Drifting away - in Colorado
Drifting away - in Colorado
Date: Sunday, August 17, 2003 4:52 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
The Denver Post has been a strong advocate of guest-worker visas
throughout the years and they constantly bash Rep. Tom Tancredo for
wanting to abolish H-1B. That makes it all the more surprising that
Richard Armstrong got so much space to discuss how American workers are
being forced to train their foreign replacements and how outsourcing
factors into this phenomenon.
There is one obvious omission in this article; it never mentioned that
the visas being discussed are called H-1B and L-1. Perhaps the
journalist had to walk a tight rope with the editors of this newspaper.
Hopefully she will do some follow-ups because it's rare to see a
balanced article in the Denver Post.
http://www.denverpost.com/Stories/0,1413,36~33~1547648,00.html
Denver Post
Drifting away
Once in high demand, technical workers in Colorado and across the
nation are seeing their jobs sent overseas, where labor is cheaper.
Many fear such 'offshoring' will hurt the economy and nationa l
security.
By Jennifer Beauprez
Denver Post Business Writer
Sunday, August 03, 2003 - Denver-based Quark Inc., one of the nation's
best-known software companies, has just built a brand-new facility that
will employ 1,000 software and technology workers.
The growth might appear encouraging to the state's ailing tech economy,
but there's a key caveat: the center, and the jobs, are in Chandigarh,
India.
Quark is among a long line of tech companies now moving jobs or
creating new ones in India, China, Vietnam and Singapore in search of
cheaper and faster software development, manufacturing or tech support.
The trend appears to be an unstoppable force that infuriates many of
Colorado's jobless and worries some economists who say it ultimately
may hinder the state's economic recovery.
"This is part of why the economy is still sluggish," said Mac Clouse,
director of the Reiman School of Finance at the University of Denver.
"It's not the traditional economic model anymore," he said. "Businesses
may be spending, but they're not spending their dollars here - it's not
going to result in new jobs and increased economic activity."
Momentum by U.S.-based companies to create new jobs in foreign
countries is building throughout the tech industry. Late last month,
news leaked that IBM Corp. would move 1,000 jobs overseas.
A couple of weeks earlier, Microsoft Corp. said it would hire 5,000
more people, up to 2,000 of them outside the United States. At about
the same time, Oracle Corp. said it will almost double workers in its
Indian unit to 6,000.
Tech-heavy Colorado is being hit especially hard.
Two-thirds of the layoffs in Colorado over the past few years came from
telecommunications and technology firms. In June, 142,000 people were
looking for work in the state, according to the Colorado Department of
Labor and Employment.
Dozens of Colorado companies have already moved or created technology
manufacturing jobs outside the country. More recently, they're taking
technical support, software jobs and even network operations overseas.
One Denver firm called Technology Crafters is helping 18 Colorado
businesses do software development in India.
"There's a lot of interest," said Robert Welch, the company's
president. "American software teams are awesome for innovation, but in
terms of being able to crank things out in a productive manner, they're
not the best on the planet."
Three years ago, Louisville-based Storage Technology Corp. moved its
manufacturing operations to Puerto Rico. Agilent Technologies shipped
hundreds of its Colorado Springs jobs to India and China. Also in the
Springs, broadband device maker Actiontec sent several hundred jobs to
India, and computer storage firm Quantum sent 865 jobs to Malaysia.
Now PeopleSoft, the company that last month acquired Denver software
maker J.D. Edwards, plans to double its Indian operation to as many as
700 jobs. And Denver tech consulting firm Ciber Inc. revealed a few
weeks ago it will create new software and information
technology-related jobs in India.
"All this is a huge challenge that the new mayor and Gov. Owens have to
bring back a job base to Colorado and to Denver," Clouse said.
On Tuesday, Denver Mayor John Hickenlooper and Gov. Bill Owens will fly
to California to meet with tech firms that have Colorado operations.
The duo will encourage those businesses to expand in the state and in
Denver.
"There are still jobs to be created domestically," said Hickenlooper's
press secretary Lindy Eichenbaum Lent. "We just need to make our case."
But it won't be easy.
The pressure on corporate executives to look overseas is huge,
primarily fueled by the weak economy.
Within the next 18 months, one in 10 U.S. technology jobs will be moved
offshore, according to Gartner Inc., a research firm that follows
technology trends.
Indian workers, above, staff a U.S. companys call center in
Bangalore, India. Technical jobs are increasingly being offshored
to companies such as Wipro Technologies in Bangalore, top.
Business executives say they can't compete, let alone keep their
companies alive, if they hire U.S. IT workers for $40,000 to $80,000 a
year while their competitors hire the same talent in India for $8,500
to $9,800.
Mac Slingerlend, chief executive of Ciber, argues that by using Indian
workers, his firm ultimately saves U.S. jobs. The company employs 6,000
worldwide.
For instance, Ciber lost work from a major client, American Express,
when the financial firm sent half of its software development work to
India.
Because Ciber didn't do work in India at the time, the company lost the
business and was forced to cut 100 jobs in its Phoenix office,
Slingerlend said.
