8 Articles About Job Destruction
8 Articles About Job Destruction
Date: Wednesday, December 31, 2003 11:46 AM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1:
http://www.nytimes.com/2003/12/29/opinion/29HERB.html
I am surprised at how passive American workers have become. A couple of
million factory positions have disappeared in the short time since we
raised our glasses to toast the incoming century. And now the
white-collar jobs are following the blue-collar jobs overseas. It might
be a good idea to throw a brighter spotlight on some of these trends
and explore the implications for the long-term economy and the American
standard of living. But that's exactly what we're not thinking about.
Government policy at the moment is focused primarily on what's best for
the corporations. From that perspective, job destruction and wage
compression are good things - as long as they don't get too much
high-profile attention.
Article 2:
http://www.prospect.org/webfeatures/2003/12/meyerson-h-12-29.html
Corporations have been having a bang-up recovery all along, it turns
out; they are about to experience their seventh straight quarter of
profit growth. The operating earnings of the 500 companies on the
Standard and Poor's index, researchers at Thomas First Call in Boston
estimate, will rise by 21.9 percent over last year. Who could ask for
anything more? Well, the American people, for one.
Article 3:
http://informationweek.com/story/showArticle.jhtml;jsessionid=DQXOBJ3N1OQUQQSNDBGCKHQ?articleID=16100082
Circuit City Outsources HR Administration
Exult will manage the services using a mix of on-shore and offshore
facilities.
Consumer electronics retailer Circuit City Stores Inc. is handing off
the management of its human-resources administration to outsourcing
vendor Exult Inc. under a deal disclosed Monday. Exult will manage the
services from facilities in Charlotte, N.C., and Mumbai, India.
Article 4:
http://www.eweek.com/article2/0,4149,1374382,00.asp
Offshore Outsourcing: A Natural Law?
So where will these freshman techno-geeks look for a major?
Biotechnology? Maybe. Linguistics? Not much of a hiring opportunity
there. Perhaps they will all be MBAs or lawyers? For a moment, that's
almost as worrisome a thought as offshore outsourcing.
Article 5:
http://www.csoonline.com/read/110103/outsourcing.html
U.S. companies continue a pell-mell rush into offshore outsourcing of
software development. Those that haven't stopped to look at global
intellectual property law are in for a big surprise.
Article 6:
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/11/12/BUGI52VMQR1.DTL
Pakistani threatened UCSF to get paid, she says
Breaking her silence for the first time, the Pakistani woman who
threatened to release UCSF patient files on the Internet says she had
"no choice" but to breach the hospital's security after being cut off
by the Texas man who'd made her the final link in a long chain of
clerical subcontractors.
Article 7:
http://www.nytimes.com/reuters/technology/tech-tech-jobs.html
US Companies Moving More Jobs Overseas
NEW YORK (Reuters) - U.S. 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.
Article 8:
http://www.infoshop.org/inews/stories.php?story=03/12/29/4006802
Jobless Count Skips Millions
The Rate Hits 9.7% When the Underemployed and Those Who Have Quit
Looking are Added
The nation's official jobless rate is 5.9%, a relatively benign level
by historical standards. But economists say that figure paints only a
partial - and artificially rosy - picture of the labor market.
http://www.nytimes.com/2003/12/29/opinion/29HERB.html
December 29, 2003
OP-ED COLUMNIST
The White-Collar Blues
By BOB HERBERT
I am surprised at how passive American workers have become.
A couple of million factory positions have disappeared in the short
time since we raised our glasses to toast the incoming century. And now
the white-collar jobs are following the blue-collar jobs overseas.
Americans are working harder and have become ever more productive -
astonishingly productive - but are not sharing in the benefits of their
increased effort. If you think in terms of wages, benefits and the
creation of good jobs, the employment landscape is grim.
The economy is going great guns, we're told, but nearly nine million
Americans are officially unemployed, and the real tally of the jobless
is much higher. Even as the Bush administration and the media celebrate
the blossoming of statistics that supposedly show how well we're doing,
the lines at food banks and soup kitchens are lengthening. They're
swollen in many cases by the children of men and women who are working
but not making enough to house and feed their families.
I.B.M. has crafted plans to send thousands of upscale jobs from the
U.S. to lower-paid workers in China, India and elsewhere. Anyone who
doesn't believe this is the wave of the future should listen to
comments made last spring by an I.B.M. executive named Harry Newman:
"I think probably the biggest impact to employee relations and to the
H.R. field is this concept of globalization. It is rapidly
accelerating, and it means shifting a lot of jobs, opening a lot of
locations in places we had never dreamt of before, going where there's
low-cost labor, low-cost competition, shifting jobs offshore."
An executive at Microsoft, the ultimate American success story, told
his department heads last year to "Think India," and to "pick something
to move offshore today."
These matters should be among the hottest topics of our national
conversation. We've already witnessed the carnage in manufacturing
jobs. Now, with white-collar jobs at stake, we've got executives at
I.B.M. and Microsoft exchanging high-fives at the prospect of getting
"two heads for the price of one" in India.
It might be a good idea to throw a brighter spotlight on some of these
trends and explore the implications for the long-term economy and the
American standard of living.
"If you take this to its logical extreme, the implications for the
entire middle-class wage structure in the United States are
terrifying," said Thea Lee, an economist with the A.F.L.-C.I.O. "Now is
the time to start thinking about policy solutions."
But that's exactly what we're not thinking about. Government policy at
the moment is focused primarily on what's best for the corporations.
From that perspective, job destruction and wage compression are good
things - as long as they don't get too much high-profile attention.
"This is a significant problem, much greater than we believed it was
even a year ago," said Marcus Courtney, president of the Washington
Alliance of Technology Workers, an affiliate of the Communication
Workers of America.
