U.S. Job Loss: Reason for Celebration?

[BigBearJohn]

I found this site extremely worthwhile and worth visiting.
I just received this letter in my e-mail from TechsUnite:

U.S. Job Loss: Reason for Celebration?
By Marjan Foruzani

44 new companies were added onto this month’s tracker update, contributing to 24,478 additional jobs offshored and 7,754 additional jobs laid off. Numbers of both jobs moved offshore and U.S. jobs laid off continues to grow each month, as well as the number of new companies added on the TechsUnite Offshore Tracker. This leaves no question that offshore outsourcing is spreading rapidly at increasing rates among U.S. companies. IBM, as an example, increased its Indian workforce by 150 percent in one year. By the end of 2003 the company employed 9,000 workers in India and by the end of 2004 grew to employ 23,000 workers in Bangalore, Pune, Gurgaon and Calcutta. This growth has been facilitated by the fact that offshore outsourcing is not only becoming increasingly accepted, but now it is even celebrated. Each year, as thousands of tech workers experience the hardship and loss caused by offshore outsourcing, others honor it. Since 1997, the annual Outsourcing Excellence Awards has commended 12 companies (6 company partnerships) each year for their outsourcing practices in glitz-and-glam, “Oscar-like” ceremonies. Celebrating the loss of American jobs, this year the awards go to:

Bank of India and Hewlett-Packard
Westpac and Electronic Data Systems
Key Bank and ABN AMRO
Fairmont Hotels and Avendra LLC
QinetiQ and Accenture
Johnson & Johnson and Hewitt Associates

Although some of the companies considered for the awards outsource within the United States, the TechsUnite Offshore Tracker shows that five of this year’s six winning relationships involved outsourcing providers with offshore employment numbers into the thousands. Such names as Accenture, Electronic Data Systems (EDS), ABN AMRO, and Hewitt Associates are known offshore outsourcers, and are continuing to expand their operations overseas. Moreover, as program director, Debra Floyd, states, the awards are established to recognize not only those companies “achieving value through outsourcing,” but also those “approaching the offshore marketplace, and transforming their business.”

ABN AMRO has offshored almost 3,000 jobs to India and was specifically chosen by Key Bank for its offshore presence. In describing its outsourcing relationship with ABN AMRO, Rob Martens, Vice President of Strategic Alliance Development for Key Bank, declares his bank was the first to become involved with an offshore outsourcing provider and “unless you are partnered with a bank or a company like ABN, which has the offshore capabilities and the global brick and mortar network, you’re going to be outgunned.”


The Everest Group, a sponsor of the Outsourcing Excellence Awards, has identified several common trends among the 47 outsourcing relationships it researched in order to select its finalists. The first trend, however, contains a degree of contradiction. Companies told the Everest Research Institute that the primary motivator was not the lure of saving costs, but a need to outsource processes to experts who knew exactly what they were doing. Yet companies also stated that a second motivator for outsourcing was driven by a desire to avoid spending capital on non-core processes. The second motivator seems to bring the first one into question. The first implies that the thousands of unemployed IT professionals here in the United States lack the expertise in IT processes that companies are looking for. If the expertise needed is for non-core processes, however, the second motivator suggests that qualified professionals can be found in America, but at a cost that companies are not willing to pay.


A second trend found by the Everest Research Institute was an increase in full-service human resource outsourcing (HRO), in which three or more processes are being outsourced within the human resources division. As Everest Group CEO Bendor-Samuel states: “This tells me more and more buyers are willing to outsource more than payroll and benefits administration to get where they want to go.” Thus, the breadth of jobs vulnerable to outsourcing is expanding.


A third so-called trend identified by Bendor-Samuel is “offshoring is here to stay but so far, only in a small way.” Although the Everest Group CEO identifies offshoring to be taking place “only in a small way,” the group’s research found that 50 percent of the company relationships studied for the Awards this year include some offshoring component, a percentage that has increased from last year. The Everest Group also noted that 62 percent of the outsourcing relationships studied since January 2004 involved companies with less than 25,000 employees. This suggests that outsourcing is no longer a practice common among only the largest companies, but is now being driven by mid-sized businesses as outsourcing becomes both more acceptable and accessible.


Two of the new additions onto this month’s tracker update were listed among the 27 finalists for last year’s Outsourcing Excellence Awards. AAA was recognized for its outsourcing relationship with EDS, and 7-Eleven for its relationship with Affiliated Computer Services (ACS).


Both AAA and 7-Eleven display not only a trend in outsourcing, but also nearshoring, a name given to the practice of offshoring to Canada and closer non-U.S. locations. Although 7-Eleven was recognized for its partnership with ACS, whose primary offshore locations are in India, it has been involved with outsourcing to Headstrong and EDS in Canada. This division of EDS has also provided IT services for AAA, American Airlines, Blue Cross-Blue Shield of Massachusetts, Coors Brewing, the U.S. Army and the U.S. Department of Defense. Nearshoring to Canada is not a new phenomenon and its appeal of a favorable exchange rate, comparable time zones, and predominantly English-speaking natives contribute to its growing use by U.S. companies. A New England representative for Canadian-based QA labs reports to Mass High Tech news that “he’s crossing his fingers that American C-level executives will continue to mandate that if a job can be outsourced, it must be outsourced.”


Help us build this list by submitting an event form on the Offshore Tracker when you hear of American jobs moving offshore. Any media source, with the date of the article, or the URL is greatly appreciated, and helps us speed the verifying process.


Check out their site, if interested: http://www.techsunite.org/offshore/