Outsourcing - Part II
Tech workers in California protest job losses due to outsourcing:
Signs of a
structural change in the American economy? (Photo: Tony Jazvo,
San Francisco
Chronicle)
NEW HAVEN: A new specter is haunting America's political landscape
, the flight of white-collar jobs to foreign countries. As educated
voters grow worried about unemployment, US politicians are adopting
protectionist rhetoric. However, the outsourcing of office work
to developing countries raises fundamental questions about the
world economic system that are unlikely to be answered this election
season.
Because the government does not collect data on outsourcing,
nobody knows for sure how many jobs have gone offshore. Private
IT research firm Forrester estimates that some 400,000 American
service jobs have been moved overseas since 2000. This figure
may not appear so serious in a country with 130 million workers,
but it is the possibility of future job loss that has politicians
spooked. Forrester estimates that 3.3 million American service
jobs will be offshored by 2015. Add to that the rosy forecasts
about job growth in India and one has the makings of a serious
problem. A report by McKinsey predicted that by 2008 IT services
and back-office work in India will grow fivefold, employing four
million people. Not surprisingly, a plethora of anti-outsourcing
legislation has been introduced into state legislatures, and the
US Senate is considering banning the outsourcing of government-funded
projects.
Voter anger today is not unlike that of past decades when manufacturing
jobs left America for cheaper shores. (See Chart 1) Then, some
protests were quelled by the possibility of moving "up the
economic ladder" as the US transitioned to a service economy.
Now, however, the upper end of that very growing sector of US
economy is coming under threat. Unlike in the nineties when a
period of mass layoffs was more than offset by the net creation
of 22 million new jobs, the current job creation machine is sluggish.
One can see this downturn as cyclical and dismiss the rising
concern as election year fever. Some analysts, however, worry
that more is at stake. Blue-collar workers, long wary of outsourcing,
have now been joined by programmers, engineers and office workers
- a group with much greater political clout. And the media is
covering the story more than ever before. One CNN program has
begun campaigning against outsourcing, compiling a web-based list
of companies (so far totaling 326) that it accuses of "exporting
America" by "either sending American jobs overseas,
or choosing to employ cheap overseas labor, instead of American
workers."
Democratic Party front runner Senator John Kerry has begun calling
such firms "Benedict Arnold companies" after the most
despised traitor of the American war of independence. This week
Kerry stepped up the pressure: "Companies will no longer
be able to surprise their workers with a pink slip instead of
a pay check; they will be required to give workers three months
notice if their jobs are being exported offshore." If he
wins the presidency, Kerry would require the Labor Department
to compile statistics of jobs sent offshore and report them on
an annual basis to Congress.
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