Accurate data on the number of jobs already lost are all but impossible
to come by. But there is no disputing the direction of the trend, or
the fact that it is accelerating. Allowing this movement to continue
unchecked will eventually mean economic suicide for hundreds of
thousands, if not millions, of American families.
Globalization may be a fact of life. But that does not mean that its
destructive impact on American families can't be mitigated. The best
thing workers can do, including white-collar and professional workers,
is to organize. At the same time, the exportation of jobs and the
effect that is having on the standard of living here should be
relentlessly monitored by the government, the civic sector and the
media. The public has a right to know what's really going on.
Trade agreements and tax policies should be examined and updated to
encourage the creation of employment that enhances the quality of life
here at home. Corporate leaders may not feel an obligation to
contribute to the long-term well-being of local communities or the
nation as a whole, but that shouldn't be the case with the rest of us.
http://www.prospect.org/webfeatures/2003/12/meyerson-h-12-29.html
Un-American Recovery
How the Bush recovery has undone the great balancing act of the New
Deal.
By Harold Meyerson
Web Exclusive: 12.29.03
Print Friendly | Email Article
Why is the Bush recovery different from all other recoveries? A slump
is a slump is a slump, but it's during recoveries that the distinctive
features of a changing economy become apparent. And our current
recovery differs so radically from every other bounce-back since World
War II that you have to wonder whether we're really talking about the
same country.
After inching along imperceptibly for quarter after quarter, the
economy is, by some measures, roaring back. The annual growth rate last
quarter topped 8 percent, while productivity increased by more than 9
percent. To be sure, employment is still down by 2.4 million jobs since
Bush took office, but it's finally begun to rise a bit.
And there are some indices that make even the productivity increases
pale by comparison. Corporations have been having a bang-up recovery
all along, it turns out; they are about to experience their seventh
straight quarter of profit growth. The operating earnings of the 500
companies on the Standard and Poor's index, researchers at Thomas First
Call in Boston estimate, will rise by 21.9 percent over last year. Who
could ask for anything more?
Well, the American people, for one. Since July the average hourly wage
increase for the 85 million Americans who work in non-supervisory jobs
in offices and factories is a flat 3 cents. Wages are up just 2.1
percent since November 2002 -- the slowest wage growth we've
experienced in 40 years. Economists at the Economic Policy Institute
have been comparing recoveries of late, looking into the growth in
corporate-sector income in each of the nine recoveries the United
States has gone through since the end of World War II. In the preceding
eight, the share of the corporate income growth going to profits
averaged 26 percent, and never exceeded 32 percent. In the current
recovery, however, profits come to 46 percent of the corporations'
additional income.
Conversely, labor compensation averaged 61 percent of the total income
growth in the preceding recoveries, and was never lower than 55
percent. In the Bush recovery, it's just 29 percent of the new income
coming in to the corporations.
Someone with an antiquarian vocabulary might rightly note that this is
a recovery for capital, not labor; indeed, that it's a recovery for
capital at the expense of labor. But we are none of us antiquarians, so
let's just proceed.
There are only a couple of ways to explain how the capacity of U.S.
workers to claim their accustomed share of the nation's income has so
stunningly collapsed. Outsourcing is certainly a big part of the
picture. As Stephen S. Roach, chief economist for Morgan Stanley, has
noted, private-sector hiring in the current recovery is roughly 7
million jobs shy of what would have been the norm in previous
recoveries, and U.S. corporations, high-tech as well as low-tech, are
busily hiring employees from lower-wage nations instead of from our
own.
The jobless rate among U.S. software engineers, for instance, has
doubled over the past three years. In Bangalore, India, where American
companies are on a huge hiring spree for the kind of talent they used
to scoop up in Silicon Valley, the starting annual salary for top
electrical engineering graduates, says Business Week, is $10,000 --
compared with $80,000 here in the States. Tell that to a software
writer in Palo Alto and she's not likely to hit up her boss for a
raise.
That software writer certainly doesn't belong to a union, either.
Indeed, the current recovery is not only the first to take place in an
economy in which global wage rates are a factor, but the first since
before the New Deal to take place in an economy in which the rate of
private-sector unionization is in single digits -- just 8.5 percent of
the workforce.
In short, what we have here resembles a pre-New Deal recovery more than
it does any period of prosperity between the presidencies of the second
Roosevelt and the second Bush. The great balancing act of the New Deal
-- the fostering of vibrant unions, the legislation of minimum wages
and such, in a conscious effort to spread prosperity and boost
consumption -- has come undone. (The federal minimum wage has not been
raised since 1997.) And the problem with pre-new deal recoveries is
that they never created lasting prosperity.
The current administration is not responsible for the broad contours of
this miserably misshapen recovery, but its every action merely
increases the imbalance of power between America's employers and
employees. But the Democrats' prescriptions for more broadly shared
prosperity need some tweaking, too. With the globalization of high-end
professions, no Democrat can assert quite so confidently the line that
Bill Clinton used so often: What you earn is a result of what you
learn. This year's crop of presidential candidates is taking more
seriously the importance of labor standards in trade accords, and the
right of workers to organize. But they've got a way to go to make the
issue of stagnating incomes into the kind of battle cry it should be in
the campaign against Bush. If they're not up to it, I say we outsource
'em all and bring in some pols from Bangalore.
Harold Meyerson is the Prospect's editor-at-large. This column
originally appeared in Wednesday's Washington Post.
http://informationweek.com/story/showArticle.jhtml;jsessionid=DQXOBJ3N1OQUQQSNDBGCKHQ?articleID=16100082
Circuit City Outsources HR Administration
Exult will manage the services using a mix of on-shore and offshore
facilities.
By Paul McDougall, InformationWeek
Nov. 10, 2003
Consumer electronics retailer Circuit City Stores Inc. is handing off
the management of its human-resources administration to outsourcing
vendor Exult Inc. under a deal disclosed Monday.
