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Us tech jobs go to india Original Source Link: (May no longer be active)
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Posted on Mon, Jul. 21, 2003
Going abroad
More U.S. technology companies are shifting jobs to India where cheaper, educated labor is plentiful
By Andrea Ahles
Star-Telegram Staff Writer
Jobs have been hard to find for three years in tech centers like Plano and San Jose, but not in places like Mumbai and Bangalore.
Dell Computer, Electronic Data Systems, i2 Technologies and Microsoft are among a growing number of U.S. companies opening customer care and software development centers in India.
Tech workers in India are smart, technically adept and, most of all, cheap. And as budget-cutting became increasingly important on Wall Street in the past two years, more companies are looking to India to provide software support at a fraction of their present costs.
But some workers' advocate groups are questioning these expansions to India and other underdeveloped countries, saying U.S. companies are simply eliminating some of America's highest-paying engineering jobs.
Forrester Research predicts that in the next 15 years, 3.3 million U.S. service-industry jobs, including 472,000 in computer services, will move to other countries like India. That translates to $136 billion in wages, the Cambridge, Mass.-based market research firm says. Some industry observers say that 80 percent of all offshore information technology services work is done in India.
"Twenty years ago, the Indian government put a focus on teaching people technical skills, so there is a pretty good educational infrastructure in place," said John McCarthy, group director at Forrester Research. "Now what's happening is U.S. companies are making a much more strategic investment in India."
Although Fortune 500 companies like General Electric began moving operations to India in the early 1990s, the trend has picked up momentum in the past two years.
Last week, Microsoft confirmed that it is testing a support unit in India and, depending on the success of that unit, may move more jobs to India and possibly out of the company's call center in Irving.
Plano-based Electronic Data Systems opened a new customer care center in Mumbai last month and employs 900 people in the country. The company also announced in October that it would move 1,500 jobs from higher-cost customer care centers in the United States and Europe to lower-cost centers in India, Brazil, Ireland and the Czech Republic.
Dallas-based i2 Technologies, which was co-founded by India native Sanjiv Sidhu, moved research and development jobs back to India in 2002 as part of a restructuring of its operations. And Austin-based Dell Computer, which unveiled plans for a customer support center in Fort Worth in 2000 only to later back away, opened a call center in India last year to serve its U.S. customers.
Companies that hire third-party IT providers such as EDS for their IT services or software development can save 30 percent to 60 percent if that work is performed offshore, industry analysts say. And by locating centers in India, IT companies can have ongoing, 24-hours-a-day software development between programmers in the United States and Asia.
In addition to the cost benefits, tech companies say that their Indian software development and customer facilities are crucial to remaining competitive in the global market. IT firms such as IBM Global Services, EDS and HP are facing stiff competition from Indian-based outsourcing companies.
"In the systems engineering or the program developer area, it is extremely competitive, particularly in India," said Dan Zadorozny, president of EDS Applications Services. "Customers are demanding we deliver the same service and in a much more cost-effective fashion."
For example, last fall, Swedish telecommunications company Ericsson sold its software development center to Indian-based Wipro, which will develop software for Ericsson's maintenance and operations.
Despite the competitive and cost-efficient claims by companies, U.S. workers' groups are concerned that too many jobs are going overseas, particularly in technology.
"All facets of software production are currently in the works to be moved offshore," said Marcus Courtney, president of WashTech, a Seattle-based workers' group affiliated with the Communications Workers of America union. "People are really not yet fully aware of the magnitude of what's going on and how this is really transforming America's economy."
Courtney said his organization is concerned that technology companies are only the first of the service industries to move jobs to underdeveloped countries.
Now accounting, engineering, health care and engineering companies are investigating the possibility of locating facilities in India, Courtney said, which would affect thousands of white-collar workers in the United States.
Although outsourcing to India may be popular on Wall Street today, outsourcing consultant Jeff Elam said it may not be a cost-efficient strategy for everyone.
Most companies don't realize there are telecommunications infrastructure costs and project management issues that need to be in place before a project or business process is moved overseas, he said.
"The cost savings, particularly on the development side, are not as much as expected," said Elam, a principal at North Highland Group. "You still need to have people in the U.S."
Atul Vorha, president of India-based Majesco Software, concedes that a company needs one or two U.S.-based employees for every five in India. But American workers and companies need to realize that the trend of outsourcing to India is "unstoppable," he said, just like the overseas movement of U.S. manufacturing jobs in the 1980s.
Majesco Software, which was founded 20 years ago and has its U.S. headquarters in Irving, provides customized technology solutions for companies and has partnered with several companies that have located operations in India.
Vorha, who splits his time between India and the United States, adds that the money an American company saves by outsourcing projects to India usually gets reinvested in the United States, creating even better jobs.
"The business of America has always been innovation and creativity," Vorha said in a telephone interview from Mumbai.
"All that India is doing is helping make the back office more efficient."
Destination: India
Companies that have shifted information-technology services and software development to India in the past two years:
• Oracle: Moved more than 2,000 development jobs to India and is shifting accounting and payroll operations.
• i2 Technologies: Opened a development center and offered to move expatriates back to India to jump-start the center.
• Hewlett-Packard: Shifted 1,200 Compaq customer-service jobs from Florida to an existing HP center in India.
• Dell Computer: Opened a call center in India to support U.S. home and small-business customers and handle Malaysian and Australian customer-support jobs.
• Ericsson: Sold its software-development center to India-based Wipro.
• EDS: Opened a center in Mumbai last month. Will move 1,500 jobs from the United States and Europe to low-cost centers in India.
• BNSF: Worked with Indian-based Infosys to develop software for BNSF. The railroad replaced more than 100 contract computer programmers as a result of the agreement.
Source: Forrester Research, Star-Telegram archives
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Andrea Ahles, (817) 390-7695 aahles@star-telegram.com
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