9 Outsoucing and NIV articles
9 Outsoucing and NIV articles
Date: Friday, December 26, 2003 7:42 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1:
http://www.alternet.org/story.html?StoryID=17412
White-Collar Anger
Pete Bennett is fed up, and he's not going to take it anymore. "People
are tired and angry and upset," says the 47-year-old unemployed worker
from Danville, California, frustration noticeable in his voice. "People
are hurting, losing their homes. If we keep pulling jobs out of the
country, how is the economy going to stay up?"
Article 2:
http://www.hindustantimes.com/2003/Dec/22/181_503198,001300460000.htm
Outsourcing backlash gets abusive, ugly
"I don't want to speak to you, connect me to your boss in the US,"
hissed the American on the phone. The young girl at a Bangalore call
centre tried to be as polite as she could. At another call centre,
another day, another young girl had a Londoner unleashing himself on
her: "Young lady, do you know that because of you Indians we are losing
jobs."
Article 3:
http://www.azcentral.com/arizonarepublic/business/articles/1220adobe20.html
AdobeAir lets 500 workers go
Global firms hit swamp-cooler maker
Cheap foreign labor and global competition have cost the Valley 500
hard to replace manufacturing jobs and a bit of its history. AdobeAir,
whose pioneer swamp coolers tamed the sweltering Valley summers and
paved the way for the post-World War II growth that continues today,
shut down its Phoenix factory earlier this month in favor of lower-cost
operations in Mexico.
Article 4:
http://www.infoworld.com/article/03/12/22/50NNpsoft_1.html
Kana turns to India for code warriors
Cost savings drive vendors to overseas development
In what looks more and more like the way of the future, Kana, a midsize
CRM vendor, has introduced three separate applications for its customer
care suite within six months by turning to a company in India to write
the code.
Article 5:
http://news.com.com/2100-1017-5130309.html?tag=sas_email
AOL takes passage to India
America Online is quietly laying the groundwork to hire software
engineers in Bangalore, India--a decision that is sparking some pointed
criticism but also is becoming de rigueur among technology companies.
Article 6:
http://www.stanford.edu/class/comm273/Published/Articles/obaid-main3c.htm
Be American, Employ Americans, Opponents of H-1B Visas Say
October 1st was Allan Rays lucky day. After being unemployed for
nine months, the 36-year-old software engineer finally got a job at a
startup. "I thought it was fate, that the day congress lowered the cap
on H-1B visas, I got a job," he said. "Companies prefer to employ
workers from overseas, because they work long hours for less money,"
said Ray, who applied to about 50 companies before being called for an
interview. "You have no idea, what I had to go through to get rehired."
Article 7:
http://economictimes.indiatimes.com/articleshow/378808.cms
US speeds up job flights to India, on the sly
US corporations are picking up the pace in shifting well-paid
technology jobs to India, China and other low-cost centers, but they
are keeping quiet for fear of a backlash , industry professionals said.
(Will the BPO Wave shift to China?)
Article 8:
http://online.wsj.com/article/0,,SB107239377349503200,00.html
Nice Work If You Can Get It
By ROBERT B. REICH
It's hard to listen to a politician or pundit these days without
hearing that America is "losing jobs" to poorer nations --
manufacturing jobs to China, back-office work to India, just about
every job to Latin America. This lament distracts our attention from
the larger challenge of preparing more Americans for better jobs.
Article 9:
http://economictimes.indiatimes.com/articleshow/368688.cms
What backlash? Lehman to double outsourcing to India
NEW DELHI: Despite its recent decision to stop outsourcing its computer
help desk to Wipro, Lehman Brothers may actually double the number
information technology jobs it outsources to India.
http://www.alternet.org/story.html?StoryID=17412
White-Collar Anger
By Kevin Danaher and Jason Mark, AlterNet
December 18, 2003
Pete Bennett is fed up, and he's not going to take it anymore.
"People are tired and angry and upset," says the 47-year-old unemployed
worker from Danville, California, frustration noticeable in his voice.
"People are hurting, losing their homes. If we keep pulling jobs out of
the country, how is the economy going to stay up?"
Coming from an autoworker or a steelworker, these would be familiar
words. But Bennett isn't a laid off Ford or GM employee. He used to
work for companies such as Bank of America and Wells Fargo, where, as a
contract database programmer, he earned between $80,000 and $90,000 a
year. But in the last year, he says, he hasn't been able to find any
programming work - such jobs, he is told, are moving overseas.
Bennett is not alone. In recent years, hundreds of thousands of highly
skilled, well-paid positions have been sent abroad.