Under the seven-year agreement, Exult will provide payroll, benefits
administration, compensation, and employee contact-center services for
38,000 Circuit City employees. Exult will manage the services from
facilities in Charlotte, N.C., and Mumbai, India. An Exult spokesman
says the contract is worth several million dollars but declined to be
more specific.
HR administration is the fastest-growing segment of the
business-process-outsourcing market, according to research firm
Gartner. The firm expects total HR BPO sales to grow 18% this year to
$46 billion and reach $51 billion next year.99
http://www.eweek.com/article2/0,4149,1374382,00.asp
Offshore Outsourcing: A Natural Law?
November 5, 2003
By David Morgenstern
Following a recent article about offshore outsourcing of IT jobs, I
received another barrage of e-mails from readers that threatened to tip
my ISP bandwidth allocation over the edge. What were the hot-button
issues? Everything.
Reading the messages, I grew intrigued by the widespread belief that
jobs must flow out of a country to find the cheapest source of
production, regardless of the long-term consequences to the society and
economy of a country. Or to the company itself.
Many readers believe that this practice is a natural law and not just
the result of short-term thinking by business managers as well as the
considerable lobbying efforts of huge multinational corporations.
Charles Macleod considered offshore outsourcing of IT just a part of
the capitalist ecology. "It's about money - quality and company loyalty
now seem secondary, and their importance to an outfit depends on the
individual values of any one organization."
"Unless we are interested in supporting a mechanism of tariffs and
other protectionary measures (for example, the farming subsidies that
prop up American farmers vs. the much-cheaper Third World crops), IT
people will remain a part of a global resource pool. ... The bottom
line is that all companies look to streamline operations - to cut costs
and pass on savings to consumers in the form of more competitive
pricing of their products. That's capitalism baby. We all benefit from
it (depending on your beliefs) even if we are also the current victim
du jour," Macleod said.
According to Steve Loy, associate professor of CIS at Eastern Kentucky
University in Richmond, the outgoing tide of jobs could threaten
fundamental technology research as well as jobs. He described a domino
effect for the entire tech industry.
"The astute students will recognize the rapidly dwindling job
opportunities for CIS/MIS majors and will chose other programs of
study," Loy warned. "... Thus, a self-feeding cycle of loss of domestic
IT jobs will cause fewer people to pursue IT degrees, which will lead
to reduction in IT faculty, which leads to fewer IT programs, which
leads to a workforce with less or inadequate IT knowledge to compete in
the high-tech world economy."
"As an IT educator, I wonder if it's moral to encourage American
students to major in IT programs. I also wonder when state governments
will realize that their efforts to attract high-paying, high-tech jobs
are doomed to fail. I wonder when voters and politicians will realize
that high-tech labor is now a commodity item in which cost is the
primary factor, and that reductions in taxes and cutting government
regulations will not turn return prosperity to the U.S. economy," Loy
observed.
So where will these freshman techno-geeks look for a major?
Biotechnology? Maybe. Linguistics? Not much of a hiring opportunity
there. Perhaps they will all be MBAs or lawyers? For a moment, that's
almost as worrisome a thought as offshore outsourcing.
Other readers were also concerned with the transfer of knowledge. A
reader named Vinn said IT admins need to counter the offshore
outsourcing message by pointing to the values of experience, knowledge,
trust and pride within a company.
"What is happening is this: experience is being exported. If low-level
(or labor intensive) tasks are sent offshore, then so is the experience
gained from performing those tasks. When the time comes to perform
higher-level tasks, where previous experience is mandatory, there is no
alternative than to go offshore - because that is where the experience
now resides," Vinn said.
"Many company plans imply that higher level tasks (the architectural
decisions) will remain performed on-shore, while the lower-level tasks
are performed 12,000 miles away. This is short-sighted because
eventually the required experience will be offshore," he said.
Vinn is exactly right. Management has grown comfortable with relying on
outside resources to perform many tasks, instead of developing the
expertise in-house. Perhaps the wholesale move of some IT function
offshore is seen as matter of degree. Even though that "degree" is
halfway around the world.
Meanwhile, Joel Tompkins, a senior IS engineer, said the IT field may
be ripe for unionizing, he considered unions "as corrupt as the
companies they fight."
"Without some sort of organization, the average IT worker is going to
find himself or herself as an expendable commodity, and not capable of
commanding salaries and benefits so many were recently used to. The
downside of unionization is that it will add to the push to go
overseas."
Joel has some good points. However, I disagree with his framing of the
relationship between companies and their workers. The "fight" here is
not for the company itself, rather, it's about getting the bosses to
recognize the values Vinn described above - experience, knowledge,
trust and pride - that are expressed in their workers and the jobs they
perform.
Now, that process can at times be adversarial. Because there are often
times when people don't want to listen.
Discuss This in the eWEEK Forum
eWEEK.com Storage Center Editor David Morgenstern is a longtime
reporter of the storage industry as well as a veteran of the dot-com
boom in the storage-rich fields of professional content creation and
digital video.
http://www.csoonline.com/read/110103/outsourcing.html
U.S. companies continue a pell-mell rush into offshore outsourcing of
software development. Those that haven't stopped to look at global
intellectual property law are in for a big surprise. BY MICHAEL
FITZGERALD
The Sting
On a typically steamy New Delhi day in late August 2002, Nenette Day
walked into the Ashoka, one of the city's best hotels, for a meeting
with Shekhar Verma. Verma had been fired from his job at Geometric
Software Solutions Ltd. (GSSL), an outsourcer based in Bombay. He
claimed to have the source code for SolidWorks Plus's 3-D
computer-aided design package, which GSSL was debugging. Verma had
contacted a number of SolidWorks' competitors and offered to sell them
the source code. Day, an American, had taken the bait and flown to New
Delhi. After confirming that what Verma possessed was indeed
SolidWorks' source code, Day began negotiating on price, eventually
bargaining him down to $200,000 for the code. The deal struck, Day got
up and left the room. Then agents from India's Central Bureau of
Intelligence (CBI) swept in and arrested Verma. Day was not arrested -
she is actually a special agent out of the FBI's Boston Cybercrime Unit
and had gone undercover to work with the CBI on this case, the first
undercover operation for the FBI in India.
