By AMY MARTINEZ, Staff Writer
The News & Observer

Software and technology companies that hire workers in low-cost countries such as India will add $3.3 billion to North Carolina's economy and create 9,699 new jobs by 2008, a new industry-funded study says.

The cost savings from paying workers in those countries less than those in the United States already have led to 2,555 new jobs in the state since 2000, according to the Information Technology Association of America, which is based in Arlington, Va., and represents 400 companies, including AT&T, Amazon.com and IBM.

"The global economy is a good thing," senior vice president Bob Cohen said Tuesday. "It has become a politicized issue, but for most people, it creates jobs and improves real wages."

That's not the viewpoint of many laid-off technology workers, who argue that the movement of jobs offshore is a leading factor in North Carolina's rising joblessness. In fact, the state has lost 100,000 jobs since the end of the recession in November 2001.

But U.S. companies say hiring offshore is not to blame for the jobless recovery -- rather, they say, the real culprits are the excesses of the late 1990s, as well as productivity gains and technological advances that allow them to do more with fewer workers.

The study, conducted by Global Insight of Lexington, Mass., relies on economic models and information from technology companies to measure the effect of offshore hiring on all 50 states. It predicts that by 2008, companies that send at least some of their technology functions offshore will add $124 billion to the U.S. economy and create a net gain of 317,367 jobs. They'll do that by cutting costs, lowering prices, operating around the clock and tailoring products to local needs, according to the study.

The big winners are California, Texas, Florida and New York, primarily because of their large, diversified economies, the study said. North Carolina's projected job growth ranks 11th, in line with its size.

The study is an effort by the Information Technology Association to counter criticism of federal trade policies and thwart a push in North Carolina and other states to limit government contracting with companies that hire offshore. This month, state lawmakers agreed to spend $1.2 million and hire 34 call-center workers in North Carolina to try to scale back a contract that sent food-stamp work to India.

Enacting "protectionist legislation or regulations as a result of the political pressure" would be unwise, given the benefits of hiring offshore, the study said. It calls on governments to spend more money on research and development and worker training.

"We have no choice but to retrain our people to do things that people offshore can't do," said Michael Le, president of International IT Services, a Raleigh outsourcing firm with 48 software developers in Vietnam. Workers there are paid $300 to $500 a month, compared with $5,000 a month in the United States, he said.

Le encourages computer programmers and software developers to upgrade their skills and become project managers, system architects and engineers. "Those are the things we do best," he said.

But others worry that the very ones losing their jobs to globalization are getting lost in the debate.

To be sure, some industries will benefit more than others. The construction sector will add the most jobs in North Carolina as a result of globalization -- 2,554 during the next four years -- followed by transportation and utilities, education and health services, according to the study. The sole loser will be the publishing, software and communications sector. It's already down 627 jobs and is projected to lose 1,268 by 2008.

"We're losing the exact kinds of jobs that five or 10 years ago we thought we would build our economy on," said Gary Shoesmith, an economist at Wake Forest University. Shoesmith thinks that the technology sector will benefit from globalization, but not for another five years.

"Real people are seriously injured in the transformation globalization creates," said Carol Conway, deputy director of the Southern Growth Policies Board, a nonprofit organization in Research Triangle Park.

Conway is the author of a new study titled "Fast Forward: Mobilizing the South for Prosperity in a Global Economy," in which she argues that North Carolina and other Southern states are not doing enough to benefit from globalization.

"It is correct that there will be job creation," she said. "But there will also be an exodus of some types of jobs."

International IT Services: www.iits-usa.com

Reference Link(s):

http://newsobserver.com/business/technology/story/3464848p-3079625c.html