These days architects in the Philippines are producing blueprints for
Fluor; electronic engineers in India are designing cell phone chips for
Texas Instruments; and computer programmers in the Czech Republic are
building software for Kodak. The stream of job loss is set to become a
torrent; a November 2002 study by the consulting firm Forrester
Research estimated that over the next 15 years some 3.3 million US
service sector jobs would be sent abroad. A more recent report by
economists at UC Berkeley says as many as 14 million programming,
accounting, paralegal and other service jobs are at risk of being
"off-shored."
The off-shoring of service jobs is dij` vu all over again. In the
1970s, U.S. corporations started shipping manufacturing jobs to
low-wage countries such as Mexico, China and Indonesia in an effort to
cut labor costs. Now, that same drive to reduce labor costs is hitting
more highly skilled workers as service jobs go to well-educated workers
in New Delhi and Prague and Singapore. As skilled workers are painfully
starting to learn, the logic of cost cutting doesn't distinguish
between blue collar and white collar.
While the economics of sending manufacturing jobs and service positions
abroad may be the same, the political consequences promise to be
different. In American politics it's one thing to attack the working
class, but quite another to undermine the middle class, which votes in
higher percentages. As any political consultant will tell you, as the
middle class goes, so goes the nation. By cutting white collar
positions, American businesses are sowing the seeds of a populist
backlash that could redraw the political map.
One political topic that is bound to be influenced by the off-shoring
of service jobs is the hot-button issue of trade policy. Surveys by the
Pew Center show that support for free trade policies splits sharply
along income lines. Among families earning more than $75,000 a year, 63
percent of people see globalization as positive; among families earning
less than $50,000 a year, support drops to 37 percent.
In effect, better paid workers have supported free trade policies so
long as they aren't impacted by them. But now many of those people are
suffering the same cold fate that manufacturing workers have grappled
with for decades. As more and more skilled jobs go abroad, supporters
of free trade are almost certain to reassess whether corporate
globalization is in their best interests.
The loss of high skilled jobs could also have a significant impact on
next year's presidential election. Voters' job anxiety is shaping up as
the number one election issue, with President Bush struggling against
the loss of more than 2 million jobs on his watch and a so far "jobless
economic recovery."
Off-shoring skilled positions is only going to make the anemic job
market worse: According to the industry consulting firm Gartner Inc.,
one in 10 U.S. technology jobs will move overseas by the end of 2004.
The disappearance of those good-paying jobs gives Democrats a chance to
reach out to more affluent voters whose natural sympathies may lie with
Republicans - but whose anger could translate into Democratic gains.
Winning elections is in large measure about managing expectations - and
it's the newly unemployed skilled workers whose expectations are being
downsized furthest. As Pete Bennett puts it: "These people have never
experienced this before. ... What are we going to replace these jobs
with? Flipping burgers?"
The long-term political effects of the off-shoring of skilled jobs
promise to be larger than one single issue or one election. The export
of skilled jobs could very likely cause an anti-corporate backlash that
will reverse the decades-long drive toward deregulation and the
weakening of organized labor.
During the heady days of the late 1990s, America's high tech class by
and large supported the push for deregulation and laissez-faire
economics. Now, the software designers and tech engineers who didn't
think the government needed to play a role in overseeing the economy
are the victims of uncontrolled economic forces. The once comfortable
are becoming the insecure. The shift from being a winner to a loser is
bound to prompt some serious rethinking about whether corporations
should be given free rein to do whatever they like.
The first signs of this are already evident. Newly vulnerable high tech
workers - traditionally not big union supporters - are starting to
listen to the entreaties of organized labor. The Communication Workers
of America says it is seeing increasing enthusiasm for unionization
among off-shored high tech workers. Calls are also increasing for
government regulation to staunch the hemorrhage of jobs. In response,
state and federal legislators are considering laws to keep service jobs
in the United States. The laissez-faire mentality of the 1990s is being
replaced by demands that government act to restrain corporations' basic
instincts. The political pendulum between dislike of big government and
dislike of big business is swinging in a new direction.
Those businesses shipping high skilled jobs overseas should beware:
Short-term profits may come at the cost of future political peril.
Kevin Danaher and Jason Mark are authors of the new book,
"Insurrection: Citizen Challenges to Corporate Power" (Routledge
Press). They work for the human rights group Global Exchange.
http://www.hindustantimes.com/2003/Dec/22/181_503198,001300460000.htm
Outsourcing backlash gets abusive, ugly
Srinivasa Prasad
Bangalore, December 20
"I don't want to speak to you, connect me to your boss in the US,"
hissed the American on the phone. The young girl at a Bangalore call
centre tried to be as polite as she could.
