OUTSOURCING JOBS TO INDIA JUMPED 60% IN 2003 COMPARED TO 2002. U.S. FIRMS KEEPING OUTSOURCING COMPANIES ON SPEED DIAL.

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New York – Outsourcing to India has exploded during the recovery -- it jumped 60% in 2003 compared to the year before, according to the research firm Dataquest, as corporations use some of their profits (not to mention tax breaks) to expand overseas hiring, TIME’s Jyoti Thottam reports in this week’s cover story. Outsourcing is accelerating and becoming the defining issue of this campaign.

Vivek Paul, CEO of Wipro, one of India’s leading outsourcing companies (they handle voice and data processing for Delta Airlines, for instance), says its service business grew 50% in the last quarter of 2003. “Companies that are emerging from the slowdown are beginning to invest some of that in India,” he says.

Study: 3.3 Million Jobs Overseas by 2015: John McCarthy, author of the Forrester Research landmark study that predicted 3.3 million jobs would move overseas by 2015, says last year’s gains in outsourcing didn’t come from new companies jumping on the bandwagon. The most dramatic changes came from outsourcing dabblers who finally made a commitment, devoting as much as 30% of their IT budgets offshore, TIME reports.

“I feel like I’ve been betrayed”: Billy Johnson of Altamonte Springs, Fla., is convinced that one of the tens of thousands of new jobs in India should be his. Johnson, 41, was a programmer for Worldcom when the company imploded in the wake of a massive accounting scandal. For a while, he believed his unemployment was just the economy. A lifelong Republican, he thought that when the Bush tax cuts kicked in, the jobs would follow. “I feel like I’ve been betrayed,” he says. “I keep hearing about jobs being created, but I don’t see them.”

Nightmare Issue for White House: “Outsourcing is the ultimate nightmare issue for the White House, because it’s a problem that every voter understands. It’s extraordinarily difficult to solve—and impossible to solve in the short run,” says Bruce Reed, the president of the centrist Democratic Leadership Council, who was also Bill Clinton’s chief domestic-policy adviser. And while Bush can blame many of the economy’s woes on the vicissitudes of war, terrorism and corporate scandals, outsourcing is one problem that won’t go away when those do, TIME’s Karen Tumulty reports.

Kerry vs. Bush: Senator John Kerry is taking the opportunity to paint Bush as insensitive to the job anxieties of the middle class. “I don’t think the Bush Administration has ever felt this or had a sense of it,” Kerry told TIME. “And I think the No. 1 major issue facing the country right now is, How you really create the jobs that we want?” Hitting the hot button, he has branded corporate chiefs who send jobs overseas “Benedict Arnold CEOs” and, like his rival Senator John Edwards, has pledged to do something about it—for example, by repealing tax breaks that reward companies for shipping jobs abroad and providing incentives for employers to keep them in the U.S.

Kerry vs. Edwards: With a touch of demagoguery, Edwards has sought to get an edge on Kerry by reviving the old, unresolved battle over NAFTA, which Kerry voted to approve a decade ago. “When it comes to bad trade agreements, I know what they do to people,” Edwards said last week. “I have seen it with my own eyes what happens when the mill shuts down.” Kerry points out that at the time Edwards was in no position to put anything on the line over NAFTA: “I don’t know where he registered his vote, but it wasn’t in the Senate.”

Democratic Proposals Do Little More than Attack Outsourcing at Margins: But even as the Democrats denounce the phenomenon, the proposals they offer do little more than attack it at the margins. Massachusetts Senator John Kerry calls for a study to examine the problem and possible solutions. He would discourage outsourcing federal contracts and would require employees from outsourced call centers to identify their location so that consumers can respond to that information as they see fit. (His own campaign was embarrassed by a firm it had hired that was routing calls to Wisconsin voters through Canada.) North Carolina Senator John Edwards would also try a combination of browbeating and suasion: he would create a new Office for Corporate Responsibility at the Commerce Department to encourage companies to keep jobs here rather than outsourcing them, TIME reports.

In a related forum on the issue, TIME looks at how business leaders and economists view outsourcing. Some of those quoted include:

Craig Barrett, CEO, Intel Corp. “Let’s compete—by training the best workers, investing in R. and D., erecting the best infrastructure and building an education system that graduates students who rank with the world’s best.”

Alan Greenspan, chairman of the Federal Reserve Board (speaking in Omaha, Neb., last week)

“Our system has had obvious strains ... We need to be forward-looking to adapt our educational system to the evolving needs of the economy. Protectionism will do little to create jobs, and if foreigners retaliate, we will surely lose jobs.”

Robert Reich, former Secretary of Labor, and professor of economic policy at Brandeis University

“The answer is not to try to stop outsourcing, but we do have to get serious about job retraining, lifetime learning, extended unemployment insurance and wage insurance.”

Contact:

Ty Trippet

TIME

212-522-3640

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