Sol
2003-12-31 15:39:40 UTC
http://www.reuters.com/newsArticle.jhtml?type=financeConews&storyID=4059208&pageNumber=0
U.S. companies quietly moving more jobs overseas
Tue December 30, 2003 04:55 PM ET
(Page 1 of 2)
In Dec. 23 NEW YORK story headlined "U.S. companies quietly moving
more jobs overseas" please read in the 14th paragraph ... Previously,
IBM has pointed to a report by the McKinsey Global Institute that
concludes the U.S. economy ultimately will benefit ... and please
delete ... The report was commissioned by Nasscom, a group made up of
Indian tech companies as well as IBM's Indian services unit -- showing
an effort by those invested in offshoring to sway public opinion ...
(correcting to show that McKinsey said the report was not commissioned
by Nasscom).
A corrected version follows.
By David Zielenziger
NEW YORK, Dec 23 (Reuters) - U.S. corporations are picking up the pace
in shifting well-paid technology jobs to India, China and other
low-cost centers, but they are keeping quiet for fear of a backlash,
industry professionals said.
Morgan Stanley estimates the number of U.S. jobs outsourced to India
will double to about 150,000 in the next three years. Analysts predict
as many as 2 million U.S. white-collar jobs such as programmers,
software engineers and applications designers will shift to low-cost
centers by 2014.
But the biggest companies looking to "offshoring" to cut costs, such
as Microsoft Corp. (MSFT.O: Quote, Profile, Research) , International
Business Machines Corp. (IBM.N: Quote, Profile, Research) and AT&T
Wireless (AWE.N: Quote, Profile, Research) , are reluctant to attract
attention for political reasons, observers said this week.
"The problem is that companies aren't sure if it's politically correct
to talk about it," said Jack Trout, a principal of Trout & Partners, a
marketing and strategy firm. "Nobody has come up with a way to spin it
in a positive way."
This causes a problem for publicly traded companies, which would
ordinarily brag about cost savings to investors. Instead, they send
vague signals that they are opening up operations in India and China,
but often decline to elaborate.
Moreover, on the threshold of a U.S. presidential election year, job
losses are a hot-button issue. A company that highlighted a major job
transfer could wind up in the campaign debate.
Multinationals find that when they trumpet expansion overseas, they
cause problems at home. When Accenture Ltd. (ACN.N: Quote, Profile,
Research) executives in India this month announced plans to double
their staff to 10,000 next year, they triggered a flood of calls to
the company's U.S. offices about U.S. job losses.
Offshoring companies "are paying Chinese wages and selling at U.S.
prices," said Alan Tonelson, of the U.S. Business and Industrial
Council, a trade group for small business. "They're not creating
better living standards for America."
The U.S. sales director for one of India's top computer services
providers said his company has won business from customers such as
Walt Disney Co. (DIS.N: Quote, Profile, Research) , Time Warner Inc.'s
(TWX.N: Quote, Profile, Research) CNN and the Fox division of News
Corp. (NCP.AX: Quote, Profile, Research) -- none of which want public
disclosure.
In India, some technology companies have recently adopted lower
profiles. Microsoft Corp. (MSFT.O: Quote, Profile, Research) has been
removing its name from minibuses used to ferry engineers on overnight
shifts. Major Indian beneficiaries of U.S. business such as Infosys
Technologies Ltd. (INFY.BO: Quote, Profile, Research) , Wipro Ltd.
(WIPR.BO: Quote, Profile, Research) and Satyam Computer Services Ltd.
have stopped identifying new customers.
While there have been reports that IBM intends to ship 4,700 high-end
jobs to India and China next year, they mark a rare instance when
figures "have been reported in black and white," said Linda Guyer,
president of ***@IBM, a union that has tried to organize IBM
employees.
Those numbers were not released by IBM, but rather disclosed by the
Wall Street Journal, which had obtained an internal memo. The company
has declined to comment.
Guyer believes as many as 40,000 of IBM's 160,000 U.S. jobs will be
transferred overseas by 2005, a figure she says was gathered from
phone calls by IBM employees.
Previously, IBM has pointed to a report by the McKinsey Global
Institute that concludes the U.S. economy ultimately will benefit.
Recently, AT&T Wireless told the U.S. Securities and Exchange
Commission that it would lay off 1,900 employees this year.
Communications Workers of America members obtained an internal memo
prepared by Tata Consultancy Services of India that discussed how it
would assume those U.S. jobs.
Subsequently, AT&T Wireless officials acknowledged it was exploring
the job shifts but didn't offer details.
While some companies, such as Electronic Data Systems Corp. (EDS.N:
Quote, Profile, Research) , CAP Gemini Ernst & Young and Sapient Corp.
(SAPE.O: Quote, Profile, Research) , acknowledge they shift jobs
abroad to exploit cost advantages and around-the-clock work, IBM
asserts that it is not moving jobs but creating new ones.
"It's a business strategy, period. You cut costs. You revamp. You look
at what your mission statement says and try to turn a profit," said
Sylvia Thomas, who was laid off by chipmaker Agere Systems Inc.
(AGRa.N: Quote, Profile, Research) after declining offers to relocate
to headquarters in Allentown, Pennsylvania -- or to Singapore.
