12 Outsourcing Articles
12 Outsourcing Articles
Date: Thursday, September 25, 2003 8:57 AM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1:
http://www.inq7.net/brk/2003/sep/07/brkinf_2-1.htm
Japanese software jobs going to China, India
Article 2:
http://www.kansascity.com/mld/kansascity/business/6814635.htm
Blame it on economic hypocrisy
Article 3:
http://www.suntimes.com/output/jesse/cst-edt-jesse16.html
Economy heats up, but U.S. workers left in the cold - by Jesse Jackson
Article 4:
http://www.suntimes.com/output/letters/cst-edt-vox21a.html
RNC accused Jesse Jackson of Spreading lies
Article 5:
http://news.mysanantonio.com/story.cfm?xla=saen&xlb=110&xlc=1057140
U.S jobs: Next stop, India? (USAA Insurance)
Article 6:
http://www.zwire.com/site/news.cfm?newsid=10152364&BRD=1426&PAG=461&dept_id=186027&rfi=6
Rate of high-tech job export alarms analysts (EDS)
Article 7:
http://www.informationweek.com/shared/printableArticle.jhtml?articleID=15000146
Identity Crisis - Technology workers mull the impact of offshore
outsourcing and struggle to find a unified voice
Article 8:
http://www.charlotte.com/mld/charlotte/business/6528220.htm
Easley orders review of contracts, vendors - Governor wants to
determine if work, such as at call centers, is done abroad
Article 9:
http://asia.cnet.com/newstech/industry/0,39001143,39148119,00.htm
China to match India as IT outsource hub: Gartner
Article 10:
http://money.cnn.com/2003/09/17/news/international/boeing.reut/index.htm
Boeing sees China as major supplier - Aerospace firm says it will buy
$800 million in parts from China between now and 2010.
Article 11:
http://www.financialexpress.com/fe_full_story.php?content_id=42728
New US Rules On BPO Are No Cause Of Worry: Deshpande explains
Article 12:
http://www.stateline.org/story.do?storyId=324770
Contracting Out IT Jobs Vexes States
(Note that George Newstrom and Harris Miller, both from Virginia are
quoted in this article)
http://www.inq7.net/brk/2003/sep/07/brkinf_2-1.htm
Japanese software jobs
going to China, India: exec
Posted:3:23 PM (Manila Time) | Sept. 07, 2003
By Erwin Lemuel G. Oliva
INQ7.net
OUTSOURCING opportunities in software development from Japanese firms
are heading towards China and India, a Japanese executive said during a
briefing in Manila Friday.
Based on a survey of 120 Japanese firms last year, 41 companies
identified China as the country they were likely to turn to for
offshore software development work. Eighteen companies went for India,
while three companies planned to work with Philippine companies.
Japanese firms are more likely to go to Chinese firms because they have
better grasp of the Japanese language, apart from other factors such as
lower labor cost and availability of technical skills, said Hironori
Horiguchi, chief executive officer of Bitoc Corp. in Japan.
He said that Japanese firms identified Japanese language fluency as the
preeminent requirement they look for in companies wanting to work with
them.
"The Indian software companies are slowly learning Japanese language. I
hope Philippine firms won't be left behind," Horiguchi said.
He added: "Of the 15 companies that I've visited in the Philippines, I
only found one software engineer able to speak Japanese fluently."
The software development market is estimated to be worth 6,700 billion
yen as of 2003, the executive said.
Most Japanese software companies were now looking at outsourcing
development work to other countries to save cost, Horiguchi said. Most
of the software outsourcing opportunities in Japan were coming from
system integration firms in Japan, he added.
Horiguchi said that China was now more aggressive in attracting
offshore software development opportunities from Japan through the
establishment of "software parks."
He said Dalian City, one of China's software industrial parks, has
already convinced Japanese software companies to locate there, offering
incentives such as exemption from rent and electricity charges, and
three-year tax breaks.
http://www.kansascity.com/mld/kansascity/business/6814635.htm
Posted on Sat, Sep. 20, 2003
Blame it on economic hypocrisy
By JERRY HEASTER
Columnist
Blame it on economic hypocrisy
If the American dream dies, it will be from terminal economic
hypocrisy.
Take, for instance, all the bleating about foreign goods and foreign
workers robbing Americans of their jobs, and thus their economic
security.
Who is kidding who? This is a myth fueled by America's mass
self-delusion that you can live life on the cheap and still enjoy a
well-paying job.
Well, perhaps some Americans can, but as recent events show, their
numbers are shrinking with each passing month.
The issue that somehow never gets addressed when the plight of the
American worker is being discussed is how virtually every American
bears direct responsibility because of what they've wrought as
consumers and investors.
Companies downsize and do everything possible to restrain labor costs
because it accomplishes two goals: One, it helps in the eternal quest
to keep product and service prices as low as possible at retail and
thus remain competitive; two, if restraining outgo enhances income, the
corporate stock price is bid up by investors who like the improving
profits picture.
