Offshore Outsourcing Controversy Just Warming Up

Offshore Outsourcing Controversy Just Warming Up

There are signs offshore outsourcing may soon become as hot a political issue here as it already is in the US.

While employees wait to learn how many jobs they will lose to India thanks to the $75 million deal Telstra recently signed with Indian IT company Infosys, Gartner is warning Australian IT workers face a massive wave of IT redundancies over the next few years.

Gartner EXP (Executive Programs) vice president and research director Andrew Rowsell-Jones told Computerworld local vendor-based jobs will move to offshore outsourcing markets on a "substantial" scale under pressure of tightening budgets and increasing performance pressures on corporate IT departments.

The Australian Computer Society has also said the trend toward offshore outsourcing of IT services could cost the country 40,000 computer jobs and billions of dollars in lost economic benefits by 2015.

The Community and Public Sector Union (CPSU) fears that process has already started, claiming Telstra's deal with Infosys could cost several hundred Australian jobs. Infosys country manager Ananda Rao says since Infosys has been given eight or nine months to manage the transition, it is too early to say how many people would be working on the project here and how much of the work involved would be sent offshore.

However CPSU Director of Campaigning and Communications Dermot Browne says the CPSU is deeply concerned at the ongoing erosion of Aussie IT jobs and the increasing use of offshore outfits like Infosys.

“Over recent weeks, there has been a steady stream of Australian IT jobs lost from the companies Telstra has deals with including Deloittes and IBM-GSA,” he says. “These jobs will never return.

“Workers across the industry and inside Telstra are increasingly uneasy about Telstra’s longer term motives and the fact that the Federal Government is sitting on its hand rather than acting to protect this vital industry and the talented people who work in it.”

Meanwhile with the ALP due to release its IT policy within months Senator Kate Lundy has reportedly expressed concerns about offshore outsourcing, describing it as an effort by multinationals to drive down labour costs. She also has reservations about the privacy and security implications of shipping IT work to subcontractors in countries such as India.

Lundy forecasts IT policy will be an election issue in Australia. “It has been a significant issue for some time. The frustration level is getting higher and higher. Labor has committed to ICT as a strategic industry and people are looking for a nation-building strategy,” she says.

Meanwhile in the US, companies that have been sending IT jobs offshore for some time are facing increasing political heat.

There was a furore last month when the media learnt the Indiana Department of Workforce Development — which is chartered with helping the unemployed find jobs - had hired programmers from India to update its computers.

The agency, which needed $US15.2 million worth of computer upgrades to speed handling of unemployment claims, got into hot water after hiring a company based in India to do the work.

And as more and more US citizens wonder why their soaring unemployment levels aren’t being alleviated by current so-called jobless recovery, companies resorting to offshore outsourcing are facing increasingly critical attention.

For instance in a recent newsletter headed America's Biggest Export: Jobs, management consultant and futurist William Dunk of GlobalProvince writes “What’s happened to America is that we are not only exporting our manufacturing jobs to China but we are putting our knowledge-worker jobs all over the globe.

“. . .Complacently, we may have thought we were only sending grunt, blue collar work out of the States. But we’re outsourcing a huge volume of our white collar work to the world, which has retarded our recovery,” he wrote. “Employment in the US services sector has remained unchanged over the past 21 months as the economy has recovered. Usually the services industry headcount has grown five per cent by this stage of the cycle.”

Dunk predicts the furore will lead to an inevitable rise in protectionism against foreign goods and services.

“Our policymakers have not figured out the endgame here. That is, they do not know how to keep Americans at work when they send jobs abroad, not only in manufacturing but in the digital occupations that are supposed to take up the slack. With modern broadband communications, it is even easier, if anything, to do knowledge work abroad than manufacturing.”

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More about ALPAustralian Computer SocietyCommunity and Public Sector UnionCPSUDeloittesGartnerGSA GroupIBM AustraliaInfosysTelstra Corporation

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