Posted by : bpburnwal on Jan 09, 2004 - 11:39 AM General

Concerned about the growing economic threat from India and China, a coalition of America's top high-technology companies, including Hewlett-Packard and Intel, plans to press U.S. officials to commit to a multibillion-dollar strategy for keeping the nation competitive.
"There is no job that is America's God-given right any more. We have to compete for jobs as a nation," said Carly Fiorina, HP's chair and chief executive officer, who along with Intel CEO Craig Barrett announced the initiative at a news conference in Washington on Wednesday. "Our competitiveness as a nation is not inevitable. It will not just happen."

Fiorina and Barrett are part of the Computer Systems Policy Project, an advocacy coalition of CEOs from eight leading information-technology companies. Among the group's priorities, which it plans to push in meetings beginning next month with Bush administration officials and members of Congress, are a permanent extension of the research and development tax credit; increased spending on federal research and math and science education; and a commitment to develop broadband Internet capacity for consumers and businesses.

At the same time, the coalition warned against erecting barriers to trade, and against trying to prevent companies from moving high-tech jobs overseas, known as "offshoring." Some members in Congress are pushing legislation to prevent such jobs from leaving the country.

The group gave no precise cost for its proposals, which Barrett and Fiorina said were just a starting point for discussion with policy-makers. Barrett, who chairs the group, estimated the cost to be in the billions of dollars -- although less than the approximately $30 billion the federal government currently spends on agriculture subsidies, which he criticized as an investment "in the industries of the 19th century."

But with the federal government facing an estimated record $500 billion budget deficit in 2004 and growing criticism in Congress about high-tech companies moving jobs overseas, the chance of the proposals being enacted this year is low, Fiorina admitted. Indeed, the industry has been trying unsuccessfully for several years to permanently extend the research and development tax credit, which expires periodically and needs to be reauthorized.

Still, leaders of the tech coalition believe it is important to start discussing ways to make the United States more competitive before the country loses its lead in the high-tech market to other countries. Protectionism, they said, should be avoided.

"Countries that resort to protectionism end up hampering innovation and crippling their industries, which leads to lower economic growth and, ultimately, higher unemployment," said a 19-page report released by the group Wednesday that details its policy proposals.

Global rivalry

Barrett said the global economy has seen a dramatic change as India, China and Russia have opened their markets over the past two decades.

The United States now must decide if it will compete with those countries for new high-tech jobs or retreat into isolationism.

"It had been assumed we had a lock on white-collar jobs and high-tech jobs," Barrett said. "That is no longer the case."

Both he and Fiorina defended the shift of high-tech jobs to India and other countries, saying such outsourcing has been going on for years in the industry and helps companies increase their workforce in the United States by keeping them profitable. The way to increase information-technology jobs in the United States, they argued, is to have a well-educated workforce and ensure that the country remains the world's high-tech leader by stressing innovation.

Some members of Congress from both political parties have other ideas. Several bills have been introduced to respond to the shift of high-tech jobs in recent years to countries such as India. Among the proposals is one requiring people answering phones at call centers, many of which have been moved to foreign countries, to disclose their location. Another would prohibit companies awarded federal contracts from doing any of the work overseas.

"Wanting to keep jobs in America isn't protectionism," Rep. Don Manzullo, R-Ill., chair of the Small Business Committee of the House of Representatives, said during a hearing last year on the loss of U.S. white-collar jobs. "It is . . . the very thing needed to promote globalism."

Last fall, Forrester Research estimated that 3.3 million U.S. service jobs would be relocated abroad over the next 15 years, including more than 400,000 information-technology jobs. The General Accounting Office (GAO), the investigative arm of Congress, is studying the impact of outsourcing on the U.S. economy.

The middle class

Rep. Zoe Lofgren, D-San Jose, said she wants to wait for the GAO report, due out in the next few months, before she decides on a policy response to the movement of jobs abroad. "We need to maintain our middle class in America," she said. "We need to understand the dynamic that's going on here and its impact on our ability to innovate and compete."

But Lofgren also praised the Computer Systems Policy Project for its proposals.

"If you don't pay attention to your long-term competitiveness," she said, "you wake up one day to find out you're out of the game."