Monday, April 12, 2004
Call-center baloney?
I have been very suspicious about the numbers surrounding outsourcing. In fact, I was just discussing with a friend whether he had seen any numbers he would call truly reliable. This is a point that I have made earlier on this blog itself -- the very dodgy data surrounding the claims of damage done to the U.S. economy. AEvery other story critical of oursourcing to India has depended on a Forrester study which claimed that 3.3 million jobs would be outsourced by 2015, a forecast for which the methodology used was unknown. John Kerry attacks outsourcing based on that number and so does everyone else. A cover-story in the Wall Street Journal throws some more light on this number.
The actual number of jobs lost to outsourcing and its impact are a lot less clear than the politicians and media jumping on the issue acknowledge. Many economists estimate that roughly 100,000 white-collar jobs migrate overseas each year. That is a substantial number, though actually relatively small when measured against the size of the labor market and job losses that occur for others reasons.
For a sense of the confusion over the outsourcing numbers, consider a set of oft-cited estimates from John McCarthy, a researcher at Forrester Research Inc. in Cambridge, Mass. In April 2002, Mr. McCarthy traveled to India in an effort to develop and sell research about offshore outsourcing. He left impressed with the country's ability to win contracts from American companies for white-collar work, such as processing insurance claims. When he returned to his office, he gathered newspaper clippings and pored through Labor Department statistics on 505 white-collar occupations. Based on his own assumptions about the vulnerability of various job categories to outsourcing, he made an educated guess about how many jobs would be shipped offshore by 2015.
His number -- 3.3 million jobs representing $136 billion in wages -- fed a growing media and political storm. BusinessWeek highlighted the number in a February 2003 cover story. The Wall Street Journal has referred to it at least five times. Lou Dobbs, a CNN business-news anchor, has made mention of the numbers on several occasions in his criticisms of businesses that move jobs overseas.
Sen. John Kerry, the likely Democratic presidential candidate, cited the Forrester research last November when he introduced legislation to regulate the call-center industry, noting in a press release, "this is 2% of the entire work force." Tom Daschle, the Senate Minority Leader, latched onto Mr. McCarthy's numbers when Democrats introduced legislation in February requiring companies to file disclosures when they send jobs overseas.
Mr. McCarthy now says his numbers were hyped and that it "makes me a little mad." He says the projected loss of jobs and income will occur over a number of years, mostly later in the decade. To date, he says, the actual number of white-collar jobs that have moved offshore is less than 300,000. That equals only about 0.2% of the total job market in any given year. "I'm in awe that 18 months later I'm still getting five calls a day" about the report, says Mr. McCarthy. He refers to the increased attention on Indian companies as "this call center baloney."
The actual number of jobs lost to outsourcing and its impact are a lot less clear than the politicians and media jumping on the issue acknowledge. Many economists estimate that roughly 100,000 white-collar jobs migrate overseas each year. That is a substantial number, though actually relatively small when measured against the size of the labor market and job losses that occur for others reasons.
For a sense of the confusion over the outsourcing numbers, consider a set of oft-cited estimates from John McCarthy, a researcher at Forrester Research Inc. in Cambridge, Mass. In April 2002, Mr. McCarthy traveled to India in an effort to develop and sell research about offshore outsourcing. He left impressed with the country's ability to win contracts from American companies for white-collar work, such as processing insurance claims. When he returned to his office, he gathered newspaper clippings and pored through Labor Department statistics on 505 white-collar occupations. Based on his own assumptions about the vulnerability of various job categories to outsourcing, he made an educated guess about how many jobs would be shipped offshore by 2015.
His number -- 3.3 million jobs representing $136 billion in wages -- fed a growing media and political storm. BusinessWeek highlighted the number in a February 2003 cover story. The Wall Street Journal has referred to it at least five times. Lou Dobbs, a CNN business-news anchor, has made mention of the numbers on several occasions in his criticisms of businesses that move jobs overseas.
Sen. John Kerry, the likely Democratic presidential candidate, cited the Forrester research last November when he introduced legislation to regulate the call-center industry, noting in a press release, "this is 2% of the entire work force." Tom Daschle, the Senate Minority Leader, latched onto Mr. McCarthy's numbers when Democrats introduced legislation in February requiring companies to file disclosures when they send jobs overseas.
Mr. McCarthy now says his numbers were hyped and that it "makes me a little mad." He says the projected loss of jobs and income will occur over a number of years, mostly later in the decade. To date, he says, the actual number of white-collar jobs that have moved offshore is less than 300,000. That equals only about 0.2% of the total job market in any given year. "I'm in awe that 18 months later I'm still getting five calls a day" about the report, says Mr. McCarthy. He refers to the increased attention on Indian companies as "this call center baloney."
