by Jeffrey McCracken and Jamie Butters
Detroit Free Press Business Writers
TROY, MI — Auto-parts giant Delphi Corp. is shedding at least 150 well-paying technology jobs and will shift some of the work overseas to an Indian firm. The move is one step in the company’s effort to pare down its 500-person information technology staff.
Troy, Mich.-based Delphi becomes just the latest multibillion-dollar corporation to move white-collar jobs to India or other lower-wage countries. The increasingly common development called offshoring has become a hot-button issue in the presidential campaign as jobs have been slow to return to the U.S. economy.
Delphi said about 80 full-time employees will lose their jobs or receive buyout offers. On top of that, last Friday, the company cut about 70 temporary or contract workers that did various computer jobs. Another 70 full-time Delphi employees will be moved to new jobs, some of which will only last a few months.
The job cuts and new assignments will be in place by April 1.
Delphi spokesman David Bodkin said only 20 to 30 Delphi jobs would move to the Tata Group, India’s largest information technology, or IT, firm, with sales of $10 billion. However, Delphi workers who talked to the Free Press, but asked not to be named for fear of losing their jobs, said they were told that “well over” 100 Delphi jobs will move overseas as Tata’s contract grows.
These Delphi employees, who worked in software development and support, make between $50,000 and $80,000 each, a Delphi worker told the Free Press. Delphi workers learned of the latest job cuts in a staff meeting Tuesday morning.
Others in the auto industry are also shipping salaried jobs overseas. Last week, General Motors Corp. confirmed it was moving some design and IT work to its new offices in Bangalore, India, as it cuts contract workers.
Ford acknowledged this week that it has been moving white-collar work to India for some time.
Several current and former Ford employees called and wrote the Free Press after Ford spokespeople said last week they were not aware of any white-collar work being shifted to India. The employees said Ford has, for years, sent IT and accounting work from Dearborn, Mich., to a Ford site in Chennai, India.
“A lot of good people who were loyal to Ford lost their jobs,” said one Ford employee who asked not to be identified.
Ford has almost 2,000 employees in India, including direct employees at its manufacturing plant and contract workers who handle IT and accounting, said Ford spokesman Oscar Suris. He would not specify how many IT and accounting jobs Ford has in India beyond saying it is “much less than” half of the 2,000.
Ford’s activities there, he said, are primarily manufacturing-related for the purpose of serving the rapidly growing local and regional market.
Delphi’s Bodkin said the outsourcing to Tata was necessary to compete with other suppliers. Delphi has annual sales of $28 billion and makes parts ranging from steering components to XM satellite radio.
“We operate in 41 countries. . . . We try to keep jobs in the United States when we can do so competitively,” he said.
Delphi has a total of 16,000 hourly and salaried workers in Michigan and 55,000 in the U.S.
Wall Street auto analysts said suppliers like Delphi need to constantly find ways to make products at a lower cost.
“Trying to figure out the lowest-cost way of making or doing something is the job of senior management. They have to show that they’re not being left behind because they know other competitors are doing this,” said Robert Hinchliffe, auto-parts analyst with UBS in New York.
The auto industry is far from the first to discover the availability of lower-wage, well-educated English speakers in India.
One in 10 U.S. technology jobs will have moved overseas by the end of the year, according to Marsh Inc.’s risk-consulting practice. During the next 15 years, more than 3.3 million U.S. white-collar jobs and $136 billion in U.S. wages will shift to low-cost countries around the world, according to Forrester Research Inc.
The potential for cost savings is so enormous — with Indian IT workers making only $10,000 a year — that companies find offshoring irresistible. But research by the Gartner Group indicates that corporations are satisfied with their experiences only half of the time.
The problem is that many companies do not take into consideration such potential obstacles as political instability, infrastructure weaknesses and quality assurance, according to Marsh Inc.’s risk-consulting service.
As outsourcing shifts from call centers to higher-paying technical jobs, companies expose themselves to the possibility that their strategies could be shared with a rival, said Bill Spinard, a senior vice president in Marsh Inc.’s risk-consulting service.
“Now we’ve gone into — particularly with accounting and IT — the inner sanctum of the business, and we’re sharing some very, very critical information,” he said.
Copyright 2004 Detroit Free Press. All Rights Reserved.
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