At another call centre, another day, another young girl had a Londoner
unleashing himself on her: "Young lady, do you know that because of you
Indians we are losing jobs."
Outsourcing backlash is getting ugly. Handling irate callers is the new
brief for the young men and women taking calls at these outsourced job
centres. Supervisors tell them to "be cool."
Avinash Vashishta, managing partner of NeoIT, a leading US-based
consultancy firm, says: "Companies involved in outsourcing both in the
US and India are already getting a lot of hatemail against outsourcing
on their websites and it is hardly surprisingly that some people should
behave like this on the telephones." Vashishta says Indian call centres
should train their operators how to handle such calls.
Indeed, the furore raised by the western media over job losses because
of outsourcing has made ordinary citizens there sensitive to the fact
that their calls are being taken not from their midst but in countries
like India and the Philippines.
The angry outbursts the operators face border on the racist and sexist,
says the manager of a call centre in Hyderabad. But operators and
senior executives of call centres refuse to go on record for fear of
kicking up a controversy that might result in their companies losing
clients overseas.
"It's happening often enough and so let's face it," says a senior
executive of a Gurgaon call centre, adding: "This doesn't have any
impact on business."
http://www.azcentral.com/arizonarepublic/business/articles/1220adobe20.html
AdobeAir lets 500 workers go
Global firms hit swamp-cooler maker
Max Jarman
The Arizona Republic
Dec. 20, 2003 12:00 AM
Cheap foreign labor and global competition have cost the Valley 500
hard to replace manufacturing jobs and a bit of its history.
AdobeAir, whose pioneer swamp coolers tamed the sweltering Valley
summers and paved the way for the post-World War II growth that
continues today, shut down its Phoenix factory earlier this month in
favor of lower-cost operations in Mexico.
About 500 workers, many who had been with the company over 30 years,
were let go.
"It's a hostile environment for U.S. manufacturing jobs," said
AdobeAir's President and CEO David Roberts.
Indeed, an estimated 500,000 U.S. manufacturing jobs have been moved to
Mexico since the North American Free Trade Agreement was ratified a
decade ago.
Roberts said the AdobeAir workers were given severance according to
length of service, and because their jobs were moved to a foreign
country, they also are eligible for extended unemployment benefits and
help in retraining.
"They left disappointed, but not hostile," Roberts said. He said he
personally said goodbye to every worker.
Roberts said closing the plant was a difficult decision, but one that
was necessary. "We probably held out longer than we should have to
protect American jobs," Roberts said. "But you reach a point where
can't swim against the tide any longer."
He said the company, the world's largest maker of evaporative, or
swamp, coolers has seen its sales eroded by foreign-made low-cost
units. "We had to change our business model or face insolvency," he
said.
Work that had been performed at the AdobeAir 15th Street factory for 65
years will now take place in plants in Monterrey and Naco, Mexico. The
company has sold its 750,000-square-foot plant, which will be
subdivided into light manufacturing and distribution space. AdobeAir
will retain about 200,000 square feet for its headquarters and
distribution operations. About 65 people will work there.
http://www.infoworld.com/article/03/12/22/50NNpsoft_1.html
Kana turns to India for code warriors
Cost savings drive vendors to overseas development
By Ephraim Schwartz December 22, 2003
In what looks more and more like the way of the future, Kana, a midsize
CRM vendor, has introduced three separate applications for its customer
care suite within six months by turning to a company in India to write
the code.
The latest application, Kana Response 8, is an automated e-mail
response package deployed in customer-service solutions at Bank of
America, Jet Blue, Priceline, and Blue Cross Blue Shield of Minnesota.
Using natural-language understanding, Response 8 recognizes what the
customer is asking in an e-mail and can respond with templated answers
from its knowledge base.
At the same time, the e-mail is put into a live-agent queue. If the
automated response resolves the customer query, then Response 8 goes
back into that queue and pulls out the e-mail.
But the bigger news is that this and two other applications - IQ 8, the
knowledge base; and Service 8, a multichannel contact-center management
application - were developed at HCL Technologies in India at about
one-fourth the cost of what Kana would have paid for developers in the
United States.
"For every $1 we spend [in the United States], we spend 25 cents
overseas. So by keeping the budget the same, we increase the number of
[coders] available," said Ken Jochims, director of marketing at Kana.
The software is still designed at Kana, and Kana controls product
management efforts.
Being able to turn to HCL or any outsource developer is greatly
facilitated by the fact the Kana uses a standard J2EE platform.