"I've cost American jobs by not doing work on India," he said.
Slingerlend acknowledges that if the U.S. economy remains lackluster,
India will chip away at American jobs and economic growth here. But he
said the United States is simply too expensive.
"If things can be done well and more inexpensively, the work will find
its way to these places," he said. "The question is, do we want to
participate or put our heads in the sand? I'm not trying to sound cruel
or crude, but we as a country need to adapt."
That doesn't provide much consolation to the thousands of Coloradans
looking for work, some of whom say they were replaced by foreign
workers.
"Corporate America is loyal to their stockholders, not loyal to
America," said Richard Armstrong, an unemployed Denver computer
programmer who was laid off three times and each time replaced by
foreign workers.
"We really can't compete because they're earning $6,000 a year
overseas," he said.
Armstrong started a website, HireAmericanCitizens.org, to organize
rallies and urge people to write Congress to stop offshore job
development. He also is pushing for reform of the temporary worker visa
program that he says is abused by companies and ultimately used to send
more jobs overseas.
"They bring in these people to work and train on their software,"
Armstrong said. "Once they've trained them, they can do everything
offshore."
Protesters picket last month outside Microsoft Corp. offices in Irving,
Texas. Workers are upset because the software giant announced it would
close the facility and move 800 jobs to India. The trend among tech
companies to offshore jobs worries both workers and economists.
Yet jobs have been leaving the United States for years in a number of
other industries. The automotive industry began hiring offshore in the
1960s as did clothing, shoe and widget manufacturers a decade later. In
1970, manufacturing jobs made up 15 percent of the Colorado workforce.
By 2000, they made up just 9.3 percent.
And more recently, customer call centers started moving overseas.
"It's the worry du jour. But it's been going on for hundreds of years,"
said Tucker Hart Adams, a regional economist for U.S. Bank.
"These people have to retrain," she said. "It's particularly hard for
the older worker, but these jobs won't be here to put people back to
work when we move out of this recession."
Critics of "offshoring" argue that technology isn't the same as making
tennis shoes or cars. They worry that eventually, all the high-tech
brain power will be in the hands of another country - which potentially
could be dangerous to U.S. national security and to future high-tech
innovation.
"Right now we're the technology leader of the world," said Jim Hertzel,
chairman of Alumni Consulting Group International, a Greenwood Village
technology consulting firm. "If we take the technology and let someone
else do it for us, what's left for us?"
Armstrong, the laid-off programmer, fears that future college
graduates, who will soon include his own son, won't find jobs or that
others will be discouraged from even learning software skills.
He says that ultimately will lead to a technology brain drain for
future American generations.
"It's dumbing down of American software," Armstrong said. "We're going
to be so dependent upon that labor and they'll have an opportunity to
have their way with us. It puts our assets and capital at risk."
And while manufacturing jobs in the 1970s were replaced with new and
higher-paying jobs in technology, the future for today's jobless tech
workers is not clear, said Clouse, the DU economist.
"No one knows what will replace these jobs," Clouse said.
Meanwhile, the noise made by people such as Armstrong over offshoring
has piqued the interest of Congress.
Two congressional representatives from Washington state, Democrats Jay
Inslee and Adam Smith, asked the U.S. General Accounting Office to
study why companies are going offshore, which policies could encourage
them to stay here and what domestic jobs will look like in the future.
Washington has had one of the top state unemployment rates in the past
couple of years, reaching 7.7 percent in June.
"We want to steer people toward jobs that will be there," said Smith's
press secretary, Katharine Lister. "We're concerned we may be giving
tax breaks to companies and then encouraging them to send jobs
overseas."
Armstrong and Hertzel want to see Congress impose tariffs penalizing
companies that do offshore work and create rewards for those that do
not.
But John Hansen, Colorado's secretary of technology, said the solution
is not regulation. That, he said, will strangle businesses' global
competitiveness.
Hansen said U.S. companies and citizens must innovate and come up with
technologies that create new companies and ultimately new jobs. Most of
that innovation, he said, will come from university laboratories.
"We need to create an environment for innovation, access to capital and
favorable tax climate," Hansen said. "(Regulation) will not work in the
long run."
Technology workers must make themselves more valuable to employers as
well, said John Raeder, CEO of IQNavigator, a Denver software firm that
develops its code in India.
Raeder said tech workers should develop expertise in finance, marketing
or perhaps business strategy as well as software.
"Don't pigeonhole yourself into just learning computer science," he
said. "A lot of creativity for software cannot be done offshore."
Young college graduates already are starting to adapt, said Terry
Wanger, director of DU's Suitts Center for Career Placement. She said
73 percent of DU's new graduates are getting jobs because they bring
with them additional expertise and they expect jobs with lower salaries
and less responsibility.
She said it's critical that older workers see the shift in the industry
as well.
Welch, who sees the global economy firsthand as president of Technology
Crafters, agrees.
"Colorado will evolve. We have to," said Welch. "We're in direct
competition with people from all over the world."
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