8 H-1B/L-1 Offshoring Articles

Date: Monday, November 10, 2003 2:56 PM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

Article 1:
http://sfgate.com/cgi-bin/article.cgi?f=/chronicle/a/2003/10/01/MN55780.DTL
Congress cuts visas for skilled foreign workers
High unemployment in U.S. tech sector underscored by rollback in H1-B
program. A huge visa program for foreign high-tech and other
specialized workers will quietly shrink by two-thirds starting today,
drastically reducing the number of available slots for Indian, Chinese
and other highly educated workers -- many of them graduates of U.S.
universities -- who rely on the visas to get U.S. jobs when they
graduate.

Article 2:
http://sify.com/news/fullstory.php?id=13276088
Debate in US after H1-B visa cap lowered.
With the tech boom over, Congress has allowed an expanded visa program
aimed at foreign high-tech workers to lapse, but debate is still raging
over the needs for the US technology workforce.

Article 3:
http://www.rediff.com/money/2003/oct/03spec.htm
Forget H1-B, protect L-1.
The hope of Indian software companies, that when it came to the crunch
the US would reconsider scaling down the limit for issuing H-1B visas,
has been belied. In the new US financial year beginning this month, the
annual quota has fallen by two-thirds, to the 65,000 level that existed
till 1998. On the face of it, this is a new hurdle in the way of the
rapid growth of Indian software, because slightly over half of the
revenue of frontline Indian companies comes from on site work.

Article 4:
http://www.atimes.com/atimes/South_Asia/EJ08Df02.html
H1-B visas: US gets it wrong again.
The US government's move to slash H1-B visa entrants into the United
States appears likely to blow up in the faces of those who sought the
October 1 cut from 195,000 skilled workers to 65,000. While nobody is
sure exactly how the dynamics are going to play out, many analysts
believe that cutting the numbers of skilled information-technology (IT)
workers into the United States will result in US companies sending the
jobs overseas to much cheaper countries. India, with its extensive IT
operations in such places as Bangalore, is almost guaranteed to be a
beneficiary.

Article 5:
http://www.bayarea.com/mld/mercurynews/business/7225976.htm
Caught in the pull of globalization
When Natasha Humphries went to Bangalore, India, in December to train
Indian contract workers to do quality-assurance testing for her
employer, Palm, she realized that her own job coordinating that work
could be done by local workers there, as well. ``I'm fairly intuitive
-- I saw the writing on the wall,'' said the 30-year-old Santa Clara
resident. Humphries was indeed laid off in August.

Article 6:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/11/09/BUGME2SG5L1.DTL&type=business
The user has a right to know
The subject of outsourcing work abroad brings up heated feelings on
both sides of the issue, pro and con. A group of East Coast info-tech
professionals says that everyone's entitled to his own opinion on the
matter, but companies doing the outsourcing should at least be required
to tell consumers that personal information is heading overseas.

Article 7:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/10/29/BUGL42L7N91.DTL&type=business
BofA to send tech work, data to India
Bank of America snagged a lot of headlines when it announced this week
that it will create the second-biggest U.S. bank by acquiring
FleetBoston Financial for about $47 billion. But virtually no attention
was paid just days earlier when BofA said it will move more operations
abroad by setting up a subsidiary in India next year to handle key tech
functions, many involving sensitive customer information.

Article 8:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/10/22/MNGCO2FN8G1.DTL
A tough lesson on medical privacy
Pakistani transcriber threatens UCSF over back pay. "Your patient
records are out in the open... so you better track that person and make
him pay my dues." A woman in Pakistan doing cut-rate clerical work for
UCSF Medical Center threatened to post patients' confidential files on
the Internet unless she was paid more money.To show she was serious,
the woman sent UCSF an e-mail earlier this month with actual patients'
records attached.

http://sfgate.com/cgi-bin/article.cgi?f=/chronicle/a/2003/10/01/MN55780.DTL

Congress cuts visas for skilled foreign workers

High unemployment in U.S. tech sector underscored by rollback in H1-B
program

Carolyn Lochhead, Chronicle Washington Bureau
Wednesday, October 1, 2003
)2003 San Francisco Chronicle | Feedback

Washington -- A huge visa program for foreign high-tech and other
specialized workers will quietly shrink by two-thirds starting today,
drastically reducing the number of available slots for Indian, Chinese
and other highly educated workers -- many of them graduates of U.S.
universities -- who rely on the visas to get U.S. jobs when they
graduate.

With the tech economy still mired in recession and unemployment in
Silicon Valley at 8.7 percent in August -- after reaching 9.5 percent
in June -- Congress has let the H1-B visa program drop from 195,000 new
visas a year to its preboom level of just 65,000.

The program was expanded twice by Congress with great bipartisan
fanfare, the last time in 2000, to 195,000 visas, just as the tech boom
reached its peak. Members, particularly from California, were eager to
respond to Silicon Valley executives who complained they could not find
enough Americans to fill the upper ranks of their burgeoning workforce.

But since the tech collapse, laid-off engineers and computer workers in
Silicon Valley and other tech-heavy regions have complained bitterly
that the program allowed foreign workers to steal their jobs and
undermine their pay. In addition, several "job shops" were found to be
abusing the program by using H1-B workers for low-end generic work
rather than the highly specialized work intended by the program.

H1-B visas, instituted in 1952, permit foreigners holding at least a
bachelor's degree or possessing equivalent specialized knowledge to
work in the United States for three years, with the opportunity for a
three-year extension. Many applicants are already in the country,
usually as students at U.S. universities and many apply for permanent
status when their H1-B visas expire.

At their peak, half the visas went to Indians, who by the latest count
still use a third of the allotment. As a result, they are the group
most affected by the quota decline, said Sanjay Puri, executive
director of USINPAC,

or the U.S. India Political Action Committee.