The arrest led to the first prosecutorial filing for
outsourcing-related intellectual property (IP) theft in India, in a
case that may come to trial before year's end. Given that software
outsourcing was a multibillion-dollar business in India last year, the
trial will draw close scrutiny from both sides of the world. Sound like
an open-and-shut case? Day herself is not nearly so confident. "With no
case precedents, the reality is we have no idea how this plays out
under their law," she says. Day also says that Verma made two small
mistakes (she declines to specify them) without which he could have
already gotten off scot-free, and that after a full week in India
working with the prosecutors this fall, Day still doesn't understand
the applicability of at least one of the critical charges.
Intellectual property, if stolen, "is a genie that can't be put back in
the bottle," says Day. Currently, she says, "there is really no law to
protect American companies' intellectual property."
Protect Yourself
Nine steps that can help protect your intellectual property
Read More
U.S. companies need to think seriously about what that means.
Consulting company McKinsey estimates that by 2010, the U.S. IT
industry will save $390 billion through offshore outsourcing of
software development. But it also opens up new channels of industrial
espionage in bitterly poor nations that often don't have laws
protecting foreign companies and rarely enforce whatever laws may
exist. India, obviously eager to protect its national income from
outsourcing, is scrambling to demonstrate that it takes foreign
intellectual property seriously. Some observers say that other
countries vying for outsourcing dollars are even worse when it comes to
providing legal protection for intellectual property. Court cases are
still relatively hard to find, but that's about to change. Smart
companies need to reexamine their outsourcing contracts and make sure
that they aren't at risk of becoming the test cases.
The Jungle
It would be wildly speculative to suggest that the SolidWorks case will
even slow the bullet train that is offshore outsourcing of software
development. The National Association of Software & Service Companies
(Nasscom) alone expects its outsourcing business in India will increase
by 26 percent to 28 percent this year (Gartner predicts even faster
growth for higher-level business process outsourcing worldwide).
India's IT sector exported $10 billion worth of goods and services last
year, and projects it will reach $21 billion to $24 billion in 2008.
Meanwhile, Forrester Research estimates that in the next 12 years, 3.3
million IT jobs will leave the United States and go overseas. These
trends won't reverse because of one case of an employee gone bad. "This
is dealing with a rogue employee who left and stole information. That
happens everywhere," says William B. Bierce, partner in Bierce &
Kenerson, a New York law firm specializing in outsourcing and
international business law.
The key question, of course, is the real degree of risk U.S. companies
face. If overseas IP theft court cases are hard to find, doesn't it
stand to reason that CIOs and CSOs are doing a decent job of protecting
corporate IP assets? Dean Davison, vice president and director of
outsourcing and service provider strategies at Meta Group, emphasizes
that he almost never hears complaints about IP thefts, and in general
doesn't hear horror stories about overseas outsourcing. On the other
hand, Elliot Turrini, an attorney with McElroy, Deutsch & Mulvaney,
sounds much more dire. "Intellectual property is a legal fiction we've
created to ensure a return on investment and promote the arts and
sciences," he says. In countries with less developed laws, Turrini
says, "Basically you're wide open."
Anecdotally, there are additional examples of IP spats overseas.
Davison does say he's aware of one case where a U.S. company outsourced
product design to an Indian firm, which successfully completed the
project, then turned around and used the code to create a version for
the Indian market. The U.S. company didn't care because it had no
interest in the Indian market. A third case is currently pending in
India. Legato Systems, a maker of storage software, has alleged that
eight of its former employees in India took some of its intellectual
property with them when they went to a competitor. Legato declined to
comment on the action publicly, though one of its officials, speaking
as an individual, told an Australian publication in February that he
would recommend against future offshoring in countries without better
legal protections.
The irony: While these IP theft cases are from India, that country
actually has a much better cultural and legal climate for IP protection
than many other nations offering offshore coding. Observers say India
has a culture that generally seems to respect intellectual property, as
compared with China or Russia, for example - consider those nations'
records regarding piracy of shrink-wrapped software and of copyrighted
materials such as movies and music.
THE IRONY: While these IP theft cases are from India, that country
actually has a much better cultural and legal climate for IP protection
than many other nations offering offshore coding.
Indeed, Indian prosecutors in the SolidWorks case appear to have
decided to charge Verma in part to establish firmer support for IP
rights. India does not have laws against trade theft, so prosecutors
filed charges against Verma under a general civil theft law, with a
secondary charge of criminal breach of trust against his employer,
GSSL. Another charge, pertaining to copyright law under India's
recently enacted IT Act, was added later. But despite being caught
red-handed, Verma might well win his case. Because the source code
didn't belong to GSSL, technically, Verma didn't steal from an Indian
company. Thus India's laws don't necessarily apply. It's a frustrating
situation for U.S. law enforcement officials. As Day says, "How can he
steal something from GSSL when they don't own it? And when the
nondisclosure breach of trust was signed between him and SolidWorks?"
Those are fine questions, and U.S. companies should look closely at the
way the Indian courts and government respond to them.
Nondisclosure works well in the United States, which has laws like the
Industrial Espionage Act of 1996, which makes it a criminal offense to
steal trade secrets. But the law does not apply to non-U.S. citizens
acting outside U.S. borders. Bierce, though, says India's reaction is
already reassuring for U.S. companies. "Even if [the prosecutor]
doesn't win, he's inspired fear," he says. He also says that if
prosecutors lose the case, they'll almost certainly complain that
India's existing legal structures are not sufficient. Bierce predicts
that "some bright, young legislator will propose a new, more specific
law."
