10 Articles Worth Reading
10 Articles Worth Reading
Date: Wednesday, February 02, 2005 2:26 AM
JOB DESTRUCTION NEWSLETTER
by Rob Sanchez
January 02, 2005 No. 1188
Article 1:
http://www.inthesetimes.com/site/main/article/1881/
Ground Control to Mr. Bush
By Bernie Sanders January 20, 2005
"Theres a trade deficit. Thats easy to resolve: People can buy
more United States products if theyre worried about the trade
deficit." - George W. Bush, December 15, 2004
Reminiscent of the callous "Let them eat cake" reputedly uttered by
Marie Antoinette on her way to the guillotine, President Bushs
remarks show how out of touch he is with the economic reality most
Americans face.
Article 2:
http://www.cio.com/archive/011505/outsourcing.html
Innovation Ships Out
U.S. computer makers such as Dell, Motorola and HP are outsourcing not
just the manufacture but the design of new products to offshore
companies. Could this be the end of America's innovative edge in
electronics? Buy a laptop anywhere in the world and there is a
one-in-four chance that T.J. Fang will process the order. You'll just
never know it.
Article 3:
http://www.mercurynews.com/mld/mercurynews/business/10727718.htm
Racism is no answer to outsourcing
It all started in mid-December when Troi Torain, known as Star on
WUSL-FM, played a recording of a two-minute call to the 800 number for
a company that sells hair beads. Once Torain confirmed he'd reached an
Indian call center, he unleashed a verbal attack.
Article 4:
Email Newsletter from the Petoskey Chamber of Commerce (no link)
Congressman Bart Stupak was in Petoskey yesterday and gave a rather
bleak outlook for relief from the H2B Visas for seasonal foreign
workers. This could lead to a very thin labor pool this summer,
particularly in the hospitality industry throughout northern Michigan.
Article 5:
http://feeds.bignewsnetwork.com/redir.php?jid=ddd82ce23009e4c0&cat=d805653303cbbba8
IBM-Lenovo deal faces security investigation
IBM's plan to sell its PC business to Lenovo Group may become a matter
of American national security. The IBM-Lenovo deal is the biggest PC
industry tie-up since HP bought Compaq in May 2002. Lenovo is
attempting to combine IBM's vast resources in the United States, Europe
and Asia with its own presence in China, creating the third-largest PC
maker in the world, behind Dell and HP.
Article 6:
http://news.com.com/U.S.+firm+sweet+on+offshoring+deals+gone+sour/2100-1011_3-5519780.html
U.S. firm sweet on offshoring deals gone sour
A small U.S. software development company is growing fast in part by
mopping up offshoring messes.
Chicago area-based Decision Design doubled its revenue last year to $5
million, with a chunk of the business stemming from clients unhappy
with projects they sent overseas.
Article 7:
http://www.madison.com/tct/news/stories/index.php?ntid=26831&ntpid=0
Epic maintains mystique on road to prosperity
It's arguably the greatest high-tech success story in Wisconsin, with a
new $150 million headquarters rising from the snow-covered rolling
countryside of western Dane County. In its search for talent, the
company has embraced the use of foreign work visas, which allow aliens
to remain in the United States as long as they are employed. It is
second in Wisconsin in the number of H-1B visas in effect, behind
Compuware of Milwaukee, with about 20 percent of its staff from another
country.
Article 8:
http://economictimes.indiatimes.com/articleshow/1005678.cms
20,000 H-1B visas on offer from Mar 8
Watch out for the stampede. Applications for the 20,000 cap-exempt H-1B
visas, set aside for holders of masters or higher degrees from US
institutes , will be accepted from March 8. The rush for these visas
will be considerable, which could give an impetus to demands for
increasing cap numbers or adding to the exemptions list.
Article 9:
http://www.nlectc.org/justnetnews/11111998.html#story8
"Prison Industries Go High Tech With Low Cost Labor"
An increasing number of prison inmates are being used for computer data
entry jobs, as prison industries go high tech.
Article 10:
http://www.registermail.com/news/topnews/b55in4apgid.html
Maytag closes
What happened: Refrigerator production ended in Galesburg in September
as Maytag Corp. sent its last two refrigerator lines from here to
Mexico and Korea, ending another 800 to 900 local jobs at the region's
once-largest employer.
1. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.inthesetimes.com/site/main/article/1881/
Ground Control to Mr. Bush
By Bernie Sanders January 20, 2005
"Theres a trade deficit. Thats easy to resolve: People can buy
more United States products if theyre worried about the trade
deficit." - George W. Bush, December 15, 2004
Reminiscent of the callous "Let them eat cake" reputedly uttered by
Marie Antoinette on her way to the guillotine, President Bushs
remarks show how out of touch he is with the economic reality most
Americans face. Apparently, the president hasnt visited a shopping
mall or Wal-Mart lately. If he had, like the millions of Americans who
flocked to our nations stores this holiday season to buy toys,
bicycles, computers, sneakers, clothes, telephones, cowboy boots (yes,
Mr. President, cowboy boots!), even artificial Christmas trees and
decorations, he would surely know that an overwhelming majority of
these products were made overseas, mostly in China.
Mr. President, did you buy an Xbox for your teenage relative this
holiday season? If you tried purchasing one that was made in the United
States, youre out of luck. According to Flextronics CEO Michael
Marks, "We moved all of the production of Microsofts Xbox consoles
from Mexico to China."
Did Mrs. Bush buy you a pair of Ariat cowboy boots for Christmas? Well,
guess what, Mr. President? Every last one: made in China.
As everyone knows from your accident last summer, you are an avid
bicycler. How about a sturdy mountain bike for Christmas? Oops, 85
percent of our bicycles are made in China.
As our commander in chief, you might be thinking about picking up some
more rare-earth magnets for our militarys smart bombs and cruise
missiles. Well, guess what? Eighty percent of those magnets are made in
China.
How about an American flag? Since 9/11, more than 10 million American
flags were made in China.
Levis Jeans? Sorry, they arent made in the United States anymore
either. Did your staff purchase Christmas decorations for the White
House this year? Approximately 80 percent of these decorations are now
made in China. (By the way, did you read about the so-called Christian
"dissident" who was placed under house arrest in China because he
wanted to have a party with his friends to celebrate the birth of Jesus
Christ?)
Mr. President, you may want to do your holiday shopping next year with
former General Motors CEO Jack Smith. At least, he sounds like hes
been out in the real world lately. "Walk around Wal-Mart," Mr. Smith
says, "and it looks as if everything is made in China." And he should
know about Chinese imports. After all, General Motors is laying the
groundwork for moving the U.S. auto industry abroad by purchasing $4
billion in auto parts from China by 2009, up from $200 million last
year.
While the stark reality of Americas industrial might moving abroad
may have escaped the president and his economic advisers, a growing
number of members of Congress see with their own eyes the devastating
effect that the presidents trade policy is having on manufacturing
jobs in their own districts. Its high time that Congress brought the
president down to earth, and made him understand that our current
unfettered free trade policies have been a disaster for the working
families of this country - and need a fundamental overhaul.
Today, the middle class in our country is shrinking, poverty is
increasing, and the gap between the rich and the poor is growing wider.
This year, the United States will have a record-breaking trade deficit
of almost $600 billion, including an estimated $140 billion trade
deficit with China. Over the last four year we have lost 2.7 million
decent-paying manufacturing jobs - more than 16 percent of that sector.
Many of those jobs have gone to China, a totalitarian society where
workers are paid pennies an hour and have minimal rights. Meanwhile,
most of the new jobs being created here are low wage with minimal
benefits.
Amazingly, while the U.S. middle class declines, corporate America is
helping make China the economic superpower of the 21st century. Not
only is China rapidly becoming the manufacturing center of the world,
it is quickly becoming the information technology hub as well. Andy
Grove, the founder of Intel, predicted last year that the United States
will lose the bulk of its information technology jobs to China and
India over the next decade. These are some of the best-paying jobs
available.
And John Chambers, the CEO of Cisco, is typical of many corporate
leaders when he said: "China will become the IT center of the world,
and we can have a healthy discussion about whether thats in 2020 or
2040. What were trying to do is outline an entire strategy of
becoming a Chinese company."
The time for playing nice with corporate outsourcers and their enablers
in government is over. Congress must repeal Permanent Normal Trade
Relations with China and develop trade policies that protect and create
good-paying jobs in America. We must create a noise so loud that even
the president hears it.
Bernie Sanders represents Vermont as an at-large member of the House of
Representatives, where he has served since 1991. Read more at his Web
site.
2. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.cio.com/archive/011505/outsourcing.html
Jan. 15, 2005 Issue of CIO Magazine
OUTSOURCING
Innovation Ships Out
U.S. computer makers such as Dell, Motorola and HP are outsourcing not
just the manufacture but the design of new products to offshore
companies. Could this be the end of America's innovative edge in
electronics?
BY CHRISTOPHER KOCH
Buy a laptop anywhere in the world and there is a one-in-four chance
that T.J. Fang will process the order. You'll just never know it.
