Fortune 500 Forecast: 50% Fewer Jobs in U.S.

Offshore outsourcing of traditional IT work will grow 20 to 25 percent each year in the next few years, from its current market value of roughly $20 billion, according to Atul Vashistha, CEO of San Ramon, California-based offshore advisory firm NeoIT. TPI, a Houston-based global sourcing advisory firm that has worked on 550 large outsourcing contracts since 1998, says that nearly half of its 2003 deals had an offshoring component.

What will this mean in the next two to five years? First, the good news: global sourcing is causing downward price pressure on all service providers, domestic and foreign, which means customers will have the upper hand in negotiating deals, analysts predict. To compete on price with Indian providers like Infosys Technologies and Wipro Technologies, U.S. providers will need to open centers in India and elsewhere; IBM, EDS, Accenture, Hewlett-Packard, and Hewitt Associates have led the charge.

Now for the troubling news: experts say that growth in global sourcing will transform the U.S. workforce. "In 5 to 10 years, a majority of Fortune 100 companies could have 50 percent fewer employees," predicts McGuire. Forrester Research forecasts that 3.3 million U.S. service-industry jobs will go offshore in the next 15 years.

And business-process outsourcing (BPO), in which companies contract for services ranging from HR record-keeping to basic accounting to airline reservations services, will explode—from $110 billion in 2002 to $173 billion in 2007, according to Gartner. In June, an Accenture/Economist Intelligence Unit survey of senior executives at 236 global companies revealed that 30 percent outsourced finance and accounting functions. Indeed, those jobs are now among the most common to be moved offshore. In the future, the focus will be less on offshoring discrete processes within a department and more on moving the entire function (all of HR, for example) offshore.

Here to read more.