"It wouldn't be possible without a standard platform. That goes to the
whole concept of componentization," Jochims said.
http://news.com.com/2100-1017-5130309.html?tag=sas_email
AOL takes passage to India
By Jim Hu and Evan Hansen
Staff Writer, CNET News.com
http://news.com.com/2100-1017-5130309.html
Story last modified December 22, 2003, 4:00 AM PST
America Online is quietly laying the groundwork to hire software
engineers in Bangalore, India--a decision that is sparking some pointed
criticism but also is becoming de rigueur among technology companies.
America Online is quietly laying the groundwork to hire software
engineers in Bangalore, India--a decision that's sparking some pointed
criticism but also is becoming de rigueur among technology companies.
Bottom line:
AOL already has a presence in Bangalore, but this would be the first
time it has turned to India to help build its flagship Internet
software. The company's plans are in line with those of fellow Net
biggies Yahoo and Google, adding to fear among U.S. technology workers
that their jobs will be shipped abroad.
AOL's plans slipped out on its Web site in a Dec. 10 job posting
seeking a global program manager to "coordinate software development
teams" in the United States, Dublin, Ireland, and Bangalore. The
posting bothered some people because it appeared at the same time AOL
announced it was laying off hundreds of software engineers at its
Netscape Communications unit in Mountain View, Calif., as well as other
West Coast offices.
"It's America Online with code built where?" said one former Netscape
manager. "There's an image issue that they should address, especially
with all the people they just chucked."
Besides raising concerns about exporting high-paying, high-skilled jobs
abroad, many of these workers have long griped that higher-ups at AOL
allowed Netscape to falter.
AOL said the job posting and the layoffs are unrelated.
"We are considering opening a small (engineering) office in Bangalore,"
spokesman Andrew Weinstein said. "That action is completely unrelated
to the Netscape job actions that were taken."
Like Ireland and other foreign countries, India isn't a new frontier
for AOL. The company already operates a call center in Bangalore and
has relied on software engineers in India previously through an
alliance with Sun Microsystems. Still, this would mark the first time
AOL turned to India to help build its flagship Internet software.
One out of every 10 jobs
AOL's Bangalore explorations come as U.S.-based businesses are
increasingly tapping cheaper labor abroad, typically to handle
low-level jobs such as customer service. In a newer wrinkle, some
software companies are experimenting with hiring skilled programmers to
assist on higher profile projects, including product development.
In July, AOL rival Yahoo outlined plans to hire programmers in
Bangalore to help build its Web products. Google also is planning to
open a Bangalore office and expects to hire 100 software engineers by
year-end 2004.
These actions have heightened fears among U.S. technology workers that
their jobs will be shipped abroad.
More than eight in 10 software companies are exporting their work
offshore this year or next, according to a July study by research firm
Sand Hill Group.
U.S. tech going abroad
A growing number of high-technology companies are boosting employment
in foreign markets--sometimes at the expense of Silicon Valley job
growth. Bangalore, India, is proving to be a popular locale for
software development.
America Online:
A recent company job posting seeks a product manager in Dulles, Va., to
lead global software development in the United States; Dublin, Ireland;
and a new office in Bangalore, India. This comes on the heels of AOL
laying off 450 software developers in California. AOL denies a link
between the two events.
Google:
The search giant plans to open its first international research and
development center in Bangalore next year, with a staff of about 100
programmers.
Hewlett Packard:
The computer maker plans to cut 4,800 U.S. jobs, after missing its
earnings mark for the third quarter. HP also plans to outsource more
work to India, China, Poland, Costa Rica and the Philippines.
Oracle:
The database company plans to double its 3,000-person workforce at two
Indian research centers. It recently opened development centers in
China, employing 200 developers.
Siebel Systems:
The business software maker said it would cut 490 jobs in July and move
some business operations abroad to boost its bottom line.
Yahoo:
The Internet company opened an office in Bangalore in July and plans to
hire 150 software developers by the end of 2004.
Source: CNET News.com
Gartner predicted that one out of every 10 jobs at U.S. information
technology companies will be shuttled abroad by the end of next year.
IDC recently estimated that by 2007, 23 percent of all IT services jobs
will be offshore, up from 5 percent this year. The figures refer to IT
work done for U.S.-based companies.
Cost cutting is the most commonly cited reason for this practice.
Hewlett-Packard has pegged the cost of a talented programmer in India
at about $20,000 a year, well below the cost of a top U.S. tech worker.
Companies also face facilities costs and the expense of managing
offshore work, offsetting the impact on the bottom line. The total
savings from hiring an IT service provider to perform foreign work may
be as high as 40 percent to 50 percent, IDC analyst Ned May said.