Fang's secret is cloaked in IT, in servers that consolidate purchase
orders from name-brand American companies such as Dell,
Hewlett-Packard, Apple and IBM. The order trail leads to Fang's ERP
system at Quanta Computer in Taipei. Fang, assistant vice president and
head of IT operations at Quanta, feeds those orders to his Taiwanese
and Chinese suppliers and factories, and within five days, Quanta "drop
ships" to the customer a laptop that the buyer himself configured on
the brand-name website. No one at the company selling the laptop ever
lays a finger on it. Indeed, investment bank Morgan Stanley estimates
that the manufacturing for 89 percent of American brand-name laptops
are outsourced today. What's more, many of these famous computer brand
names don't even design their machines anymore. New models are chosen
from a shelf of fully functioning prototypes offered up by a handful of
Taiwanese companies. Quanta's ability to design and build new laptops
from scratch has helped it gain a 25 percent share of all laptops sold
in the United States. "In the past 10 years, [companies such as Quanta]
have gone from undercover stealth to a massive global business," says
Adam Pick, senior analyst for iSuppli, a market intelligence
consultancy.
Outsourcing has reached the highest level of the manufacturing supply
chain: R&D. By outsourcing R&D offshore, original equipment
manufacturers (OEMs) can freeze a portion of their R&D budgets while
growing their product offerings. Even R&D powerhouses such as IBM, HP
and Motorola have frozen - or even reduced - their R&D budgets since
2000. "[Outsourcing] is a tremendous opportunity for cost savings on
R&D," says Jack Faber, vice president of operations, enterprise systems
for HP.
But there may be a downside to all this R&D reshuffling. Some
economists say the outsourcing of manufacturing - and now design - is
the leading edge of a longer-term trend toward reduced innovation and
competitiveness among U.S. companies. As OEMs turn over the development
of new products to outsourcers, it could have a withering effect on
these companies' ability to create the next breakthrough, especially as
many freeze R&D spending. Spending on R&D by U.S. companies declined
more in 2002 (3.9 percent) than it has since the National Science
Foundation began tracking the number in 1953.
Though the technology slump that began in 2000 may play a big role in
these declining R&D numbers, there is a larger, more disturbing trend
at work, argues Gregory Tassey, senior economist at the National
Institute of Standards and Technology (NIST). For the past 12 years,
the proportion of R&D money going toward new innovation - the "R" in
R&D - has also been going down, displaced by incremental product
development (next year's laptop, for example). Product development -
the "D" in R&D - swallows more resources than the "R" work, and it does
not create new opportunities for revenue; it merely extends current
product categories.
For CIOs in electronics and other industries, the shift toward global
manufacturing and R&D means big changes in the supply chain.
Meanwhile, government spending on R&D has also been dropping over the
same period. R&D spending in the United States now lags behind many
countries, including Japan and Germany. The changing mix of R&D
spending in the United States could have a major impact on U.S.
competitiveness over the long term, Tassey says. Governments around the
world are pumping money into private-sector R&D to boost innovation. In
contrast, U.S. government spending on R&D is almost all focused on
specific programs - such as space, defense and health - rather than
free-form research.
"We have the view in this country that private industry is capable of
making the necessary investments in R&D to keep the U.S. competitive,"
says Tassey. "If that's the case, then every other country in the world
is wrong."
If you thought your Dell was designed in the U.S., think again
Here is a list of companies that outsource most, if not all, of the
design and manufacturing of some of their products.
Read More
The U.S. computer industry may be a bellwether for other industries
that have not yet begun to send product development work to
outsourcers. As U.S. companies increasingly shift their R&D focus from
new breakthroughs to product refreshes, they will be tempted to move
that work offshore, where well-trained and well-educated engineers are
available at a fraction of the cost of their U.S. counterparts.
The trend is eerily similar to the offshore outsourcing of computer
programming. Unemployment rates among both R&D engineers and IT
programmers in the United States continue to trend downward, despite
the recent economic rebound. As more valuable components of the
manufacturing value chain progressively move offshore, will the
ultimate value creators - advanced research and innovation - eventually
move offshore too? How long can U.S. companies continue to innovate
when they no longer manufacture or update products? What will be left
behind? Marketing?
For CIOs in electronics and other industries, the shift toward global
manufacturing and R&D means big changes in the supply chain. Companies
that outsource R&D or split it among different locations or suppliers
will need IT linkages to enable better collaboration among engineers.
And as companies outsource other pieces of the supply chain (customer
service, shipping, and warranty and repair, for example), CIOs will
need to replace direct oversight of processes with automated monitoring
and reporting to ensure that suppliers are meeting quality metrics and
shipping on time.
