A filing Tuesday with the U.S. Securities and Exchange Commission (SEC), the regulatory body that monitors publicly traded companies, indicates that Dell last year generated most of its new jobs overseas, in the fastest-growing markets there, including China. Dell’s disclosure confirms the pattern in global IT spending growth last year, but business analysts said the outsourcing numbers need to be placed in context.
“Even the experts don’t know precisely how many U.S. jobs have been, or will be, sourced overseas,” according to a new report by the U.S. Chamber of Commerce called “Jobs, Trade, Sourcing and the Future of the American Workforce,” which was released to TechNewsWorld this morning. “Yet, under any estimate or forecast, these jobs amount to a small fraction of our nation’s 138 million workforce.”
This finding hasn’t stopped Democratic presidential candidate Sen. John Kerry (D-Mass.) or some Congressional legislators from trying to make outsourcing a political issue in this election year.
At a campaign stop at a school in New Hampshire this week, Sen. Kerry, who has never worked in the private sector and went directly into politics after his four-month stint in Vietnam in the 1960s, described his plans to end the loophole that he said gives corporations tax breaks for moving operations overseas. Kerry also said he would invest in science, education and technology to create jobs.
“If your policy is just tax cut, tax cut, tax cut, for wealthy Americans … then you don’t have the job creation you need,” said Kerry during the campaign swing.
Insourcing Big Too
Research demonstrates that more white-collar work, contrary to public perception, is shipped from other countries to the United States than from the United States to overseas locations. “When it comes to trade in services, insourcing beats outsourcing by nearly $60 billion annually,” said the Chamber’s report. “Political rhetoric aside, the nation’s knowledge workers have not lost significant job opportunities to foreign competitors. The unemployment rate among Americans with a four-year college degree is just 2.9 percent.”
The Dell figures released to the SEC are illustrative. The company’s business has taken off overseas during the last two years, and, like other companies with growth in foreign markets, it is adding workers there.
Dell’s shipments to China, one of the world’s fastest-growing markets for PCs, grew 36 percent in the fourth quarter, which ended January 30th.
Dell has increased staffing in that country in manufacturing, sales and support — but not in high-end work like design or management.
Across the Sea of Japan, in Japan, Dell’s revenues rose 26 percent last year.
Dell’s Thousands Abroad
Of the nearly 7,000 jobs Dell added in 2003, about 1,000 were in the United States. The computer maker now employs 6,600 people in the Asia-Pacific-Japan region, 6,900 in the Americas outside of the United States, and 10,300 in the Europe-Middle East-Africa region.
The company makes all of its notebook PCs in Penang, Malaysia, and operates call centers in Panama and India. The call centers respond to tech-support questions from customers around the globe. That trend is likely to continue, as Dell has set the goal of increasing its worldwide PC market share to 40 percent over the next few years, up from just 16 percent today.
“Even with job losses in manufacturing and some service occupations, more Americans are working today than at any time in history,” said the Chamber’s report. “More than half a million payroll jobs have been created so far this year. The nation’s employment machine is fundamentally strong.” Indeed, some experts portray growth in outsourcing as a sign of economic strength, not weakness, for the United States.
The world’s top 30 IT services companies reported strong revenue growth overall in 2003, due in large part to the fact that more customers are seeking to outsource work that’s unrelated to their core business, according to a new survey by IDC. Revenues increased 10.9 percent from 2002 levels to reach an aggregate US$209.2 billion, IDC said.
Project-oriented services, such as systems integration, custom-application development and consulting, increased by just 7.2 percent, IDC said.
Heated rhetoric over the jobs issue may cool down, however, now that more reports of good jobs growth are coming forward. The U.S. economy grew at an annualized rate of 4.1 percent in the fourth quarter after a third-quarter surge of 8.2 percent, according to a recent report.
“As the debate over trade, jobs and the sourcing of work overseas has unfolded, we are struck by how infrequently solid facts have been brought into the discussion,” said the Chamber’s report. “The result is a debate that has generated more heat than light.”
The vicissitudes of politics and a plan to stop outsourcing, although popular with some, probably won’t be enough to sway the election among workers. As a campaigner, Kerry “doesn’t warm anybody up,” but President Bush is seen as “likable and strong,” according to focus-group polls of undecided union voters conducted for the AFL-CIO.
Labor must help the famously aloof Yale-educated lawyer Kerry “create an emotional bond” if fence-sitting members are to vote for him in November, according to the results. The focus groups were conducted last month in St. Louis, Missouri, and Philadelphia, Pennsylvania, by Lake Snell Perry & Associates, a Democratic polling firm.