Mounting layoffs fire up offshoring debate

The offshoring debate heats up as the United States braves out the worst economic downturn since the Great Depression. Labor groups are slamming companies for shipping jobs overseas at a time of spiraling U.S. high-tech unemployment, and critics have characterized the Obama administration's early efforts to reach out to high-tech executives as tacit complicity.

At the same time, a new survey has found that some offshored jobs are heading back home, as employers in one sector discover the economies of overseas outsourcing are not what they expected.

Workers cried foul in late January when IBM Corp. announced the layoff of about 2,800 U.S. employees, with union officials claiming the company was sending jobs offshore. IBM officials provided few details about the layoff but did launch a counteroffensive called Project Match to connect displaced U.S. workers with job openings overseas.

The project would require U.S. workers to relocate to a low-wage country like India and accept a salary at the going rate for the area, although the company said it would help with relocation costs. The gambit seemed to impress few, least of all representatives of IBM workers and other offshoring opponents.

The rising tide of layoffs has labor unions and professional groups "very concerned," IEEE-USA President Gordon Day said in an interview. "We're expecting [U.S. engineering unemployment] to go up substantially in 2009."

As recently as 2007, engineering unemployment was at a historically low 0.5 percent, according to the U.S. Bureau of Labor Statistics. But the jobless rate for U.S. engineers jumped to 2.8 percent last year, and this year's rate looks to be much higher.

Job cuts everywhere
One ominous sign came when Spansion Inc., the leading maker of NOR flash memory components, said it was filing for U.S. bankruptcy protection and laying off workers. Some of the affected workers spoke out when reports surfaced that the company's new CEO could be in line for a $1.75 million bonus if he found a buyer for the troubled memory vendor.

"None of the U.S. employees got any advance notice—or severance, or medical benefit extension," one laid-off employee told EE Times semiconductor editor Mark LaPedus.

Said another: "We got zero severance pay, just vacation accrued and 35 percent of COBRA [health insurance] for four months."

Such scenarios have become common in the high-tech industry in recent months. Besides IBM and Spansion, the list of U.S., Asian and European manufacturers that have announced job cuts and reorganizations since mid-2008 includes Advanced Micro Devices, Hewlett-Packard, Intel, Nokia, Sony, Sun Microsystems and Xilinx. According to the Website TechCrunch, more than 300,000 high-tech workers were been laid off between August 2008 and mid-February.

Outsourcing opponents also complain that the high-tech industry is using euphemisms like "rebalancing" to blunt the growing chorus of complaints about layoffs. Said IEEE-USA's Day: "Is 'rebalancing' the new 'downsizing'? We really don't know what that means." Regardless of how companies attempt to soft-pedal layoffs through terms like rebalancing and another IBM formulation, "resource action," labor groups agree that the upshot is the same: You're out of a job.