Jobs, Income Succumb To Offshoring

June 30, 2005
Offshoring (the transfer of American production facilities and jobs to India, China, and elsewhere)is the second highest cause of unemployment among U.S. technical professionals. According to the 2004 IEEE-USA Unemployment Survey, victims of offshoring ac

Offshoring (the transfer of American production facilities and jobs to India, China, and elsewhere)is the second highest cause of unemployment among U.S. technical professionals. According to the 2004 IEEE-USA Unemployment Survey, victims of offshoring accounted for 15% of laid-off U.S. IEEE members. The lead cause of unemployment, with a 62% tally, was from a business downturn.

And for the first time in more than 30 years, the median income declined for U.S. IEEE members. In 2003, their median income was $99,500, dropping from 2002's $101,000 total. When you add in the large numbers of foreign guest workers in the U.S. and the huge increases in jobs moving offshore, it's predictable that many U.S. high-tech workers would be unemployed, says Richard Ellis, who analyzed the survey results for IEEE-USA (see the table).

In its recent survey, human-resources consulting firm Watson Wyatt says that 13% of respondents in professional and technical positions are strongly concerned their jobs may be sent overseas. Meanwhile, only 8% of all respondents are strongly concerned that their own job is at risk.

Another survey by The Conference Board, which disseminates information about management and the market place to business organizations, indicates that most experts see no end in sight to the offshoring trend, as companies continue to look for cost savings and competitive advantage. But, estimates show that half of all offshoring operations are destined to fall short of expectations. Companies are under increasing pressure to calculate the risks, not just the rewards, of shifting jobs offshore.

"Companies now need a comprehensive decision-making framework to help senior executives rationally and systematically assess the risks and rewards of offshore," says Ton Teijman, senior advisor to the Conference Board on Offshoring and Outsourcing.

There are a few strong job segments, though. One in particular involves EE and computer scientists with security clearances. Government agencies, including law enforcement and companies in the defense and aerospace sector, can't meet the demand for all of the technical positions requiring a federal government security clearance. Another need area is wireless. In a March JobSeeker survey performed by TelecomCareers.net, both online and at the Cellular Telecommunications and Internet Association (CTIA), 74% of wireless industry professionals rated the current job market as "strong" or "growing."

"The rollout of new data services has many of our wireless clients posting new openings, and the wireless folks out there feel positive about new developments," says Quinn Jones, president of TelecomCareers.net.

Nonetheless, the trend of moving high-tech jobs offshore may be far from over. In April, Intel president Paul S. Otellini told a hearing of the President's Advisory Panel on Federal Tax Reform that Intel may build its next $3 billion semiconductor plant overseas. He said this decision was based not on U.S. wages or capital expenditure considerations, but on tax benefits. Intel could save $1 billion by building a factory in Asia or Europe rather than in the U.S., he added. Intel will decide where to locate the new plant later this year.

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