The Fine Print
Perhaps. Then again, it may be a long wait. Many observers still say
too few U.S. companies worry about intellectual property theft when
they send software development overseas, and that those that do fret
nevertheless don't make sufficient efforts to protect themselves
contractually. Why the Alfred E. Neuman-like serenity? In the case of
India, which by some estimates has about 90 percent of the market for
offshore software outsourcing, it's largely because the country is a
member of the World Trade Organization and adheres to its intellectual
property add-on, Trips (Trade-Related Aspects of Intellectual Property
Rights). In addition, several of the largest Indian outsourcing
companies are incorporated in the United States and can be sued here.
But Trips protections still must be enforced locally, and no countries
prominent in software outsourcing have local laws covering theft of
trade secrets.
"Complying with Trips is a starting point, but plenty of countries have
signed Trips agreements. China is one of them, but there are plenty of
examples of piracy or misappropriation of design by Chinese firms,"
says Michael Murphy, an attorney at Shaw Pittman in Los Angeles. Trips
signers or not, if a country's culture does not respect property, the
courts are unlikely to enforce laws. Several sources interviewed for
this article agreed, though not for attribution, that China regards
intellectual property - especially that of foreigners - as communal
property.
Despite its near miss on source code, SolidWorks has no plans to stop
outsourcing to India. It won't even change business partners. It has
worked closely with GSSL for more than six years, and has had the
company do its debugging for the past five.
"It's been a very good relationship for us," says Holly Stratford, vice
president and general counsel for SolidWorks. "We think it's very cost
efficient, and it's a talented group of people. At times they've been
almost a virtual office of ours."
Instead, both companies underwent intensive internal security analyses,
Stratford says. "We obviously reviewed with them what their procedures
were that made this possible, and they instituted a lot of revised
procedures," most of which she won't disclose, though she does note
that GSSL won't let employees take home source code to work on it
anymore. SolidWorks also has substantially changed its security
procedures for U.S. workers, ranging from the way it handles access
codes and office security to what it makes available on servers for
remote workers. She says this might create some inconvenience for
employees, but they don't grumble much about it. Stratford says the
prompt response by the FBI and India's CBI quickly addressed
SolidWorks' main concern, which was making sure it got its source code
back. After the sting, all the copies of the source code were recovered
from Verma's quarters. As for any strain in relations, she says matter
of factly that "the reality is, everybody has the same issue with their
own employees." To her, a potential landmark case serves mostly as "a
wake-up call."
The truth is, SolidWorks got lucky. Verma allegedly contacted several
competitors; only one of them told SolidWorks that its source code was
up for sale.
THE TRUTH IS, SolidWorks got lucky. Shekhar Verma allegedly contacted
several competitors; only one of them told SolidWorks that its source
code was up for sale.
Praba Manivasager, CEO of Renodis, an offshore advisory firm, says that
he expects the Indian government to move quickly in passing stronger
intellectual property laws, with the full support of Nasscom, India's
main software association and a powerhouse lobbyist in the country.
Manivasager notes that the Indian government is already working to
change its traditional reputation of being guarded and difficult to
work with, both because the country is competing with China for
overseas investment and because existing business investors were
nervous about India's near-war with Pakistan two years ago. "It's
actually overhauled a lot of international policies to help foreign
investors come into India," he says. "This case could serve as a
landmark case, but it will most likely solidify what we are seeing,
which is more and more support for international business. The Indian
government has a lot to lose" if it doesn't take the case seriously, he
adds.
The Closing Argument
Laws or no laws, many believe it would help if U.S. companies would
treat offshore software outsourcing with greater care. Many companies
looking to farm out their development work care only about dollar
savings and can be sloppy about everything else.
Ken Pfeil, CSO at Capital IQ, says the SolidWorks theft case should
ring alarm bells at every company that wants to outsource. "You really
have to dig on due diligence," he says. "[Require] background checks on
employees, look at the company history and financial stability, look at
their retention rates for employees." Turrini, the lawyer, recommends
putting someone with deep pockets on the hook. For instance, insist on
indemnification agreements with the outsourcing provider, and make sure
that provider has substantial assets in the United States just in case.
Failing that, he recommends, get insurance for source code.
While those steps might sound straightforward, companies often fail to
take even basic steps to check on potential suppliers, according to
Bill Malik, who spent 11 years as an analyst at Gartner. He declined to
name names but said that "people far too often don't do their due
diligence. I've seen organizations that just want to take a pass on the
whole thing. They just want to outsource development to the cheapest
vendor."
Usually, such hasty decisions are driven by the need to keep up profits
and revenue. Looking at short-term financial gains is a huge mistake,
Malik says, and cases like the one unfolding in India show why.
Also ahead: a shift in the outsourcing market that will put
intellectual property protection in the spotlight. The first wave of
software outsourcing has focused on application development and
maintenance, both of which have fairly contained levels of risk,
outside of the odd rogue employee like Verma. But as companies move
more and more types of software development overseas, such as databases
and other packaged applications, they need to think about what kind of
data they make available for testing. Also, Nasscom members are
aggressively seeking out higher-end business process outsourcing (BPO)
opportunities, such as call centers and claims processing. India did
more than $1.2 billion in this type of work last year and expects to
generate $16 billion in revenue from BPO in 10 years. These kinds of
applications create thorny issues about personal data protection for
U.S.-based customers.
Legal eagles such as Bierce say that India and other nations interested
in drawing more high-end software work such as BPO need to adopt laws
that protect personal information when it's transferred from other
countries. "Software development is easy - you don't have data
protection problems until you start populating a database," Bierce
says. He notes that Nasscom is working on such a law, though it failed
to generate one in a similar effort several years ago. The push for
call centers, claims processing and other back-office work means that
U.S. companies must reassess what's at stake. As offshore vendors deal
more and more often with customers and specific customer data, the
potential for abuse rises.