As we all know, there are two things Americans prize above all else:
low consumer prices and high stock prices. Americans, however, also
like high wages and salaries, which is an end often at odds with low
consumer prices and high stock prices.
In its own paradoxical way, this pursuit of mutually exclusive goals
brings to mind the old saw about how everyone wants to go to heaven,
but nobody wants to die.
Wal-Mart's experience tells us much about ourselves. It was long
scorned by many Americans as a Darth Vader who laid waste to the Main
Street enterprises of small-town America by underselling them. Over
time, though, a curious thing happened. The Wal-Mart everyone loved to
hate became the master of the retail universe, the ultimate big-box
behemoth.
In retrospect it's hard to resist the idea that its colossal success
wouldn't have happened without the patronage of masses of putative
haters of Wal-Mart. Although many criticized what Wal-Mart represented,
as consumers they couldn't resist the allure of saving big bucks.
A global variation of this same theme is playing out in the debate over
Chinese goods swamping America's consumer marketplace. Even as many
Americans condemn the "slave" labor they claim makes China's low-price
goods possible, they can't resist the savings they realize from buying
Third World products.
Closer to home, as another example, does anyone doubt that shopping
relentlessly, say, for the cheapest phone service won't foment
cut-throat competition in the telecom industry and thus lead to mass
layoffs down at the ol' major-employer local telecom giant?
There's nothing wrong with wanting the best value for the lowest
possible price. This is human nature. In many cultures, those who don't
haggle over price are considered chumps to be taken advantage of.
However, the cognitive dissonance many Americans suffer in today's
marketplace results from a hypocritical conceit. This conceit can be
summed up in one question: Do Americans sincerely believe they can
forever immunize themselves from the consequences of a low-price world
they've created?
In a word, no.
Jerry Heaster's column appears Wednesday, Friday, Saturday and Sunday.
To reach him, write the business desk at 1729 Grand Blvd., Kansas City
Mo., 64108; call (816) 234-4297, or send e-mail to jheaster@kcstar.com.
http://www.suntimes.com/output/jesse/cst-edt-jesse16.html
Economy heats up, but U.S. workers left in the cold
September 16, 2003
BY JESSE JACKSON
According to the economists who measure these things, the U.S. economy
has been in recovery for nearly two years. Growth has started; the
stock market has come back a bit; corporate profits are up. Only one
thing is missing: jobs.
Astonishingly, we continue to shed jobs, particularly manufacturing
jobs -- the good jobs that are the basis of America's broad middle
class.
The White House is clearly perplexed. President Bush has racked up
record deficits with tax cuts and increased spending, primarily on the
military and homeland security. The dollar has declined in value,
making American exports cheaper for Europeans. The Fed has kept
short-term interest rates low for months. With fiscal, monetary and
currency all working the same way, the economy should be roaring.
Instead, it's stumbling along and we're still losing jobs. Some 2.7
million have gone since Bush took office.
Not surprisingly, Americans have growing doubts about the president's
economic management. How can you go from record surplus to record
deficits and still produce no jobs?
This White House may not be good at economic management, but it is good
at politics. In the run-up to the 2002 elections, the administration
rolled out the ''Iraq crisis'' in September. Chief of Staff Andrew Card
admitted the timing was planned, commenting ''You don't roll out a new
product in August.''
This September, the White House is rolling out a campaign designed to
prove that it cares about jobs, particularly manufacturing jobs. The
president donned a union jacket for Labor Day and announced that he was
creating a new government post to worry about jobs. The Treasury
secretary was dispatched to China to beg them to stop undervaluing
their currency. The Commerce secretary promised new legislation to help
somehow. This week, the president travels to Michigan to tout his Big
Oil energy program as a jobs generator.
But political gestures won't help manufacturing workers or the
communities that are ravaged by plant closings. They won't help the
growing number of poor mothers who are the first to be laid off and the
last to be hired. They won't help the kids coming out of high school
and college into the worst job market since the last George Bush was in
the White House.
The problem is the president got it wrong. Tax cuts -- particularly for
the wealthy and for businesses -- are the least efficient way to put
people to work. A lot of the money was pocketed or invested abroad.
Bush's tax cuts may well have created more jobs in Shanghai than
Saginaw.
And the president's trade policies force American workers to compete on
an uneven playing field against China and Japan that peg their
currencies low to capture our markets. With the Republican National
Committee itself outsourcing its phone solicitations to a firm in
India, the president's trade policies have created more jobs in New
Delhi than in Toledo.
The president fought against the program that would have worked a lot
better. Public investments in vital areas -- in building schools, in
energy efficiency and alternative energy, in public health and homeland
security -- would have put people directly to work and helped capture
markets of the future. But the president demanded his top-end tax cuts.