"What you're starting to see now is reverse immigration," Puri said,
noting job fairs in Silicon Valley and New York promoting jobs in India
for Indian graduates of U.S. universities.

"People are still coming here, but the jobs are getting outsourced to
India, " Puri said. "Fewer people are coming here and the ones who are
here are now moving back."

The number of new visas actually available this year will be
considerably smaller even than 65,000, because about 22,000 petitions
are already pending and will be counted against the new lower ceiling.
Another 6,800 visas also have been set aside for workers from Chile and
Singapore under new free trade agreements signed with those countries,
leaving roughly 36,000 visas available next year for the entire
country.

Even with the downturn, demand for the visas reached about 80,000 this
year.

If the economy performs better next year, experts say the 65,000 cap
could reached by June, or even as early as March.

That is bad timing for foreign graduate students, said Eleanor Pelta,
managing director at Morgan Lewis Resources, part of a national law
firm.

Many foreigners who graduate with advanced degrees in areas as diverse
as finance and astrophysics take part in a year of on-the-job training
with a prospective employer, Pelta said, usually running from June
graduation to the following June.

Yet with the economy still failing to produce jobs, members of Congress
are in no mood to increase the ceiling.

"My view is when the economy is as good as it was in 1999 and 2000,
there was a growing need, and when it's bad, there isn't," said Sen.
Dianne Feinstein, D-Calif., who voted for the expansion in 2000.
"Therefore I see no reason to raise the level of the cap because there
is just going to be the substitution of foreign workers for American
workers."

Rep. Zoe Lofgren, D-San Jose, who led the drive to expand the visas in
2000, said the use of the program by Silicon Valley companies "has just
fallen like a stone," reflecting the economic downturn.

The overall number of visa-holders hired by the tech industry plummeted
by 60 percent from 2001 to 2002, from 180,286 visas to 70,067, while
the tech industry's share of the visas fell from 54 percent to 37
percent over that time. H-1B visas issued for computer occupations
declined 81 percent, from 84, 853 to 16,174.

Lofgren said that while unemployment "is a huge problem in Silicon
Valley, I hear more from people concerned about outsourcing as a cause"
than H1-Bs, referring to the trend of companies moving operations, and
jobs, to India, China and other tech-savvy countries where wages are a
fraction of U.S. rates.

Santa Clara chipmaker Intel, where H1-B holders constitute 5 percent of
its workforce, contends it still needs the visas for highly specialized
workers.

Spokeswoman Jennifer Greeson said Intel is "concerned about
circumstances that would further reduce the numbers next year, and we
are thinking about what options to pursue."

There are other sectors facing labor shortages -- physicians are needed
in rural areas and many high schools lack science and math teachers --
and these are now taking a greater share of H1-B slots, which also go
to such occupations as artists and fashion models.

American tech workers are not sorry to see the program decline. During
the peak of the boom the unemployment rate for electrical engineers was
just 1 percent, but now has reached an all-time high of 7 percent.

"Some of those people I've been in contact with have been out of work
for two years," said George McClure, chair of the workforce committee
of the Institute of Electrical and Electronics engineers. "So I think
it's hard right now to make the case that we don't have the necessary
human resources in the tech area that are present right here to meet
the need."

E-mail Carolyn Lochhead at clochhead@sfchronicle.com

http://sify.com/news/fullstory.php?id=13276088

Debate in US after H1-B visa cap lowered

Friday, 03 October , 2003, 16:58

Full Coverage: The Fuss over H1-B Visas

By Rob Lever in Washington

With the tech boom over, Congress has allowed an expanded visa program
aimed at foreign high-tech workers to lapse, but debate is still raging
over the needs for the US technology workforce.

The expanded program for H-1B visas -- provided for workers with
special skills -- expired with the end of the fiscal year September 30,
bringing the cap down to 65,000 compared with 195,000 over the past
three years.

The expanded cap was enacted in 2000, when unemployment was at record
lows and US companies complained about a shortage of high-technology
workers. About half of the H-1B workers came from India, with large
numbers coming from by China, Canada, Britain, the Philippines and
South Korea. But even with the lower cap, some complain that the influx
of foreign workers has led to higher unemployment and lower wages for
the tech sector.

"We hope (the lower cap) helps, but there are still hundreds of
thousands of people on the visas that are already here," said Chris
McManes of the IEEE-USA, the US arm of the Institute of Electrical and
Electronics Engineers.

McManes said that the H-1B and other types of visas for tech workers --
including the L-1 visa for intra-company transfers -- have "exacerbated
high-tech unemployment, which is at unprecedented levels".

He said official data show the unemployment rate for electrical and
electronics engineers -- just one category of tech workers -- rose to
seven percent in the first quarter of 2003, the highest since the
organisation began keeping records in the 1970s.

But some say the US will need more high-tech workers from abroad when
the economy picks up.

Eleanor Pelta, an attorney in Virginia who represents employers, said
demand for new H-1B visas outpaces the 65,000 cap.

"The 65,000 is not going to be sufficient," Pelta said. "Congress is
very reactive when it comes to immigration. By the time they look at an
issue and make a decision, often the economic conditions have changed.
That's what I'm concerned may happen here."

Clouding the debate over visas is the growing trend for US firms to
outsource functions in the high-tech sector to other countries like
India or the Philippines.

According to the Commission on Professionals in Science and Technology,
the share of foreign-born employees in the IT workforce has doubled in
the past decade. But outsourcing of IT work to foreign locations has
quadrupled since 1995 to over 1.2 billion dollars in value in 2001.

