Will Offshoring Become a Political Issue?

ANALYSIS: Some labor advocates want Congressional hearings on the implications of shifting IT jobs to lower-cost countries. But even if lawmakers agree that it's a problem, the answers aren't readily apparent.

Moving work from the United States to countries where labor is cheaper isn't new. Over the last 50 years, textile, automobile and steel manufacturers all shipped jobs overseas. Now, it's IT's turn.

Call centers and assembly plants were first to go, but lately, software development hubs have begun popping up in China, India and other countries.

This week, IBM said it would shift 3,000 jobs to developing countries. In fairness, Big Blue noted it would add 4,500 here this year, for a net gain of 1,500. But workers there, and at other IT bellwethers, remain wary.

IDC found U.S. companies spent $16.3 billion on offshore technology services last year. The research group expects that figure to hit $46 billion by 2007. In addition to IBM, Accenture and Hewlett-Packard are boosting their presence overseas.

It's unsettling news for U.S. programmers, who, not so long ago, believed their skills made them indispensable in the information age. To counter the trend, some white collar IT workers are taking a page out of the playbook of their blue-collar colleagues -- political activism.

Contacting Congress

Raising awareness is step one, said Lee Conrad, national coordinator for Alliance@IBM, a group trying to unionize employees of the Armonk, N.Y., company. "I don't think our political leaders have this on their radar yet," Conrad said.

Perhaps it's because the phenomenon is relatively new and the number of IT jobs moved overseas is still far less than traditional manufacturing. But Conrad and others think the problem is dire, especially given that programmers make between $50,000 and $70,000, depending on experience and location.

"We're working with local Congressmen and contacting presidential candidates," said Conrad, who would like to see additional hearings and investigations about the implications of the trend.

Besides economic impact on workers, their families and communities, Conrad raises the specter of national security, noting that many IT firms do considerable business with the federal government.

U.S. Rep. Bernie Sanders (I-VT) requires no convincing. Sanders is a vocal critic of "corporate welfare" and has made offshoring a priority this session.

The Congressman was not available for comment, but he recently told the Associated Press, "If (companies) think they can simply destroy the American middle class and move jobs abroad then I will do everything I can to make sure that the taxpayers of this country are not supporting them."

Sanders will re-file a bill that would require companies seeking taxpayer money to meet certain conditions. Similar pieces of legislation are also pending. And at the state level a handful of governments are looking to block contract awards to companies who would do work offshore (To date, Indiana is the only state to have refused a bid on these grounds).

Others lawmakers are aware of the growing outrage about offshoring, but are still seeking hard facts.

"I have . . . been struck by how little good data is available on the offshoring of U.S. jobs, particularly since this phenomenon may be one of the most profound changes in the U.S. economy in our lifetimes," U.S. Sen. Charles Schumer (D-NY) wrote to the secretaries of the Labor and Commerce departments.

Schumer wants new statistics be kept on the number and types of jobs shifted offshore, and the number of companies using offshore labor for production and services.

But even if Congress can agree that offshoring is a problem, the answers aren't readily available. Unlike products manufactured by companies in foreign countries, it's more difficult to put a tariff on a piece of software that comes from a U.S.-based company, but may have had lines that were coded abroad, said Phil Singer, a spokesman for Sen. Schumer.

Companies cautious

Given the emotional nature of the issue, IT firms don't want to fan the fire. However, an IBM spokesman takes issue with some of the criticism.

"IBM has 139,000 employees in the U.S. and 180,000 elsewhere in the world," said John Bukavinsky, a vice president of communications for IBM. "We get about 60 percent of our revenue outside the United States. So we're very much a global company."

Earlier media reports pegged the number of jobs IBM was moving offshore in 2004 at 4,700, about 1,700 more than the final number. Worldwide, IBM will hire about 15,000 people this year.

"It's not a zero-sum game," Bukavinsky said. "The creation of jobs in one geography doesn't preclude us from hiring in another."

Draft memos which cautioned managers to avoid the term "offshore," and suggested correspondence with employees on the matter should be "sanitized" by human-resources and public relations staffers, were also published by the media.

Bukavinsky called some of the facts in the stories were "incomplete," while others were "inaccurate," and noted that any internal documents were drafts and not IBM policy.

IBM has not received any formal requests for hearings on offshoring. "In the past we've been asked to give testimony on a variety of industry issues," he said. "So if we were asked to testify we take those things seriously."






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