Pick a Number, Any Number…
Just how many nonmanufacturing jobs are heading overseas? It depends who you ask. Goldman Sachs estimates U.S. companies have sent 400,000 service jobs overseas since 2000, and the Information Technology Association of America (ITAA) says that 104,000 tech jobs moved abroad in that period.
Two years ago, Forrester Research Inc. predicted that 3.3 million U.S. service jobs would be sent offshore by 2015, but that analysis is now called conservative by experts like Cynthia Kroll, senior regional economist at the Haas School of Business at the University of California, Berkeley. Kroll estimates that as many as 14 million U.S. jobs — ranging from investment research to tax preparation — are at risk of being sent offshore, because they are easily standardized and don’t involve face-to-face interaction.
Rafiq Dossani of Stanford University’s Asia Pacific Research Center also calls the Forrester number a “gross underestimate,” and says he expects 1 million jobs to be sent to India alone by the end of next year. “For every skilled worker, there are several less-skilled workers in support positions. That’s where job loss is going to be large,” he says. AFL-CIO president John Sweeney declares that outsourcing will move 1 million jobs overseas every year for the foreseeable future.
Still, the real story seems to be the increasing number of highly skilled, nonunion jobs affected. Our own survey (on the following two pages) shows a remarkable percentage of companies now shipping finance and accounting jobs overseas.
Despite all the variations in the base figure, just about everyone seems to agree that more jobs will move overseas. But is that really so terrible? The ITAA argues that offshore outsourcing also will create jobs in the United States (some 317,000 by 2008), thanks to the economic boost companies get from the move. And in a recent speech, Federal Reserve Board governor Ben S. Bernanke argued that the number of jobs lost to offshore outsourcing constitute little more than 1 percent of those regularly lost in the United States as the result of normal economic churn.
Is Everybody Doing It?
Offshoring isn’t quite as common as the hype would suggest: according to CFO’s survey of 275 finance executives at a broad range of companies, only 18 percent currently use offshore outsourcing. Those companies have moved an average of 6 percent of their workforce overseas during the past three years, although some companies sent as much as 27 percent.
Clearly, offshore outsourcing is growing. Sixty-four percent of those already outsourcing plan to use more overseas workers in the next two years.
Note: Figures may not add up to 100 percent due to rounding. All data is from the CFO survey unless otherwise indicated.
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