Bob Cohen, spokesman for the Information Technology Association of
America, which represents tech companies, said it is likely that firms
will outsource work offshore if they cannot find workers at home.

"The intuitive argument is that companies not able to get access to
specific skill sets may instead send those jobs offshore," Cohen said.

But IEEE-USA's McManes said that the increased use of foreign IT
workers has led to greater outsourcing to other countries.

"We think it's fueling outsourcing because people are coming over here
and gaining intimate knowledge of US business practices and making
contacts; armed with that knowledge, they go back to wherever they're
from and help in outsourcing," he said.

IEEE-USA argues that as a result of these guest worker programs, the
United States is losing skills and its competitive advantage in
technology, and would be better off with programs leading to
citizenship.

The group also says Congress should provide more enforcement mechanisms
to ensure that temporary IT workers are paid prevailing wages in the
United States.

But ITAA's Cohen said the H-1B program has been an important tool for
US industry for decades. "The way the program performed showed it was
self-correcting," Cohen said.

"As demand for IT workers fell, demand for H-1B visas fell. The program
worked the way it was supposed to work."

") 2003 sify.com India Limited. All Rights Reserved. This material
may not be published, broadcast, rewritten, or redistributed."

http://www.rediff.com/money/2003/oct/03spec.htm

Forget H1-B, protect L-1

BS Bureau | October 03, 2003 | 12:14 IST

The hope of Indian software companies, that when it came to the crunch
the US would reconsider scaling down the limit for issuing H-1B visas,
has been belied.

In the new US financial year beginning this month, the annual quota has
fallen by two-thirds, to the 65,000 level that existed till 1998. On
the face of it, this is a new hurdle in the way of the rapid growth of
Indian software, because slightly over half of the revenue of frontline
Indian companies comes from on site work. And the US is by far the
biggest IT market, accounting for over 60 per cent of the revenue of
most active Indian companies.

Poll: Will H1-B visa cut hit Indian IT firms?

US to tighten H-1B, L-1 visa norms further

The truth is less worrying and must be understood in context. Indian
software was as affected as anybody else ever when the technology
bubble burst in 2000 and the global economy encountered a brief
recession in the wake of 9/11.

Now the US economic activity is picking up with stocks, particularly
technology ones, moving up at a faster pace.

But this is turning out to be a case of jobless growth. Naturally,
anxiety levels are high about high levels of unemployment despite the
up-tick in growth, the situation not being made any better by Americans
getting ready to elect another president late next year.

High unemployment in an election year does no politician any good and
American ones have predictably opted for what is politically safe as
opposed to what would have been good for the US economy in the longer
run. Adoption of IT, aided by outsourcing, massively drove US
productivity through the nineties.

Fortunately for Indian software, various factors have limited the
downside of the latest US action on visas.

First, the cut is not as big as it looks. In the last US financial
year, only 79,100 H-1B visas were issued (in 2001 there were 1,63,600
visas).

Even if you assume that the majority of H-1B visas are issued to
Indians, the impact on India's software industry will be less than the
14,000 difference between 2003 and 2004. What is more, the world is
witnessing an unforeseen wave of off-shoring, and its chief beneficiary
is India.

So fewer people will have to work at the premises of the customer to
get a particular job done. Additionally, H-1B visas are issued for six
years and Indian companies have built up sufficient pipelines to take
care of current work and that in the immediate future.

The crunch could come in 2005 if there is a sharp increase in orders
and no commensurate rise in visas issued.

What raises anxiety levels, meanwhile, are the growing uncertainties in
the US over the future of L-1 visas. These are issued to companies for
their staff to work at their branch offices and there is no limit to
these.

Individual legislators are now trying to change the rules of the game;
if the L-1 route also gets narrowed, then there will be a serious
problem.

http://www.atimes.com/atimes/South_Asia/EJ08Df02.html

H1-B visas: US gets it wrong again

By Siddharth Srivastava

NEW DELHI - The US government's move to slash H1-B visa entrants into
the United States appears likely to blow up in the faces of those who
sought the October 1 cut from 195,000 skilled workers to 65,000.

While nobody is sure exactly how the dynamics are going to play out,
many analysts believe that cutting the numbers of skilled
information-technology (IT) workers into the United States will result
in US companies sending the jobs overseas to much cheaper countries.
India, with its extensive IT operations in such places as Bangalore, is
almost guaranteed to be a beneficiary.

The H1-B visa program has been criticized by unemployed US
professionals for "taking away" their jobs. H1-B is the
specialty-occupation visa status under which a large number of IT firms
send their employees to the United States for on-site
project-development work, popularly known as body-shopping.

The United States is the prime export destination for the Indian
software industry, with export revenues jumping from US$164 million in
1991 to $10 billion in 2002, clocking an annual growth rate of 45
percent. Almost 50 percent of the H1-B visas issued worldwide last year
by the US went to Indian professionals. India is also currently the
second-largest source, after Mexico, of legal immigrants to the US.

Some figures in India's dollar-spinning software industry expressed
concern consequent to the cut. There are reports that some companies
are accumulating visa-ready people in the belief that the
non-availability of visas may upset their customers' delivery schedules
and hamper project work.

"We are not really worried about its impact on the Indian industry in
the short term," Kiran Karnik, president of the National Association of
Software and Services Companies (NASSCOM), told Asia Times Online. "But
if the level of 65,000 is maintained for a long time, it will have
fallout. The export prospects of smaller and newer companies will be
badly hit," he added.

Karnik and many others in industry, however, are optimistic about the
United States again raising the cap. "The US has been facing a shortage
in software skills along with other areas such as health and academics.
I am sure once the US economy picks up, the H1-B visa cap may be
increased," Karnik said.