AOL appears poised to jump on the bandwagon at a time when it is paring
back software engineering in Silicon Valley. It laid off 450 employees
in its California offices earlier this month. Many of the employees who
were laid off were software engineers at Netscape. AOL has offered to
relocate 100 of the workers to its Dulles, Va., headquarters or its
office in Columbus, Ohio.
Weinstein said the bulk of AOL's coding efforts will now be centered on
the East Coast. AOL will also continue hiring software engineers and
programmers in Dulles and Columbus.
One former AOL executive doesn't expect the company to outsource key
programming projects any time soon, suggesting an India software
engineering office probably would handle lower-profile tasks such as
quality assurance, at least to begin with.
"There has not been much software-product off-shoring so far," this
person said. "It can only be more difficult managing the process from
afar."
Culture clash
Sources said AOL's recent Silicon Valley layoffs reflect a new focus on
cost cutting, as well as simmering tensions between AOL headquarters
and Netscape--a company AOL acquired in 1999 for nearly $9 billion only
to end its signature engineering efforts such as its pioneering Web
browser.
"The AOL guys always thought the Netscape guys were overpaid, they
didn't ever integrate the Netscape stuff into their culture," said the
former Netscape project manager. "The West Coast (engineering) groups
make less sense for them."
For their part, Netscape workers looked down on Dulles for lacking the
technological savvy and pioneering spirit that has long defined Silicon
Valley. Some think AOL management never understood how to tap Silicon
Valley's potential and never took advantage of the area's academic
breeding ground for talent.
About 300 AOL workers will remain in Mountain View.
One engineering group that was largely spared was Nullsoft, the
developers of the popular online music player Winamp. Despite the loss
of two prominent members, Nullsoft's founder, Justin Frankel, and most
of his team remain at the company. Days after the layoffs were
announced, Nullsoft released its long-anticipated Winamp 5.0 media
player, a new version of the software that the team hopes will revive
interest after a couple years of missteps.
"AOL is in Silicon Valley because it offers unique value, not because
of cost advantages," said David Weiden, vice president of marketing at
TellMe and a former Netscape executive.
CNET News.com's Paul Festa, Alorie Gilbert and Ed Frauenheim
contributed to this report.
http://www.stanford.edu/class/comm273/Published/Articles/obaid-main3c.htm
Sharmeen Obaid
Be American, Employ Americans, Opponents of H-1B Visas Say
Nov 6
C273
English
October 1st was Allan Rays lucky day. After being unemployed for
nine months, the 36-year-old software engineer finally got a job at a
startup. "I thought it was fate, that the day congress lowered the cap
on H-1B visas, I got a job," he said.
"Companies prefer to employ workers from overseas, because they work
long hours for less money," said Ray, who applied to about 50 companies
before being called for an interview. "You have no idea, what I had to
go through to get rehired."
The H-1B visa is an employer-sponsored, non-immigrant visa for a
foreign worker coming temporarily to the U.S. to perform services in a
specialty occupation. A congressional cap on the number of foreign
workers allowed to come into the U.S. on H-1B visas reverted on Oct. 1,
the start of the federal fiscal year, to pre-dot-com boom levels of
65,000 visas. Congress did not extend an earlier limit of 195,000
visas.
H1-B visas are renewable after three years for up to six years, and
workers seeking a green card can get permission to continue working
while their application is pending. This cap does not affect existing
H1-B holders working in the United States.
There are thousands of engineers like Ray, who have been laid off, in
part because of the economy and in part because businesses are choosing
to hire qualified workers from poorer countries. According to the
Institute of Electrical and Electronics Engineers, the unemployment
rate in the United States for electrical and electronics engineers
stands at an unprecedented 7 percent.
Norman Matloff is a professor of computer science at the University of
California at Davis and has spent considerable time researching the
H-1B visa system. "There certainly is no doubt that the prime reason
employers like the program is cheap labor," he says. "I do support
hiring the best and the brightest from around the world, but only a
tiny percentage of the H-1Bs are in this category."
Sun Microsystems admitted in court in 2002, that it was laying off
Americans while retaining H-1Bs in the same jobs. The company also
admitted that it did not give Americans priority over H-1Bs in
hiring. In a San Jose Mercury News report in September 2002, employers
Bank of America and Siemens admitted forcing their American workers to
train foreign replacements.
"By hiring the cheapest instead of the best, Silicon Valley employers
have actually retarded technological progress," Matloff said. "The
natives in the Valley have, per capita, been more entrepreneurial than
the immigrants."
