Emergic: Rajesh Jain's Blog

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The Global Job Shift

February 2nd, 2003 · No Comments

Outsourcing work to lower cost nations continues. Manufacturing to China, software services to India and now other business process-oriented jobs to countries. Business Week captures this trend in a recent cover story.

It’s globalization’s next wave–and one of the biggest trends reshaping the global economy. The first wave started two decades ago with the exodus of jobs making shoes, cheap electronics, and toys to developing countries. After that, simple service work, like processing credit-card receipts, and mind-numbing digital toil, like writing software code, began fleeing high-cost countries.

Now, all kinds of knowledge work can be done almost anywhere. “You will see an explosion of work going overseas,” says Forrester Research Inc. analyst John C. McCarthy. He goes so far as to predict at least 3.3 million white-collar jobs and $136 billion in wages will shift from the U.S. to low-cost countries by 2015. Europe is joining the trend, too. British banks like HSBC Securities Inc. (HBC ) have huge back offices in China and India; French companies are using call centers in Mauritius; and German multinationals from Siemens (SI ) to roller-bearings maker INA-Schaeffler are hiring in Russia, the Baltics, and Eastern Europe.

The driving forces are digitization, the Internet, and high-speed data networks that girdle the globe. These days, tasks such as drawing up detailed architectural blueprints, slicing and dicing a company’s financial disclosures, or designing a revolutionary microprocessor can easily be performed overseas.

From anecdotal evidence (speaking to friends), there is a clear shift apparent. A new formula: 1 person in the US = 3 in India. The outsourcing has been hastened by the slowdown in much of the developed world, as companies seek to wring out all the costs they can.

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