The other question, however, is whether the reduced quota would
actually result in giving any unemployed Americans jobs, which was the
original intention of the cut as spelled out by Congressman Tom
Tancredo, a Colorado Republican who spearheaded the movement against
H1-B visa users. The indications are negative.

A new study by the US General Accounting Office (GAO), released in
September, points out that since March 2001, unemployment among "highly
educated individuals" in the United States increased by about 400,000,
resulting in total unemployment of 1.2 million people in that knowledge
class. As the dot-com bubble collapsed, employment "substantially
decreased within information-technology occupations, for which
employers often requested H-1B workers".

Overall, the GAO found, "despite increases in unemployment, most
employers said that finding workers with the skills needed in certain
science-related occupations remains difficult". The question of whether
overseas workers are taking US jobs, the GAO said, remains up in the
air because there isn't enough information available to make a
decision.

The US Chamber of Commerce has pleaded that the cap of 195,000 H1-B
visas be retained to help maintain America's global competitiveness.
"It is unclear what, if any rationale, was used in developing this cap.
What is clear is that the cap will cause great economic hardship to US
employers," a spokesperson for the chamber said.

The chamber disputes the theory that H1-B workers displace US workers
and lower US workers' wages and working conditions in certain job
sectors. "It is hard to displace US workers when you don't have any US
workers to choose from," the spokesman told reporters. "If the
government refuses to recognize market needs and demands, the only
alternative for American companies will be to move more of their
operations offshore."

Indeed, some reports suggest that even US President George W Bush was
against the cut. At a private reception in Jackson, Mississippi, Bush
is reported to have vehemently expressed his opposition to the bill
that Tancredo introduced to reduce the quota.

Bush is reported to have said, "Tancredo and I are at opposite ends of
the pole. I fully do not support Congressman Tancredo's bill against
H1-Bs." If this is true, it is apparent that the president understands
that the current unemployment situation in his country is not due to
H1-B visa holders taking US jobs.

In further voices that might not augur well for the United States,
several industry leaders in India have predicted that the cut will help
accelerate job exports to India.

Prasad Jagatjit, vice president for human resources at i2 said the move
would boost offshore work done in the country. At a recent seminar on
outsourcing of IT work to India, KPIT-Cummins Infosystems chief Ravi
Pandit described this transition as the "maturing" of the Indian IT
industry as it moves from body-shopping to the higher level of working
on outsourced projects.

Avinash Vaishista, chief executive officer of neoIT, an outsourcing
advisory, said, "Putting a cap on H1-B visas gives offshoring a big
shot in the arm. The restriction on importing skilled manpower will
push companies to do more offshoring work in India."

Karnik said employers in the United States currently need and will
continue to need H1-B workers. "The H1-B visa program has been very
useful for the US companies. It's an issue for US industry to take up.
By reducing the cap from 195,000 to 65,000 you are artificially
suppressing the market forces," he said. Several other industry leaders
have expressed similar sentiments.

To buttress Indian industry confidence further, in a new survey by
management consulting firm A T Kearney, North American automotive
executives have picked India over China as the most popular offshore
destination for the migration of business-processing activities.

It is becoming increasingly clear that the cap on H1-B visas was an
emotional reaction to subvert the situation of high unemployment in the
United States. As they say in India, the target was somewhere, the aim
somewhere else.

(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved. Please
contact content@atimes.com for information on our sales and syndication
policies.)

http://www.bayarea.com/mld/mercurynews/business/7225976.htm

Posted on Mon, Nov. 10, 2003

Caught in the pull of globalization

ECONOMISTS SAY FLOW OF WORK OVERSEAS IS UNSTOPPABLE -- AND HEALTHY FOR
U.S.
By Aaron Davis and Margaret Steen
Mercury News

When Natasha Humphries went to Bangalore, India, in December to train
Indian contract workers to do quality-assurance testing for her
employer, Palm, she realized that her own job coordinating that work
could be done by local workers there, as well. ``I'm fairly intuitive
-- I saw the writing on the wall,'' said the 30-year-old Santa Clara
resident.

Humphries was indeed laid off in August. Her former employer, now known
as palmOne, says her layoff was not directly related to its outsourcing
in India. Humphries, however, disagrees. And in unemployment, she has
become an activist.

``I am not angry with companies for trying to conserve costs, but at
the same time, we do have to acknowledge that it's going to create more
problems for us domestically if we don't create more jobs for U.S.
citizens,'' said Humphries in an interview last month before she
testified in front of a congressional committee examining the effect of
white-collar jobs moving overseas.

With the American economy finally gathering steam but employment growth
still uncertain, the offshoring of U.S. tech and service jobs has
become a hot-button issue. It has challenged the economic futures of
white-collar workers and stirred the globalization debate like never
before.

Grass-roots backlash

On one side are American workers in Silicon Valley and elsewhere who
feel anger, fear and profound uncertainty as white-collar tech jobs
quickly move to lower-cost countries like India and China. Offshoring
has sparked a small backlash of grass-roots protests from New York to
California and spurred protectionist legislation in eight states. The
issue promises to become a contentious election-year topic.

On the other side are business executives and economists who argue that
the offshoring of jobs is unstoppable and ultimately healthy for the
United States, spurring this country to shed certain jobs and create
more sophisticated ones in order to stay atop the ladder of innovation.
The shift of tech work overseas is just the latest chapter in decades
of globalization, they argue.

``I think overall, long term, the U.S. economy can take it. But there's
going to be a huge amount of restructuring pain,'' said Rafiq Dossani,
senior research scholar at Stanford University and co-author of a major
offshoring study.

Such forecasts are of little comfort to the tens of thousands of tech
workers -- many of them in the valley -- who have seen their companies
create jobs in India, China and other countries even as they lay off
workers here.

