US tech majors defend outsourcing
Worried about Govt reaction, US firms are defending outsourcing as necessary for profits.business Updated: Jan 09, 2004 19:03 IST
Worried about possible government reaction to the movement of US technology jobs overseas, leading American computer companies are defending recent shifts in employment to Asia and elsewhere as necessary for future profits and warning policy makers against restrictions.
"There is no job that is America's God-given right anymore," said Hewlett-Packard CEO Carly Fiorina. "We have to compete for jobs."
In a report released on Wednesday, the companies said government efforts to preserve American jobs through limits on overseas trade would backfire and "could lead to retaliation from our trading partners and even an all-out trade war."
Intel CEO Craig Barrett said the United States "now has to compete for every job going forward. That has not been on the table before. It had been assumed we had a lock on white-collar jobs and hi-tech jobs. That is no longer the case." Barrett complained about federal agriculture subsidies he said were worth tens of billions of dollars while government investments in physical sciences was a relatively low $5 billion. "I can't understand why we continue to pour resources into the industries of the 19th century," Barrett said.
The effort by the technology industry represents an early response to their growing concerns that US lawmakers may clamp down on the practice, known as "offshoring," especially during an election year.
"Countries that resort to protectionism end up hampering innovation and crippling their industries, which leads to lower economic growth and ultimately higher unemployment," said the Washington-based Computer Systems Policy Project, whose member companies include Intel, IBM, Dell Inc and Hewlett-Packard.
A Commerce Department report last month said increasing numbers of technology jobs are moving from the United States to Canada, India, Ireland, Israel, the Philippines and China -- and predicted that "many US companies that are not already offshoring are planning to do so in the near future."
The subject has been the focus of several congressional hearings, and some lawmakers have asked the General Accounting Office for a study on the economic implications of moving technology jobs offshore.
The technology group argued in its new report that moving jobs to countries such as China or India -- where labor costs are cheaper -- helps companies more readily break into foreign markets and hire skilled and creative employees in countries where students perform far better than US students in math and science.
"Americans who think that foreign workers are no match for US workers in knowledge, skills and creativity are mistaken," the trade group's report said.
Even as technology companies lobby against limits on offshore employment, they are urging the Bush administration to approve new tax credits on research and development spending, spend more on university research on physical science and adjust tax depreciation schedules for technology purchases. They said they also want improvements in education, especially in elementaries through high schools.
A vocal critic of technology companies moving jobs overseas, Marcus Courtney of Seattle, dismissed the latest report. "This is not a recipe for job creation in this country," said Courtney, president of the Washington Alliance of Technology Workers. "This is a recipe for corporate greed. They're lining up at the public trough to slash their labor costs."
First Published: Jan 08, 2004 11:05 IST