Now the president wants to spend $87 billion in Iraq and Afghanistan,
while demanding ''spending restraint'' here at home. He'll put Iraqis
to work on public works projects, but sit by as teachers are laid off
from budget cuts.
The Bush White House thinks it can sell Americans on just about
anything. But just as ''spin'' can't hide the fact that American
soldiers are stuck in a shooting gallery in Iraq, slick packaging won't
hide the fact that good jobs are going abroad, health care costs are
going up and wages and benefits are going down.
Eventually, the economy will generate jobs, despite the Bush policies.
But for the families and communities that have suffered the plant
closings, ''eventually'' is taking a long time to arrive.
Copyright ) The Sun-Times Company
All rights reserved. This material may not be published, broadcast,
rewritten, or redistributed.
http://www.suntimes.com/output/letters/cst-edt-vox21a.html
Spreading lies
On Sept. 16, your newspaper published a column by Jesse Jackson,
''Economy heats up, but U.S. workers left in the cold,'' which
contained a factually inaccurate statement about the Republican
National Committee. I would like to make your readers aware of this
urban myth that is being circulated for political gain.
Some independent news Web sites and publications have been publishing
information suggesting that the ''U.S. Republican Party'' has been
using companies, such as HCL eServe in India, for the purposes of
fund-raising on behalf of President Bush. We have informed them that
this information is wrong and defamatory to the RNC, and we have asked
that they cease and desist from publishing this false information.
As we have pointed out to the publishers and authors of these articles
and letters, the term ''U.S. Republican Party or ''Republican Party''
can only be interpreted as referring to the RNC, and the RNC has never
contracted with the referenced companies. In fact, all vendors for the
RNC are contractually obligated to have their phone calls originate
from the United States. If the authors of these previous articles and
letters, as well as Jackson, had checked with the RNC, we would have
been happy to confirm this.
Jim Dyke,
communications director,
Republican National
Committee, Washington, D.C.
http://news.mysanantonio.com/story.cfm?xla=saen&xlb=110&xlc=1057140
U.S. jobs: Next stop, India?
By Sanford Nowlin and Travis E. Poling
Express-News Business Writers
Web Posted : 09/21/2003 12:00 AM
When Paul Olivares took a job at USAA's information technology
department 14 years ago, he thought he might stay with the company
until retirement.
Customer service agents field calls from the United States at the
Customer Asset call center in Bangalore, India. Labor can be 70 percent
cheaper than in the United States, and companies that shift their
customer service departments to India can save up to 60 percent.
Associated Press File Photo
Paul Olivares is considering switching professions to pursue his love
of music after he had to leave his job in USAA's information technology
department. The company has been giving more work to Indian contractors
who will work for much less money.
Nicole Fruge/Express-News
But his hope for that faded as the insurance giant began a series of
layoffs in 2001 that slashed hundreds of jobs, then imported scores of
foreign contractors to work in its information technology subsidiary,
ITCO.
USAA, like many other major corporations, outsourced part of its IT
workload to Mumbai, India-based Tata Consulting Services, which
supplies staff that some estimate are working for less than half what
USAA workers earn.
Olivares, 40, left USAA a month ago after a supervisor gave him a poor
mid-year review, yet was unable to provide what he thought was
sufficient cause. He said he was "forced out," adding that the person
now doing his job is a Tata employee.
While Olivares said he's not sure how much his replacement is making,
he's willing to bet that the worker is making a lot less than his
$65,000-a-year salary.
A USAA spokesman said Olivares left on his own and his position has not
been filled by a Tata employee or anyone else.
"I felt like I had no stability," Olivares said of his final months at
USAA. "I wasn't sure whether I'd have a job one day to the next. How
can you compete with someone who's happy working for half of what you
are? A lot of people at USAA feel that way. There are a lot of really
nervous people out there right now."
Increasingly, U.S. companies are shifting high-tech work overseas and
importing inexpensive foreign contractors as a cost-cutting measure.
The move has become more and more controversial since it means the loss
of U.S. jobs amid an already dismal market for high-tech workers, and
it has generated fear among corporate employees that their positions
may be the next to go.
The U.S. Bureau of Labor Statistics estimates 500,000 information
technology professionals have lost their jobs since 2001, and that
figure could reach 1 million by the end of 2004.
Most of the job losses have been the result of the dot-com failures and
several years of corporate cost cutting, but many say U.S.
corporations' use of foreign outsourcing will be one of the key drivers
going forward.
About 550,000 high-tech jobs are expected to move overseas by year's
end, according to technology research firm Gartner Group. And only
about 40 percent of the U.S. workers who once held those positions will
be "redeployed" by their current employers.
By the end of next year, eight of 10 corporate technology directors
will be ordered to outsource at least a portion of their services to an
overseas vendor, according to the report. Among those already
outsourcing are San Antonio-based telecom giant SBC Communications
Inc., Austin's Dell Computer and Bank of America.