Of course, if outsourcing is truly complete - from design right on down
to shipping, service and repair - there is a distinct possibility that
companies could drastically cut back on internal IT as well, severely
reducing the CIO's span of influence. Indeed, as OEMs turn more of
their supply chain over to offshore electronic manufacturing services
(EMS) companies, they will rely more and more upon the internal IT
groups of these organizations to monitor their supply chain for them.
"OEM has become a misnomer unless you change the M to marketing," says
Kristian Talvitie, director of strategic marketing and communications
for Plexus, a global EMS company based in the United States.
Moving Up the Food Chain
In the past 15 years, EMS companies here and abroad have moved steadily
up the food chain in large part because the value of the work to which
they laid claim has been driven down by price pressure and global
competition. Indeed, the work that launched the EMS industry in the
'80s, stuffing components such as microprocessors onto computer circuit
boards for big-name computer manufacturers, has ceased to be
profitable, industry insiders say. "Placing components on boards is
commoditized. You have to offer a whole variety of services to win a
new customer today," says John McManus, managing director and senior
analyst for Needham & Co., an investment banking and research company.
To survive, EMS companies have had to continually take on higher-order,
more complex pieces of the electronics supply chain to keep their
hollow-cheeked profit margins (overall industry average is 2 percent to
5 percent) from disappearing altogether. Design work typically has
higher gross profit margins, between 8 percent and 11 percent,
according to iSuppli's Pick. This has led to the growth of upstart
companies such as Quanta that specialize in total design, manufacturing
and shipping solutions for customers. Traditional EMS companies,
accustomed to focusing exclusively on the manufacturing portion of the
supply chain, are now expanding their design services to compete. "[EMS
companies] want to get more of the value added at the research end,"
Tassey says. "Innovation is where you capture the big value, the new
markets."
Quanta, unlike its larger EMS competitors, does not swallow customers'
old factories and try to squeeze profits out of them. Quanta emphasizes
design and logistics in Taiwan and assembles a network of
manufacturers, mostly in China, to build its products. And Fang can use
lightweight IT connections to hook his supply chain together and keep
customers apprised of where their products are in the process. Fang has
created an Internet portal for his network of 700 small suppliers. Each
morning, suppliers download their purchase orders from Quanta's website
and print out bar codes that they slap on the side of the box so that
Quanta can quickly direct the materials where they need to go at its
Taipei logistics center.
IT Makes Outsourcing Easy
IT has accelerated the outsourcing trend in electronics because it
allows OEMs to monitor the processes they give up, such as
manufacturing and design. IT can't replace a good assembly line foreman
or a chief engineer who watches over things, but in many cases,
monitoring the process is enough. For example, OEMs don't need to test
each PC made by an EMS before it gets shipped if they have set up a
testing process at the factory that is monitored by IT. The OEM just
has to verify, via an IT-based reporting system, that PCs that didn't
pass the agreed-upon test were not shipped. Monitoring reduces the
number of people from the OEM needed onsite at the EMS's factory and
virtually eliminates the need for the OEM to physically take possession
of the products.
As U.S. companies increasingly shift their R&D focus from new
breakthroughs to product refreshes, they will be tempted to move that
work offshore.
For big U.S. companies with diverse product lines such as HP, it's
impossible to get everything they need from a single EMS company. Nor
would these companies want to, for competitive, intellectual property
and security reasons. But HP, for one, does try to limit the number of
EMS companies it deals with, partly to shave costs, and also because
the increased IT demands of monitoring the EMS's processes can be quite
expensive for highly configurable products such as high-end servers.
"If we want to create a build-to-order process for customers with an
EMS, there is a lot more intimacy required in the information we
exchange with the EMS," says Faber. More product options means more
monitoring of the EMS company's processes. "The information pipe will
be a lot bigger and must be much more responsive to changes than when
we're dealing with a commodity product," he says.
If an EMS can take over the entire product process, from design to
manufacturing to shipping to customers, and OEMs can verify through
relatively inexpensive IT controls that the EMS is performing all these
processes up to snuff, it becomes a much more enticing package for
OEMs. Splitting up linked processes such as design, manufacturing and
shipping is hard; it costs more and requires more oversight from the
OEM. That's why design is becoming a deal maker (or breaker) for new
outsourcing business. "All of the [EMS] companies realize they have to
get involved in the design effort at the early stage because that's how
the business is won today," says Needham's McManus.
