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A sometimes funny, somtimes angry, but mostly progressive, blog on the politics and issues of Pittsburgh, Pennsylvania and America.

Wednesday, October 27, 2004

Tech Outsourcing

New Reports Show U.S. Tech Job Loss, Offshoring Escalating

Separate reports released in the past two weeks, one by a national outsourcing firm and the other by a Congressionally mandated commission, reveal efforts to create jobs faster than they are being eliminated remains a challenge for many sectors of the U.S. economy.

The latest study released by the U.S.-China Economic and Security Review Commission states during 2004, the U.S. will lose as many as 406,000 jobs as they are shifted from the U.S. to other countries. The figure compares to 204,000 jobs in 2001. Nearly one-fourth of the 2004 job losses are expected to go to China. Mexico and India are the other significant beneficiaries of the offshoring trend.

While the conventional wisdom in the U.S. is that companies need to offshore jobs to remain competitive, the report also says businesses engaged in production shifts "tend to be large, publicly held, highly profitable, and well established... The principal motive for production shifts to China is cost reduction rather than producing for the Chinese market."

Other key findings include:
  • "The number of jobs lost because of production shifts far exceeds that reported by the Bureau of Labor Statistics in its report on mass layoffs due to overseas relocation.
  • "Trade adjustment assistance to workers laid-off owing to overseas job relocation is poor, covering less than one-third of the cases where production shifts occur."
The entire report and additional information on the Congressionally mandated Commission is available at:

Computer and related high-wage tech job cuts jumped 60 percent in the third quarter, according to the latest quarterly survey by Challenger, Gray & Christmas. The 54,701 positions lost during the summer brings the total to 118,427 so far this year.

The largest number of layoff intentions were at computer companies, which planned 30,624 cuts in the third quarter (127 percent increase over the previous quarter). Also seeing increased job cutting are telecommunications (+8 percent to 19,825) and electronics (+75 percent to 4,092).

The year-to-date total jobs cut account for 16 percent of the 724,320 announcements for all industries
in the first nine months of 2004.

Source: Copied from the SSTI Weekly Digest for October 25, 2004.