Statistician defends his outsourcing figures

In his report, McCarthy, a vice president at Forrester Research, predicted that 3.3 million service jobs would move abroad by 2015. That figure was cited repeatedly, as the public sought to understand and weigh the merits of pushing high-paying jobs such as computer programming to lower-wage countries such as India.

Earlier this year, McCarthy again found himself at the centre of the discussion when he issued an update to his original report. The revised findings defended the original forecast as largely on the mark, though it bumped up the 3.3 million projection to 3.4 million. More significantly, it increased the estimate of near-term lost jobs by some 240,000. In other words, the new report predicts that a total of 830,000 positions will have moved offshore by 2005.

The reports transformed McCarthy into an offshoring guru who was highly sought after by the media. But news stories have at times mangled his analysis. In a recent interview with ZDNet UK sister site CNET News.com, McCarthy discussed his frustration with the press and described why businesses, fearing the potential public relations backlash, have stopped talking about their offshoring plans.

Q: What was your reaction to the recent US Department of Labor report that only a small fraction of mass layoffs earlier this year stemmed from offshore relocations? Does it contradict your projection of 3.4m services jobs going overseas by 2015?
A: No. People do not suddenly do mass layoffs around most offshore activities. They involve a series of pilots. They cut people who are contract employees, who therefore they don't even have to report in that model. So I think it underreports the overall offshore activity. It accurately reports the number of large-scale kind of layoffs that are part of it.

So there could be a lot of these dribs and drabs of jobs going offshore.
Right. We know what people do -- they cut contractors. Those technically aren't full-time employees. So even if they cut 100 contractors, they wouldn't have to report those. And it grows much more incrementally, where most people probably don't hit that threshold of 50, where they have to report it. Or they may not even know they were supposed to report it.