"There are plenty of qualified Americans, who need jobs," said Ray, who
knows at least 10 persons who have masters degrees in engineering but
are unemployed. "Its sad that companies have to recruit overseas. I
hope that the cap in the H-1B visas will allow some of my friends to
finally get jobs."
Strict opposition for the H-1B exists, mainly from an organization
called The Federation for American Immigrant Reform. .The organization
"aims to restore reasonable and moderate levels of immigration to
ensure that all Americans have a good quality of life today and
tomorrow," says its Web site, (www.fairus.org.) It opposes the H-1B
visas and have requested that congress support Americans, rather than
the mass influx of immigrants.
"The companies I represent have already started panicking," says
Michael Sawyer, a California immigration law attorney. "The economy is
doing better and some companies have started hiring again. The Silicon
Valley has relied on workers with H-1B visas for years and they will
pressure Congress into removing the cap, otherwise they will be forced
to move part of their businesses to countries like India."
Matloff disagrees.
"Companies want cheap labor, but they want it here," he says. "They
need the face-to-face interaction. So far, only about 1 percent or so
of U.S. software development is being shipped abroad, because it is not
cost-effective to do it abroad, in spite of the low labor costs."
Business groups contend there should no cap on H-1B visas, because the
market will determine how many high-skilled foreign workers U.S.
companies need. In 2001, for example, 164,000 H-1B visas were. But in
2002, H-1B visa approvals plummeted along with the economy, to only
79,000. Through the first three quarters of fiscal 2003, only 56,986
H-1B petitions were approved.
As business groups pressure Congress to remove H-1B visa restrictions,
opponents like Matloff argue that the visa program has had few benefits
for Silicon Valley.
"The H-1B program has played virtually no role in the technological
development of Silicon Valley," he says." The vast majority of major
technological advances have been made by U.S. natives."
http://economictimes.indiatimes.com/articleshow/378808.cms
US speeds up job flights to India, on the sly
DAVID ZIELENZIGER
REUTERS[ WEDNESDAY, DECEMBER 24, 2003 10:20:58 AM ]
Click for more>>
NEW YORK: US corporations are picking up the pace in shifting well-paid
technology jobs to India, China and other low-cost centers, but they
are keeping quiet for fear of a backlash , industry professionals said.
(Will the BPO Wave shift to China?)
Morgan Stanley estimates the number of US jobs outsourced to India will
double to about 150,000 in the next three years. Analysts predict as
many as two million US white-collar jobs such as programmers, software
engineers and applications designers will shift to low cost centers by
2014.
But the biggest companies looking to "offshoring" to cut costs, such as
Microsoft Corp., International Business Machines Corp. and AT&T
Wireless, are reluctant to attract attention for political reasons,
observers said this week.
"The problem is that companies aren't sure if it's politically correct
to talk about it," said Jack Trout, a principal of Trout & Partners, a
marketing and strategy firm. "Nobody has come up with a way to spin it
in a positive way."
This causes a problem for publicly traded companies, which would
ordinarily brag about cost savings to investors. Instead, they send
vague signals that they are opening up operations in India and China,
but often decline to elaborate.
Moreover, on the threshold of a US presidential election year, job
losses are a hot button issue. A company that highlighted a major job
transfer could wind up in the campaign debate.
Multinationals find that when they trumpet expansion overseas, they
cause problems at home. When Accenture Ltd. executives in India this
month announced plans to double their staff to 10,000 next year, they
triggered a flood of calls to the company's US offices about US job
losses.
Offshoring companies "are paying Chinese wages and selling at US
prices," said Alan Tonelson, of the US Business and Industrial Council,
a trade group for small business. "They're not creating better living
standards for America."
The US sales director for one of India's top computer services
providers said his company has won business from customers such as Walt
Disney Co., Time Warner Inc.'s CNN and the Fox division of News Corp.
-- none of which want public disclosure.
In India, some technology companies have recently adopted lower
profiles. Microsoft Corp. has been removing its name from minibuses
used to ferry engineers on overnight shifts. Major Indian beneficiaries
of US business such as Infosys Technologies Ltd., Wipro Ltd. and Satyam
Computer Services Ltd. have stopped identifying new customers.
While there have been reports that IBM intends to ship 4,700 high-end
jobs to India and China next year, they mark a rare instance when
figures "have been reported in black and white," said Linda Guyer,
president of Alliance@IBM, a union that has tried to organize IBM
employees.
Those numbers were not released by IBM, but rather disclosed by the
Wall Street Journal , which had obtained an internal memo. The company
has declined to comment.
