South-Western - Management  
U.S. Jobs Jumping Ship
Topic Globalization of Human Resources
Key Words Overseas labor
News Story

Employers in a wide range of industries are moving jobs overseas. Manufacturers have been using the cheaper labor overseas for years, but other industries are following suit, especially information technology. One consultant said the by 2004, more than 80% of U.S. executive boardrooms will have discussed offshore sourcing, and more than 40% of U.S. enterprises will be sourcing IT services.

IBM and Microsoft are two companies considering increasing outsourcing. Microsoft's Brian Valentine cited all the advantages of moving operations to India, including the chance to "leverage the Indian economy's lower cost structure" where a company can get "two heads for the price of one." A Microsoft spokesman stated that the company was trying to encourage employees to "think globally and explore ways to improve our customer reach."

U.S. businesses have already developed a taste for cheaper labor in developing countries. A survey of 145 U.S. companies found that 88 percent of the firms that hire overseas labor claimed to get better value for their money offshore, while 71% said offshore workers did better quality work.

It is predicted that over the next 15 years, 3.3 million U.S. service industry jobs and $136 billion in wages will move offshore to countries like India, China and the Philippines.

Questions
1.

Wages are clearly an advantage to moving certain service operations to developing countries. What are the less obvious implications for companies of moving large numbers of jobs overseas?

Source "U.S. Jobs Jumping Ship" CNN/Money, July 22, 2003.
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