Michael Fitzgerald is a freelance writer based in California. Send
feedback to Executive Editor Derek Slater at dslater@cxo.com.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/11/12/BUGI52VMQR1.DTL
Pakistani threatened UCSF to get paid, she says
David Lazarus
Wednesday, November 12, 2003
)2003 San Francisco Chronicle | Feedback | FAQ
Breaking her silence for the first time, the Pakistani woman who
threatened to release UCSF patient files on the Internet says she had
"no choice" but to breach the hospital's security after being cut off
by the Texas man who'd made her the final link in a long chain of
clerical subcontractors.
Lubna Baloch said by e-mail from Karachi that she is "not an
opportunistic person who willfully did that to gain some attention."
She said she is instead the "worst sufferer of this situation" because
she was only trying to secure UCSF Medical Center's help last month in
obtaining money that she was owed.
"I feel violated, helpless," she wrote, adding that she is "the most
unluckiest person in this world."
Doctors at U.S. hospitals routinely dictate notes about patient visits,
consultations, operations and discharges. Those notes in turn are
frequently handed to outside firms that specialize in transcribing them
into written form.
The case involving UCSF's patient files represents the
nightmare-scenario- come-to-life for the medical industry. For about 20
years, UCSF has farmed out much of its transcription work to a
Sausalito company called Transcription Stat.
Transcription Stat outsourced many of the hundreds of files received
daily to a network of 15 subcontractors. One of these was a Florida
woman named Sonya Newburn, who then outsourced the files yet again to a
Texas man named Tom Spires.
Spires outsourced the work one more time to Baloch in Karachi, who
agreed to do the transcribing for a small fraction of the amount UCSF
originally paid Transcription Stat, thus allowing everyone in the chain
to walk away with a modest profit.
But on Oct. 7, Baloch attached two patient files to an e-mail and
contacted UCSF. She demanded that the medical facility assist her in
squeezing outstanding funds from her employer, Spires.
"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," Baloch wrote.
She was subsequently paid off by Newburn, Spires' employer, and wrote
another e-mail to UCSF saying that she was "retracting any statements
made by me earlier." Baloch said she'd destroy all UCSF files in her
possession, but there's no proof that she's made good on that promise.
Meanwhile, it's come to light that more than a month after UCSF patient
privacy was jeopardized, a Southern California doctor was still sending
confidential materials to Baloch as of this week.
Fawad Zafar-Khan, a Santa Monica physician, said he had no idea that
Baloch had issued a threat against one of the country's most
prestigious medical institutions.
Baloch did not respond to earlier e-mails seeking comment on the
matter. Informed, though, that Zafar-Khan had been found in Santa
Monica -- threatening her relationship with one of her steadiest
clients -- she decided to step out of the shadows Tuesday and tell her
side of the story.
"I myself am a medical doctor," she wrote. "I had no intentions to ever
disclose any patient information as this is unethical."
Nevertheless, Baloch said, she was "very disturbed" by her inability to
resolve her dispute with Spires and had "no choice but to contact the
hospital to remedy the situation."
She said she was originally contacted by Spires via e-mail about five
months ago. He claimed to be "a subcontractor of one big company
contracting work from UCSF," she said.
Transcription Stat originally received 18 cents a line from the
hospital for handling the facility's medical records. Three
subcontractors later, Baloch said she was offered just 3 cents a line
by Spires to do the same work.
She said things went well enough at first, but gradually she noticed
that her payments were not arriving promptly at the end of each month.
Baloch also said that Spires refused to give his phone number,
preferring instead to communicate via e-mail or Instant Messenger.
Soon, she said, it became apparent that Spires couldn't be counted on
to make regular payments. In September, Baloch wrote, she told Spires
to stop sending her work and to pay all outstanding cash so she could
deal with a nagging debt problem.
"To that he blocked me from his e-mail and messenger list," she said.
And so, Baloch wrote, she sent her e-mail to UCSF.
Spires couldn't be reached for comment. UCSF's chief operating officer,
Tomi Ryba, said in a statement Tuesday that protecting patients'
confidentiality "continues to be a high priority for us."
For her part, Baloch is still in Karachi, still free, still busy
transcribing U.S. patient records.
"Oh my God," said Zafar-Khan, the Santa Monica physician, when told of
the situation with UCSF.
He was then told that Baloch has been using Zafar-Khan's name and
Southern California address as part of efforts to attract more
transcription work via medical Web sites. Her online resume says she
can be contacted through Zafar-Khan's office.
"Oh my God," Zafar-Khan said again. "I had no idea. I will fire her
immediately."
He said he found Baloch through a mutual acquaintance in Karachi.
Zafar- Khan said he's been sending Baloch as many as 10 patient files a
week for the past half-year, paying about $250 a month for her services
-- half what he might pay a U.S. transcriptionist.
"Now I'm worried that she'll come back to me with something like what
she did with UCSF," he said, noting that he can't be sure whether
Baloch made copies of his records after completing her transcribing.
"I'm concerned."
He should be.
"He doesn't want that world of hurt coming down on his head," said
Catherine Graham, chief executive of CMG MedCom, a
medical-transcription consulting firm in Virginia.
As it stands, she said the word is already out on Web sites frequented
by overseas transcriptionists: U.S. institutions are vulnerable to
shakedowns. Baloch got paid off and got away clean.
"The precedent has been set," Graham observed. "This is not the last
time something like this will happen."
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.nytimes.com/reuters/technology/tech-tech-jobs.html
December 30, 2003
US Companies Moving More Jobs Overseas
By REUTERS
Filed at 5:02 p.m. ET
NEW YORK (Reuters) - U.S. 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.
Morgan Stanley estimates the number of U.S. jobs outsourced to India
will double to about 150,000 in the next three years. Analysts predict
as many as 2 million U.S. 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. (MSFT.O), International Business Machines Corp.
