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Intel CEO defends offshoring

Intel CEO Craig Barrett defended outsourcing U.S. jobs to lower-cost countries, saying offshoring has been going on for decades, and that the media is making an issue out of the hot topic during an important election year.
/ Source: Reuters

The chief executive of U.S. chip giant Intel defended on Tuesday the firm's policy of moving jobs to lower-cost countries, a shift which has drawn fire in the United States that is feeling the pinch of a weak labour market.

Offshoring — moving white-collar jobs to overseas locations where labour is cheaper — has become a political hot potato as U.S. President George W. Bush seeks re-election this year.

Along with other large U.S. firms, Intel Corp has been criticized by Americans unhappy about the slow pace of hiring despite improved profits and share prices.

But Craig Barrett, Intel's CEO, said the policy was not new and had only recently been made to seem controversial because it was an election year.

"The topic of outsourcing or offshoring is popular in the press today," Barrett told a news conference.

"You shouldn't think of offshoring as a recent phenomenon. This has been happening for decades. It seems the press has just discovered it recently because it is an election cycle, especially in the United States."

He said Intel, the world's largest maker of computer microchips, would continue outsourcing jobs as it seeks to build its operations in Southeast Asia, where it has major plants in Malaysia and the Philippines.

In Malaysia, where the government on Tuesday launched a drive to wire up schools, Intel employs about 8,000 staff, around 10 percent of its global workforce.

Intel has also spent about $1 billion on two outfits in China, where it is currently embroiled in a trade dispute over a wireless computing standard, called WAPI, that could hit its Chinese sales if unresolved.

Barrett said Southeast Asian governments had to work fast to train a next generation workforce if they wanted a bigger share of the global outsourcing market.

"Working together, we can train one million teachers to integrate technology into lesson plans, outfit 100,000 schools with wireless communications and computing capabilities, and deploy 10 million computers in classrooms over the next five years in Southeast Asia," he said.

About six million jobs, mainly in the high-tech sector, are expected to be transferred out of the United States and Europe over the next 10 years as firms continue cost-cutting drives and the baby boomer generation retires.

Management consultancy A.T. Kearney said in a recent report that India, China and Malaysia were the top three destinations for global employers looking to relocate jobs.