White-collar sweatshops
White-collar sweatshops
Date: Thursday, July 10, 2003 5:15 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
This is a good article that covers outsourcing issues in detail.
Unfortunately Josh Bivens, an international economist at the Economic
Policy Institute, gets the last word. He said that it's "simply a
convenient myth" that outsourcing is taking jobs away from Americans.
Bivens said that the #1 thing hurting IT professionals is the bad
economy. Apparently free-trade economists haven't figured out that the
bad economy has been exacerbated by H-1B and outsourcing.
http://www.salon.com/tech/feature/2003/07/02/outsourcing/index_np.html
(not entire article without subscription)
White-collar sweatshops
"Globalization" is becoming a dirty word to U.S. tech workers,
increasingly angry and anxious as their jobs disappear overseas, never
to return.
July 2, 2003 Wednesday
By Katharine Mieszkowski
Salon online magazine
John Napier, 53, a senior software engineer at Massachusetts-based EMC
Corp., was laid off two years ago.
Despite his master's degree in engineering and 15 years of experience,
Napier has been unable to land a new gig since. "I've never in my adult
life seen so many ads looking for gold specs that are practically
unachievable," he says. "The interviews are so few and far between. Or
they're just fishy interviews. People don't seem serious about
interviewing."
Napier says that neither the bursting of the late-'90s tech bubble nor
the doldrums of a poky recovery from the recession explain his layoff
and ongoing unemployment. He places the blame for his woes on
globalization: the double whammy of American companies flooding an
already soft job market with foreign workers brought into the United
States on H-1B visas while at the same time employing non-U.S. workers
still in their home countries to write code or perform other high-tech
services.
The latter practice, known as "outsourcing" or "offshoring" or even
"near shoring" when it takes place in a neighboring country, is based
on a simple economic rationale: Cut costs by sending work overseas to
someone who will do it for less money. In the past, such work tended to
be relatively low-skilled, such as answering customer service calls, or
handling simple forms of tech support. But no longer. Now programmers
are feeling the pinch, and the phenomenon may be quickly spreading out
of the high-tech sector.
A new study from A.T. Kearney, a management consulting company owned by
Electronic Data Systems, predicts that in the next five years U.S.
banks, brokerages and other financial service companies will relocate
more than 500,000 jobs offshore -- fully 8 percent of their workforce.
According to A.T. Kearney's research, the jobs that will move away
include "high-end internal functions"such as financial analysis,
research, regulatory reporting, accounting and graphic design.
Globalized outsourcing is where the white-collar world meets the
sweatshop, and an increasingly thick slice of laid-off workers, like
Napier, fear that their jobs haven't just temporarily disappeared in a
dip in the economic cycle -- they've gone overseas and are never coming
back.
Globalization is now causing insecurity higher up the food chain," says
Josh Bivens, an international economist at the Economic Policy
Institute.
For some laid-off employees, like Napier, the trend is nothing less
than a betrayal. "The entire American way of life is being mortgaged by
a small set of entrepreneurs," he says, "and it's not doing us any
good." While he waits for someone to look at his resume, Napier has
found a new salary-free vocation -- as an activist picketing business
conferences that train companies how to go offshore.
In January 2003, Napier's theory of the real reasons underlying his
continued employment received some direct support. EMC, Napier's former
employer, announced the opening of a software-development facility in
Bangalore. Initially, the center will do software support and
maintenance, but eventually it will contribute to development of the
core storage product. U.S.-based technology consulting firms have been
relentlessly selling the joys of offshoring to their peers. Electronic
Data Systems, for instance, has more than 15 centers -- in locations
such as Auckland, New Zealand; Sao Paulo, Brazil; and
Chennai, India -- doing everything from help-desk support to
application coding, as part of its "Best Shores" initiative.
The company's marketing paean to what it calls "global sourcing" purrs
that foreign workers provide not just a cost savings but also "faster
innovation, reduced time to market, and a greater ability to constantly
take advantages of new opportunities in the rapidly changing global
marketplace." In other words, the workers of the rest of the world can
get the job done faster and cheaper than the ones in the United States.
EDS is far from the only technology consulting firm bragging about what
offshoring can do for its clients; other biggies, including
Hewlett-Packard and IBM, are selling the same line. Software and
hardware companies are buying the pitch. Brian Valentine, a senior vice
president for Microsoft's Windows division, gave a presentation last
July called "Thinking About India," in which he exhorted Microsoft
managers to get the outsourcing "religion," because competitors such as
G.E., Dell and Cisco already had.