(IBM.N) and AT&T Wireless (AWE.N), 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 U.S. 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. (ACN.N) 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 U.S. offices about
U.S. job losses.
Offshoring companies ``are paying Chinese wages and selling at U.S.
prices,'' said Alan Tonelson, of the U.S. Business and Industrial
Council, a trade group for small business. ``They're not creating
better living standards for America.''
The U.S. sales director for one of India's top computer services
providers said his company has won business from customers such as Walt
Disney Co. (DIS.N), Time Warner Inc.'s (TWX.N) CNN and the Fox division
of News Corp. (NCP.AX) -- none of which want public disclosure.
In India, some technology companies have recently adopted lower
profiles. Microsoft Corp. (MSFT.O) has been removing its name from
minibuses used to ferry engineers on overnight shifts. Major Indian
beneficiaries of U.S. business such as Infosys Technologies Ltd.
(INFY.BO), Wipro Ltd. (WIPR.BO) 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 U.S. 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 U.S. economy ultimately will benefit.
Recently, AT&T Wireless told the U.S. Securities and 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 U.S. 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. (EDS.N),
CAP Gemini Ernst & Young and Sapient Corp. (SAPE.O), 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.
(AGRa.N) after declining offers to relocate to headquarters in
Allentown, Pennsylvania -- or to Singapore.
http://www.infoshop.org/inews/stories.php?story=03/12/29/4006802
Jobless Count Skips Millions
The Rate Hits 9.7% When the Underemployed and Those Who Have Quit
Looking are Added
by David Streitfeld
December 29, 2003
Los Angeles Times
SAN FRANCISCO - Lisa Gluskin has had a tough three years. She works
almost as hard as she did during the dot-com boom, for about 20% of the
income.
When Gluskin's writing and editing business cratered in 2001, she
slashed her rates, began studying for a graduate degree and started
teaching part time at a Lake Tahoe community college for a meager wage.
It's been a fragmented, hand-to-mouth life, one that she sees mirrored
by friends and colleagues who are waiting tables or delivering
packages. In the late '90s, the 35-year-old Gluskin says, "we had
careers. We had trajectories. Now we have complicated lives. We're not
unemployed, but we're underemployed."
The nation's official jobless rate is 5.9%, a relatively benign level
by historical standards. But economists say that figure paints only a
partial - and artificially rosy - picture of the labor market.
To begin with, there are the 8.7 million unemployed, defined as those
without a job who are actively looking for work. But lurking behind
that group are 4.9 million part-time workers such as Gluskin who say
they would rather be working full time - the highest number in a
decade.
There are also the 1.5 million people who want a job but didn't look
for one in the last month. Nearly a third of this group say they
stopped the search because they were too depressed about the prospect
of finding anything. Officially termed "discouraged," their number has
surged 20% in a year.
Add these three groups together and the jobless total for the U.S. hits
9.7%, up from 9.4% a year ago.
No wonder the Democratic presidential candidates have seized on jobs as
a potentially powerful weapon.
Howard Dean criticized President Bush for "the worst job creation
record in over 60 years." Richard Gephardt said that "I have three
goals for my presidency: jobs, jobs, jobs." John Kerry said "the first
thing" he'd do as president would be to fight his "heart out" to bring
back the jobs that have disappeared in recent years.
Bush, meanwhile, is quick to seize credit where he can. When the
unemployment rate for November fell one-tenth of a point, he went out
immediately to give a speech at a Home Depot in Maryland.
"More workers are going to work, over 380,000 have joined the workforce
in the last couple of months," Bush said. "We've overcome a lot."
A number of economists say it's a mistake to evaluate the job market
solely by talking about the official unemployment rate. It's a blunt
instrument for assessing a condition that is growing ever more vague.
"There's certainly an arbitrariness to the official rate," says
Princeton University economics professor Alan Krueger. "It irks me that
it's not put in proper perspective."
On Jan. 9, when the rate for December is announced, both Republicans
and Democrats will assuredly again maneuver for advantage - precisely
because the number isn't expected to change much.
"At this point, where we don't know which way it's going but it isn't
likely to be going far, both sides will try to use it," says Michael
Lewis-Beck, a political scientist at the University of Iowa.
In every election since 1960, the party in the White House lost when
the unemployment rate deteriorated during the first half of the year.
If the rate improved, the party in the White House won.
That's not a coincidence, says Lewis-Beck, who has edited several
volumes on how economic conditions determine elections. "People see the
president as the chief executive of the economy," he says. "They punish
him if things are deteriorating and reward him if things are
improving."
By any normal standard, things should have been improving on the
employment front long before this point. More than 2 million jobs have
been lost in the last three years, a period that encompassed a brief,
nasty recession and a recovery that was anemic until recently. Even in
the best-case scenario, Bush will end this term with a net job loss.
That hasn't happened to a president since Herbert Hoover at the
beginning of the Depression.
Many economists are mystified about why a suddenly booming economy is
producing so few jobs.
"We're all sitting there and saying, 'When are they going to return?' "
says Richard B. Freeman, director of the labor studies program at the
National Bureau of Economic Research. "It's looking a little better,
but we don't understand why it isn't looking a lot better. Why
shouldn't Bush be sitting there saying, 'Man, I'm sitting pretty. This
is a great boom'?"
One statistic proving particularly perplexing is the percentage of the
adult population that is employed. This number rises during good times,
as people are lured into the workforce, and falls during recessions as
companies falter.
True to form, the percentage of adult Americans with jobs dropped from
a high of 64.8% in April 2000, just as the stock market was cresting,
to 62% in September - the lowest level in a decade. If past recessions
are any guide, those 5 million people who found themselves jobless
should have driven the unemployment rate up to about 8%.
Instead, the rate never went much above 6%.
