Outsourcing wave grows

WASHINGTON - Although some U.S. firms are bringing overseas work back home, evidence is growing that companies are moving more jobs than ever to China and other countries - a trend that could hinder efforts to bring down the nation's stubbornly high unemployment rate.

One sign of the growing movement of jobs overseas is the rising number of applications for federal Trade Adjustment Assistance, which usually goes to factory workers who lost their jobs because their work was sent overseas or was undercut by cheaper imports.

For the six months that ended Sept. 30, workers at about 1,200 offices and plants nationwide were approved for Trade Adjustment Assistance. That's about 20 percent more approvals than in the same six-month period last year, according to the Labor Department.

In addition, the most recent Commerce Department data show that employment at the foreign subsidiaries and affiliates of U.S. multinational firms grew by 729,000, to 11.9 million, between 2006 and 2008. Over that period, domestic employment by such firms slipped by 500,000 jobs, to 21.1 million.

"The paradigm has shifted," said John Challenger, chief executive of the Chicago outplacement and consulting firm Challenger, Gray & Christmas. "Most companies see the next phase or era of growth as global. . . . That'll still create jobs here, just not on the scale when they were focusing on growth in the U.S."

That trend could further stall the economic recovery, which many economists believe will continue to lack vigor while unemployment remains high - currently 9.6 percent nationally.

Among the companies that have recently sent jobs overseas are Hewlett-Packard Co. in Palo Alto, Calif., and Hilton Worldwide, the McLean, Va., hotelier that had maintained a reservations center in Hemet, Calif., employing 295 people. Hilton indicated it was moving the center to the Philippines to save money.

"Across all aspects of its business, Hilton Worldwide is committed to maximizing operating efficiencies while maintaining service levels," Hilton said in a statement.

Also moving to the Philippines this year were JPMorgan Chase's telephone-banking operations, from Troy, Mich.

Hewlett-Packard is laying off an undisclosed number of human-resources employees in 10 states, transferring their functions to Panama.

Hilton and Hewlett-Packard would not provide details of the job moves, which were disclosed in recent government filings.

The movement abroad of U.S. production and jobs has been going on for more than two decades, with service firms more recently pushing the trend. Experts say more such movement could help U.S. firms better compete in the global economy, thus boosting sales and profits that will sustain them and generate more business.

Eventually, stronger, expanding firms could create more opportunities for U.S. workers, though that's not a sure thing. More and more, for example, upscale engineering and development for products manufactured in China are being done in China, near the centers of production - not in the United States.

Dennis Donovan, a corporate-relocation consultant, said many legal and engineering firms already had outsourced routine work overseas, and he sees a bigger wave of such action by the burgeoning health-care industry. At the same time, he sees fewer companies moving overseas strictly on the basis of cost.

"Now it's R&D centers and also for market penetration," said Donovan, a principal at Wadley-Donovan-Gutshaw Consulting in Bridgewater, N.J.

He said some U.S. firms were beginning to move call centers and other back-office operations back to the United States because costs in China, India, and other leading outsourcing countries had risen sharply and quality had not been consistent.