U S Tech Jobs Being Transferred to India Term Paper
- Length: 6 pages
- Subject: American History
- Type: Term Paper
- Paper: #61447361
Excerpt from Term Paper :
U.S. Tech Jobs Transferred in India
According to global research agency Gartner Inc., one out of every ten jobs in American software industry by the end of 2004 will completely move to low-cost emerging markets like India, China, Russia since United States companies have moved to cut costs. However, till now India has captured the major proportion of white-collar jobs exported from the U.S. And has proved to be the leading gainer amongst all other developing countries (Jeff).
A media report highlighted by the global research has estimated that approximately even 500,000 white-collar American jobs already have found their way offshore to the countries like China, Philippines and Malaysia; yet none has been able to capture more American jobs than India (Jeff).
However, one of the major disadvantage pointed out by the research agency was that these computer programmers who have been transferred to India are being employed comparatively at only $6,000 annually to $60,000 in the United States. Today white-collar American jobs are fading in the same way as it was in 1980s and 1990s when millions of American manufacturing jobs disappeared (Jeff).
In a report 'U.S. offshore outsourcing: Structural changes, Big impact,' as many as 500,000 jobs are in the United States software and computer services arena, making approximately 10.3 million jobs, that will transfer to India within the next year. Even though the research agency has highlighted the economic benefits of business process outsourcing that has warned against the effect that the BPO thrust may have on business policies. Due to rising outsourcing, the report has also indicated that companies run the risk of loss of organizational performance, intellectual assets as well as bright future talent (Jeff).
In order to reduce the expenses Microsoft Corp, TM and Oracle Corp have planned to shift work and jobs to India. Earlier, it was estimated by Forrester Research Inc. that America's software industry is expected to move over the next 15 years to approximately 3.3 million service jobs from the United States to India. According to statistics released by the state Employment Security Department, it was in 2001 at Washington State when the number of computer-services employees fell to 62,500, down from the peak of 67,800 employees (Black, 2003).
Advantages of Tech Jobs in India
For Western companies, India since the late 1990s has been known as a tech mecca that required good programming done on the low cost basis. According to research firm, IDC, today, tech jobs is growing as an advantage to United States tech companies for a more vital basis; as the market for India's information technology is likely to grow 19% from $4.65 billion to $5.52 billion and by 2005 it has been predicted by IDC that the market will grow more than double, i-e to $11.5 billion, resulting in the second-fastest-growing international tech market (Black, 2003).
Bombay-based analyst, Ravindra Datar, employee at research firm Gartner opined that as small and midsize enterprises are buying from local companies, large firms give preference to reputable international brands, which guarantees good quality service (Black, 2003). In addition, as the hardware business is growing so does the sales of software and computer services as predicted by IDC, where packaged software will increase in sales from $402 million to $794 million in the coming four years, while spending by Indian companies on IT services will nearly triple, i-e, $3.2 billion. Thus, this has turned out to be beneficial as well as better for India's economy, which is enjoying a growth in tech employment (Black, 2003).
Moreover, according to Forrester Research, now Indian programmers, who just had local companies such as Wipro as their best choice, will find additional prospects at big and multi-United States companies that will transfer more than 3.3 million jobs to India over the next decade (Black, 2003). Also, due to the global economy in a state of fall as of variety of factors like the SARS virus, Iraq war, the tech bubble-burst, etc. firms have been under pressure and struggling to keep afloat. With profits streams to dry up or steadily, the majority United States companies have been obligated to lower costs jobs and transfer part of their operations abroad (Bjorhus, 2002).
As compare to other overseas markets, the market of India offers highly educated and skilled employees at a fraction of what such workers cost in America. The outsourcing has evidently become the best growing Information Technology industry section. Thus, now by transferring routine jobs abroad and increasing profits, United States companies can afford to concentrate more deeply on cutting-edge research and development (Bjorhus, 2002).
Another advantage that may be taken into consideration is that as American companies are growing stronger, profits may drop down in order to create new jobs from restaurants to car dealerships to universities, thus, resulting in good jobs in poor countries, decreasing the large gap between the world's rich and poor states, and inflation reduction in the United States (Bjorhus, 2002). In a recent study by Forrester Research Inc. It was revealed that by 2015, approximately 3.36 million jobs, worth about $136 billion per annum in wages, would move overseas since United States employers finding ways to cut down salary costs and office rents, resulting in an another advantage to such poor developing countries like India (Bjorhus, 2002).
At the same time the economic slowdown is also increasing the export of jobs. Executives confront smaller budgets along with more pressure for profits finding it much cheaper to send work to overseas contractors. More United States firms in order to cut costs are following Silicon Valley's lead by shifting engineering with other technology-related jobs to India as well as to other states like places China, Ireland and the Philippines.
Although, this is resulting in few job losses, yet foreign outsourcing will increase and strengthen the United States economy by reducing costs and facilitating firms with more flexibility to appoint or sack employees as conditions of business changes.
According to Stephanie Moore, an outsourcing expert at Giga Information Group in Cambridge, Mass, approximately two hundred out of the Fortune five hundred firms have shipped software work overseas, which will be followed by other 1000 Fortune firms. It is estimated that global revenue from overseas software work has hit $7.68 billion in 2002, up 20% from 2001. Also corporate budgets for overseas software outsourcing will most likely to double by 2004, estimated by Forrester Research.
Disadvantages of Tech Jobs in India
As more and more jobs are being shifted from the United States, a bubbling environment with tensions is on rise. In the past few months, a wave of legislations took place in order to prevent everything from outsourcing of government contracts to business (L1) visas as well as lessen the number of H1-B visas available introduced by the United States lawmakers (Geewax, 2003).
Another disadvantage is the float of jobs that is creating disturbance among the engineering groups, recharging their fears that white-collar tech jobs in the United States are moving in the similar manner as that of blue-collar manufacturing jobs, i-e over the border and across the seas (Geewax, 2003).
Due to this, Congress has been asked to investigate by a major engineering group whether the overseas drift, together with United States firms bringing in foreign engineers on H-1B visas, is partially to be blamed for rising unemployment among United States engineers.
A professor of computer science at the University of California-Davis, Norman Matloff, has argued:
the actual number of software jobs being shipped overseas is a fraction of the country's total. And it will remain small, he argues, because nothing beats face time at the soda machine for finishing engineering jobs right" (Rachel, 2003).
Nonetheless, the increase in offshore outsourcing is producing hard-hit tech workers concerned. According to the IEEE-USA, the United States arm of the Institute of Electrical and Electronics Engineers, the rate of jobless engineers have doubled in the second quarter of this year, from 2% to 4%, and even more for computer scientists and electronics engineers, resulting in outrage and betrayal expressed by some unemployed engineers. Critics have argued that majority U.S. firms are selling out technology jobs that were expected to be the future of the United States workforce (Rachel, 2003).
For example, firms like Franklin Templeton Investments in San Mateo, have transferred approximately twenty percent of its tech work to service providers in India, according to records maintained by the state's Department of General Services. Due to this few experts have opined the disadvantage is more in terms of growth in overseas tech services as it has been less about increased United States demand than about aggressive marketing by Indian firms, including some of the biggest firms Wipro Technologies, Infosys and Tata Consultancy Services (Geewax, 2003).
Furthermore, tech consultants like Accenture; a Bermuda-based Arthur Andersen spinoff, IBM Global Services; Computer Sciences; Electronic Data Systems and Price water house Coopers are all speeding up to have their set up in overseas firms. Majority going to India, while few others moving to the Eastern Europe, Philippines, Ireland…