Chief executive officers at companies offshoring US jobs to foreign countries, mostly to India, received larger pay packets and their firms saw a rise in profits, a study has revealed.
Top executives at the 50 largest outsourcers of service jobs made an average of $10.4 million in 2003, a 46 per cent increase over the previous year, and 28 per cent more than the average large-company CEO, said the study titled 'Executive Excess 2004: Campaign Contributions, Outsourcing, Unexpensed Stock Options and Rising CEO Pay.'
"These 50 CEOs seem to be personally benefiting from a trend that has already cost hundreds of thousands of US jobs and is projected to cost millions more over the next decade," said the study by the Institute for Policy Studies and United for a Fair Economy, two left-leaning think tanks.
India claimed the greatest number of outsourced service jobs, particularly for call centers and software programming work, it said.
The study said outsourcing did indeed increase profits by lowering labour costs, but argued that there was no proof that this translated into more and better American jobs.
US firms account for more than two-thirds of India's $12.5 billion annual business in international software and business support services. Analysts predict that the market could quadruple by 2008.
The average pay of the leading outsourcing CEOs was 3,300 times the pay of an average Indian call centre employee and 1,300 times more than that of a computer programmer, it said.
Offshoring has become a hot-button issue in the year of the US presidential election.
Defenders of the practice, say it ultimately assists the US economy. But critics say it costs US workers jobs and threatens the country's long-term tech leadership.
Democratic presidential nominee John Kerry has pledged to create incentives to keep US jobs from going overseas.
The report argues that while a relative handful of Indian workers undoubtedly benefit from outsourcing, the larger benefits are questionable.
The recent elections in India revealed the widespread resentment among the Indian poor who feel they have not benefited from the global service sector, it observed.
Given a lack of other economic opportunities, Indian workers are understandably often eager to secure new jobs catering to the US market, it said.
However, in a largely unregulated global economy, these workers must face the nagging fear that their jobs could quickly evaporate as soon as firms can find lower costs elsewhere.
Thus, while US workers are facing increased job anxiety as a result of outsourcing, there are also strong concerns that the outsourcing trend is not a panacea for the developing world.
The study also said the so-called CEO-to-worker wage gap is rising again, after two years of narrowing.
With executive pay up 9 per cent in 2003, the ratio between CEO pay and worker pay reached 301 to 1, up from 282 to 1 in 2002.