Outsourcing is not just for non-critical work," Valentine wrote in his
presentation, which is reproduced on the Web site of the Washington
Alliance of Technology Workers (WashTech), a tech workers group that is
lobbying and organizing against the practice. "Redmond is not the
center of the universe." By sending software development to facilities
in India, Microsoft can expect "quality work at 50 to 60 percent of the
cost," he continued. "That's two heads
for the price of one."
These aren't low-level jobs that we're talking about that are being
sent overseas," says Marcus Courtney, an organizer with WashTech.
"These are America's best-paying jobs."
Courtney believes the outsourcing trend is undermining a U.S. tech job
market that's already soft. WashTech has asked Congress' General
Accounting Office to investigate how the phenomenon is affecting the
U.S. labor market. Several states, including New Jersey, Connecticut
and Washington, have introduced legislation to ban spending state money
with American companies that outsource.
No one really knows how many jobs have been exported so far, but
whether they're hyping the trend or sounding the alarm against it,
industry trade organizations, analysts and workers' groups agree that
outsourcing is taking off. John C. McCarthy, an analyst with Forrester
Research, predicts that in the next 15 years, 3.3. million U.S. service
jobs, from
accounting to software development, totaling $136 billion in wages,
will move offshore to countries such as India, Russia and China.
In the computer industry, McCarthy calculated that 27,171 computer jobs
were sent offshore in 2000; he predicts the industry will send 108,991
jobs offshore by 2005, and 472,632 jobs by 2015. According to the
Information Technology Association of America, approximately 10.3
million workers are or have been employed in the information technology
(IT) sector in 2003.
McCarthy believes contractors are most likely to be affected.
"Traditionally, if you lost your job, you could go work as a
contractor, and in some cases make more money. That kind of escape
valve has disappeared," he says.
In a 2003 survey of some 400 IT managers, the Information Technology
Association of America found that 12 percent of the companies surveyed
had already sent jobs offshore, and that 67 percent of the respondents
who were engaged in outsourcing pinpointed software engineering and
programming as the areas in which they'd made the move.
The rush to outsource is a case where corporate interests are flatly at
odds with those of individual workers and, possibly, of the national
economy. From a corporate executive's point of view, it would be
irresponsible to the shareholders not to take advantage of a way to get
twice the work for half the money. It would be negligent. But for
American workers, the equation works out differently.
Marcus Courtney has been organizing around tech worker issues for more
than five years. He says he's seen a "grassroots explosion" over the
issue of H-1B guest workers and offshoring in recent months. It's a
labor movement with a twist -- tech workers are notoriously anti-union,
tending toward the libertarian end of the political spectrum. But a
free market working against them means that it's time to organize for a
little protection.
The tenor of the debate ranges from serious political advocacy on the
topic of how H-1B visas and offshoring are affecting the American
economy and xenophobic fulminations dedicated to immigrant bashing.
I do think that there's some scapegoating," says Daniel T. Griswold, an
economist with the Cato Institute, a libertarian think tank. "When the
economy turns down, foreigners get blamed."
The countries benefiting from offshoring deny that they're stealing
American jobs. On the contrary, they contend the opposite. In Bangalore
in late June, the chair of the National Association of Software and
Service Companies, a trade
group, argued that outsourcing jobs to India will not lead to job
losses in the United States. Instead, outsourcing will help U.S.
companies survive the downturn in the global economy. Chairman Som
Mittal predicted that once the economy ticks up, concerns about
outsourcing will recede.
John Bauman, president of the Organization for the Rights of American
Workers, a nonprofit in Meriden, Conn., disagrees. His organization
protests outside conferences that teach companies to outsource, its
members arming themselves with signs that say "Outsourcing Is Stealing
Billions From Americans, " "Stop Outsourcing. Save America. Hire
American" and "Will Code for Food."
Bauman says that his group wants to change American laws, not bash
foreigners: "We have no grudges against these people coming over here
on H-1B visas. They're very nice people regardless of what country
they're from. They themselves are not at fault; these laws that are
allowing them to literally replace our U.S. workers are." The movement
against H-1B visas is intimately tied to the anger at outsourcing.
Anti-outsourcing activists see an insidious progression: Come to
America to work for U.S. companies, get trained by U.S. workers, and
then take away American jobs after going home.
The number of H-1B visas that allow temporary guest workers to come to
the United States is fixed by Congress, a political football that can
be fought over domestically. But it's harder to see how the U.S.
government could regulate the "offshoring" of jobs, even if it saw fit
to try.
The practical question of enforcing this is mind-bogglingly difficult,"
says Griswold. "It's one thing to try to monitor slabs of steel coming
into U.S. ports. It's quite another thing to try to monitor and control
bits of information bouncing off satellites and flying through cables
at the speed of light. It opens up questions of privacy and how
powerful we want government to be."
