Author Says Offshoring 'Real WMD' for U.S.

Friday Oct 15th 2004 by Sharon Gaudin
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The author of the new book Rising Elephant says offshoring IT jobs ultimately will threaten the U.S.'s position in the world, and it will create a new superpower -- India.

America's high-end, high-paying IT jobs are increasingly moving to India, threatening the U.S.'s predominant position in the world and setting India up to become the next superpower, according to the author of a new book, Rising Elephant.

Ashutosh Sheshabalaya, a former journalist and technology consultant who heads Allilon, an IT services firm in Europe, is issuing a warning that the offshoring of U.S. high-tech jobs marks the remaking of the American workforce, as well as the world economy.

While offshoring IT jobs has raised concerns and voices in the high-tech community, Sheshabalaya says it's a far more complex and dangerous issue than most Americans understand. He predicts that this relocation of high-value jobs will ''erode the foundations of Western supremacy.''

Sheshabalaya calls this the "real weapon of mass destruction."

''Entire chunks of the Western economic system may be eroding at a faster pace than few believed possible only a few years ago,'' Sheshabalaya contends. ''The consequences of the relocation process remain unfathomable.... momentous.''

The author points out that while U.S. workers have suffered through the offshoring of textile and manufacturing jobs, this will be the first time the economy has had to deal with the loss of high-value jobs. This is a direct assault on the American middle and upper-middle class. And there should be no mistake, he adds, that India has any intention of simply pulling in low-end call center and programming jobs. High-value, high-tech jobs are equally at risk -- only the timing is different.

India's focus, Sheshabalaya says, is a ''full sweep of high-value white-collar services.'' He calls it the Great Displacement.

And the relocation movement quietly began about 20 years ago, starting in the mid-1980s and then slowly picking up in the mid-'90s. The dot-com boom masked some of this movement. Workers and industry analysts were too caught up in the wave of big salaries, bigger bonuses and more jobs than the U.S. workforce alone could fill to notice. With a down economy and the death of the dot-com boom, the fog has cleared and the statistics on offshoring are mounting.

According to Forrester Research, an industry analyst firm, 3.3 million American jobs will move overseas by 2015. Sheshabalaya notes that means 800 American IT jobs will move to India every day for the next 11 years. Another analyst firm, Gartner Group, predicts that one in 10 U.S. tech jobs might be moved out by the end of this year.

Technology employment in the southern Indian city of Bangalore has overtaken that in Silicon Valley.

In a one-on-one interview with Datamation, Sheshabalaya talks about the failings of the American government to deal with this crisis, what happens when U.S. students stop studying computer science and America's waning days as a superpower.

Q: You say India is positioning itself to become a world power -- a superpower. Is this really possible?
It is not only possible -- in many senses, it's inevitable. The question is over what time frame will it happen. This isn't an accidental success story that India is doing well in IT. There is a massive consensus in India that this is a good way to leapfrog over all the challenges of development of a very poor country. What is very important about IT is that it cuts across all the major interest groups in India as being one of the most crucial possibilities for the country to become a big power and then a superpower.

Q: How soon do you see this happening?
By the year 2040 or 2050. It's going to be a paradigm shift. It won't be tomorrow and it also won't be very dramatic. It will take a generation or two in international politics... The use of the words 'great displacement' is very important. This will take some time. This will be more subtle than you might think.

Q: Do you see India and the United States being superpowers at the same time, or do you see America's global influence waning because of the job exodus?
It's a transition. I'd say it's a matter of one going up and one going down. Europe is going down faster. The U.S. is figuring it out faster than Europe. The displacement isn't a one-way street. There will be a lot of up and down for both sides in this process... By 2050, the U.S. will not be where it was at the turn of the millennium. It will no longer be the case that the U.S. will always get its way.

Q: You use the phrase "the real weapon of mass destruction" when talking about this job relocation. Are you saying that India pulling in high-skill jobs is virtually a WMD for the U.S., along with many European countries?
Actually, this is a quote from the Washington Times. But I do agree. It seems to have numbed and paralyzed many already.

Continue on to read Sheshabalaya's predictions that U.S. IT workers will end up moving to India to find jobs, what happens when students stop studying computer science, and what is ahead for the U.S. economy.

Q: What do you see happening to the U.S. economy because of offshoring?
Never before in history have high-end jobs moved out. The biggest risk for the U.S. is that it gets caught by surprise in being a renter economy. The U.S. could end up doing the final branding and packaging for the world market, while the work is actually be done elsewhere. You cannot have an economy that does not have a skills base of its own...
The worry for me is that... nobody is clearly putting across what comes after these high skill jobs leave. Try to explain what will replace these high-skill sets. The U.S. has long been the place where everything happens. It was a place for discoveries. If these skills go someplace else... there could be a very big snapping of elasticity of the way it held everything together.

Q: Won't high-level IT jobs need to remain here in the U.S.? Won't companies need project managers and architects within the company's walls?
People who are facing the customers, facing the decision makers in large corporations are going to be required. They need to actively redefine their roles. Over the next 40 years, there will be a very big drift... Those roles will start shifting outside the United States. When that happens, I'd say the process will accelerate very quickly.

Q: Are you saying that U.S. IT workers will end up moving to India to find work?
For me, that is very much an undercurrent that has not been looked at realistically. It's the only thing that carries its own solution. There is no reason why high-skilled workers can't move to India where the work will be done. There will be a high-level physical transfer. They will be connecting with the Indian high-tech machine. In the next five years, it will happen virtually. Americans will be working for an Indian company but still will be based in the United States. Later on, the choice may be for American IT people with a high-level of familiarity of the American market to actually go to India.

Q: But if companies are largely sending work to India because it's cheaper there, wouldn't U.S. workers going to India expect a huge pay cut?
There will be a lot of upward leveling of pay in India. There also will be an encouragement for people to take lower wages but benefit from lower taxes. And they would benefit much more by working in India than in having no job.

Q: Do you think the U.S. government could be, or should be, doing more about this situation?
Definitely. This is one of my biggest complaints. Someone should have been explaining what is going on so people aren't side swiped. The government is pretending there is no problem or that they can block the problem out of existence with legislation. Not allowing job insurance for the IT profession is a problem. There is an absolute need for that. If this wave is accepted as being inevitable, then it's important to try to ride the wave... They need to give incentives to Indian companies to hire people in the U.S. and that's just not happening.

Q: In your book, you say U.S. students will stop majoring in computer science when they see that there are fewer jobs available to them here. Is the U.S. moving toward a time when offshoring isn't a choice but a necessity because we no longer have trained people who can do the job here?
If students stop studying IT, there will be no choice but to go even faster into India. It becomes a self-fulfilling prophecy. Students should not be looking just at jobs here in the U.S. Why don't they look beyond the U.S.? There are a lot of jobs -- they just might not be here.

Q: It sounds like you're predicting that the United States is moving into what will be a difficult time.
Oh, definitely. There is no question about that... Somebody needs to start talking about what is in the next stage. There obviously is a kind of numbing about what is happening here. There is a profound structural crisis coming. What must be figured out is how this can be proactively handled.

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