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Rajeev Dhawan Forecasts Continued Outsourcing Of Service Jobs

March 2004
Rajeev Dhawan Forecasts Continued Outsourcing Of Service Jobs

The Georgia Indo-American Chamber of Commerce (GIACC) held a talk by Prof. Rajeev Dhawan, an eminent scholar in economic forecasting at GCATT in downtown Atlanta on January 27.

About 50 members of GIACC and their guests attended the talk, which was entitled, ?Musings from the top of the Himalayas'.

In his address, Dr. Dhawan predicted, "Service jobs will continue to be outsourced overseas as long as U.S. companies face flat revenues and are unable to raise prices. The economy would continue growing this year, but would produce only about 1.25 million new U.S. jobs in 2004, most of which would be low paying".

He said he would not consider the U.S. economy to be healthy again until it is able to create three million jobs "to make up the damage for the jobs that have been lost over the past three years," he added. "Middle class jobs are under siege because companies cannot afford to pay if their revenues are down," he said, predicting a bleak future for U.S. bookkeepers in particular because their services are vulnerable to being moved overseas. Atlanta, which appears to have had better than average growth in service jobs recently, has only been able to "look good on paper" since the new jobs are for low wages, he said.

Dr. Dhawan said that the advances in telecom and software development during the 1990s had eliminated the need for some companies to remain physically located in the U.S. "The comparative cost advantages of outsourcing service work are forcing companies or institutions to outsource services to control expenses," he said.

Dr Dhawan cited the example of the cost savings Massachusetts General Hospital in Boston had experienced by sending X-rays via the Internet to India. While the hospital was finding it difficult to hire radiologists at home, India has a surplus that work for far lower salaries. He also cited Smith Barney, a division of Citicorp Global Markets Inc., which in the early 1990s moved back-office jobs to Florida, but had moved them again to India by the late 1990s.

Dr. Dhawan is the director of the Robinson College of Business' Economic Forecasting Center. He has been honored as one of the country's most accurate employment forecasters by the Bank One Economic Outlook Center at Arizona State University. Dr. Dhawan was recognized for his accuracy in forecasting the U.S. job growth, receiving "The Most Accurate of Total Non-farm Employment" award.

GIACC president Kirtan Patel earlier welcomed the attendees and welcomed the speaker Dr. Dhawan.


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