But other economists say that while offshoring may be good for a
company's bottom line, it may ultimately not be good for that same
company's market. "It makes perfect sense for the individual company,
and it makes no sense for the U.S. economy," says Alan Tonelson, author
of "The Race to the Bottom: Why a Worldwide Worker Surplus and
Uncontrolled Free Trade Are Sinking American Living Standards."
An individual company may cut costs and increase profits by sending
jobs overseas, says Tonelson, but in the long run that will erode the
huge market that they depend on most -- the buying power of U.S.
consumers. "If all of this outsourcing to India and China and Russia,
if it was mainly serving those economies, it would be different, but
much of this outsourcing is serving the U.S. market."
In other words, in the effort to make goods and services more cheaply,
American companies may be undermining their own long-term interests.
"American industry has been firing its best customers, which are its
own workers," says Tonelson. "It's as if these companies expect the
American consumer to keep on consuming."
But discussions about tech jobs moving overseas tend to ignore how many
new jobs are created by the growing demand of foreign markets, other
economists say.
So far, the rise in globalization has been pretty darn nice for people
who are in the top end of the technology and tech skills spectrum,"
says Gary Burtless, an economist at the Brookings Institute. "It's
worked out pretty darn well. Whatever they might say, folks in those
occupations have enjoyed faster income gains, even taking into account
the last two bad years, than people in most occupations in the U.S. I
believe that the United States is still a very, very big net exporter
of computer services. That means that on balance a lot more people in
this industry who work here in the U.S. owe their living to the fact
that the U.S. is selling in a huge world market."
If the U.S. government starts trying to set restrictions on the ability
of U.S. companies to export work to other countries, Burtless says,
those countries may stop buying products from those same American
companies. "Microsoft is worth a tremendous amount more because it is
selling in a global market," Burtless says. "But if the U.S. tries to
create a new set of rules, there is no earthly reason other countries
have to buy Microsoft. They can buy Linux."
There are things that workers can do to save their jobs, says
WashTech's Courtney, such as fighting federal research and development
subsidies to companies that are sending jobs overseas. Why shouldn't
workers demand the same protections that software companies do for
their intellectual property rights? asks Courtney.
The high-tech industry today is pushing our elected officials and
leaders to go over to China and India and demand protection for their
intellectual property rights," Courtney says. "Why aren't they over
here demanding the protection of
our economic interests?"
In a depressed economy, worker anxiety naturally rises. But the
Economic Policy Institute's Bivens thinks that the whole outsourcing
threat is overblown: "I think that there's a real bias toward
exaggerating the outsourcing we're
doing. You always hear that India is taking away a lot of these jobs.
It's still really, really tiny in the latest data, which is two years
old."
Bivens concedes that "maybe it's exploded in the last two years," but
he points out that the technology industry has an incentive to keep the
offshoring option in the public eye as it engages in a continuous
political battle to maintain the number of H-1B visas it can extend to
foreign workers. The threat is potent: "Fine. If we can't get the
visas, we'll just send the jobs over there!"
Certainly EDS, Hewlett-Packard and other companies selling offshoring
services to high-tech companies have a vested interest in pumping up
the appearance of a trend. In fact, a competing research firm, Gartner
Group, challenged the study by A.T. Kearney (EDS's consulting group),
which predicted 500,000 financial services jobs would go overseas in
the next five years. In a report entitled "White-collar Job Loss Due to
Offshore Outsourcing Inflated," Gartner acknowledged that "among IT
jobs in the more-developed countries, the offshore migration is already
occurring." But "immediate concern, however, is
unwarranted over the loss of non-IT professional or white-collar jobs,"
the report said.
Bivens also argues that your average corporate executives have to pay
lip service to the outsourcing trend to sound like they're on the
cutting-edge -- and keep their jobs: "To a chief information officer,
outsourcing is a sign of creative cost-cutting. They're never going to
say, No, we're not considering it. " Studies that rely on asking
executives about future plans could therefore produce inflated numbers,
he says.
But after reading yet another article about the cost savings of
outsourcing and offshoring, who can blame unemployed or underemployed
tech workers forbelieving that their jobs have been farmed out to some
faceless worker in China who will work for half the money?
Bivens thinks that in most cases that fear is simply a convenient myth:
"The No. 1 thing that is hurting information technology professionals
is the recession and the popping of the tech-market bubble.
Outsourcing, even if it's second, would be way distant."
Help to Keep ZaZona.com Online
Donate to the Cause at
http://www.zazona.com/Donations.htm
To Subscribe or Unsubscribe send an email to
Back to archives