Guyer believes as many as 40,000 of IBM's 160,000 US jobs will be
transferred overseas by 2005, a figure she says was gathered from phone
calls by IBM employees.
Previously, IBM has pointed to a report by the McKinsey Global
Institute that concludes the US economy ultimately will benefit. The
report was commissioned by Nasscom, a group made up of Indian tech
companies as well as IBM's Indian services unit -- showing an effort by
those invested in offshoring to sway public opinion.
Recently, AT&T Wireless told the US Securities & Exchange Commission
that it would lay off 1,900 employees this year. Communications Workers
of America members obtained an internal memo prepared by Tata
Consultancy Services of India that discussed how it would assume those
US jobs.
Subsequently, AT&T Wireless officials acknowledged it was exploring the
job shifts but didn't offer details.
While some companies, such as Electronic Data Systems Corp., CAP Gemini
Ernst & Young and Sapient Corp., acknowledge they shift jobs abroad to
exploit cost advantages and around-the-clock work, IBM asserts that it
is not moving jobs but creating new ones."It's a business strategy,
period. You cut costs. You revamp. You look at what your mission
statement says and try to turn a profit," said Sylvia Thomas, who was
laid off by chipmaker Agere Systems Inc. after declining offers to
relocate to headquarters in Allentown, Pennsylvania -- or to Singapore.
URL for this article:
http://online.wsj.com/article/0,,SB107239377349503200,00.html
Nice Work If You Can Get It
By ROBERT B. REICH
It's hard to listen to a politician or pundit these days without
hearing that America is "losing jobs" to poorer nations --
manufacturing jobs to China, back-office work to India, just about
every job to Latin America. This lament distracts our attention from
the larger challenge of preparing more Americans for better jobs.
Most job losses over the last three years haven't been due to American
jobs "moving" anywhere. They've resulted from an unusually long jobs
recession which, hopefully, is coming to an end. We can debate whether
the Bush administration has done enough, or the right things, to
accelerate a jobs recovery. But job growth eventually will resume, as
aggregate demand bounces back.
It's true that U.S. manufacturing employment has been dropping for many
years, but that's not primarily due to foreigners taking these jobs.
Factory jobs are vanishing all over the world. Economists at Alliance
Capital Management took a look at employment trends in 20 large
economies and found that between 1995 and 2002, 22 million factory jobs
had disappeared. The U.S. wasn't even the biggest loser. We lost about
11% of our manufacturing jobs in that period, but the Japanese lost 16%
of theirs. Even developing nations lost factory jobs: Brazil suffered a
20% decline, China a 15% drop. What happened to factory jobs? In two
words, higher productivity. I recently toured a U.S. factory containing
two employees and 400 computerized robots. The two live people sat in
front of computer screens and instructed the robots. In a few years
this factory won't have a single employee on site, except for an
occasional visiting technician who repairs and upgrades the robots,
like the gas man changing your meter.
Manufacturing is following the same trend as agriculture. As
productivity rises, employment falls because fewer people are needed.
In 1910, a third of adult Americans worked on farms. Now, fewer than 3%
do. Since 1995, even as manufacturing employment has dropped around the
world, global industrial output has risen more than 30%. In China,
modern factories are replacing inefficient state-sector plants. China
produces more goods than ever before, but millions of Chinese factory
workers have lost their jobs.
We should stop pining after the days when millions of Americans stood
along assembly lines and continuously bolted, fit, soldered or clamped
what went by. Those days are over. and stop blaming poor nations whose
workers get very low wages. Of course their wages are low; these
nations are poor. They can become more prosperous only by exporting to
rich nations. When America blocks their exports by erecting tariffs and
subsidizing our domestic industries, we prevent them from doing better.
Helping poorer nations become more prosperous is not only in the
interest of humanity but also politically wise because it lessens
global instability.
Want to blame something? Blame new knowledge. Knowledge created the
electronic gadgets and software that can now do almost any routine
task. This goes well beyond the factory floor. America also used to
have lots of elevator operators, telephone operators, bank tellers and
service-station attendants. Most have been replaced by technology.
Supermarket check-out clerks are being replaced by automatic scanners.
The Internet has taken over the routine tasks of travel agents,
real-estate brokers, stock brokers and accountants. With digitization,
high-speed data networks and improved global bandwidth, a lot of
back-office work can now be done more cheaply abroad. Last year,
companies headquartered in the U.S. paid workers in India, China and
the Philippines almost $10 billion to handle customer service and
paperwork.
Any job that's even slightly routine is disappearing from the U.S. But
this doesn't mean we are left with fewer jobs. It means only that we
have fewer routine jobs. When the U.S. economy gets back on track, many
routine jobs won't be returning -- but new jobs will take their place.
