More US backlash on outsourcing

One out of every ten infotech service firm employee in the US will be unemployed by 2004 thanks to the huge number of jobs shifting offshore...

One out of every ten infotech service firm employee in the US will be unemployed by 2004 thanks to the huge number of jobs shifting offshore. One out of every 20 US employee working in a non-service sector will be jobless by the same time and only 40 per cent of the same will ever get back a job anywhere.

And if this was not alarming enough, digest this: The backlash in the US now will only see an increase in pitch in the coming months. And so where do all this leave the Indian IT-services companies dependent heavily on offshore revenues? 8216;8216;They will have to move up the value chain,8217;8217; said Rita Terdiman, VP and research analyst with Gartner at the inauguration of the two-day Gartner summit.

8216;8216;The backlash will only get worse before it gets any better,8217;8217; she said. Terming global outsourcing as an 8216;irreversible mega trend8217;, she pointed out that while in past India emerged as destination of choice, there is now consolidation at an international level with tremendous current and latent options for customers.

Those opposed to outsourcing say it effectively means exporting work and jobs, a controversial strategy given that the overall number of people collecting unemployment benefits reached a 20-year high last week.

As a result, places like Canada and Mexico are appearing as brighter spots for 8216;nearshore8217; offshoring. 8216;8216;Getting work done from a nearshore destination gives the firms not only a language advantage, but also cultural and time zone advantages,8217;8217; she pointed out. Gartner termed offshore outsourcing as the world8217;s fastest growing IT industry segment. The growth, according to Gartner, is a result of the 29 per cent CAGR of the offsource IT services segment and the 68 per cent CAGR of offshore BPO between 2002 through 2007.

Forrester Research Inc predicts that American employers will move about 3.3 million white-collar service jobs and 136 billion in wages overseas in the next 15 years. Concern about the impact on the nation8217;s economy and its workers is prompting union protests and congressional hearings. At least five states introduced legislation aimed at keeping jobs in the US, among other things, by blocking companies from using foreign workers on state contracts. Outsourcing took off in the 1990s when companies, mainly manufacturers, wanted to cut costs and concentrate on their core high profit-margin tasks. The labour market was tight. Companies, looking for ways to further slash costs in the face of global competition, sent more work overseas, and laid off workers at home.