Outsourcing jobs in India to increase 10 times by 2008
WASHINGTON: A typical casualty of this growing trend of outsourcing jobs to India is the northeastern state of Connecticut - part of the Tri-State area - where the job market is expected to be the hardest hit, says the study done by Economy.com, a Westchester, Pennsylvania based firm.
"In the new world order, jobs are increasingly transportable, and will migrate to low-cost regions in order to boost corporate profits and business productivity," said Don Klepper-Smith, economist at New Haven, Connecticut-based Scillia, Dowling & Natarelli Advisors -- a prestigious law firm.
And Connecticut's tech workers will be hardest hit by the change, said Klepper-Smith.
The state's sluggish job growth rises out of the business cycle, the use of technology to replace people at jobs, and the replacement of skilled domestic workers with cheap foreign labour, he said.
The job market for workers in computers and information technology is getting tougher in Connecticut, compared to other U.S. states.
Klepper-Smith said the state has a concentration of financial and insurance firms that have heavily relied on offshore outsourcing to reduce labour costs.
Klepper-Smith partly based his views on the Economy.com study, which suggests that many computer-related jobs produced by U.S. companies will go to Indian companies that can do the work at lower cost, according to a report in the New Haven Register, a local newspaper.
In 2002, the business process outsourcing sector employed 171,000 people in India and brought in $2.4 billion in revenue, based on estimates by the National Association of Software and Services Companies (Nasscom).
Economy.com's forecast showed that offshore outsourcing will double that sector in India to 400,000 people in 2004 and triple the revenues to $6.1 billion. By 2008, the business process outsourcing (BPO) field will employ 1.2 million in India and haul in $23 billion in revenues.
Klepper-Smith said he expects to see structural changes in the job market.
Other economists say that available data does not give a clear or convincing picture about trends in IT employment.
Ed Deak, an economist at Fairfield University, said that job data does not track unemployment trends among IT workers specifically.
Deak expressed doubt that Connecticut would be hit disproportionately because the state does not have a high enough concentration of software-related jobs.
The real crisis, Deak said, is taking place in factory jobs. Manufacturing employs 200,000 people in Connecticut, less than half of the 420,000 it employed in 1983, he said.
John A. Bauman, president of the Organisation for the Rights of American Workers in Meriden, said that IT workers are suffering an undocumented jobs crisis because they often work as temporary workers, contractors and consultants.
That makes many ineligible for unemployment compensation, he said. "What doesn't show up in the numbers are the IT contractors. They aren't eligible for unemployment. They show up nowhere," Bauman said, according to the news report.
The Organisation for the Rights of American Workers estimates that unemployment among the state's IT workers reached 27 percent in May.
In recent years, Connecticut has developed a strong tech economy. In 2001, the software and IT sector employed 66,000 in the state.
Each of those jobs added another 2.3 jobs to the state economy, based on a study published in April 2003 by the Connecticut Technology Council.
The study, conducted by the Connecticut Centre for Economic Analysis, said that the software and IT sector, through multiplier effects, employed 13.2 percent of the state's work force.
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