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It's an OutsourceWorld
A controversial trend in the IT industry makes its presence known at New York's PC Expo.
September 17, 2003: 2:47 PM EDT
By Mark Gongloff, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Though it's on the outskirts of New York's massive PC Expo, it takes up nearly a third of the expo's total floor space at the Jacob Javits Convention Center, a metaphor for its growing impact on the IT industry.

It's OutsourceWorld, and it's only getting bigger.

DSS promises big cost savings at OutsourceWorld  
DSS promises big cost savings at OutsourceWorld

Just past the Hewlett Packard (HPQ: Research, Estimates) exhibit at the 22nd PC Expo, OutsourceWorld pitched its booths, filled with reps from more than 80 global outsourcing companies who want to help customers -- U.S. firms, mostly -- cut costs and raise productivity by farming out work, quite often overseas.

In booths decorated with the flags of Nepal, South Africa, Egypt and many more nations, company and country representatives touted the advantages of moving work abroad.

An Indian software development company, DSS Infotech International Inc., promised customers savings of up to 50 percent by moving work to its development centers. Bulgaria noted its information technology (IT) professionals make, on average, just $300 a month. IBM (IBM: Research, Estimates) commandeered a cafe to ply potential customers with free coffee and brag about its outsourcing abilities.

More and more, U.S. firms, including CNN/Money parent company AOL Time Warner (AOL: Research, Estimates), are getting the message and moving jobs in IT and other services offshore -- pretty soon, the whole world will look a little like OutsourceWorld.

Countries such as Bulgaria and Romania tout their advantages at OutsourceWorld  
Countries such as Bulgaria and Romania tout their advantages at OutsourceWorld

Consulting firm Forrester Research has predicted that, in the next 15 years, 3.3 million U.S. service industry jobs and $136 billion in wages will move offshore to countries such as India, Russia, China and the Philippines.

Needless to say, this development is unwelcome news for thousands of U.S. IT workers, who blame offshore outsourcing for a nagging lack of IT jobs and stalling wage growth.

"Workers, from software developers to system administrators to engineers, are very frightened about what this trend means about the future of the industry and the future of their jobs," Joshua Sperry, an organizer with the Communications Workers of America, said this week in a press release announcing a protest of offshore outsourcing.

Exhibitors not so popular

John Sullivan, a senior account manager with Princeton, N.J.-based EPAM Systems Inc., which has software development centers in Moscow and Minsk, Belarus, said at his company's exhibit that he'd caught some flak from PC Expo visitors accusing his and other companies of destroying U.S. jobs.

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Sullivan argued, however, that offshore outsourcing could actually save jobs by cutting corporate costs and enabling companies to take on last-minute, short-term projects, for which it's easier and quicker to outsource than to hire and fire a bunch of temporary U.S. workers.

"We have companies that wouldn't be doing business at all if they had to develop in the United States," Sullivan said. "They're in business because of what we can provide."

Technology (general)

Curtiss Montgomery, director of outsourcing services for Buffalo, N.Y.-based IT staffing firm CTG -- which actually keeps most of its outsourcing in the United States -- acknowledged that the flow of jobs offshore was causing real pain to thousands of workers in the short term.

But, echoing the sentiments of most economists on the issue, Montgomery also pointed out that other U.S. industries, agriculture and manufacturing, had gone through similar periods, and the country eventually ended up the better for it.

"The problem is figuring out how to take displaced workers and help them to do something more valuable for the economy," Montgomery said. "You can't stop this -- but it can be guided."  Top of page

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