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Wed, May 19, 2004 - Page 12 News List

US jobs moving abroad faster

OFFSHORING A report suggests that 830,000 US jobs will have moved abroad by the end of next year, but it's still not clear if this is really a bad thing for the economy

AFP , WASHINGTON

The movement of US service jobs offshore to low-cost countries is growing faster than expected, with the number likely to hit 830,000 by the end of next year, a research firm said Monday.

The report by Forrester Research updated an earlier projection of 588,000 jobs -- a 40 percent jump from the prior forecast.

"Interest and use of offshoring continues to rise, particularly on the IT [information technology] side," said Forrester analyst John McCarthy.

The Forrester data, widely cited in the debate over outsourcing, suggested a slight increase in the projected number of US service jobs moving offshore by 2015, to 3.4 million from 3.3 million.

McCarthy said the media furor around offshoring has drawn more attention to the practice, and ironically has spurred more companies to look at moving services to India or other locations.

"At a time when businesses are trying to stretch their flatter IT budgets," he said, "companies are looking at offshore as doing more with less or the same amount."

McCarthy said the growth in offshoring is coming as companies expand from the simpler tasks of data entry and call centers to more complex ones. But he said the long-term outlook is little changed, because of limits to the kind of work that can be outsourced and a lack of skills and English speakers in many countries.

The report found that by the end of last year, 315,000 jobs had been shifted offshore, representing less than 1 percent of the jobs in the affected categories. This number was expected to grow to 1.6 percent by the end of next year.

The original report 18 months helped fuel a heated political debate over moving jobs to low-wage countries.

Some political leaders seized on the report to urge measures to stop the flow of jobs offshore. Meanwhile, business groups and economists argued that the move benefits the US by bringing down costs for US goods and services and helping spur demand for US exports in countries where the new jobs are created.

But one study released in March concludes that moving high-tech jobs to low-wage countries resulted in a net gain of 90,000 jobs for the overall US economy last year.

Forrester analyst Stephanie Moore said there are no signs that companies are discouraged by the political backlash on outsourcing.

But she noted, "They have to be very careful about how they discuss this," adding that in many cases, "they are not allowed to use the word offshore."

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