With the relentless margin pressure that exists in the computer
industry today, OEMs are quickly coming to the view that there is no
point in devoting a great deal of R&D resources to mature product
categories that change as rapidly as PCs, laptops and cell phones. R&D
engineers are the most expensive nonmanagement employees these
companies have. "The OEMs are building entirely new product families
every few years. So you either keep building R&D capacity to do that,
or you outsource it," says Chris Smith, president and CEO of RiverOne,
a maker of supply chain management software. "It's driven by the pace
of change in the industry."
Indeed, Quanta is not designing anything all that original. The company
is unlikely (at least for now) to invent the next revolutionary new
product category. But it is perfectly capable of designing and
manufacturing the next version of a PC, laptop or, in a move up the
value chain, storage server on its own. "These companies started with
circuit boards and worked their way up to design over the years.
They've built up a lot of trust with the OEMs," says iSuppli's Pick.
These companies aren't simply providing cheap labor, either. Pick says
many have instituted quality programs such as Six Sigma that rival
Western producers. Factory capacity utilization among EMS companies
averages 85 percent to 90 percent in the Far East, versus 65 percent
worldwide.
Innovation Not Far Behind
Quanta's Fang is careful to point out that his company has no intention
of developing its own brands and selling against its customers. But
other offshore EMS's have already broken that taboo. For example, BenQ,
another Taiwanese EMS, sells its own brands of cell phones and computer
accessories in the Far East and the United States.
Quanta could be forced to do the same in the not-too-distant future.
The incredible growth of electronics outsourcing has masked a
fundamental weakness in the business model: Nobody has yet learned how
to make much profit doing it. Even design margins have begun to erode
recently, as EMS companies flock to the model and OEMs push for lower
prices. To avoid a race to the bottom, the industry is going to have to
find a way to earn better returns. "I don't think there's anything
stopping the outsourcing push," says Needham's McManus. "The issue is:
Can you be a successful corporation with returns on capital that are no
better than 15 percent?"
Indeed, during a recent conference call, Jure Sola, chief executive
officer of Sanmina-SCI, a large EMS company, told financial analysts,
"There's no way in the world this industry can exist on the margins
that we are delivering today."
Innovation is the route out of low-margin manufacturing. IBM, Xerox,
AT&T and HP built their R&D capabilities with cash from unique products
that commanded high margins - or, in the case of AT&T, from an outright
monopoly. But those companies have a harder time justifying investments
in research today. "It's difficult to make an ROI argument for creating
fundamentally new scientific knowledge," says Mark Bernstein, president
and center director of PARC, the former Xerox think tank that was spun
out into an independent subsidiary in 2002. "Faster product cycles and
the increased focus on efficiency and productivity have made it harder
for companies to have a long-term vision."
The loss of manufacturing and design could make it difficult for the
traditional R&D powerhouses to innovate in the future. "Real
breakthrough product development usually requires manufacturing and
research to be located together," says NIST's Tassey. Supercomputers
and high-tech weapons, for example, required close collaboration
between engineers and manufacturers.
But PARC's Bernstein says R&D must become more global by necessity.
"The breadth of research required to master a market these days is
pretty significant," he says. "You're going to see a lot more
partnering" around the globe to do research. Besides outsourcing
manufacturing and design, many U.S. companies have opened their own
dedicated R&D facilities in low-cost countries such as India and China.
Innovation still occurs under the banner of a U.S. corporation, but it
happens elsewhere, employing lower-cost engineers. Though U.S.
corporations will continue to innovate under this model, the United
States and its pool of engineers will become lesser engines of that
innovation.
To some observers, this may sound a death knell for the United States'
current lead in technology innovation, but HP's Faber isn't overly
worried. "I hate to sound like a Republican," he says, "but when I
first came here 20 years ago, we had our own factories for sheet metal
and screws and everyone thought we had to keep them. As we outsource,
we just keep focusing on higher value-added work." HP's newer 64-bit
servers are examples of products that are largely conceived and
designed in the United States, he says.
It's clear, however, that this is a sensitive issue for the traditional
R&D powerhouses. All but one (HP) declined to comment on the growing
trend in outsourcing the "D" in R&D. At the same time, the EMS
companies we spoke to denied they have any plans to expand into the "R"
part of R&D or offer their own products for sale. Given their
dependency on brand-name companies for business, it's unlikely that
we'll see a "Quanta Labs" anytime soon. But as the EMS companies take
on more and more design work and build up their engineering groups,
there is little doubt that they will eventually have the capability to
come up with their own ideas.
Quanta, for instance, has 1,500 design engineers today. The plan is to
expand that number to 7,000 in the next couple of years. Fang thinks
other EMS companies will follow suit. "The profits in manufacturing
aren't large," he says. "So moving into design is an obvious choice.
