- NEW YORK (Reuters) -- The
movement overseas of U.S. white-collar jobs over the next few years is
accelerating faster than previously expected, Forrester Research said on
Monday, fueling a highly charged election-year issue.
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- Technology market researcher Forrester said in a report
titled "Near-Term Growth of Offshoring Accelerating" that it
expects the number of U.S. business service and software jobs moving offshore
to reach 588,000 in 2004 from 315,000 in 2003.
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- The loss of U.S. software programing, customer call-center
and even legal paperwork positions should rise to 830,000 jobs by 2005,
up 40 percent over this year, the report said.
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- "In the short term, (the trend) is definitely growing,"
Forrester business services analyst Stephanie Moore told reporters in a
conference call.
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- The revised prediction reflects heightened awareness
among corporate customers of potential lower costs associated with sending
work offshore. It comes 18 months after Forrester helped spark an outcry
in the United States over outsourcing when it predicted that some 3.3 million
jobs could be shifted to countries such as India by 2015.
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- The rush of jobs overseas, coming amid debate over a
"jobless" U.S. economic recovery, has provoked a political backlash
that has made it a prominent issue in the U.S. presidential campaign.
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- "The political backlash has increased the awareness
of offshoring ... and increased the awareness of the savings from offshoring
among our (corporate) clients," Moore said.
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- IMPACT ON U.S. EMPLOYMENT QUESTIONED
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- Despite the outcry, government economists say the impact
on overall U.S. employment remains minimal.
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- Forrester is careful to say that it's statistics focus
on specific types of jobs that lend themselves to being transferred overseas
and does not suggest some wholesale export of jobs.
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- The 830,000 jobs expected to move outside the United
States in 2005 amounts to fewer than 1.6 percent of jobs in specific categories
viewed by Forrester as most likely to be affected. "The emotional
1 million mark" will be crossed in 2006, report author John McCarthy
said in the conference call.
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- But critics say the threat to U.S. jobs is exaggerated.
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- Cathy Minehan, president of the Federal Reserve Bank
of Boston, has downplayed the effect, saying offshore services accounted
for one-tenth of 1 percent of U.S. gross domestic product in 2002.
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- "Clearly, this is not immaterial, but it simply
isn't large enough to have had a major impact on U.S. employment levels
in the aggregate, despite the rhetoric that suggests otherwise," she
said during a speech in March.
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- "Offshoring is likely to continue. But does it bear
a lot of the blame for our current weak job growth? The available data
suggest that the answer is no," Minehan said.
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- Forrester said it saw little change in its long-term
outlook, forecasting that 3.4 million jobs will move overseas not just
to India but to China, Russia, the Philippines and Mexico by 2015, up from
the 3.3 million it had predicted.
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- Forrester says the jobs at risk of moving offshore are
concentrated in customer service call-center operations and low-level computer
programing and Web design work. But it also includes some biotech, architectural
and legal research jobs.
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- "It's pretty low-level stuff, but it's stuff that
ends up being expensive to organize stateside," Moore said of legal
work like scanning boxes of documents into electronic form.
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- "COWS HAVE LEFT THE BARN"
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- The Forrester forecast assumes minimal risk of major
policy changes following last week's election defeat of India's ruling
BJP party, which pushed to cut taxes and lower communications costs thereby
fueling the outsourcing trend to South Asia.
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- Stocks of Indian software services have tumbled on fears
that policy changes could hamper growth.
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- But John McCarthy, author of the Forrester report, said
the growing sophistication and diversification of Indian software services
companies such as Infosys, TCS and Wipro, along with deregulation of telecoms
services, minimizes the threat that policy changes could slow the movement
of jobs to India.
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- "To some extent, the cows have left the barn,"
he said.
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- Major U.S. computer services suppliers such as IBM, Accenture
and EDS also have embraced the trend, shifting tens of thousands of jobs
to India, McCarthy said.
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