"I only see the trend increasing," said Carrie Lewis, who follows IT
outsourcing for Boston's Yankee Group. "The people who are going to
feel it are the companies' internal IT people, the people who are
managing the projects (that go overseas)."
Riding high on the outsourcing boom, though, are companies like Tata:
consulting firms based in India, which has an abundance of
well-educated, English-speaking tech workers, most of whom will work
for a fraction of the salary expected by U.S. employees.
Operations in China, Russia and the Philippines have also won work from
U.S. companies for their access to skilled low-wage workers.
Tata, which bills itself as one of the world's largest IT consulting
groups, has $1 billion in annual revenue, the majority coming from U.S.
clients.
The company has more than 50 U.S. offices, and its customers include
not only USAA, but SBC, Best Buy, three state governments and the U.S.
Department of Defense.
USAA currently uses about 500 workers from Tata's TCS business unit.
That's about 2 percent of the insurer's Alamo City work force and 20
percent of the jobs inside its ITCO division.
SBC uses Tata for special IT projects, though officials said there are
only about 10 of the Indian company's workers in the United States on
such work right now. SBC also uses overseas contractors for
customer-service work, such as online help for users of its fast DSL
Internet service, but officials declined to say how many people the
contractors employ.
While SBC has cut more than 20,000 jobs during over two years, company
spokesman Walt Sharp said the use of contractors such as Tata isn't a
means for it to jettison U.S. workers.
"The purpose of this, in part, is to maintain our costs and allow us to
spend domestically on the development of new products and services," he
said.
Brad Russell, a spokesman for USAA, also defended his company's hiring
of Tata workers, saying the work performed by the consultants isn't the
same as that done by the ITCO workers laid off in 2001.
Although Tata employees did help phase out the old technology some of
those people worked with, Russell said they were not replacements for
the laid-off USAA employees. The several hundred ITCO employees caught
in recent layoffs were unable to meet changing technology and job
requirements, he added.
And ITCO hasn't stopped hiring, according to Russell. It's beefing up
its ranks again with 50 to 100 new, non-Tata hires soon.
USAA said contracting allows the company to save money on wages and
benefits and helps avoid layoffs of its own employees when the task is
accomplished. The company still owns the intellectual property produced
by the consultants.
"In today's environment, companies are looking at ways they can
maintain their competitiveness," Russell said. "It's a lot less
expensive to have that flexibility."
But experts said that flexibility comes with a high cost to workers.
While there are job retraining programs for workers laid off when
manufacturing jobs are shipped overseas, there is no such safety net
for workers in IT or other white-collar fields.
"The problem I have is that you need to do something to acknowledge the
losers, the people who have lost their livelihoods because of this,"
said Ron Hira, a Rochester Institute of Technology public-policy
professor who tracks IT work force issues. "There are no programs right
now to do that.
"Workers often don't even know they're going to be affected because the
companies aren't up front with them. They're getting hit with this out
of the blue."
USAA workers caught in the company's recent layoffs balk at the thought
that the company's use of Tata is preventing further layoffs. They said
the choice to use Tata was a move to cut costs by getting rid of U.S.
workers.
"The layoffs are still going on," said Al Cortez, a former USAA IT
manager who lost his job in 2001. "You don't hear of 400 or 500 being
let go, but it's happening in ones and twos."
Candice Johnson, spokeswoman for the Communication Workers of America
union, which represents more than 100,000 SBC workers, said she
recognizes the company is contracting out customer-service work to
remain competitive.
But, "it's disappointing that this is the way SBC and other companies
seem to be dealing with cutting costs," she added.
"When manufacturing jobs were going overseas, we were told that they
were being replaced with these new, information-age jobs. What are our
workers going to do now that these information-age jobs are leaving?"
Despite the objections of workers and a growing number of outsourcing
activists, many companies are following USAA's and SBC's lead.
Dallas-based EDS early this month said it's cutting jobs and increasing
its work force in places like India and the Philippines to 20,000 from
9,000 by the end of next year. And union officials this summer said IBM
Corp. is planning to move thousands of jobs to India and China to cut
costs.
Indeed, during the next 15 years, 3.3 million white-collar jobs not
just those in the tech trades are expected to move overseas,
according to Forrester Research Inc. estimates.
"There's no way this is going to stop at IT," said Mike Emmons, an
anti-outsourcing activist who lost his job last year when Siemens
Information Communication Networks outsourced its entire IT department
to India. "Who are they going to cut next? Accounting? Finance?
Architects? If you sit at a desk, they can send your job overseas or
bring someone in to replace you."
To be sure, the lure of an inexpensive overseas work force is tough to
resist.
U.S. IT workers who charge $80 to $120 per hour for project work
compete with Indian workers who will do the same work for $40 an hour,
Yankee Group analyst Lewis said in a new research report.
