Shift of tech jobs abroad speeding up

Date: Wednesday, December 25, 2002 9:52 PM

H-1B and JOB DESTRUCTION NEWSLETTER

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VPs like Bob Pryor are now admitting that US companies use foreign workers
with H-1B visas to reduce costs. Just a couple of years ago they all claimed
there was a desperate shortage of technical talent in the US. Why are they
so honest all of a sudden?

Pete Bennett of http://www.nomoreh1b.com said that outsourcing of American
jobs is a "pretty disturbing pattern". Check out his website to find out
more about these disturbing patterns.

http://www.boston.com/dailyglobe2/359/business/Shift_of_tech_jobs_abroad_speeding_up_report_says+.shtml

Shift of tech jobs abroad speeding up, report says

By Diane E. Lewis, Globe Staff, 12/25/2002

Spurred on by new technology and a shift in the way corporate America does
business, employers will move about 3.3 million white-collar service jobs
and $136 billion in wages overseas in the next 15 years as they seek lower
costs, increased production, and higher profits, according Forrester
Research Inc.

Leading the way will be the information technology industry - the sector
often credited with fueling the US economic boom of the 1990s - says the
Cambridge firm's forecast.

Back-office accounting and customer-calling work are already being shipped
abroad. But in the future, professional positions in technology, law, art,
architecture, life sciences, and business management will be, too, says
Forrester.

Its report is one of the first attempts to quantify the jobs that will be
lost to overseas operations.

''We estimate that of the 700 service job categories in the United States,
about 550 will be impacted by offshore outsourcing in some way over the next
15 years,'' said analyst John C. McCarthy, the report's author.

''Companies are doing it because they feel they can get better quality work
for 50 percent of the cost. This is another way of making the US economy
more efficient, more competitive, and more prosperous,'' he added.

Global outsourcing is a growing business, said Bob Pryor, a vice president
of Cap Gemini Ernst & Young and head of the firm's outsourcing practice in
the Americas. In the past, he said, US companies relied on foreign workers
with H-1B visas to reduce costs. ''Now they are focusing on offshoring,'' or
sending the work overseas.

In the services sector, basic information technology support services,
computer programming, and office work are leading the trend.

In 2000, computer and back-office work accounted for significant portions of
the 102,674 jobs shipped abroad, representing 27,171 and 53,987 positions,
respectively, McCarthy said.

By 2015, he added, 472,632 computer jobs and 1.65 million office positions
will have been shifted to places like China, India, the Philippines, or
Russia.

Some US companies aim to maximize production by opening sites or contracting
with foreign service providers in other time zones, which lets them triple
the amount of work that's done by extending the work day to 24 hours.

Take mValent, a Tewksbury software company launched last year that's using
funds from Charles River Ventures and IDG Ventures to expand.

Every four weeks or so, Raman Sud, vice president of engineering, travels to
Pune, India, to interview technology professionals from an Indian firm that
has agreed to supply top talent. The goal for mValent is to create parallel
teams of highly trained employees in the United States and India that will
provide the technology infrastructure.

Sud said technology workers in remote sites have fewer interruptions or
distractions, because the corporate office cannot introduce work unrelated
to the project at hand. Moreover, he said, with two teams, the work is never
interrupted.

''It will be possible for the two teams to operate in tandem, so that when
the sun is up here we are working, and when it is down they are working,''
he said.

''There are also cost benefits. ... For every one person you have here, you
could have three to four in India - people with engineering degrees and
computer science and the experience of five-plus years.''

''We assign a mentor to them, and that helps to bring them up to speed
within a month,'' he continued. ''The mentor is here. Once we have a
critical mass there, the people there will mentor new people coming in. Our
plan is, within the next six to nine months, to have close to 15 people.
Right now, we have four and they are very highly compensated [by Indian
standards]. So if you are a software developer, then you would be making
about a third of what a developer gets here. For an administrator, it might
be half.''

mValent is hardly the first US company to rely on offshore outsourcing,
though. For 30 years, hundreds of manufacturers have shifted at least some
production overseas. But the trend is expanding, analysts say.

Forrester's McCarthy said US workers can benefit if they have the training
and expertise to lead or manage offshore work from their stateside bases.

''There are definitely cost savings,'' said Suzy Punj, senior vice president
of Strategic Research Institute in New York. ''You would have to pay someone
$40,000 here to do call center or back office work. There, they would make
about $4,000, which is a good salary [in India]. There, they receive the
perks of car services to and from the house, an apartment, and free lunch.
So people stick around.''

General Electric Co., Boeing Co., and Nortel Networks Ltd. are among the
companies sending programming jobs to India, Ireland, Russia, and China,
according to Gartner Inc. in Stamford, Conn.

Oracle Corp. has moved more than 2,000 software development jobs to India,
while Capital One and Ford Motor Co. have moved back-office jobs, such as
payroll processing, to India, currently the country of choice for many
companies, McCarthy said.

''China is trying to get ready for this, but they are far behind because
they do not have as many English-speaking people,'' Punj said. ''Eastern
Europe, the Philippines, and Latin America are all getting into this.

''A lot of [companies] don't want to talk about it because they are taking
jobs away ... It is a no-win situation and it stems from the recession.
Companies are saying if they can stay afloat, perhaps things will get
better.''

But thousands of computer professionals have been laid off in recent months,
and unions and and other groups that represent workers say the news is far
from encouraging.

''If we don't have these jobs, what will people do?'' asked LeEarl Bryant,
president of the 220,000-member Institute for Electrical and Electronics
Engineers-USA. ''Why did we dupe people into going to college and studying
these fields if there will be no jobs?''

Peter Bennett, a laid-off computer programmer and California activist,
founded the Web site nomoreh1b.com, to protest corporate use of immigrant
guest workers under the H1-B visa program.

He said the transfer of work abroad is a continuation of that trend. ''We
have never in the history of immigration invited more than 3.3 million
people here and given them our best jobs,'' Bennett said. ''So, this is the
start of a pretty disturbing pattern.''

Diane Morello, workplace research director at Gartner Inc., warns that
companies could experience a backlash from their US workers. Those that do
not weigh the pros and cons could wind up hurting their ability to innovate,
she said.

''For every person affected negatively in the United States ... there is
someone elsewhere in the world for which this is a bounty - a huge
opportunity,'' Morello said. ''And we are seeing this emerge in other fields
besides manufacturing. We are expecting a backlash from [US] employees who
are, at one point, being pressed to work endless hours and being threatened
that their jobs may go overseas. They may find that the only way they can
fight this or be heard is through organizing or employee activism.''

In Massachusetts and in other US tech centers, technology professionals who
thought their jobs were secure are struggling to make sense of layoffs. Last
year, for example, 695,581 high-tech job cuts were announced nationwide,
representing 36 percent of all the payroll reductions proposed by US firms
during that period, according to Challenger, Gray & Christmas Inc., an
outplacement firm.

This year, between January and September, there were 334,650 job cuts
announced, or 33 percent of all reductions, the firm said.

Forrester predicts more layoffs in basic technology support, computer
programming, and a range of professional fields - tough news for
white-collar workers.

Diane E. Lewis can be reached at dlewis@globe.com.

This story ran on page E1 of the Boston Globe on 12/25/2002.
© Copyright 2002 Globe Newspaper Company.

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