"More than half of the additional people who would have reported
themselves as unemployed in a previous big recessionary period
aren't," a puzzled UC Berkeley economist, Brad DeLong, wrote on his
website. "They're reporting themselves as out of the labor force
instead."
"Out of the labor force" means you're not working for even one hour a
week and don't want to, either. It's the traditional category for
students, married women with young children, flush retirees and idle
millionaires.
A new way that people seem to be joining this category is by getting
themselves declared disabled. This designation makes them eligible for
government payments while removing them from the unemployment rolls.
From 1983 to 2000, economists David Autor and Mark Duggan wrote in a
recent study, the number of non-elderly adults receiving government
disability payments doubled from 3.8 million to 7.7 million.
The scholars present a case that the sharp increase isn't because the
workplace suddenly became more dangerous. Instead, it has been prompted
by liberalized screening policies, which make it possible to claim
disabled status for, say, several small impairments as opposed to one
big injury. Government examinations also have been downplayed in favor
of the disabled's own medical records and the pain he or she claims to
be experiencing.
At the same time, benefits have been sweetened. As a result, millions
of individuals who lost jobs now have an attractive - and permanent -
alternative to searching for work.
Autor and Duggan concluded that if disability payments weren't so
appealing, many more people would be unemployed, boosting the jobless
rate two-thirds of a point.
Another way in which people forgo an appearance on the unemployment
rolls is if they decide to go into business for themselves. There are
9.6 million people who say they are self-employed full time, a number
that rose 118,000 last month. Without the recent increase in
self-employed, the jobless number would look much worse.
Many others may be working for themselves part time, temporarily, as a
way to get food on the table in the absence of better options.
Take Steve Fahringer, who until recently was working for a Bay Area
marketing agency that cut 20% of its employees and trimmed the wages of
the remainder by 20%. Fahringer didn't particularly like his job.
Because the recession supposedly was history, he thought he could find
a new position. The 34-year-old didn't think it would be easy, but he
thought it possible. So he quit.
"I left July 1," he says. "I haven't found a new job yet."
It's a common problem. The segment of the labor force that has been
jobless for more than 15 weeks has risen nearly 150% since 2000. The
current level is the highest since the recession of the early 1990s.
Nearly one-quarter of the jobless have been unemployed for longer than
six months.
In Fahringer's case, he spent some time aggressively looking for a job,
which made him part of the official July unemployment rate of 6.2%.
Then he stopped looking, which meant that he was one small reason the
rate started going down.
Instead of unemployed, Fahringer was classified as "discouraged." A
little more than 8% of the people who want a job in the Bay Area are
estimated by the Bureau of Labor Statistics to be discouraged, slightly
higher than Los Angeles/Long Beach but lower than the battered
technology center of San Jose.
Discouraged workers have never been included in unemployment rates,
although they came close the last time a commission met to reform the
system, a quarter of a century ago. "It was a very hot issue,"
remembers Glen Cain, a retired economist who was a commission member.
He says the conservatives on the panel, who felt that anyone who really
wanted a job should be out there hustling no matter what, prevailed.
Fahringer found an alternative way to earn a bit of money. He did some
acrylic paintings, which he sold for a total of $1,000. He calls
himself "a hobbyist," which means for a while he moved out of the labor
force entirely.
Now he's a temp, assigned by his agency to a nonprofit office. For the
first time in six months, he's working 40 hours a week. By the
government's accounting, he has once again joined the ranks of the
employed. But from the standpoint of his wallet, Fahringer is worse
off: He's earning less money, with no paid holidays, no sick leave, no
pension plan, no health insurance, no future.
The Economic Policy Institute, a liberal-leaning Washington think tank,
says Fahringer's situation is in many ways typical. The industries that
were expanding in the late '90s, including computer and professional
services, paid well.
Those industries are in retreat. So is manufacturing, a traditional
source of high wages. On the rise, meanwhile, are lower-paying service
jobs.
During the boom, it was easy to trade up. Now it's just as easy to
trade down.
Fahringer's solution: Opt out.
"I'm thinking of going back to school," he says. "I'd take out a loan."
That would put him out of the labor force again.
In some eyes, a nation of burger flippers, temps and Wal-Mart clerks
isn't the worst scenario for the economy. The worst is that companies
continue to eliminate jobs faster than they create them, setting up a
game of musical chairs for the labor force.
That prospect alarms Erica Groshen, an economist with the Federal
Reserve Bank of New York. "If you plot job losses versus gains on a
chart, it's shocking," she says.
Losses are running at about the same rate they were in 1997 and 1998,
two good years for the economy. But job creation in the first quarter
of 2003 - the most recent period available - was only 7.4 million, the
lowest since 1993.
"If this goes on too long, you'd have to worry there's something
fundamentally wrong," Groshen says. Although the economy has picked up
since March, "so far I haven't seen anything that suggests job creation
is picking up."
That bodes poorly for Ian Golder. His last full-time job was with a
start-up publication that wrote about venture capital.
Two years ago, Golder was laid off. It was the first time since he
graduated from UC Berkeley 14 years earlier that he didn't have steady
work.
Golder looked for a while, gave up for a while, then landed a
contracting gig with no benefits proofreading for a chip maker. When
that ran out, he worked 20 hours a month on a financial services
newsletter.
His wife, Heather, a recent graduate in English from UC Davis, also was
without a job. They thought about selling their house in Sacramento and
moving, but prospects didn't look any better anywhere else. To make
ends meet, they took in two boarders.
At the beginning of December, things seemed to improve a bit. Golder
got a job in the document-control department of a medical devices
company. The department, he was told, used to have 20 full-time people.
Now it has five, plus four temps.
The job will last two months. After that, who knows?
"Optimists say things will be better then," Golder says. "But a
full-time position with benefits seems pretty remote."
Copyright 2003 Los Angeles Times
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