- The Washington Times - Tuesday, December 16, 2003

Some technology companies are beginning to rebound from the collapse that occurred in the industry three years ago, according to a report released yesterday by the Bush administration.

But few companies are hiring new workers, and some positions may be lost as tech firms ship work overseas.

“Technology is clearly on the comeback trail,” said Phil Bond, the Commerce Department’s undersecretary for technology.

A turnaround by a rejuvenated tech industry could help fuel an economic recovery, much like the industry’s growth fueled the economy beginning in 1996.

The Commerce Department’s report, Digital Economy 2003, indicates that information-technology companies will contribute about 0.8 percent to the estimated 2.9 percent rate of real U.S. economic growth in 2003, based on data gathered through the first three quarters of the year.

It is the department’s fifth report on the industry.

But there is no evidence that tech firms are adding a significant number of jobs.

“We are not yet seeing a turnaround in most major categories of the information-technology sector, but we are seeing a stabilization,” said Kathy Cooper, the department’s undersecretary for economic affairs.

Other industries began adding jobs in August, she said.

The number of jobs at tech companies, including computer makers, software developers and semiconductor manufacturers, have declined 11.2 percent to 4.8 million since 2000. Jobs in the rest of the private sector declined 2 percent over the same period.

Tech companies added 1.8 million jobs from 1993 to 2000, but they have shed about 600,000 positions since that time.

“It is unclear how soon unemployment rates for workers in computer-related occupations will return to pre-2000 levels,” Commerce Department economists wrote in their report.

The department’s report on the tech sector comes amid moves by some U.S. companies to eliminate domestic jobs and shift work overseas. Computer giant IBM Corp. reportedly will move up to 4,700 computer programming jobs to India, China and other countries, though it hasn’t confirmed its plans.

The Commerce Department has been unable to quantify the effect that “offshoring,” or foreign outsourcing, by U.S. companies has had on domestic employment. The department has little idea how many tech industry jobs have moved overseas, Mrs. Cooper said.

Others have tried to determine whether tech jobs are moving overseas.

Forrester Research estimates about 400,000 information-technology jobs will move overseas in the next 15 years.

A survey of hiring managers this year by the Information Technology Association of America found 12 percent of information-technology companies opened outsourcing operations overseas.

Cheaper communications costs and highly skilled work forces overseas, especially in India, have boosted offshoring among tech companies.

That means that even while the tech industry has started creating new jobs slowly, the loss of some technology jobs may be permanent, the report says.

One sign that the technology sector may have started to rebound is an increase in orders for computers and semiconductors, helping those industries rebound from losses in 2001 and 2002. Orders for telecommunications equipment continue to decline.

Computer shipments during the first nine months of the year were 14 percent higher than the same period a year ago, according to the report, and semiconductor shipments were up 22 percent. Orders for communications equipment fell 9 percent.

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