The movement is "an irreversible mega trend" that is disorienting not
only North America but also the United Kingdom and Australia, Diane
Morello, a Gartner vice president and research director, said in a
recent research report.
Companies should worry about farming out so much IT work to overseas
firms "because they cannot afford to have domestic IT talent dry up,"
Morello said. "When investment resumes and the economy rebounds, (chief
information officers) will need a cadre of seasoned IT professionals
and eager recruits to turbocharge new ideas, new investments and new
programs."
Aren't there protections for U.S. workers in the laws that govern work
visas?
Well, it depends on the visa.
Many workers fretted about companies' use of the H-1B visa, which
allows employers to bring in foreign workers to fill skilled positions.
That visa requires that the company can show it's unable to find a U.S.
worker to fill the position and that the foreign worker it hires will
be paid the prevailing U.S. wage for the job.
But anti-outsourcing activists said companies often skirt the H-1B
regulations or bring in contractors using the less-restrictive L-1
visa.
Originally designed to allow large companies to transfer professionals
with "special knowledge" to their U.S. operations from overseas
subsidiaries, the L-1 is now widely used to bring contractors into the
country. Unlike the H-1B, it doesn't require companies to seek a
qualified U.S. worker first or to pay the visa-holder prevailing U.S.
wage.
Companies' use of the H-1B fell in 2002 with the collapse of the tech
industry, but the L-1 rose during most of the '90s and experienced
virtually no decline from 2001 to 2002.
"My parents came in as immigrants," Rochester Institute's Hira said. "I
have nothing against immigration. I think the problem is that the
program is being gamed and abused by these companies, sometimes quite
flagrantly."
Employees' anger and worry about the outsourcing trend and perceived
misuse of the L-1 may be generating some waves with politicians.
Three bills designed to curb the use of the L-1 have been introduced in
Congress, and some lawmakers have called for hearings on the issue.
What's more, the Homeland Security Department is also investigating
whether corporations' use of the L-1 to bring in contractors is an
abuse of the program.
But activists such as Emmons question how successful those measures
will be, given the political clout of the companies that are using L-1s
or overseas contracting to cut costs.
"Do you think these people are going to do anything to hurt the
corporations that are writing them checks?" he asks.
Indeed, even the Republican Party has turned to outsourcing recently.
The Indian magazine Business Standard recently reported that the GOP
has hired HCL eServe to set up call centers in two Indian cities to
make fundraising calls into the United States.
And the recent moves in the Capitol are little consolation for U.S.
workers who claim they've already been victimized by the outsourcing
trend.
Former USAA manager Cortez, who now teaches math for the Alamo
Community College District, said he worries his students now studying
for computer science degrees may be moving into a lousy job market once
they graduate.
Olivares, the other ex-USAA worker, said he's pursuing an unemployment
claim against his former employer and looking into a career change,
possibly pursuing his lifelong love of music. He said he feels burned
out on IT and worries that he may end up at another company that
decides to outsource his job.
Olivares said he harbors no resentment toward the Indian workers who
now populate the ranks at ITCO, but said the decision by management to
bring them has contributed to his desire to leave the tech business.
"How can you blame the Indian people?" Olivares asks. "They're just
doing what they're allowed to do. It's the company management that's
made this decision."
snowlin@express-news.net
tpoling@express-news.net
http://www.zwire.com/site/news.cfm?newsid=10152364&BRD=1426&PAG=461&dept_id=186027&rfi=6
Rate of high-tech job export alarms analysts
By A. LEE GRAHAM , STAFF WRITER 09/12/2003
When Electronic Data Systems Corp. announced plans to more than double
its overseas work force, technology workers saw the writing on the
wall.
It's a script all too familiar to those rocked by a tumultuous economy.
But many companies - not just EDS - are looking to foreign soil as they
trim budgets and tighten belts.
"More jobs are going to countries like India every day," said Steven
Jeffes, a marketing consultant who is no stranger to layoffs.
After serving Dallas companies, among other clients, Jeffes found
himself snipped from the work force.
He eventually found employment with AnswerThink Consulting. But the
position would prove fleeting; he was laid off in May. Jeffes now
consults independently from his home in Albany, N.Y.
"I fear the overseas trend is a reality that's just beginning."
According to analysts and recent studies, Jeffes' fears are not
unwarranted. In fact, companies are moving jobs overseas at rates
considered alarming to many in the high-tech field.
Some view this outgrowth of globalization as positive for fostering
competition and offering opportunities to workers who otherwise might
be locked out of the industry. But a growing number of critics cry foul
when U.S. employers hire Indian software programmers willing to work
for $10,000 a year in positions that pay $60,000 or more at home.
"It's hard to talk about because you don't want to sound xenophobic,"
said a Plano tech worker, who wished to remain anonymous. "Any time you
complain about jobs going overseas, you're misunderstood as criticizing
that country. But that's not the case. We're losing jobs, and these
companies need to deal with the problems at home."
