Where The Good Jobs Are Going

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Little by little, Sab Maglione could feel his job slipping away. He worked for a large insurance firm in northern New Jersey, developing the software it uses to keep track of its agents. But in mid-2001, his employer introduced him to Tata Consultancy Services, India's largest software company. About 120 Tata employees were brought in to help on a platform-conversion project. Maglione, 44, trained and managed a five-person Tata team. When one of them was named manager, he started to worry. By the end of last year, 70% of the project had been shifted to India and nearly all 20 U.S. workers, including Maglione, were laid off.

Since then, Maglione has been able to find only temporary work in his field, taking a pay cut of nearly 30% from his former salary of $77,000. For a family and mortgage, he says, "that doesn't pay the bills." Worried about utility costs, he runs after his two children, 11 and 7, to turn off the lights. And he has considered a new career as a house painter. "It doesn't require that much skill, and I don't have to go to school for it," Maglione says. And houses, at least, can't be painted from overseas.

U.S. financial-services firms expect to move more than 500,000 jobs overseas within five years

Jobs that stay put are becoming a lot harder to find these days. U.S. companies are expected to send 3.3 million jobs overseas in the next 12 years, primarily to India, according to a study by Forrester Research. If you've ever called Dell about a sick PC or American Express about an error on your bill, the friendly voice that answered your questions was probably a customer-service rep in Bangalore or New Delhi. Those relatively low-skilled jobs were the first to go, starting in 1997.

But more and more of the jobs that are moving abroad today are highly skilled and highly paid — the type that workers assumed would always remain at home. Instead Maglione is one of thousands of workers adjusting to the unsettling new reality. "If I can get another three years in this industry, I'll be fortunate," he says. Businesses are embracing offshore outsourcing in their drive to stay competitive, and almost any company, whether in manufacturing or services, can find some part of its work that can be done off site. By taking advantage of lower wages overseas, managers believe they can cut their overall costs 25% to 40% while building a more secure, more focused work force at home. Labor leaders — and nonunion workers, who make up most of those being displaced — aren't buying that rationale. "How can America be competitive in the long run sending over the very best jobs?" asks Marcus Courtney, president of the Seattle-based Washington Alliance of Technology Workers. "I don't see how that helps the middle class."

The same process is under way in Europe. According to Gartner Research, three-quarters of the Continent's large and medium-sized firms will explore offshore services by the end of next year. In the U.K. — Europe's largest outsourcing market — the floodgates are already open. Late last month, news and information provider Reuters announced it was shifting some of its back-office operations to India. Just days earlier, U.S. investment bank Goldman Sachs said a significant part of its British administration and IT departments would be headed in the same direction. U.K. call-center staff are feeling the heat, too. On the back of large-scale moves by British Airways, HSBC and the insurance giant Prudential, telecoms operator BT recently announced plans to switch more than 2,000 call-center jobs to India. But labor unions are answering BT back. "The bulk of your customers are in the U.K., the bulk of your profitability is in the U.K., and here you are moving work out of the country and damaging communities," says Bill McClory, acting deputy general secretary of Britain's Communication Workers' Union. Overall, labor leaders say around 200,000 jobs will be outsourced abroad over the next five years.