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India helps keep hiring down in US tech sector

world Updated: Sep 08, 2010 00:38 IST
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For years the technology sector has been considered the most dynamic, promising and globally envied industry in the US. It escaped the recession relatively unscathed, and profits this year have been soaring.

But as the nation struggles to put people back to work, even high-tech companies have been slow to hire, a sign of just how difficult it will be to address persistently high joblessness. While the labor report released last week showing August figures provided mildly positive news on private-sector hiring, the unemployment rate was 9.6 per cent.

The disappointing hiring trend raises questions about whether the tech industry can help power a recovery and sustain American job growth in the next decade and beyond. Its tentativeness has prompted economists to ask "If high tech isn’t hiring, who will?"

Meanwhile, an earlier generation of engineers is scouring for jobs, and having to compete with a more globalised pool of talent. There are no definitive statistics on how many jobs are being moved overseas. But economists who follow highly skilled employment say that some of the most prominent companies that laid off workers during the recession, such as IBM, are expanding their work forces abroad.

"Certainly a lot of these IT services firms plus the core software firms like Oracle are globalising their work," says Ronil Hira, an assistant professor of public policy.

In the past, the jobs most susceptible to being shipped abroad were lower-skilled positions. But now emerging economies have been harvesting their long-term investments in math and science education and attract high-tech firms — and not just textile factories or call centers.

In addition to lower wages, developing countries offer significant consumer growth, giving businesses a reason to make more products closer to the buyer, and hire locally.

And increasingly, these new, lower-cost research centers, while perhaps initially intended to adapt products for local use, are becoming sources of innovation themselves.