Confirming the trend is a recent study by the McKinsey Global
Institute, the think tank of consulting firm McKinsey & Co. It found
Indian employees benefit when a software position paying $60 an hour in
the U.S. goes to workers in India willing to earn $6 an hour.
According to the study, the U.S. economy enjoys at least two-thirds of
the benefit from offshore outsourcing, compared with the remaining
third absorbed by the country receiving the job.
India is one of several countries benefiting from offshore outsourcing.
But unlike most nations, it boasts what many consider a preeminent
school for future technology workers. The Indian Institute of
Technology, Kharagpur, is a virtual incubator for tomorrow's erudite
engineer.
"It definitely adds to the labor pool and makes the market that much
more competitive," said Jeffes. "But we're going to continue seeing
this outsourcing as long as U.S. companies benefit."
EDS is among many companies realizing those benefits. Last week, it
announced plans to beef up its work force in countries offering cheap
labor. That means boosting overseas presence from 9,000 to 20,000
employees by late 2004. The move is expected to shave cost to clients
by 25 percent.
According to a study by Forrester Research, a trend-analysis firm, many
companies are headed the same way. More than 3.3 million U.S. jobs will
go overseas by 2015, and many of those positions are white-collar in
nature.
"We're not noticing any effects at this point in time," said John
McGrane, Plano's finance director. "But it could become a trend in the
long term, meaning we could see some effects down the line."
Still, he doubts area employers will rush to move jobs overseas in
significant numbers.
"I would think those types of migrations would be for
research-and-development-type projects where you could easily outsource
those. But if you're a corporate headquarters, I'd think you'd want
your day-to-day staff closer to home."
Those still working at Alcatel, Nortel Networks and other companies
dotting Telecom Corridor already know the industry is unstable. But the
prospect of losing their livelihood to overseas workers only rubs salt
in the wound.
"I feel pretty secure in my job, but you never know," said the Plano
tech worker. "We've lost a lost of people in the past couple years. I'd
hate to think something like that would happen to me."
Contact staff writer A. Lee Graham at 972-398-4266 or
grahaml@starcntexas.com.
)Plano Star Courier 2003
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http://www.charlotte.com/mld/charlotte/business/6528220.htm
Posted on Thu, Aug. 14, 2003
Easley orders review of contracts, vendors
Governor wants to determine if work, such as at call centers, is done
abroad
STELLA M. HOPKINS & SARAH JANE TRIBBLE
Staff Writers
N.C. Gov. Mike Easley on Wednesday ordered a review of state contracts
to determine if work is done overseas.
Easley also ordered that, when soliciting bids, state agencies ask
where work will be done.
The executive directive -- the sixth for the Democrat who took office
in 2001 -- is part of an ongoing review of state purchasing policies,
said Cari Boyce, the governor's spokeswoman.
The order applies to most areas of N.C. government, including the
Department of Health and Human Services, which oversees the state's
food stamp program. North Carolina is among 40 states where food stamp
recipients rely on help desks in India to resolve problems with their
benefits, according to an Observer survey. In an article Sunday, the
newspaper reported on the widespread use of foreign workers on states'
contracts.
N.C. offices run by elected officials, such as the attorney general,
are not covered by the order, Boyce said.
S.C. food stamp users also use a foreign call center, and programmers
in India are helping revamp the state's unemployment tax system.
While not commenting specifically on state use of foreign workers, S.C.
Gov. Mark Sanford's spokesman, Will Folks, said that this summer, the
governor has used a "wider lens to look at state government operations,
including procurement."
Businesses have increasingly been using lower paid foreign workers for
computer work, call center operations and other service jobs. By one
estimate, the nation will have lost 3.3 million of these service jobs
by 2015, with the majority going to India.
Government agencies, squeezed by tight budgets, are joining the trend,
saying the use of foreign workers can save money and time and sometimes
improve quality. State officials also say that purchasing rules don't
allow them to exclude qualified bidders just because they perform work
overseas.
Critics say government agencies erode their tax base by hiring foreign
workers.
The new bidding process means agencies will know where a potential
vendor plans to do work and can consider that information when
selecting a vendor, Boyce said. However, she said, there's "no blanket
answer" on whether an agency can use that information to reject a bid.
"The governor strongly believes that N.C. state government should hire
companies that employ North Carolina workers whenever possible," Boyce
said.
N.C. Sen. Eric Reeves, a Democrat in Raleigh, called Easley's move "a
step in the right direction" because it gives the agency more
information to make a decision as to whether outsourcing jobs overseas
is a good or bad thing.
But, Reeves said more can be done. In April, he introduced legislation
to ban foreign call centers on state contracts. The proposal passed the
Senate and awaits House consideration.
"I don't want to be harsh on the governor, but ... he can certainly say
that it is the policy of this administration not to do certain things,"
Reeves said.
