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Tech jobs moving over seas { May 19 2003 } Original Source Link: (May no longer be active)
http://www.statesman.com/business/content/auto/epaper/editions/monday/business_2.htmlhttp://www.statesman.com/business/content/auto/epaper/editions/monday/business_2.html
Where in the world are the tech jobs going?
Cheaper labor abroad increasingly beckons
By Scott Leith
ATLANTA JOURNAL-CONSTITUTION
Monday, May 19, 2003
ATLANTA -- A generation ago, Vivek Kaluskar might have left his homeland of India for good.
Now, the 25-year-old is planning to go back to his home city of Bangalore when he leaves Georgia Tech with a degree in computer science.
He'll return to become part of a huge and growing tech sector in Bangalore, where local companies mingle with a who's who of American tech giants, including Dell Computer Corp., Microsoft Corp., Intel Corp. and Motorola Inc.
He'll earn less money -- maybe $1,000 a month -- but he'll also spend less to live.
"With the software boom, the standard of living is better," he said. "More and more people are able to afford larger cars. Before, people didn't own cars."
When 35-year-old Vinod Keni, CEO of Atlanta's Aquarian Group, was growing up in Bangalore, technology and other white-collar jobs were scarce. Like many young Indians, he left and didn't return.
Now Bangalore, a city of 5.5 million, has become one of the world's hot spots for the kind of white-collar jobs that were long a strength of the U.S. economy.
Coca-Cola Co., for example, already outsources about 15 percent of its information technology work.
The company thinks it can save up to 20 percent of its costs by outsourcing some of its information technology functions. In the future, about 70 percent of Coke's outsourced work will end up overseas, chiefly in India.
There's concern that tech jobs could make a shift akin to what happened when manufacturing jobs migrated to Mexico, China and Southeast Asia. As with those factory jobs, the job market for American tech workers, already depressed by the dot-com bust and the stagnant economy, could get tighter.
"The Internet has made this world a lot smaller," said Paul Eurek, co-CEO of Xpanxion, an Alpharetta, Ga., company that specializes in moving tech work offshore for clients that include Coke. "It is the way it's going to go."
Tech jobs have been moving overseas for some time, but a confluence of factors has accelerated the shift. They include corporate cost-cutting, a stale U.S. economy and the rising sophistication of many overseas tech communities.
Just a few years ago, it would have been absurd to fret about a shortage of U.S. jobs in technology and many other sectors. Even as the movement of jobs abroad started to flourish, many American workers didn't care because jobs here were so plentiful.
But the job market is changing. According to Forrester Research, 3.3 million U.S. services jobs will head offshore during the next 15 years, led by the IT industry. Delta Air Lines, for example, announced last year that it will save up to $15 million a year by placing reservations centers in India and the Philippines.
Fewer jobs in U.S.
The worldwide migration of such work has a big impact on people such as Tim Beatty, a longtime computer programmer who lives in Marietta, Ga. He watched the job market dry up after he was laid off from a tech company in late 2001.
"The bottom line is to keep your skills up," he said. "It's like the car industry. Japan did a great job because they could always show how their products had quality."
U.S. techies who can find jobs now often accept lower pay.
"The jobs are scarce, and people are willing to take less," said Greg Malever, head of Lanta Technology Group, an Atlanta recruiting firm.
In the late '90s, he said, many earned $100 an hour. Now they're settling for $40 or $50.
Even so, jobs are far from plentiful.
"Right now, I have more supply than I know what to do with," Malever said. "If I had a football team, I'd say I was four or five deep at every position."
At companies such as Coke, outsourcing has prompted fear among employees already anxious about recent layoffs.
Several Coke workers said they expect to see more jobs shifted to India.
Educators such as Stu Zweben, chairman of Ohio State University's department of computer and information science, see early signs of change in the domestic tech sector.
Computer science enrollment is falling, and graduates are finding a tough job market.
"It used to be all you had to do was wave your degree, and you had employers grabbing you before you walked out of commencement," Zweben said.
Phil Gardner, director of Michigan State University's Collegiate Employment Research Institute, said his latest survey of recruiting trends showed computer science majors reporting 11 percent fewer job offers, while most other sectors remained flat.
Some tech majors still haven't grasped that they face a new world of competition.
Gardner meets Michigan State undergrads who still see their rivals as being down the road at the University of Michigan.
"That's not really who you are competing against," he said.
Companies like the savings
The new competitors -- countries such as India, China and Russia -- have been busy building and promoting their tech sectors. India is the most aggressive, dating to the 1980s.
The growing competition from abroad hits the United States in a sector where it has long been dominant.
"This is now knowledge work -- toward the top of the food chain, as opposed to unskilled or semiskilled work," said Jim Foley, a professor at Georgia Tech's College of Computing.
The offshore movement has been led largely by tech companies such as IBM Corp., Motorola and Computer Sciences Corp.
Smaller tech companies such as Austin-based Silicon Laboratories Inc. and nontech giants such as Coke are following their lead.
Some argue that shifting work overseas has negative effects beyond the cost in U.S. jobs. Some U.S. labor activists charge that overseas operations are sweatshops.
Others say foreign work lacks quality and is hard to supervise.
But the quality of overseas work is improving, and the potential savings -- up to 50 percent by some estimates -- are compelling for many companies.
As the movement overseas matures, more high-skilled jobs could be lost in America.
Early in the trend, low-skilled jobs such as call centers and computer coding were shifted abroad.
But Intel and others now are doing development of key products such as its mobile-PC chips in India and Russia.
Richard DeMillo, dean of the College of Computing at Georgia Tech, said overseas high-tech startups often are "indistinguishable" from operations in Boston, Atlanta and elsewhere in the United States.
"There's a sea change taking place," DeMillo said, before adding: "It's a caricature to say all the jobs are going overseas. It's not as if Silicon Valley is shutting down."
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