While not every job created overseas is the result of a layoff in the
United States, it's clear that demand for technical talent in India is
taking off -- to the point that companies are recruiting in Silicon
Valley for positions in India. About 40 tech companies did just that
last week at a job fair in Santa Clara. About 750 job hunters attended,
most of Indian origin, according to Karthik Sundaram, managing editor
of siliconindia magazine, which organized the fair.

Yet some American workers see a direct connection between the job boom
overseas and their own unemployment.

Humphries, for instance, said that she was let go after a lower-paid
worker in India filled in for her during a 10-day vacation. She is now
helping lead TechsUnite SV, a local group protesting the movement of
U.S. jobs overseas.

But Milpitas-based palmOne says both the layoff and the outsourcing
were part of a larger business restructuring, and the specific work
Humphries used to do is still being done in Silicon Valley.

Whether or not she was directly replaced by an Indian worker, Humphries
embodies the worker angst now sweeping the tech workforce in the United
States.

``What Humphries represents -- having had to train her own successor --
that's like digging your own grave,'' said Rep. Don Manzullo, R-Ill.,
chairman of the House Small Business Committee, who has proposed a new
wave of ``Buy American'' legislation to limit federal agencies from
outsourcing government jobs overseas.

`Will Code for Food'

Worries over being displaced have spurred some American workers into
action. In one local protest this fall, about 40 offshoring opponents
and unemployed workers took to a street corner in Concord, waving signs
with slogans such as ``Will Code for Food.''

One programmer at the protest said she has watched her employer, Kaiser
Permanente, shift jobs to a contractor in India. ``They say they're
freeing us up to do more exciting jobs and sending more mundane work to
Indian companies,'' said the programmer, who asked that her name not be
printed. ``Nobody believes them.''

Kaiser Vice President Mary Henderson acknowledged the company has
transferred about 200 information-technology jobs to Indian companies,
paying between $25 and $30 an hour instead of $80 to $100 an hour in
the United States. No Kaiser employees have been laid off because of
the shift to foreign contractors, Henderson added, but some Kaiser
workers have been moved to other positions and had to train Indian
workers to do their old jobs.

Cynthia Chin-Lee of Palo Alto began looking for work after she was laid
off in the summer of 2002 from her job as a documentation manager at
software firm i2. After several months, she landed a full-time position
as a technical writer with software firm Remedy in Mountain View.
Still, Chin-Lee said she feels ``bewilderment and worry'' as she sees
more technical writing jobs move overseas. ``It does make me think,
maybe I need to develop some other skills.''

Legislation

What's making the loss of jobs all the more scary for tech workers is
the speed with which companies can now send jobs overseas because of
today's sophisticated communications technology. ``Thousands of jobs
can literally be moved to India overnight. Last week, three of my
friends' jobs moved there. That's just the experience of one person,''
said Arvinder Loomba, professor of operations and international supply
chain management at San Jose State University.

Indeed, say economists and historians, tech jobs seem to be moving to
India faster than manufacturing jobs moved overseas in decades past.
``What that means is there could be much less adjustment time,'' said
Martin Kenney, professor of Human and Community Development at the
University of California-Davis, who co-authored the offshoring study
with Dossani.

Some lawmakers are feeling a need to respond to the trend. With union
support, legislation has been proposed in eight states to limit
offshoring. None of the bills has yet become law.

In New Jersey, a bill to outlaw offshoring of state jobs passed the
state Senate unanimously after legislators discovered that welfare
recipients were calling Mumbai, India, when they had questions about
their food-stamp payments. The bill was defeated by the full
legislature after technology trade groups lobbied against it. But the
state did move about 10 welfare department jobs back to New Jersey --
at a cost of more than $1 million a job.

While cases like New Jersey's may be an exception, many executives,
economists and academics say that offshoring jobs ultimately helps
American companies compete in a global economy, especially in tight
economic times. And companies say that to stay competitive, they have
no choice but to hire the low-cost labor available.

``In business, there are only two levers: the cost side and the revenue
side. Since the economy is not improving, you redirect your cost.
There's no other way,'' said Ajit Gupta, chief executive and co-founder
of Santa Clara-based Speedera Networks.

Global effects

In fact, India's National Association of Software and Service
Companies, the country's largest technology trade group, offers
numerous studies to U.S. lawmakers arguing that offshoring is a
``win-win'' for both India and the United States, saving U.S. companies
money to reinvest at home.

``The development of software has to continue somewhere for the
betterment of everyone, and if U.S companies cannot afford to do it,
then it wouldn't happen at all if not for here in India,'' said Nishith
Desai, whose Mumbai law firm is the leading legal adviser to U.S.
companies moving jobs to India.

Yet for all their talk of competitiveness and long-term strategy,
corporations are sensitive to the negative imagery of hiring overseas
workers while laying off Americans. They have begun shunning the
dreaded ``O'' words -- ``offshoring'' and ``outsourcing'' -- using
instead gentler-sounding, more generic terms like ``sourcing,''
``multishoring'' and ``partnerships.''

``We don't even use the term `outsourcing.' We believe it has a
negative historical reference,'' said David Sanders, senior vice
president of BearingPoint, a global consulting firm in McLean, Va. ``We
simply call it `sourcing.' We find the best source for particular work,
no matter what country.''

Most economists, executives and academics say they're hopeful that, as
it has in the past, the United States will more than survive the latest
wave of offshoring.

``It has always been the trend that as soon as technology products and
services become commodities, then they face competition from overseas
producers,'' said Steve Cochrane, senior economist at Economy.com.
``The American economy and the global economy have been going through
this transformation ever since the 1960s, at least.''