Senate President Pro Tem Marc Basnight, D-Dare, said he supports the
governor's order and would like to see work done in-state. Although, he
said, sometimes that isn't cost effective.
Boyce said the governor's action was not prompted by The Observer's
Sunday story. The Observer "brought some important facts to light
regarding what North Carolina and other states are doing," Boyce said.
The review of state purchasing rules began in the spring.
The governor was in meetings, unavailable for comment.
Stella Hopkins: (704) 358-5173 or shopkins@charlotteobserver.com
http://asia.cnet.com/newstech/industry/0,39001143,39148119,00.htm
China to match India as IT outsource hub: Gartner
By Staff, CNETAsia
26/8/2003
URL: http://asia.cnet.com/newstech/industry/0,39001143,39148119,00.htm
China will overtake India as a base for outsourced information
technology (IT) services, reported the magazine BusinessWeek.
The world's leader in manufacturing is joining English-speaking
countries such as India and Philippines in being a hub for outsourced
service jobs. Back-office work is flowing into China due to the influx
of Western multinationals. The country already provides back-office
support for financial service, telecom, software, and retail companies
in neighboring Asian countries.
Research firm Gartner predicts that the by 2007, China will earn US$27
billion in revenue for IT services, call centers and back-office work,
matching India's figure, according to the report.
Economic forces within China and overseas are causing outsourced work
to flow into the country. China's labor is cheaper than that of India,
a powerhouse in high-end IT services. An engineer in Shanghai costs
only US$500 a month, compared to US$700 in India and US$4,000 in the
U.S. said the magazine.
While China now provides outsourced IT services for mainly for Korea
and Japan, thanks to cultural, geographic and language ties with the
two countries, fluency in English is increading thanks to the growing
number of multinational firms.
The Chinese government plans to forge partnerships with these
multinationals to train IT engineers to meet the increasing demand for
skilled service Chinese workers, fueled by China's booming economy and
the influx of multinational manufacturing companies. Gartner forecasts
that China needs four million more IT professionals to meet future
demand.
U.S.-based firms such as Oracle and Motorola have longtstanding ties
with both India and China and have set up software centers in both
countries.
Recently, outsourcing to India has created a controversy in the U.S.,
given the struggling economy and jobless rate of 6.4 per cent in the
U.S.With China's ascent, the already heated debate could be further
inflamed, as many Americans view the Asian giant as a political and
economic rival.
http://money.cnn.com/2003/09/17/news/international/boeing.reut/index.htm
Boeing sees China as major supplier
Aerospace firm says it will buy $800 million in parts from China
between now and 2010.
September 17, 2003: 7:53 AM EDT
BEIJING (Reuters) - Aerospace firm Boeing Co. said Wednesday it
expected to buy about $800 million worth of goods from China between
now and 2010, and said any revaluation of the local currency would have
little affect on its contracts there.
Boeing bought a total of about $500 million in parts from China over
the past couple of decades, and that was expected to swell to $1.3
billion by 2010, David Wang, President of Boeing China, told reporters.
Boeing mainly buys parts and tail assemblies for its 737 and 757 jets
from the Asian country, Wang said.
Asked if Boeing (BA: Research, Estimates) thought China should revalue
the yuan, which is pegged at about 8.3 yuan to the U.S. dollar, Wang
said, "I don't think we have a real stand on it."
Almost all of Boeing's contracts in China were on dollar terms, so any
revaluation would have little impact, Wang said.
Officials from the United States, Japan and elsewhere have pressured
Beijing recently to loosen its control over the currency, saying it has
kept the yuan artificially low and therefore made Chinese exports
unfairly cheap.
Wang declined to say whether the Chicago-based company planned to shift
any manufacturing to China, which has become a magnet for foreign firms
looking to cut costs by tapping the country's deep pool of cheap labor.
"The labor force is always sensitive about losing jobs. But I know many
examples where U.S. companies have set up shop here and become more
competitive in Asia," Wang said.
"It's a global marketplace and to succeed in a global marketplace and
to make U.S. companies successful in the global market, you need a
complementary presence," Wang said.
http://www.financialexpress.com/fe_full_story.php?content_id=42728
Corporate
New US Rules On BPO Are No Cause Of Worry: Deshpande
Our Corporate Bureau
Kochi, Sept 24: The new US rules and guidelines on BPO cannot hamper
Indian prospects as economics will ensure that the cheapest mode will
survive and with Indias advances in the sector, there was always
hope for the country, according to Gururaj Desh Deshpande of Sycamore
Networks. Mr Deshpande, who along with a few entrepreneurs from the
Silicon Valley are here in connection with the CEO summit as part of
the Amritavarsham 50, told a group of mediapersons the quality of
Indian technology had literally left the US scared. Some of the
customer connectivity there was inferior to Indian technology, he
added.
