July 29, 2003

One in 10 U.S. Tech Jobs May Move Overseas, Report Says

NEW YORK (Reuters) - One out of 10 jobs in the U.S.
computer services and software industry could shift to
lower-cost emerging markets such as India or Russia by
the end of 2004, a top computer consultancy said on
Tuesday.

Gartner Inc., the world's biggest high-tech forecasting
firm, said in a report entitled ``U.S. Offshore
Outsourcing: Structural Changes, Big Impact'' that
500,000 of the 10.3 million U.S. technology jobs could
move just in 2003 and 2004.

While professionals in the computer industry itself are
likely to bear the brunt, the report predicts that one
in 20 tech jobs in industry-at-large also could be moved
overseas.

This is especially true in industries with high
concentrations of knowledge workers such as banking,
health care and insurance, the author of the survey
said.

``Suddenly we have a profession -- computer programming
-- that has to wake up and consider what value it really
has to offer,'' Diane Morello, a Gartner vice president
and research director who studies work force issues said
in an interview.

``Offshore outsourcing'' is the euphemism the computer
industry uses to describe the transformation of software
development, computer services and customer call-center
work.

As a global economic recession has hit hard over the
past two years, U.S. companies have embraced as never
before a decades-old trend to hire educated workers
overseas who can be employed for a fraction of the cost
of U.S.-based programmers.

Just last week, software maker Siebel Systems Inc.of San
Mateo, California said it would cut 9 percent of its
work force, or 490 jobs, and planned to move some
operations overseas.

Executives of the world's largest computer and services
company, International Business Machines Corp. were
quoted recently as saying they had no competitive choice
other than to expand software and semiconductor
development overseas. The comments came to light in a
recording supplied by a union seeking to organize IBM
workers and supplied to Reuters. IBM now employs 5,400
workers in India out of a total work force of 316,000.

A JOBLESS TECH RECOVERY?

The debate by economists over whether the United States
may now be experiencing a jobless economic recovery
echoes disputes over high-tech job losses that heated up
during the last technology recession a decade ago. These
petered out quickly in the Internet boom of the late
1990s.

The recent acceleration of job losses actually began
during the late 1990s when shortages of qualified U.S.-
based workers led companies to turn overseas to
countries such as India, Ireland and elsewhere for
computer and Internet project work.

The mounting job losses are heating up as a political
issue, with bills put forward by legislators in five
U.S. states that would require workers hired under state
contracts be American citizens or fill a special niche
citizens cannot fill.

Morello said her study did not speculate on where such
jobs were moving. But she indicated that India, Russia
and other countries in Southeast Asia were the most
likely locations.

She also pointed to how Canada has moved recently to
position itself as a ``nearshore'' alternative to
companies who have trouble shifting jobs to more distant
``offshore'' locales.

Electronic Data Systems Corp. (EDS.N) of Plano, Texas,
the world's second largest computer services provider,
has already reached into Canada and many points beyond.
EDS has begun promoting its ``Best Shore'' strategy of
positioning software and customer service work in what
it says are the most cost-effective locations around the
globe.

EDS has 16 centers that range from New Zealand to India
to Egypt, Poland, Brazil, and Canada.

The Gartner analyst said that based on her preliminary
calculations that one in 10 software services jobs are
at stake at computer vendors and 5 percent of technology
jobs in the wider corporate world, at least 500,000 jobs
will be moved.

Copyright 2003 Reuters Ltd. |

http://www.nytimes.com/reuters/technology/tech-tech-jobs.html





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