Tech firms eye Asia to expand jobs

David Zielenziger

NEW YORK: As technology companies are seeing a rebound in business, top

executives predict that any jobs added to meet growing demand will likely be in

countries where labor is cheaper than the United States.

While speaking at the Reuters Technology, Media and Telecommunications Summit,

the executives said that they see increased hiring in countries like India and

China, but few jobs will be added in the United States.

"EDS's number of employees in low-cost locations like India will rise to

20,000 from 9,000 by 2006," Michael Jordan, chief executive of technology

services provider Electronic Data Systems Corp. Pointed Bruce Claflin, chief

executive of network products maker 3Com Corp., that the company's joint-venture

with Huawei Technologies of China has added 1,000 engineers, all supplied by

Huawei.

"In the future, there won't be a purely U.S. or Chinese product because

the silicon technology could come from the United States or Britain, and base

hardware could come from China. We do development around the world, and a

product that is sourced from China may have components and engineering

contributions from all over the world," he added.

Anne Mulcahy, chief executive of Xerox Corp., which has about 40 percent of

its 60,000 employees outside the U.S., expects little hiring. "I don't

really think we'll be adding people the way we used to," she said. Xerox

has already handed over manufacturing of most printers to Singapore based

Flextronics International Ltd.

Only a few companies, such as International Business Machines Corp., the

world's No. 1 technology company, have announced plans to add jobs this year.

But even IBM, which derives most of its sales abroad, plans to shift jobs to

remain competitive.

U.S. technology employment fell 4 percent last year to just below 6 million,

the American Electronics Association estimates, the lowest level since 1999.

According to Institute for Electrical and Electronics Engineers, the

unemployment rate for electrical and electronics engineers rose to a record 6.2

percent.

Ron Hira, a professor at Rochester Institute of Technology who analyzes

manpower for the IEEE, said a recent decrease in the U.S. government's outlook

for employment growth reflects the move to send U.S. technology jobs abroad.

Non-U.S. technology companies had a banner year in 2003. Jim Thomas, U.S.

marketing vice president for Tata Consultancy Services of India, said Tata had

double-digit growth in the United States, estimating overall U.S. business

reached almost $1 billion from $880 million in fiscal 2002. "Tata saw

"across the board" gains in many U.S. sectors," he added.

Tata, which is privately held, as well as the publicly traded Indian service

companies like the Wipro Technologies unit of Wipro Ltd. and Infosys

Technologies, have ramped up U.S. sales.

In response, more than a dozen states are considering legislation to ban

hiring non-U.S. workers to handle government contracts but none has passed yet.

Indiana's Senate this month passed such a law but its House hasn't acted yet,

said senator Jeff Drozda, its Republican sponsor. While senator Shirley Turner,

sponsor of a similar bill said in New Jersey, "We are shooting ourselves in

the head if we don't adopt protective laws."

However, EDS's Jordan maintained that such moves are ill advised, preferring

federal programs that could invoke existing trade-adjustment laws. "There

are lots of ways to skin the productivity cat," he added. "India's

only one of them."

Michael Turner, president of the Information Technology Institute, an

industry study group, said European countries that have laws prohibiting the

transfer of personal data abroad may be better protected against offshoring.

Some institutional shareholders also plan to take a stand. Dan Steininger,

chief executive of Catholic Knights, a Milwaukee-based mutual funds group with

assets around $1 billion, said he plans to introduce resolutions to deal with

offshoring this year.

"CEOs never think of reducing their own pay," Steininger said.

"Why do they always think the pain must start out at the bottom?" he

pointed.

© Reuters