Offshoring, Technology Compound Job Losses
By STEVEN D. JONES
DOW JONES NEWSWIRES
kennycanary: still working at walmart this weekend ?
A recovering economy won't restore office jobs lost in the recession because businesses have found foreign workers or technology to do those jobs for less.
The U.S. economy added fewer jobs than expected in November, and the unemployment rate rose to 9.8% from 9.6% the prior month. Private-sector hiring totaled 50,000 jobs, about half the level economists predicted, despite a rising trend of corporate revenue and profits.
A pickup in holiday spending and improving manufacturing data suggested the recovery was building strength. But the jobless numbers show most of the unemployed aren't catching the wave. One reason: Companies are continuing to cut office staff even as business recovers, according to research by corporate finance and management consultants at The Hackett Group (HCKT).
Since the recession began in 2008, 1.3 million jobs in information technology, finance, human resources and procurement functions have been eliminated, Hackett reported in research published last month. Over the next four years, Hackett estimates an additional 1 million back-office jobs will follow a similar path as companies find foreign workers and computer technology to do the tasks for less.
By 2014, nearly half of the back-office jobs that existed in corporations in 2000 will have either been eliminated or moved overseas, Hackett estimates.
"Realistically, we have to discover ways to create jobs in other industries and in other ways," said Michel Janssen, chief research officer at Hackett. "All those accounts-payable clerks companies needed in 2007, they may not need again."
Overseas contractors aren't the only threat, said Janssen, although that is a significant part of the trend. Technology that does everything from review and approve employee travel expenses to retail systems that reorder merchandise based on cash-register receipts are automating hundreds of office tasks.
Through its consulting work with clients over the past decade, Hackett has gathered a detailed picture of business, for example, down to the level of the number of payroll clerks at a company, their salaries and locations worldwide. Hackett applies that knowledge to global companies with more than $1 billion in revenue to create its back-office employment estimates.
Hackett's estimates of office-employment trends contrast with more-optimistic estimates published by official sources, such as the Bureau of Labor Statistics. For example, the BLS forecast of management and financial employment published earlier this year projects companies will add nearly 20,000 human-resources specialists annually through 2018. Hackett estimates companies will eliminate about 30,000 jobs annually in that sector through 2014.
"I suspect most of those folks at BLS haven't been to India," said Janssen. Clients share data with Hackett that allow the Miami-based consultancy to gather "a lower level of data than the BLS uses" for its forecasts, he said.
Honorio Padron, leader of Hackett's information-technology consulting group, said one client had eliminated 10% of its IT jobs during the recession, or 200 workers. Through reorganization, outsourcing and new technology, the company has decided "that bringing back even five of those jobs would be too many," Padron said.
Recession gets the blame for all the lost U.S. jobs. But no recovery can restore the millions of jobs lost to overseas workers and technology. |
