'Offshoring' taboo, but taking off

U.S. companies dare not speak its name, but "offshoring" seems to be on the rise.

U.S. companies dare not speak its name, but "offshoring" seems to be on the rise.

Research firm IDC recently predicted the worldwide market for offshore information technology services will more than double between 2003 and 2008 to $17 billion.

Another sign that U.S. businesses are eagerly sending IT tasks to lower-wage nations can be found in the healthy financial results of India-based tech companies. Infosys Technologies, for example, saw its revenue hit $379 million for the September quarter, up 51 percent from the same period last year. Its net income soared 49 percent to $97 million.

"Offshoring has become a megatrend in the industry, as more customers leverage their partnership with Infosys to increase their global competitiveness," Infosys CEO Nandan Nilekani said in a statement this month.

But don't try to tell U.S. businesses that they're all about shipping American jobs overseas, as labor advocates and politicians fume over the offshoring trend. Companies are changing their terms, if not their tune.

It's not too different from the way corporations in an earlier era employed softer words for layoffs, like "downsizing" and "rightsizing." "Offshoring" is giving way to phrases such as "co-sourcing" and "global sourcing," said John McCarthy, an analyst with Forrester Research.

"It's all part of everyone going into the offshore witness protection program," McCarthy quipped. "They're changing the title, but the activity is the same."

Defenders of offshoring say it ultimately benefits the U.S. economy and workers, and that protectionist measures would result in lower economic growth and higher unemployment.

Critics respond that offshoring costs American workers jobs and threatens the country's long-term technology leadership.

Changing the language related to offshoring riles populist commentator Jim Hightower. "Excellent news, Americans! U.S. corporations say that they are no longer 'offshoring' our middle-class jobs," Hightower wrote in an essay last month. "Does this mean that greedheaded CEOs are no longer shipping our manufacturing, professional, and high-tech jobs to India, Pakistan, Russia and other low-wage centers? Of course not. It simply means they no longer say the word 'offshoring.'"

 

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