[biztech-discussion] Flying jobs.....In case you missed it

  • From: MzWord@xxxxxxx
  • To: biztech-discussion@xxxxxxxxxxxxx
  • Date: Tue, 18 May 2004 20:10:00 EDT

From today's Chronicle...... Lisa
Jobs flying faster from U.S. 
Estimate for 2006 raised by 40% -- to 800,000 
John Shinal, Chronicle Staff Writer 

        Tuesday, May 18, 2004


U.S. corporations are sending work overseas faster than previously thought, 
according to Forrester Research Inc., whose controversial report 18 months ago 
helped stoke the national controversy over offshoring American jobs. 

In its latest study, Forrester predicts that by the end of next year, U.S. 
firms will offshore more than 800,000 service jobs, 40 percent more than the 
firm estimated previously. Forrester's overall estimate remains the same: The 
firm predicts that about 3.3 million jobs will go overseas by 2015. 

The Cambridge, Mass., researcher said the largest U.S. employers are 
expanding the types of work they send overseas. Where telemarketers and 
developers used to bear the brunt of the job loss, bank loan processors, 
claims adjusters and even legal assistants now share the pain. 

Critics of offshoring seized on the original Forrester report as evidence 
that shipping jobs overseas would devastate service-sector employment and the 
middle-class workers who fill those occupations. Yet the report itself was 
criticized by economists, company executives and others who have defended 
as a painful but necessary result of a global economy. 

The issue has become a political hot button, with some in Congress calling 
for laws to limit the type of work that can besent abroad and privacy advocates 
saying the practice puts sensitive data into the hands of overseas firms. 

Despite the criticism, the largest U.S. companies are accelerating their 
offshoring plans, and by 2008, more than half the Fortune 1000 will have 
operations, according to the report. 

Even companies that aren't prepared for the transition are choosing to export 
jobs anyway, said Forrester analyst Stephanie Moore. "We're seeing crazy 
interest in offshore outsourcing for the cost savings," said Moore, who spoke 
at a 
news conference in Orlando. 

The aggregate number of jobs sent overseas to date will pass half a million 
this year, and the figure will surpass 1 million by 2006, Forrester said. 

In contrast to conventional wisdom, the majority of those jobs will not be 
farmed out to large outsourcing firms in India and other countries. Rather, 
will be located in foreign subsidiaries of Fortune 1000 companies, according 
to Forrester. 

That contention is similar to one reached by two UC Berkeley economics 
professors in a book they published last year. 

"People don't realize that when (U.S. firms) go abroad, for the most part 
they use their own workers," said Ashok Bardhan, a senior research associate at 
the Fisher Center for Real Estate and Urban Economics. 

In fact, two-thirds of the U.S. companies that sent work offshore during the 
1990s kept the work with their own units and affiliates, said Bardhan, who 
co-authored the book "Globalization and High-Tech Industry: California and 

Many in Silicon Valley have faulted Forrester's methodology and say its 
conclusions amount to nothing more than fear-mongering. Speaking of the 
Forrester Report, Vinod Khosla, a partner with the Menlo Park venture capital 
firm Kleiner Perkins Caufield & Byers, called the methodology suspect and its 
conclusions misleading. 

"The forecasts are wrong," Khosla said last week at a meeting of Silicom 
Ventures LLC, a group of angel investors. 

The Forrester team that assembled the report said they interviewed more than 
300 of their corporate clients to learn which types of jobs they planned to 
offshore. Then, they used statistics from the U.S. Bureau of Labor Statistics 
calculate the total job loss. 

Still, others have said that a debate about how many jobs American 
corporations create overseas should include a discussion about the number of 
created by foreign firms here. 

"During a difficult economy, people look for scapegoats," said Carl Guardino, 
chief executive of the Silicon Valley Manufacturing Group, whose member 
companies employ more than 250,000 workers. 

Rather than implementing protectionist measures, "let's focus on the right 
problem, which is competitiveness," said Guardino, who added that his group 
supports funds to retrain workers whose jobs have gone overseas. 

Bardhan stopped short of criticizing the report but said he was skeptical 
that anyone can identify exactly how many jobs will go within a specific time 

"There's no way to do that with precision," said Bardhan. "I don't know how 
anyone can say with precision that this (exact) number of jobs will go by this 
(particular) year." 

Even as they embrace the trend, U.S. companies worried about political 
fallout from their employment moves are being more secretive about their 

The offshoring moves aren't made in a vacuum, and the issue has been raised 
by elected officials who decry the loss of U.S. jobs. As a result, many of 
Forrester's clients who are offshoring are doing so "underground," said Moore. 

"We have one client who refused to use the word offshore, she said. 

E-mail John Shinal at jshinal@xxxxxxxxxxxxxxxx 

   U.S. service jobs predicted to be offshored by category
               2003    2004    2005    2006      2007      2008      2010     
Management    3,500  15,000  34,000  42,000    48,000    67,000   106,000   
Business     30,000  55,000  91,000 105,000   120,000   136,000   176,000   
Computer    102,000 143,000 181,000 203,000   228,000   247,000   322,000   
Architecture 14,000  27,000  46,000  54,000    61,000    70,000    93,000   
Life sciences   300   2,000   4,000   5,500     6,500     9,000    16,000    
Legal         6,000  12,000  20,000  23,000    26,000    29,000    39,000    
Art, design   2,500   4,500   8,000   9,000    10,000    11,000    15,000    
Sales        11,000  22,000  38,000  47,000    55,000    67,000    97,000   
Office      146,000 256,000 410,000 475,000   541,000   616,000   815,000 
TOTAL       315,300 536,500 832,000 963,500 1,095,500 1,252,000 1,679,000 
   Source: Bureau of Labor Statistics; Forrester Research Inc. Chronicle 


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