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20% annual rise in offshoring seen

No matter who wins the presidential election, the outsourcing of technology jobs is here to stay. With the November election growing nearer, sending jobs to other countries has become a big issue for President George W. Bush and his Democratic challenger, Senator John F. Kerry of Massachusetts. Both are expected to touch on the issue tonight during a televised debate. In a paper released yesterday, however, META Group Inc., a Stamford, Conn., consulting and research firm, says the outsourcing trend will grow by 20 percent per year through 2008 as more US firms focus on cutting labor costs. META estimates that 60 percent of US firms will send some technology work abroad by 2008. Kerry has criticized the Bush administration for its support of outsourcing and has pledged to close a tax loophole that has allowed US firms to take business -- and jobs -- abroad. Kerry has also promised that if he is elected he will reward companies that agree to enlarge their operations in the United States. But META Group consultants said neither Bush nor Kerry will be able to stem the tide. They say, however, that new jobs will be created. "In the bigger picture, one job gain in India does not relate to one job in the United States," said Stan Lepeak, vice president of META Group. "The United States might employ fewer programmers here, but it will employ more managers and a variety of other new roles will be created to manage these new relationships." He described the bulk of the work that is being outsourced as "relatively basic" technology work. Lepeak acknowledged, however, that other jobs will be going abroad -- anything that can be done with a computer is at risk. "The growth will come from application development or software development," Lepeak said. "A big chunk of call center work will be offshore. You are also starting to see more highly skilled work . . . going offshore." Forrester Research, a Cambridge technology consulting and research firm, estimates US employers will ship 588,000 white-collar service jobs abroad this year, up from 315,000 last year. These jobs will range from software development and computer programming to accounting, legal paperwork, research, and development work. Michael Goodman, director of economic and public policy research at the UMass Donahue Institute in Boston, said that in all likelihood, technology outsourcing will not slow down because many companies want to cut costs. "The advantages are that American consumers and businesses will reap some benefits" in terms of lower costs for technology products. "Global production of clothing and consumer products has allowed chain stores like Wal-Mart to offer much lower prices," he said. "The negative effect is that it displaces people who used to work in factories here." Goodman said the big question is how the United States will capture those cost savings and develop programs that will help displaced workers move on. "People will have to be given the opportunity to adapt their skills so they can work in new, emerging, and growing industries."