US's
New Money-Saving Export: White-collar
Jobs
By Stephanie Armour and Michelle
Kessler, USA TODAY
White-collar
employees have long believed their
jobs were safe from the economic
forces that have shifted millions of
factory jobs to foreign countries in
the last 30 years.
Not
anymore.
It's not
just clothing and electronics being made
by workers in India, China and similar
places. Now, office and professional
jobs are being shipped out — raising
the specter that skilled white-collar
workers could face the same devastating
job losses that decimated the
manufacturing industry.
Almost
any professional job that can be done
long-distance is suddenly up for grabs.
Jobs done by financial analysts,
architectural drafters, telemarketers,
accountants, claims adjusters, home loan
processors and others at higher levels
of the labor food chain are being farmed
out to workers in other countries.
"We're
not just talking about call-center jobs,
but all kinds of jobs," says
Deloitte Consulting analyst Christopher
Gentle. "It doesn't leave any part
of the corporation untouched."
These
include high-paying, highly sought-after
jobs that often require advanced degrees
and years of study to attain. But
instead of paying six-figure salaries to
trained workers in America, more
companies are shelling out $10,000 to
$20,000 to get cheaper employees an
ocean away.
Major
U.S. companies, including such giants as
IBM, Microsoft and Procter & Gamble,
are leading the pack. Tens of thousands
of jobs already have been shipped out,
and analysts project that millions more
will go in coming years.
Employers
say outsourcing jobs to foreign
countries makes them more competitive
because they can reap enormous savings
in labor costs. They argue that most of
the jobs now going abroad are positions
many Americans snub, such as
telemarketing. Farming out that work
leaves better, higher-paying jobs for
American employees to do.
The trend
represents a potentially seismic shift:
In the next 15 years, American employers
will move about 3.3 million white-collar
jobs and $136 billion in wages abroad,
according to Forrester Research. That's
up from $4 billion in wages in 2000.
Financial
services companies alone plan to move
more than 500,000 jobs offshore in the
next five years, says consulting firm
A.T. Kearney. Deloitte Consulting
expects 2 million jobs worldwide to
eventually move to countries such as
India.
A
warning from organized labor
To labor
unions, farming out white-collars jobs
is more than just another way for
businesses to cut costs. They say the
trend has the potential to plunder
American jobs, prolong the weak job
market that has characterized this
jobless economic recovery and pose a
long-term danger to the employment
security long enjoyed by white-collar
workers. Critics now are trying to mount
an offensive.
"We
see it as a threat to America's
middle-class workforce, in terms of
wages and benefits," says Marcus
Courtney, president of Washington
Alliance of Technology Workers in
Seattle. "The service sector is not
immune to the forces of globalization.
We're talking about highly skilled,
best-paying jobs. It's raising the
concern of workers."
The
Communications Workers of America this
spring began pressing Congress to
authorize an investigation into the
growing number of jobs being shifted
abroad. High-tech workers have handed
out leaflets and held demonstrations
protesting the trend in states such as
Texas, Washington, Massachusetts and New
York.
Critics
are pushing for legislation that would
halt projects from being sent abroad if
they're funded by tax dollars. Others
want tax incentives to help keep
business on U.S. soil.
The
worry: Increasing profit pressures and
the ease of information exchange
provided by the Internet will turn the
wave of companies shipping out work into
a tsunami — potentially affecting
every sector of the white-collar labor
force.
Among
concerns:
•
Benefits and pay. Secure in the
knowledge that they can get cheaper
workers abroad, American companies might
begin slashing benefits here, critics
say. Even U.S. workers who get jobs
could see wages slashed because of the
competition posed by their counterparts
abroad, they say.
Companies
have already been curbing benefits as
labor costs — driven largely by health
care costs — escalate.
Pay has
also suffered as companies cut back on
raises in a sluggish economy. As more
companies start tapping workers abroad,
critics say, U.S. workers will lose the
last vestiges of their bargaining power.
At
123jump.com, a Miami Beach provider of
investment advice, the company's 32
financial analysts live in India,
Bulgaria and Argentina, earning $15,000
to $20,000 a year.
CEO
Manish Shah says he could shell out
$150,000 or more to hire analysts here.
But why? His analysts usually have MBAs
and speak fluent English.
"Can
we stop (globalization)? No," Shah
says. "We go to the cheapest
possible cost with the best possible
product."
•
Loss of American jobs. Labor unions
and consultants fear a repeat of what
happened in the manufacturing sector,
which has lost more than 2.6 million
jobs in the past three years.