It's a natural evolution." Even if Quanta has no plans to sell its own
products, surely one of those 7,000 engineers will have a good idea up
his or her sleeve.
Executive Editor Christopher Koch can be reached at ckoch@cio.com.
3. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.mercurynews.com/mld/mercurynews/business/10727718.htm
Posted on Tue, Jan. 25, 2005
Racism is no answer to outsourcing
By Mike Cassidy
Mercury News
Yes, it was just another stupid stunt by a ratings-hungry shock jock.
But this one got to Amlan Chatterjee.
And it got to me, too, once the San Jose software engineer pointed me
to blogs that had turned the Philadelphia DJ's prank into the call
heard around the world.
It all started in mid-December when Troi Torain, known as Star on
WUSL-FM, played a recording of a two-minute call to the 800 number for
a company that sells hair beads. Once Torain confirmed he'd reached an
Indian call center, he unleashed a verbal attack.
``Listen to me, you dirty rat-eater,'' he says. ``I'll come out there
and choke the eff out of you.''
Torain rants while the woman on the other end tries to politely deflect
his hate.
``Don't get slick with the mouth,'' Torain shouts, adding a vulgarity.
``How dare you outsource my call?''
That Torain, who is black, posed as a father whose white daughter wants
hair beads ``like Serena and Venus Williams'' is proof he doesn't just
play the race card. He plays the whole deck.
The broadcast itself brought few complaints. But WUSL posted the call
on its Web site. Bloggers blogged. E-mail flew. The Philadelphia
Inquirer picked up the story.
Blogs like www.turbanhead.com, which has posted the sound clip, became
salons for the outraged.
The station ultimately apologized. It removed the clip from its Web
site. Torain and his morning sidekick -- Timothy Joseph, a.k.a. Buc
Wild -- were suspended for a day.
But I wonder if there isn't more to be learned.
``Any civilized person, any person who had a normal upbringing and had
loving parents, a loving family, would be hurt by what they were
doing,'' Chatterjee, 35, said when we spoke.
Maybe we can write this off as the antics of an immature shock jock.
But what's scary about Torain's call is that it's an extreme example of
a sentiment that could grow, given the threat of offshoring and the
rancor around it.
When times are tough, there is a danger of tolerant people turning on
each other.
For years, Silicon Valley has been losing jobs. Some have been lost to
cheaper labor markets, such as India and China. Economists say
increasingly complicated and well-paying jobs will move or be created
in those markets rather than here.
Already there are Web-based campaigns to harass call center workers.
The Times of India reports a sharp increase in abusive and racist calls
to Indian call centers in recent months.
One message-board poster urges people to spend 10 minutes a day phoning
call centers and harassing Indian workers.
Chatterjee says he understands the frustration, but not the reaction.
``That person just came to do their job,'' he says.
Hate isn't the answer. Whether you like offshoring or not, it isn't
going to stop. The United States needs to become better at educating
the next generation of technologists. Companies and government need to
provide training and short-term financial support for U.S. workers who
lose their jobs to offshoring.
Silicon Valley has earned a reputation as a region that tolerates
differences. That tolerance will continue to be tested by global
changes and local economic stresses.
We can enhance the valley's reputation by finding innovative ways to
take advantage of a world where work easily migrates across borders. We
can create new partnerships. Silicon Valley companies can train workers
here for cutting-edge pursuits that will lead to more jobs here and
abroad.
Or we can choose to fail and take up with the shock jocks and anonymous
Internet ranters.
4. +++++++++++++++++++++++++++++++++++++++++++++++++++
Email Newsletter of the Petoskey Chamber of Commerce (no link)
Congressman Bart Stupak was in Petoskey yesterday and gave a rather
bleak outlook for relief from the H2B Visas for seasonal foreign
workers. Only 66,000 visas are available nationwide, and the foreign
workers must start work within 120-days of filing for the visa. This
year, all of the visas were claimed by Jan. 3 leaving many northern
Michigan businesses that rely on foreign labor during the summer months
without a chance to bring in extra help. Congressman Stupak indicated
that legislative action to raise the cap on H2B Visas is very unlikely
in the immediate future, and doubtful for the long-term. This could
lead to a very thin labor pool this summer, particularly in the
hospitality industry throughout northern Michigan.
5. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://feeds.bignewsnetwork.com/redir.php?jid=ddd82ce23009e4c0&cat=d805653303cbbba8
IBM-Lenovo deal faces security investigation
John G. Spooner
CNET News.com
January 24, 2005, 16:30 GMT
IBM's plan to sell its PC business to Lenovo Group may become a matter
of American national security.
