Sending jobs abroad debated fiercely

Workers very worried

executives say U.S. will ultimately benefit

December 30, 2003|By Aaron Davis and Margaret Steen | Aaron Davis and Margaret Steen,KNIGHT RIDDER/TRIBUNE

SAN JOSE, Calif. - When Natasha Humphries went to Bangalore, India, in December 2002 to train Indian contract workers to do quality-assurance testing for her employer, she realized that her own job could be done by local workers there as well. "I'm fairly intuitive - I saw the writing on the wall," said the 30-year-old Santa Clara, Calif., resident.

Humphries was indeed laid off in August. Her former employer, Palm Inc. - now known as palmOne - says her layoff was not directly related to its outsourcing in India. Humphries, however, disagrees. And in unemployment, she has become an activist.

"I am not angry with companies for trying to conserve costs, but at the same time, we do have to acknowledge that it's going to create more problems for us domestically if we don't create more jobs for U.S. citizens," Humphries said in an interview last month. She testified last month in front of a congressional committee examining the effect of white-collar jobs moving overseas.

With the American economy finally gathering steam but job growth lagging, sending U.S. tech and service jobs overseas has challenged the economic futures of white-collar workers and stirred the globalization debate like never before.

On one side are American workers who feel anger, fear and profound uncertainty as white-collar tech jobs quickly move to lower-cost countries such as India, China and the Philippines. Sending jobs offshore has sparked a small backlash of grass-roots protests from New York to California and spurred protectionist legislation in eight states. The issue promises to become a hot-button election-year topic if job growth doesn't come back quickly enough.

On the other side are business executives and economists who argue that the movement of jobs offshore is unstoppable and ultimately healthy for the United States, spurring this country to shed certain jobs and create more sophisticated ones in order to stay atop the ladder of innovation. The shift of technology work overseas is just the latest chapter in decades of globalization, they argue.

"I think overall, long term, the U.S. economy can take it. But there's going to be a huge amount of restructuring pain," said Rafiq Dossani, senior research scholar at Stanford University and co-author of a major study of the trend.

Such forecasts are of little comfort to the tens of thousands of technology workers - many of them in Silicon Valley - who have already seen their companies create jobs in India, China and other countries even as they lay off workers here. Humphries, for instance, said she was let go after a lower-paid worker in India filled in for her during a 10-day vacation. She is now helping lead a Silicon Valley offshoot of TechsUnite, a labor-affiliated group that is protesting the movement of U.S. jobs overseas.

But Milpitas, Calif.-based palmOne says both the layoff and the outsourcing were part of a larger business restructuring, and the specific work Humphries used to do is still being done in Silicon Valley.

Whether or not she was directly replaced by an Indian worker, Humphries embodies the worker angst now sweeping the tech work force in the United States.

"What Humphries represents - having had to train her own successor - that's like digging your own grave," said Rep. Don Manzullo, the Illinois Republican who chairs the House Small Business Committee.

What's making the loss of jobs all the more scary for tech workers is the speed with which companies can now send jobs overseas because of today's sophisticated communications technology. "Thousands of jobs can literally be moved to India overnight. Last week, three of my friends' jobs moved there. That's just the experience of one person," said Arvinder Loomba, professor of operations and international supply chain management at San Jose State University.

Indeed, say economists and historians, tech jobs seem to be moving to India faster than manufacturing jobs moved overseas in decades past.

"What that means is there could be much less adjustment time," said Martin Kenney, professor of Human and Community Development at the University of California-Davis, who co-authored the offshore-movement study with Stanford's Dossani.

With union support, legislation has been proposed in eight states to limit moving jobs offshore. None of the bills has yet become law.

In New Jersey, a bill to outlaw sending state jobs offshore passed the state Senate unanimously after legislators discovered that welfare recipients were calling Mumbai, India, when they had questions about their food-stamp payments.

The bill was defeated by the full legislature after technology trade groups lobbied against it. But the state did move about 10 welfare department jobs back to New Jersey - at a cost of more than $1 million a job.

While cases such as New Jersey's may be an exception, many executives, economists and academics say that offshoring ultimately helps American companies compete in a global economy, especially in tight economic times.

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