William Miller, professor emeritus at Stanford University and chairman
of Borland Software, said he believes the valley's workforce will
change even more as the latest offshoring trend plays out. Williams
pointed to the example of software employment in the valley, which made
up about 5 percent of tech employment locally in 1975, and grew to its
current 40 percent, as markets changed. In the future, the bulk of
workers will have to move on to new technologies and higher-level jobs,
he said.

Valley vulnerable

Silicon Valley has long been vulnerable to competition from less
expensive places -- both inside and outside the United States. The key
to the valley's future, experts say, is in a new wave of innovation,
maybe in nanotechnology, biotech or something else.

While new jobs are likely to emerge, the transition could be difficult
for many workers, especially those who are too old to easily switch to
another profession but too young to retire on savings.

Chris Parkes, for instance, is hedging his bets. The 45-year-old Moraga
resident cashed in his 401(k) to pay living expenses after he lost his
job as an electronics engineer in October 2001. After almost a year of
fruitless job hunting, which he attributes at least partly to companies
sending work overseas, Parkes decided to follow in his mother's and
grandmother's footsteps and become a nurse. He is taking out loans to
pay for his training.

Parkes eventually found an engineering job with a state agency, but he
is continuing his nursing training just in case.

The changes taking place in the U.S. economy leave Parkes, like many
workers, uneasy at best about the future: He sees U.S. workers being
left behind by globalization.

``I think people identify our economy with the corporation: If we can
get the corporation to do well, that's good for the citizens,'' he
said. ``That's not true with the way things are in a global economy.
The corporation can save money by having the work done elsewhere.''

Contact Aaron Davis at acdavis@mercurynews.com or (408) 920-5464 or
contact Margaret Steen at msteen@mercurynews.com or (408) 278-3499.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/11/09/BUGME2SG5L1.DTL&type=business

The user has a right to know

David Lazarus
Sunday, November 9, 2003
)2003 San Francisco Chronicle | Feedback

The subject of outsourcing work abroad brings up heated feelings on
both sides of the issue, pro and con.

A group of East Coast info-tech professionals says that everyone's
entitled to his own opinion on the matter, but companies doing the
outsourcing should at least be required to tell consumers that personal
information is heading overseas.

As such, these techies -- members of a grassroots organization called
the Programmer's Guild, with about 1,000 members nationwide -- have
drafted an "Information Technology Disclosure Act" that they say should
serve as a model for federal legislation.

"We're not telling companies where they can or can't go," said John
DeMartinis, a New Jersey code jockey who was the disclosure act's main
author. "We're just saying that they have to tell people about it."

He's got a point. One important aspect of the outsourcing trend is that
practitioners frequently take elaborate steps to keep their exporting
of work overseas a secret.

Nondisclosure and confidentiality agreements are routine among
outsourcers and their contractors abroad. Most companies in fact refuse
to even comment on such activities, citing the need to protect
proprietary information.

This practice seems unsavory in part because such companies treat it as
something shameful. In their efforts to avoid embarrassing questions
and bad press, these firms have all but invited increased scrutiny of
their actions.

What, consumers rightfully ask, do they have to hide?

DeMartinis' proposed Information Technology Disclosure Act seeks to put
such questions to rest by mandating that customers be informed if any
of their personal data is sent abroad. It also would require that:

-- Consumers be given the right to opt out from having personal
information -- such as their name, address or Social Security number --
go to other countries;

-- A "serviced in" label be affixed to every statement or document
processed overseas, just as manufactured goods must state a country of
origin;

-- Overseas customer-service workers, who often take pains to mask
their location, identify their whereabouts at the outset of any
conversation;

-- Calls be rerouted to domestic facilities if the consumer so chooses.

The disclosure act says such steps are intended to "help ensure that
consumers get the information they need in order to exercise choice,
get redress or remedy, and protect the security and safety of their
personal information."

DeMartinis isn't being alarmist. He works as a programmer for a major
Wall Street financial institution (which he'd rather not name for
reasons that will quickly become clear).

"At first, we were told that only nonconfidential information would go
overseas," DeMartinis told me. "And that was the case. Then things
changed, and soon everything was going overseas -- anything you could
get done more cheaply."

What sort of information? DeMartinis said his company now makes
available to contractors in India its customers' names, addresses,
Social Security numbers and complete financial records.

"I know this because I myself have access to millions of Social
Security numbers," he said. "The Indian programmers have the same
access I do. They have to support the same system I do."

DeMartinis' employer isn't alone in seeking cut-rate tech support
abroad. DeMartinis said he's spoken with counterparts at other
financial institutions, and they've all said the same: Full access to
customers' accounts is now available to contractors in other countries.

Without customers even knowing.

DeMartinis, who obviously has a vested interest in the outsourcing of
tech work, was quick to stress that he and his comrades at the
Programmer's Guild are not suggesting that just because workers are
overseas, they're less trustworthy than American techies.

"It's not an issue of being trustworthy," he said. "The issue is that
if I try to steal something, I'll get arrested. But just try and
extradite someone if they steal something overseas."

The disclosure act notes that many U.S. companies go to great lengths
to safeguard customers' data, but then farm out support of such systems
to contractors abroad.

"This is analogous," the act states, "to placing expensive locks on
your door and then handing the keys out to anyone who requires entrance
to your premises. The implications are alarming."

DeMartinis said he has sent copies of the disclosure act to a handful
of lawmakers and to date hasn't gotten much of a response -- only
encouraging words from staffers who say they'll see if their respective
bosses are interested.

They should be. The proposed disclosure act as written is nowhere close
to being something that should be enacted as law (it was drafted by
computer nerds, for goodness sakes).

But the document, which DeMartinis said he hopes to have posted this
week on the Programmer's Guild Web site (www.programmersguildusa.com),
serves as a worthy starting point for legislation that could empower
consumers and protect their privacy.