The Committee on Foreign Investments in the United States, which
reviews acquisitions of US businesses by companies based outside the
country, has shown concern that Chinese operatives might use an IBM
facility for industrial espionage, the Bloomberg news agency reported
on Sunday, citing unnamed sources. The committee is made up of 11 US
government agencies, including the departments of Justice and the
Treasury.
The report said that IBM and Lenovo were negotiating with the
committee, chaired by the Treasury Department, which would need to give
its approval for the deal in order for it to avoid a formal
investigation and the need for clearance by President Bush.
In December, IBM announced its intent to sell its PC business to
Lenovo, currently based in Beijing. The deal is valued at $1.75bn.
An IBM representative said in an email that the company is cooperating
with all government agencies that must approve the deal.
"IBM has filed the required legal notice with the Committee on Foreign
Investments," Ed Barbini, a company spokesman, wrote in the email. "IBM
is fully cooperating with all government agencies in their review of
this transaction."
Representatives of the Treasury Department weren't immediately
available for comment.
Still, IBM has cleared one other potential regulatory hurdle.
Earlier this month, the Federal Trade Commission indicated that it
would not raise any objections to the Lenovo deal on the basis of how
the sale might effect competition in the market.
The FTC granted Lenovo and IBM an early-termination ruling under the
Hart-Scott-Rodino antitrust act, which says companies planning large
acquisitions must notify the FTC and the US Department of Justice in
advance, submitting information about how their plans might affect
competition. According to the law, the companies must also wait while
the competitive aspects of their proposed acquisitions are evaluated.
With the FTC ruling, that waiting period is now over for IBM and
Lenovo.
The IBM-Lenovo deal is the biggest PC industry tie-up since HP bought
Compaq in May 2002. Lenovo is attempting to combine IBM's vast
resources in the United States, Europe and Asia with its own presence
in China, creating the third-largest PC maker in the world, behind Dell
and HP.
Under terms of the agreement, expected to close during the second
quarter, Lenovo will take over the daily operations of IBM's PC
business, which has lost nearly $1bn in recent years, according to IBM
regulatory filings. Lenovo will be in charge of manufacturing and
product design, and will also be able to use IBM PC brands such as
ThinkPad for five years.
IBM will take an 18.9 percent stake in the new Lenovo, which will
reincorporate in the United States and locate its headquarters in
Armonk, New York -- the town that IBM calls home. The deal will free
Big Blue to pursue services, software and other more profitable
businesses. Besides its stake in the company, IBM will help Lenovo in a
number of other ways, including using its sales force to sell Lenovo
PCs and providing customer support.
Lenovo will maintain its focus on China, but it also plans to expand
its sales in other markets. It is evaluating selling Lenovo-brand PCs
to consumers in the United States, for example.
CNET News.com's Martin LaMonica contributed to this report.
6. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://news.com.com/U.S.+firm+sweet+on+offshoring+deals+gone+sour/2100-1011_3-5519780.html
U.S. firm sweet on offshoring deals gone sour
By Ed Frauenheim
Story last modified Mon Jan 10 12:50:00 PST 2005
A small U.S. software development company is growing fast in part by
mopping up offshoring messes.
Chicago area-based Decision Design doubled its revenue last year to $5
million, with a chunk of the business stemming from clients unhappy
with projects they sent overseas. Through a strategy that includes
locating U.S. facilities outside of high-rent areas, Decision Design
says that it is cost-competitive with offshore companies, offering
workers familiar with U.S. business practices and culture.
The 20-person company on Monday announced new offices in Pleasanton,
Calif., that should hold another 10 or more employees.
"The additional space should be adequate to meet our growth, much of
which has been caused by the current offshoring backlash," Monty Davis,
president of Decision Design, said in a statement. The company's
Software Remediation for rescuing failing software development
projects, as well as its Homeshoring Services for low-cost outsourcing
alternatives to offshoring, he said, "have been booming."
The company is looking to hire software engineers and business
analysts, said Melinda O'Neill, Decision Design's director of
marketing.
The company's success could allay fears that a large amount of
information technology work is headed offshore. The exact scope and
effect of offshoring are unclear, though a federal study is in the
works.
Critics claim that the practice eliminates well-paying jobs and
threatens the nation's long-term technological leadership. Business
leaders have defended shipping work abroad as ultimately good for the
U.S. economy and its workers.
In any case, not all offshore deals are ideal. After receiving customer
complaints, Dell stopped sending U.S. technical support calls for two
of its corporate computer lines to a Bangalore, India, call center in
2003.