(Additional reporting by Anshuman Daga in Bangalore)
U.S. companies quietly moving more jobs overseas
Tue December 30, 2003 04:55 PM ET
(Page 1 of 2)
In Dec. 23 NEW YORK story headlined "U.S. companies quietly moving
more jobs overseas" please read in the 14th paragraph ... Previously,
IBM has pointed to a report by the McKinsey Global Institute that
concludes the U.S. economy ultimately will benefit ... and please
delete ... The report was commissioned by Nasscom, a group made up of
Indian tech companies as well as IBM's Indian services unit -- showing
an effort by those invested in offshoring to sway public opinion ...
(correcting to show that McKinsey said the report was not commissioned
by Nasscom).
A corrected version follows.
By David Zielenziger
NEW YORK, Dec 23 (Reuters) - U.S. corporations are picking up the pace
in shifting well-paid technology jobs to India, China and other
low-cost centers, but they are keeping quiet for fear of a backlash,
industry professionals said.
Morgan Stanley estimates the number of U.S. jobs outsourced to India
will double to about 150,000 in the next three years. Analysts predict
as many as 2 million U.S. white-collar jobs such as programmers,
software engineers and applications designers will shift to low-cost
centers by 2014.
But the biggest companies looking to "offshoring" to cut costs, such
as Microsoft Corp. (MSFT.O: Quote, Profile, Research) , International
Business Machines Corp. (IBM.N: Quote, Profile, Research) and AT&T
Wireless (AWE.N: Quote, Profile, Research) , are reluctant to attract
attention for political reasons, observers said this week.
"The problem is that companies aren't sure if it's politically correct
to talk about it," said Jack Trout, a principal of Trout & Partners, a
marketing and strategy firm. "Nobody has come up with a way to spin it
in a positive way."
This causes a problem for publicly traded companies, which would
ordinarily brag about cost savings to investors. Instead, they send
vague signals that they are opening up operations in India and China,
but often decline to elaborate.
Moreover, on the threshold of a U.S. presidential election year, job
losses are a hot-button issue. A company that highlighted a major job
transfer could wind up in the campaign debate.
Multinationals find that when they trumpet expansion overseas, they
cause problems at home. When Accenture Ltd. (ACN.N: Quote, Profile,
Research) executives in India this month announced plans to double
their staff to 10,000 next year, they triggered a flood of calls to
the company's U.S. offices about U.S. job losses.
Offshoring companies "are paying Chinese wages and selling at U.S.
prices," said Alan Tonelson, of the U.S. Business and Industrial
Council, a trade group for small business. "They're not creating
better living standards for America."
The U.S. sales director for one of India's top computer services
providers said his company has won business from customers such as
Walt Disney Co. (DIS.N: Quote, Profile, Research) , Time Warner Inc.'s
(TWX.N: Quote, Profile, Research) CNN and the Fox division of News
Corp. (NCP.AX: Quote, Profile, Research) -- none of which want public
disclosure.
In India, some technology companies have recently adopted lower
profiles. Microsoft Corp. (MSFT.O: Quote, Profile, Research) has been
removing its name from minibuses used to ferry engineers on overnight
shifts. Major Indian beneficiaries of U.S. business such as Infosys
Technologies Ltd. (INFY.BO: Quote, Profile, Research) , Wipro Ltd.
(WIPR.BO: Quote, Profile, Research) and Satyam Computer Services Ltd.
have stopped identifying new customers.
While there have been reports that IBM intends to ship 4,700 high-end
jobs to India and China next year, they mark a rare instance when
figures "have been reported in black and white," said Linda Guyer,
president of ***@IBM, a union that has tried to organize IBM
employees.
Those numbers were not released by IBM, but rather disclosed by the
Wall Street Journal, which had obtained an internal memo. The company
has declined to comment.
Guyer believes as many as 40,000 of IBM's 160,000 U.S. jobs will be
transferred overseas by 2005, a figure she says was gathered from
phone calls by IBM employees.
Previously, IBM has pointed to a report by the McKinsey Global
Institute that concludes the U.S. economy ultimately will benefit.
Recently, AT&T Wireless told the U.S. Securities and Exchange
Commission that it would lay off 1,900 employees this year.
Communications Workers of America members obtained an internal memo
prepared by Tata Consultancy Services of India that discussed how it
would assume those U.S. jobs.
Subsequently, AT&T Wireless officials acknowledged it was exploring
the job shifts but didn't offer details.
While some companies, such as Electronic Data Systems Corp. (EDS.N:
Quote, Profile, Research) , CAP Gemini Ernst & Young and Sapient Corp.
(SAPE.O: Quote, Profile, Research) , acknowledge they shift jobs
abroad to exploit cost advantages and around-the-clock work, IBM
asserts that it is not moving jobs but creating new ones.
"It's a business strategy, period. You cut costs. You revamp. You look
at what your mission statement says and try to turn a profit," said
Sylvia Thomas, who was laid off by chipmaker Agere Systems Inc.
(AGRa.N: Quote, Profile, Research) after declining offers to relocate
to headquarters in Allentown, Pennsylvania -- or to Singapore.
(Additional reporting by Anshuman Daga in Bangalore)