A quarter of all Americans now work in jobs that weren't listed in the
Census Bureau's occupation codes in 1967. Technophobes, neo-Luddites,
and antiglobalists be warned: You're on the wrong side of history. You
see only the loss of old jobs. You're overlooking all the new ones.
The problem isn't the number of jobs in America; it's the quality of
jobs. Look closely at the economy today and you find two growing
categories of work -- but only the first is commanding better pay and
benefits. This category involves identifying and solving new problems.
Here, workers do R&D, design and engineering. Or they're responsible
for high-level sales, marketing and advertising. They're composers,
writers and producers. They're lawyers, bankers, financiers,
journalists, doctors and management consultants. I call this "symbolic
analytic" work because most of it has to do with analyzing,
manipulating and communicating through numbers, shapes, words, ideas.
This kind of work usually requires a college degree.
Over the long term, symbolic analysts will do just fine, as long as
they stay away from job functions that are becoming routinized. They
will continue to benefit from economic change. Computer technology
gives them more tools for thinking, creating and communicating. The
global market gives them more potential customers for their insights.
To be sure, symbolic analysts are popping up all over the world. More
than half of all Fortune 500 companies say they're outsourcing some
software development or expanding their own development centers outside
the U.S. But apart from recessions, demand for symbolic analysts in the
U.S. will continue to grow faster than the supply.
No other country does a better job preparing its citizens for symbolic
analysis. Our universities are the envy of the world. and no other
nation surpasses us in providing on-the-job experience within entire
regions specializing in one or another kind of symbolic analytic work
(New York for finance, LA for music and film, Silicon Valley and
greater Boston for science and bio-med engineering, and so on).
Besides, there's no necessary limit to the number of symbolic analytic
jobs because there's no finite limit to the ingenuity of the mind or to
human needs.
The second growing category of work in America involves personal
services. Computers and robots can't do these jobs because they require
care or attentiveness. Workers in other nations can't do them because
they must be done in person. Some personal-service workers need
education beyond high school -- nurses, physical therapists and medical
technicians, for example. But most don't, such as restaurant workers,
cabbies, retail workers, security guards and hospital attendants. In
contrast to that of symbolic analysts, the pay of most personal-service
workers in the U.S. is stagnant or declining. That's because the supply
of personal-service workers is growing quickly, as more and more people
who'd otherwise have factory or routine service jobs join their ranks.
Legal and undocumented immigrants are also pouring into this sector.
But America's long-term problem isn't too few jobs. It's the widening
income gap between personal-service workers and symbolic analysts. The
long-term solution is to help spur upward mobility by getting more
Americans a good education, including access to college. Unfortunately,
just the opposite is occurring. There will be plenty of good jobs to go
around. But too few of our citizens are being prepared for them. Rather
than fret about "losing jobs" to others, we ought to be fretting about
the growing number of our young people who are losing their footing in
the emerging economy.
Mr. Reich, former secretary of labor, is professor of social and
economic policy at Brandeis and the author of "Reason: Why Liberals
Will Win the Battle for America," out in May from Knopf.
http://economictimes.indiatimes.com/articleshow/368688.cms
What backlash? Lehman to double outsourcing to India
ECONOMICTIMES.COM[ FRIDAY, DECEMBER 19, 2003 11:40:10 AM ]
NEW DELHI: Despite its recent decision to stop outsourcing its computer
help desk to Wipro, Lehman Brothers may actually double the number
information technology jobs it outsources to India.
The New York-based financial services firm had last year hired Wipro
and TCS to manage various information-technology functions. The
contract to Wipro was cancelled citing unsatisfactory service.
The move was seen as a result of the backlash against outsourcing
sweeping the west. Computer maker Dell had, a few weeks back, moved its
tech support back to the US from Bangalore .
However, Lehman MD for information technology Charlie Cortese told a
news agency that the company would add to the tasks being outsourced to
India.
Currently, 425 Wipro and TCS employees are handling Lehman's IT tasks.
This figure could double in the next two years, Cortese was quoted as
saying. ( Can the Indian BPO sector survive the backlash in the west? )
Lehman had underestimated the complexity of the training and
documentation that Wipro workers would need to take calls from Lehman
employees, Cortese said.
Lehman now outsources about 20 per cent of its IT operations to India,
which would soon reach 40 per cent. The combined value of the Lehman IT
contracts to Tata and Wipro will reach between $50-70 million annually,
he added.
) Bennett, Coleman and Co., Ltd. All rights reserved.
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