Consumers should indeed be informed about where their information is
being sent and who has access to it. They should have the ability, if
nothing else, to take their business elsewhere if they don't like how a
company treats their personal data.

Similarly, U.S. corporations should indeed be straightforward about
their outsourcing practices. If there is nothing untoward or unethical
about what they're doing, why all the secrecy?

An Information Technology Disclosure Act would at least move this whole
debate out into the sun, where we can all get a good look at it. Right
or wrong, the issue of outsourcing is too important and affects too
many people to be left in the corporate shadows.

It's our info, after all.

David Lazarus' column appears Wednesdays, Fridays and Sundays. He also
can be seen regularly on KTVU's "Mornings on 2." Send tips or feedback
to dlazarus@sfchronicle.com.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/10/29/BUGL42L7N91.DTL&type=business

BofA to send tech work, data to India

David Lazarus
Wednesday, October 29, 2003
)2003 San Francisco Chronicle | Feedback

Bank of America snagged a lot of headlines when it announced this week
that it will create the second-biggest U.S. bank by acquiring
FleetBoston Financial for about $47 billion.

But virtually no attention was paid just days earlier when BofA said it
will move more operations abroad by setting up a subsidiary in India
next year to handle key tech functions, many involving sensitive
customer information.

Bank of America, along with other U.S. financial-services giants, has
been steadily boosting its bottom line by outsourcing costly tech work.
For customers, that means an ever-increasing risk of personal data
slipping beyond the bank's grasp.

BofA says there's no reason to worry and sufficient measures have been
taken to protect customers' information.

But the danger of "offshoring," as I reported last week, is now readily
apparent after a woman in Pakistan doing cut-rate clerical work for
UCSF Medical Center threatened to post patients' confidential files on
the Internet.

She backed up her threat by attaching actual UCSF files to her e-mail.

"This wasn't an isolated case," warned Catherine Graham, chief
executive of CMG MedCom, a medical-transcription consulting firm in
Virginia. "Once information leaves the U.S., there's no control. I can
guarantee you'll see things like this happen again."

Bank of America is already among the largest clients of Infosys
Technologies and Tata Consultancy Services, two of India's leading
providers of offshore tech support. Both companies handle software
development and system maintenance for the bank.

Now comes word that BofA will establish a 1,000-employee subsidiary in
India to significantly expand its presence in the country. The bank has
yet to say where the facility will be located or what specific
functions it will oversee, only that it will be up and running by
April.

Mary Waller, a BofA spokeswoman at the company's headquarters in
Charlotte, N.C., said the Indian subsidiary will focus on "projects and
processes," which she defined as involving various ways things can be
improved for customers.

Waller declined to specify what sort of customer information might be
available to the bank's Indian unit, but she acknowledged that work on
certain processes -- streamlining loan approvals, say -- might require
accessing confidential data.

This, she said, would not pose a threat to customers' privacy.

"If you're in the subsidiary, you're working for us," Waller stressed.
"You're a part of the company."

Similarly, she said BofA's "strategic partners" like Infosys and Tata
might have access to the bank's computer network, but they too are no
threat to customers' privacy. "We absolutely hold our associates to
gold standards," Waller said.

Gold standards aside, critics of offshoring would suggest that non-
Americans are somehow less trustworthy than American workers, and
that's why the outsourcing trend is so troubling.

This is wrong. As I've written before, bad apples can be found
everywhere.

The question is not one of national trustworthiness. The question
instead is whether U.S. consumers' information is equally safeguarded
both at home and abroad.

The simple fact is that your records -- your credit history, financial
data, medical files and all other personal information -- are far
better protected within the United States than anywhere else on the
planet.

A worker at an H&R Block office in New York allegedly stole financial
information from dozens of clients last year and used the info to
obtain credit cards and go on a shopping spree. She was caught in
relatively short order and now faces numerous felony charges.

A U.S. medical transcriptionist would similarly have had the FBI
knocking at her door within hours if she threatened a major medical
center with extortion.

India passed a cyber-crime law several years ago, making it illegal for
the first time to steal confidential information from computers. Since
then, just 11 people have been charged with violating the law. Of this
number, only two cases are being prosecuted.

The issue is one of enforcement. Tough U.S. laws cannot be enforced
overseas, and, more often than not, legal systems abroad are not
prepared (or willing) to tackle these difficult, hard-to-prove cases.

Bank of America may deny the inherent risk of outsourcing vital
operations, but the bank's director of corporate information security,
Rhonda MacLean, is chairing a high-powered entity called the Financial
Services Technology Consortium -- a who's who of the finance world
focusing on industrywide tech problems.

A few months ago, consortium participants met to discuss how they can
reduce the threat to system integrity that comes with outsourcing to
places like India. They plan to issue a report on the matter by year's
end.

The threat is real, and that's why heavyweight companies like Bank of
America employ hundreds of people and spend millions of dollars
annually to keep customers' info under wraps. If its acquisition of
FleetBoston goes through, the combined bank will have total assets of
more than $933 billion and total deposits of more than $541 billion.

It will have operations in 29 states and 34 countries and serve about
2.5 million business clients in the United States. It will have 180,000
employees, 5,700 branch offices and 16,500 automated teller machines.
It will have a relationship in one form or another with 1 out of every
3 U.S. households.

And it will have an enormous need for behind-the-scenes tech support to
keep all those moving parts in motion. Does anyone doubt that an ever-
increasing amount of that support will come from abroad?

I asked BofA's Waller if those overseas workers would face the same
penalties as the bank's U.S. employees if they were caught violating
customers' privacy.

"I'd have to get back to you on that," Waller said.

I'm still waiting for her answer.

