Five metropolitan areas of the United States, including San Francisco and nearby Silicon Valley, stand to lose up to 24% of technology jobs by 2015 to cheaper locations such as India, according to a study by a prominent US think-tank.
The February report by the Brookings Institution, a Washington, D.C.-based research institution, also found that employment for American professionals in software programming, data entry and application development will fall by 17% as companies either open offices or outsource work overseas. The report was authored by Robert Atkinson and Howard Wial.
Boulder, Colorado; Lowell, Massachusetts; San Francisco, California; San Jose, California; and Stamford, Connecticut, were the five centres most vulnerable to offshoring, according to the study.
Already, large employers are illustrating the trend. For example, IBM and Accenture now employ more engineers and consultants in India than any other centre outside the US.
In 2006, Accenture, which employs around 30,000 software workers in the US, grew its workforce in India by more than 40% to 23,000 employees.
Meanwhile, IBM added 14,500 professionals to its existing pool of 38,000 workers in the country. Accenture said it plans to have a total headcount of 35,000 professionals in India by end 2007—overtaking the US as its largest pool of software professionals.
Bangalore is Accenture’s largest city in terms of number of employees, with more than 15,000 professionals, said chief executive Bill Green.
The Brookings report said that the direct job losses likely to result from service offshoring are moderate, even in the five cities at greatest risk.
San Jose, the heart of Silicon Valley with its high-technology companies, could lose up to 4.3% of its jobs to offshoring between 2004 and 2015, according to the Brookings study. That amounts to around 3,333 jobs per year.
In northern New Jersey, however, 14-17% of customer-service representatives' and insurance underwriters' jobs were projected to move abroad by 2015, the study said.
“We see a very high level of anxiety in some of these areas, as more specialized jobs in the areas of software programming move to locations such as India,” Phil Bond, president and chief executive of IT Association of America, said in a recent interview with Mint.