
next on the outsourcing list.

Kelly



The Wall Street Journal
March 23, 2004;


    Next on the Outsourcing List

Job Shift to Cheaper Countries Could
Threaten More Careers: Analysts, Architects, Attorneys

    By KRIS MAHER

Staff Reporter of THE WALL STREET JOURNAL

March 23, 2004;

Page B1

    Sheryl Matta earns roughly half what she did a few years ago, and every
month the job market in her field seems to get worse. She points to a
single cause: offshoring.

    A medical transcriptionist, Ms. Matta took her latest pay cut in
January, when the Rockville, Md., company she had been working for lost a
contract to a competitor that outsources work to India, and she was laid
off. After scrambling for a month, she found more work transcribing notes
that physicians dictate -- but will need to work 15 hours a day at her new
employer's 7-cents-a-line pay rate to hit her goal of earning $2,000 a
month.

    "I can't make a living at this anymore," says Ms. Matta, 54 years old,
who lives in Odessa, Texas. The two phone lines and Internet account needed
for her job chew up about $190 a month, and she can't afford to send her
16-year-old daughter to band camp for the French horn this summer. "Our
jobs are being taken away, and we're very, very angry about it."

    The list of jobs being affected by the movement of U.S. work to
lower-cost countries around the world is growing. American companies have
shipped computer-programming and call-center jobs to educated workers in
India, the Philippines, Mexico, Canada and elsewhere for the past decade.
Now, workers in a wide range of other fields, from accountants to
electrical engineers, are discovering that their jobs aren't immune from
offshore outsourcing.

    HELP WANTED -- JUST NOT HERE A sampling of jobs now being done by
workers overseas:

    Medical Processing insurance claims and hospital bills Medical
transcription and billing

    Animation 3-D animation special effects Linear and nonlinear editing

    Insurance Applications and claims processing Benefits administration

    Digitizing Converting text, engineering drawings, architectural designs
and maps from paper to digital format

    Desktop Publishing Page layout Advertising campaigns Typesetting and
color separation

    Telemarketing Customer-service management for international banks,
software companies and credit-card companies Airline ticketing and
reservations

    Financial Financial analysis for Wall Street banks and insurance
companies Accounting and bookkeeping Tax preparation

    Sources: outsource2india.com; WSJ research

    "You've got to look in the rear-view mirror when there's someone else
coming on the job scene who can do what you can do for less," says John
McCarthy, a Forrester Research Inc. vice president. He estimates that as
many as 588,000 U.S. white-collar jobs will be "offshored" by 2005 -- and a
total of 1.6 million by 2010. The U.S. had a total of 138.3 million
employed workers at the end of February.

    India's National Association of Software and Service Companies
estimates that more than 300,000 white-collar jobs have been created there
since 2000 to serve overseas clients, many of them U.S. companies.

    In some fields, there is theoretically no reason why the majority of
positions couldn't be sent offshore, much as furniture and textile
companies gradually moved production overseas or imported foreign-made
products. So-called placeless jobs that don't require face-to-face customer
interaction are increasingly at risk. Information-based jobs are especially
vulnerable, because it is easy and cheap to transmit data almost anywhere
these days.

    About 10% of U.S. jobs in medical transcription, in which doctors'
tape-recorded notes about cases are accessed electronically and typed into
a computer by workers who must know medical terminology, already have been
shifted to India, Pakistan, Canada and other countries, according to the
American Association for Medical Transcription. Some estimates put the
offshoring figure as high as 30%. The U.S. industry had about 99,000
workers in 2002, according to the Bureau of Labor Statistics.

    "A lot of our members are single moms raising kids, and they're going
to be put out of jobs," predicts Carrie Boatman, the Modesto, Calif., trade
group's director of professional relations.

    Yet even outsourcers acknowledge there are limits to how much work can
be sent offshore. Geographic and cultural differences can make it hard for
overseas workers to take over highly sophisticated jobs, says Manoj Jain,
chief executive of Pipal Research Corp., a Chicago investment-research and
consulting firm with a staff in India of 50 native-born employees holding a
doctorate or M.B.A. degree.

    Salaries for the most sought-after foreign workers also are surging,
offsetting the cost savings that lure U.S. companies overseas. Mr. Jain
recently gave 80% raises to his Indian employees in order to hold onto
them. "The level playing field will happen sooner than people expect," he
says.

    And some job fields in the U.S. are regulated so closely that they are
relatively insulated against offshoring. While radiologists often are
mentioned as likely casualties as jobs move abroad, federal laws require
that anyone interpreting X-rays and other images for U.S. hospitals be
trained and licensed in the U.S. The loss of U.S. radiology work "sounds
sensational and scary, but it is such a small, small part of the bigger
picture," says Jon Berger, vice president of NightHawk Radiology Services
LLC in Coeur d'Alene, Idaho. The company has 30 radiologists in Australia
-- all of them U.S. citizens paid more than $300,000 a year. That costs
about the same as a U.S. radiologist, but the Sydney office is able to keep
working after NightHawk's employees in the U.S. have gone home for the
night.