David Lazarus' column appears Wednesdays, Fridays and Sundays. He also
can be seen regularly on KTVU's "Mornings on 2." Send tips or feedback
to dlazarus@sfchronicle.com.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/10/22/MNGCO2FN8G1.DTL

A tough lesson on medical privacy

Pakistani transcriber threatens UCSF over back pay
David Lazarus
Wednesday, October 22, 2003
)2003 San Francisco Chronicle | Feedback

"Your patient records are out in the open... so you better track that
person and make him pay my dues."

A woman in Pakistan doing cut-rate clerical work for UCSF Medical
Center threatened to post patients' confidential files on the Internet
unless she was paid more money.To show she was serious, the woman sent
UCSF an e-mail earlier this month with actual patients' records
attached.

The violation of medical privacy - apparently the first of its kind -
highlights the danger of "offshoring" work that involves sensitive
materials, an increasing trend among budget-conscious U.S. companies
and institutions.

U.S. laws maintain strict standards to protect patients' medical data.
But those laws are virtually unenforceable overseas, where much of the
labor- intensive transcribing of dictated medical notes to written form
is being exported.

"This was an egregious breach," said Tomi Ryba, chief operating officer
of UCSF Medical Center. "We took this very, very seriously."

She stressed that the renowned San Francisco facility is not alone in
facing the risk of patients' confidential information being used as
leverage by unscrupulous members of the increasingly global health-care
industry.

"This is an issue that affects the entire industry and the entire
nation," Ryba said.

Nearly all Bay Area hospitals contract with outside firms to handle at
least a portion of their voluminous medical-transcription workload.
Those firms in turn frequently subcontract with other companies.

In the case of the threat to release UCSF patient records online, a
chain of three different subcontractors was used. UCSF and its original
contractor, Sausalito's Transcription Stat, say they had no knowledge
that the work eventually would find its way abroad.

The Pakistani woman's threat was withdrawn only after she received
hundreds of dollars from another person indirectly caught up in the
extortion attempt.

The $20 billion medical-transcription business handles dictation from
doctors relating to all aspects of the health-care process, from
routine exams to surgical procedures. Patients' full medical histories
often are included in transcribed reports.

While it's impossible to know for sure how much of the work is heading
overseas, the American Association for Medical Transcription, an
industry group, estimates that about 10 percent of all U.S. medical
transcription is being done abroad.

For two decades, UCSF has outsourced a portion of its transcription
work to Transcription Stat. Kim Kaneko, the owner of the Sausalito
firm, said she maintains a network of 15 subcontractors throughout the
country to handle the "hundreds of files a day" received by her office.

One of those subcontractors is a Florida woman named Sonya Newburn,
whom Kaneko said she'd been using steadily for about a year and a half.
Kaneko knew that Newburn herself used subcontractors but assumed that
was as far as it went.

What Kaneko said she didn't know is that one of Newburn's transcribers,
a Texas man named Tom Spires, had his own network of subcontractors.
One of these, apparently, was a Pakistani woman named Lubna Baloch.

On Oct. 7, UCSF officials received an e-mail from Baloch, who described
herself as "a medical doctor by profession." She said Spires owed her
money and had cut off all communication. Baloch demanded that UCSF find
Spires and remedy the situation.

She wrote: "Your patient records are out in the open to be exposed, so
you better track that person and make him pay my dues or otherwise I
will expose all the voice files and patient records of UCSF Parnassus
and Mt. Zion campuses on the Internet."

Actual files containing dictation from UCSF doctors were attached to
the e- mail. The files reportedly involved two patients.

"I can't believe this happened," Kaneko said. "We've been working for
UC for 20 years, and nothing like this has ever happened before."

The files in question were quickly traced to Newburn, the Florida
woman, who typically handled about 30 UCSF files every day.

An emotional Newburn said in an interview that she's as much a victim
as Kaneko. "I feel violated," she said.

Nevertheless, she said she's taking responsibility for what happened,
even though she said she explicitly told Spires not to send any work
overseas. "What he did was despicable," Newburn said.

Spires could not be reached for comment. E-mail to his company,
Tutranscribe, was returned as undeliverable this week.

Newburn said she contacted Spires as soon as she learned about Baloch's
threat and obtained a number to reach the Pakistani transcriber at her
home in Karachi.

"I spoke with her," Newburn said. "She was very upset but said she
wouldn't have really released the files. So I said she had to take back
the threat."

Newburn agreed to pay a portion of the money Baloch claimed she was
owed - about $500 - and Baloch said she would tell UCSF that its files
were safe.

On Oct. 8, UCSF received a second e-mail from Baloch. "I verify that I
do not have any intent to distribute/release any patient health
information out and I have destroyed the said information," she wrote.
"I am retracting any statements made by me earlier."

The problem, however, will not go away so easily.

"We do not have any evidence that the person has destroyed the files,"
acknowledged UCSF's Ryba.

Moreover, how can UCSF or any other medical institution prevent
something like this from happening again? Should legislation be passed
barring U.S. medical data from going overseas?

"I don't know the answer to that," responded Amy Buckmaster, president
of the American Association for Medical Transcription. "We don't say
that outsourcing is a terrible thing. We say that it needs to be
disclosed."

UCSF has reached the same conclusion. Ryba said the medical center is
revising its contracts with transcription firms to require up-front
notice of all subcontracting.

At the same time, she accepts that with a growing percentage of
transcription work being exported abroad, there will always be a chance
that something like this could happen again.

"We'll have to live with this risk on a daily basis," Ryba said.

David Lazarus' column appears Wednesdays, Fridays and Sundays. He also
can be seen regularly on KTVU's "Mornings on 2." Send tips or feedback
to dlazarus@sfchronicle.com.

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