06:54 PM

IT Service Execs Downplay Outsourcing's U.S. Job Impact

Panel members compare the backlash against offshore outsourcing to the outcry against offshore manufacturing 15 years ago.

A panel of IT service company executives at the Gartner Outsourcing Summit in Los Angeles on Monday downplayed the impact offshore IT outsourcing will have on U.S. jobs. A few compared such concerns to the outcry against offshore manufacturing that occurred some 15 years ago.

Vivek Paul, CEO of India-based Wipro Technologies, said his company's customers are moving ahead despite concerns about offshore IT outsourcing raised by various IT worker organizations that have formed to fight the trend. Paul cited the panic in the United States in the late 1980s, when many feared that the number of manufacturing jobs moving to Japan would cripple the U.S. economy--a fear, he says, that never materialized. Offshore outsourcing, Paul told attendees, "is good for the U.S. economy, and it's good for globalization."

Infosys CEO Nandan Nilekani also stressed globalization, noting that back in India, he works on a laptop made by a U.S. company and his kids eat at the franchises of U.S.-based fast-food companies. "What we're seeing is the natural consequences of globalization," Nilekani said.

U.S. workers--and some politicians--aren't nearly so sanguine, with outsourcing fueling doubts about the potential for growth in U.S. IT jobs. U.S. Rep. John Mica, R-Fla., has proposed a bill to put new restrictions on L-1 visas, contending that foreign firms abuse them by importing lower-cost workers to do outsourcing projects.

Wipro's Paul cautioned against such legislation, saying companies such as Wipro rely on those visas to bring project managers and other employees into the United States to strategize with clients. Visa restrictions, Paul said, "would raise the cost for doing business for everyone in this room."

Some of the executives on the panel said that the backlash can't be ignored. Cognizant Technologies Solutions Corp., which is based in the United States but runs most of its operations in India, advises clients on a change-management process when they start using offshore resources, CEO Kumar Mahadeva says. And Scott Ayer, president of offshore application services at EDS, took the issue a step further, suggesting the tech industry must do more to address the impact of offshore outsourcing U.S. employment. "Customers are concerned about what it means for their people" when jobs are sent offshore, Ayer said, adding that "we have to work as an industry" to improve the options for workers displaced by offshore outsourcing.

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