IBM may shift 3 mn jobs overseas by 2015

Wednesday, 23 July 2003, 07:00 Hrs
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IBM plans to shift around three million service jobs to foreign countries, including India, by 2015, according to the New York Times.

NEW YORK: Some jobs done in the U.S. like software design assignments will soon move out of the country as part of the tech major's efforts to cut costs and build global supply networks. Several American firms are under pressure to reduce expenses.

IBM is also determined to shift its white-collar, often high-paying, jobs overseas despite a possible backlash among politicians and its own employees.

"Our competitors are doing it and we have to do it," Tom Lynch, IBM's director for global employee relations, was quoted as saying in a recorded conference call to corporate colleagues around the world.

An IBM employee upset at the move provided a copy of the internal recording to Washington Alliance of Technology Workers, a Seattle-based group seeking to unionise high-technology workers. The alliance passed it on to the New York Times.

"In decades past, millions of American manufacturing jobs moved overseas, but in recent years the movement has shifted to the service sector, with everything from low-end call centre jobs to high-paying computer chip design jobs migrating to India, China, Russia, the Philippines and other countries," the daily said.

U.S. companies, including IBM, say creating more jobs in lower cost locations overseas "keeps industries competitive, holds costs down for American consumers, and helps to develop poorer nations while supporting overall employment in the U.S. by improving productivity and the nation's global reach," said the Times.

However, some in the Bush administration have voiced concern about offshoring at a time when the U.S. economy is weak and the IT sector is in a slump.

"Many observers are pessimistic about the impact of offshore IT service work at a time when American IT workers are having more difficulty finding employment, creating personal hardships and increasing demands on our safety nets," Bruce P. Mehlman, the Commerce Department's assistant secretary for technology policy, said at a congressional hearing last month.

Forrester Research, a high-technology consulting group, estimates that the number of service sector jobs newly located overseas, many of them tied to the information technology industry, will climb to 3.3 million in 2015 from about 400,000 this year. This represents about two percent of all American jobs.

Forrester predicts 450,000 computer industry jobs could be transferred abroad in the next 12 years. This is eight percent of the nation's computer jobs.

"For example, Oracle, a big maker of specialised business software, plans to increase its jobs in India to 6,000 from 3,200, while Microsoft plans to double the size of its software development operation in India to 500 by late this year. Accenture, a leading consulting firm, has 4,400 workers in India, China, Russia and the Philippines," said the daily.

Mehlman said firms were moving more service jobs overseas because trade barriers were falling, because India, Russia and many other countries have technology expertise, and because high-speed digital connections and other new technologies made it far easier to communicate from afar. Another reason is lower wages.

"You can get crackerjack Java programmers in India right out of college for $5,000 a year versus $60,000 here," Stephanie Moore, vice president for outsourcing at Forrester, was quoted as saying. "The technology is such, why be in New York City when you can be 9,000 miles away with far less expense?"

David Samson, an Oracle spokesman said the expansion of operations in India was "additive" and was not resulting in any jobs losses in the U.S.

"Our aim here is not cost-driven," he said. "It's to build a 24/7 follow-the-sun model for development and support. When a software engineer goes to bed at night in the U.S., his or her colleague in India picks up development when they get into work. They're able to continually develop products."

Source: IANS

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