    Still, lots of other job categories are vulnerable. Here are several
fields that experts say could see an increasing amount of U.S. work moved
to other countries:

    Accountants and tax professionals. Offshoring tax work is particularly
attractive to many accounting firms, thanks to a large supply of qualified,
lower-paid accountants in India and other countries. Mark Albrecht, CEO of
outsourcing firm Xpitax LLC, estimates that about 100,000 U.S. tax returns
will be handled overseas this year, including about 10,000 by the
Braintree, Mass., company's staff of 75 tax professionals in Chennai,
India.

    Some outsourcers estimate that an accounting firm can save $50,000 for
every 100 tax returns it ships to India. Xpitax electronically receives tax
information from other accounting firms and then loads it onto an Internet
server that can be accessed by its accountants in India.

    So far, outsourcing has captured barely a speck of the U.S.
tax-preparation business, which includes 132 million individual returns
expected this year by the Internal Revenue Service. But temporary U.S.
workers who help handle the tax-season rush from January to April could
eventually be hit hard, some experts worry. Paid preparers complete more
than half of all individual tax returns.

    "It could eliminate a whole work force, but too much is unknown at this
point to say with any accuracy whether this will happen," says Cindy
Hockenberry, a spokeswoman for the National Association of Tax
Professionals in Appleton, Wis.

    Technical writers. The job of translating complex technological
concepts and procedures into language that can be easily understood by a
nontechnical audience can be done from afar because it usually doesn't
require face-to-face collaboration with product developers. As a result,
some companies are turning to English-skilled writers in India, Russia,
China and other Asian countries to compose user guides and highly technical
product manuals.

    Some technical writers in the U.S. already have seen their wages and
job opportunities plummet. Michele Davis, 39, a self-employed technical
writer in Minneapolis, says she earned $100,000 three years ago -- but only
$12,000 in 2003. She knows several technical writers who have been forced
to take retail jobs paying about $10 an hour with no benefits.

    "I've talked to several people whose jobs have gone to Korea," says Ms.
Davis, who thinks her former clients have been moving writing jobs
overseas. "It's cheaper to have them write it and have an editor in America
correct it."

    Her husband, Jon Phillips, a programming analyst for an Emerson
Electric Co. unit, has been told that his job will be outsourced in about
six months, after he completes a new database project. Mr. Phillips earns
$80,000 a year, and estimates that his Indian replacement will earn about
$20,000. An Emerson spokesman couldn't be reached for comment.

    Architects and drafters. Many architecture firms have begun exporting
drafting work and the creation of legal documents used during construction.
Carl Roehling, president and CEO of SmithGroup, a 750-employee architecture
firm with eight U.S. offices, estimates that about a quarter of large
architecture firms currently offshore their construction-documents work,
and more firms are considering the practice to remain competitive.
SmithGroup currently offshores only construction-documents work for
overseas projects.

    Younger architects face the biggest threat. "I think we have less need
to hire on a very basic level than we did six years ago," says an executive
director for a West Coast firm that designs buildings for public-sector
clients. The large firm, which asked not to be identified, cut its staff by
10% over the past few years and uses offshore drafters for some
construction drawings.

    Some students, particularly those in drafting programs, are nervous.
Joyce Pelletier, enrolled in a computer-aided drafting program at Hudson
Valley Community College in Troy, N.Y., says many students could have
diminished opportunities as a result of offshoring. "If you're going to
design a Wendy's, it makes no difference whether you're here or in India,"
she says. Drafters "may be the steel worker of Pittsburgh," says Ms.
Pelletier, 47.

    Legal and investment research. Mindcrest Inc., of Chicago, provides
legal research for companies and law firms and has a staff of 15 in Bombay,
India. Much of its work in India is administrative tasks that typically
would be handled by paralegals or junior lawyers, and involves document
searches and researching laws in different areas, says George Hefferan,
Mindcrest's vice president and general counsel.

    The number of overseas employees doing such work is small but doubling
about ever year at Mindcrest. The job shifts are larger when companies that
have set up their own research departments outside the U.S. are included.

    Aric Press, editor in chief of American Lawyer, a legal publication in
New York, adds that "commodity legal work that is largely repetitive can be
done by intelligent lawyers anywhere."

    Meanwhile, some U.S. financial firms are creating fewer research jobs
even as they gear up for the industry's expansion, says Peter Mintz,
president of Fleetwood Research, an investment research firm in New York's
Westchester County. "Instead of rushing to hire everyone back they're
saying, 'Wait a minute, we don't have to hire back the same amount of
people,' " he says.

    Insurance claims processors. The job of processing claims involves
inputting information from people seeking to be reimbursed from insurers,
and then determining how much to pay based on insurance policies. That
chore has gone digital in recent years, removing some of the barriers that
kept processing jobs in the U.S.

    Most of the insurance jobs being moved to other countries involve
relatively simple data entry, but companies are now experimenting with
shifting more-complicated tasks such as reading contracts and settling
claims. "America doesn't have a lock on the skill base needed to do this
job," says Sid Miner, president and CEO of Business Process Management
Inc., the parent of a medical-claims processor.

    Between 10,000 and 20,000 so-called claims-adjudication jobs have moved
to other countries, Mr. Miner estimates, leaving about 300,000 of those
jobs in the U.S.

    -- Jon E. Hilsenrath and Jesse Drucker contributed to this article.

    Write to Kris Maher at
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