The scope
and type of jobs being farmed out show
how vulnerable many professional
positions are. J.P. Morgan Chase expects
to have 40 research analysts in Mumbai
(formerly called Bombay), India, by
year's end. Deloitte Consulting has
about 1,000 employees in Mumbai and
Hyderabad, India, many handling research
work. A.T. Kearney uses workers in New
Delhi for research and office support.
IBM has
expanded offices in Bangalore, India, to
handle engineering work, and is
reportedly considering a big offshore
push. Hewlett-Packard has 5,000
employees in India, doing research,
developing software and staffing call
centers. The companies say they've had
Indian workers for years.
• An
unstoppable force. While the overall
percentage of jobs being farmed out to
workers abroad is still small, the
advantages to U.S. companies are so
attractive that labor unions fear any
congressional efforts to curtail the
practice will be doomed.
Already,
major companies are able to work around
the clock because of their presence in
other countries.
Oracle
has two big development centers in
India, and 4,000 employees will be
stationed there by year's end.
Programmers there pick up projects when
their American counterparts leave for
the day, and vice versa. That way,
Oracle is working 24 hours a day.
The
numbers are continuing to swell.
Consulting firm Brulant recently
surveyed 38 large companies about
outsourcing plans. While only 18% were
seriously considering it, "100% of
them were evaluating it," says CEO
Len Pagon Jr.
Once
gone, jobs won't return
If
outsourcing takes off, it's unlikely to
stop, experts say. "The jobs aren't
coming back, that's for sure," says
Forrester Research analyst John
McCarthy.
While the
trend has been underway for years, only
now — as the pace of outsourcing picks
up and new projections show its use
continuing to grow — is debate about
the practice increasing. One reason for
the attention is the recent economic
doldrums. With unemployment at 6.2% in
July, more white-collar workers are
becoming anxious about job security.
While many have been shaken by layoffs,
workers' new concern that jobs could be
lost permanently to other countries is
sounding an alarm.
Says Josh
Bivens, an economist at the Economic
Policy Institute in Washington:
"This will cause more churning and
concern higher up the professional food
chain. Blue-collar workers have been
used to this for years."
Since the
first migration of white-collar work
involved tech jobs, other employees in
professional jobs thought they were
immune. Now, office jobs many thought
could never be done abroad are being
farmed out.
In recent
years, the Internet has made it easy to
pass data and documents around the
world. In India, deregulation of the
telephone industry has caused rates for
some international calls to fall as much
as 30%. That's made it possible for
telemarketers and customer service
agents to work seamlessly with U.S.
customers. Many assume an American name
and take training in U.S. customs,
making it hard to distinguish between a
call from Houston or Hyderabad. "In
India, it's a very respectable
job," says Chaitra Aiyar, 23, who
works at Cellbion, a call center near
Mumbai. She goes by the name Cindy
Newman when making calls.
Workers
who have never been in a U.S. office are
handling such sensitive areas as payroll
and benefits. Procter & Gamble
handles payroll, travel, benefits
administration, accounts payable,
invoice processing and other work at
offices in San Jose, Costa Rica; Manila;
and Newcastle, United Kingdom. About
7,000 people work in these offices,
which opened in 1999.
Companies
say their offices abroad are run as
tightly as those in the USA. But critics
disagree.
"There
are real security risks," says John
Guinasso at Data Systems Security in San
Jose, Calif. "Corporations here
don't have control over who has access
to information once it gets out of their
hands. There are real concerns."
Are
the fears real?
Is all
the hand wringing overblown? Labor
groups say no, but companies and some
analysts argue that shipping
white-collar jobs abroad is hardly a
menace to American jobs.
"The
recession is making all sorts of people
insecure. I don't see this as a huge
threat to the U.S. economy," Bivens
says.
Since
labor and land in countries such as
India can be cheap, the cost savings can
become "extraordinary," says
A.T. Kearney Vice President Andrea
Bierce.
An MBA
with three years experience in India
will make about $12,000 a year, compared
with $100,000 in the USA, she says; a
programmer will make $5,000, compared
with $60,000. "There are an awful
lot of companies thinking about
this," Bierce says.
But
Bierce warns that the savings aren't
immediate for many companies. The cost
of moving part of a business abroad can,
at first, be higher than the cost of
keeping it in the USA, experts say.
But it's
the fact that workers abroad are so
cheap over the long term that has
detractors crying foul. It even gnaws at
some employers.
David
Stixrood, president of Dallas-based
Corp-Wireless, which provides broadband
wireless connectively to the Internet in
truck stops, opted not to use an
overseas help desk — even though it
was cheaper — partly because he's
concerned about what outsourcing will do
to American jobs.
"We're
going to lose all those jobs,"
Stixrood says. "People are losing
their jobs to overseas markets.
Unfortunately, we live in a very
competitive world, and sometimes
competition is very cruel."
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