According to management guru, CK Prahalad, 90 per cent of the global
companies would go ahead with BPO and India had a relevance in this. He
cited the case of a bank in Europe which made an agreement with an
Indian company to upgrade the banks systems to be on par with India.
The opportunities that India had were immense, said Mr Prahalad. He is
among the top businessmen and management gurus who are to attend the
CEO summit which is to be held on Friday when they deliberate with
President APJ Abdul Kalam on how to turn his vision of a strong India
by 2020 a reality.
Later at a meeting of the Kerala chapter of the Techniques, Ideas and
Enterprises (TIE), Mr Prahalad said that discussions in India were a
litany of problems and not about opportunities. As a pointer to
success, he referred to the Jaipur foot and the Aravind Eye hospital
whose standards were superior to the ones in the US and were far
cheaper.
Economic strength, technical viability and moral leadership could make
India a major power by 2020. Though like China it could have started
going on these lines a decade ago, time was not running out. He felt
that India needed to concentrate on its co-operative sector and focus
needed to be on the bottom of the pyramid. There was immense source of
innovation to be leaders in health, education, energy, transportation
and sustainable development.
By the end of the next decade, he felt that India with the worlds
largest pool of trained manpower could have at least 30 of the Fortune
100 and have a share of 10 per cent in world trade.
http://www.stateline.org/story.do?storyId=324770
Contracting Out IT Jobs Vexes States
By Pamela M. Prah, Staff Writer
Stateline.org
September 15, 2003
States are wrestling over whether they should contract out or
"outsource" their information technology (IT) projects to private
companies, including those located overseas.
While farming out high-tech work may be cheaper and more efficient,
state officials are leery of possible voter anger about losing state
jobs to foreign companies, industry and government officials said at a
recent Washington D.C. luncheon.
The issue is important both politically and financially. State
government IT market amounts to about $50 billion a year, said Harris
Miller, president of Information Technology Association of America
(ITAA), a trade group that represents the IT industry and the sponsor
of the luncheon.
The trend in private business is to outsource IT jobs to firms located
both on- and offshore, meaning companies located in and outside the
United States. But some states are moving in the opposite direction.
Lawmakers in nearly a dozen states have introduced legislation that
would restrict state agencies from using foreign companies for IT. None
of the legislation passed, but Miller said he expects to see similar
measures resurface, particularly if the U.S. jobs picture doesn't
improve quickly.
"Today the [political] climate doesn't exist to say `offshore' out
loud," said George Newstrom, secretary of technology for the
Commonwealth of Virginia and a former high-tech official in the private
sector. "We have political leaders right now that have great angst
about any outsourcing whatsoever in state government."
Outsourcing to companies offshore is drawing even closer scrutiny, he
said.
Industry experts said state agencies consider outsourcing IT for some
of the same reasons private businesses do: better and cheaper service.
For many state agencies, "their mission is not technology business,"
said William Sweeney, vice president of global operations for
Electronic Data Systems Corp (EDS), headquartered in Plano, Texas.
Instead, the state agency's "mission" may be delivering welfare or
unemployment benefits or tracking down terrorist using financial data
and they want to focus on that, rather than IT, he said.
Newstrom of Virginia agreed that certain state IT tasks could be done
better somewhere else. He said legislation restricting IT outsourcing
is a bad idea and estimated that Virginia could save $100 million of
the $900 million it spends on IT through outsourcing and better
management.
However, Virginia is still working on understanding its IT needs, so
the state really doesn't know what to outsource, Newstrom said. He said
it took him six months to figure out exactly how much the state really
spends on IT. Then there's politics. "We reject moving work from
Virginia to Maryland, not to India, to Maryland. We don't even like
that," he said.
States that do outsource information technology business with companies
abroad often attach strings. Pennsylvania, for example, hired TCS
America, the U.S. arm of Tata Consultancy Services (TCS), one of the
largest IT companies in India according to industry figures,to help
with its IT services for it corrections department.
Pennsylvania required that the work be done by people located in the
state, Arup Gupta, president of TCS America, told Stateline.org. New
Mexico, on the other hand, hired TCS America to work on the state's
unemployment insurance system and allowed some, but not all, of the
work to be done abroad, Gupta said.
The same holds true for EDS. Some EDS state contracts specify that the
work be done by people located no more than 50 miles from the state
capital, Sweeney said.
New Jersey has learned that contracting out IT work can create a
political firestorm. The state decided to drop the idea of having some
of its call centers located abroad after coming under fire for taking
jobs out of the state. Miller said New Jersey would probably spend $1
million to bring the call centers back onshore.
"It's an interesting political tradeoff," he said.
The IT industry fears that statehouse action could affect their
business worldwide. "If we start passing legislation state by state or
at the federal level that says we can not award contracts to a non-U.S.
company then it plays into the hands of other governments around the
world that do not want to open their government IT business" to U.S.
firms, Miller said.
Contact Pamela M. Prah at pprah@stateline.org
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