Decision Design knows first-hand about the potential pitfalls of
shipping tasks to India. The company launched Indian operations in 2001
but closed them down two years later. "Our offshore experience wasn't
what we anticipated," Davis said in a statement. "The quality of work
was lower than required, which caused rework and actually created
higher costs than if we had done the work here."
The botched experiment led the company to the notion of "homeshoring
centers" in the United States that nonetheless offer low costs to
customers. In part by locating offices on the fringe of Silicon Valley
and Chicago, the company claims that it can deliver savings of 30
percent to 60 percent below typical onshore development costs.
Decision Design, whose clients include Lehman Brothers and JPMorgan
Chase, was brought in several times last year when a customer's
offshore project wasn't panning out properly, O'Neill said. Offshore
operations face problems, including low quality and slow project
completion times, she said.
The company isn't the only U.S. firm pitching itself as an alternative
to offshoring. It's also not the only one to use the phrase
"homeshoring." Research firm IDC recently used the term to describe
call center workers handling calls from their homes.
O'Neill said Decision Design began using the phrase early last year.
7. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.madison.com/tct/news/stories/index.php?ntid=26831&ntpid=0
Epic maintains mystique on road to prosperity
A story by Mike Ivey
February 1, 2005
It's arguably the greatest high-tech success story in Wisconsin, with a
new $150 million headquarters rising from the snow-covered rolling
countryside of western Dane County.
Some 2,000 employees could soon call it home, with hundreds more
expected to join the payroll in coming years.
The market for its medical software would appear unlimited: the health
care industry's long overdue transition from paper to electronic
record-keeping.
But precious little is really known about Epic Systems Corp. or its
enigmatic founder, Judy Faulkner, a computer mastermind who developed
one of the world's first databases organized around an individual
patient.
Launched in 1979 with $70,000 in cash and a $70,000 bank loan,
EpicSystems has quietly emerged as one of the leading medical software
companies in the world. Its recent growth has been astronomical: from
172 employees in 1996 to over 1,600 today. Sales topped $285 million
last year, up 30 percent from 2003.
Major clients now include Kaiser Permanente, the country's largest HMO
with more than 8 million members; the Mayo Clinic in Arizona; and the
Cleveland Clinic. Locally, Group Health Cooperative, Dean Health
System, Meriter Health Services, the UW Medical Foundation and St.
Marys Hospital are all Epic customers.
Epic expects its current client list will eventually provide electronic
health records to more than 42.2 million Americans, about 15 percent of
the population. Using software to reduce errors, coordinate treatment
and improve patient care is considered one of the major advances in
medicine today.
While many technology companies churn out press releases almost daily
touting their latest product or sales deal in an effort to excite
investors, Epic has chosen to fly well below the radar screen.
The company remains privately held by its employees - shares are
repurchased when anyone leaves - and maintains it has no intention of
ever making a public stock offering. The share price has gone from $14
in 1996 to over $100 today, making Faulkner one of the most successful,
if not wealthiest, businesswomen in the state.
Still, Faulkner rarely grants interviews, doesn't schmooze with the
local tech crowd and has no intention of changing her approach.
Faulkner has said the focus should always remain on the company and its
mission to serve patients.
"The one thing I would want to say about my life is that I have
contributed to make the world a better place," said Faulkner during an
invitation-only presentation recently at the Madison Club.
If that sounds like something out of the idealistic 1960s rather than
the cutthroat 1990s, you're not too far off. Epic Systems has its roots
in the University of Wisconsin-Madison computer science department,
where a group of graduate students decided to form a company to put
their expertise to use. Their philosophy: Do Good, Have Fun, Make
Money.
The spirit of teamwork, cooperation and hard work remains central to
the "Epic culture" today. There are no job descriptions, no dress code,
no hierarchical management structure. Sales people do not work on
commission and there is no pressure to meet quarterly targets.
For snacking, coffee, tea, cocoa, milk, fruit juice, mineral water and
microwave popcorn are free. Employees can bring in their pets on
weekends. Epic also makes an annual donation in employees' names to a
charity of their choice.
"Culture eats strategy every time," Faulkner told the Madison Club
crowd, in explaining her Zen-tinged business philosophy.
And the company has no problem with hiring people without experience.
In fact, Faulkner seems to prefer it, claiming it takes three years for
a recent college graduate to become an "Epic person" and six years for
those already tainted by the corporate world.
Applicants are tested on their intelligence to weed out those who offer
more style than substance.
"I'm always fearful of the articulate incompetent," said Faulkner, 61,
who earned a bachelor's degree in mathematics from Dickinson College in
Carlisle, Pa., and a master's in computer sciences from the UW in 1967.
Her husband, Gordon, is a physician and accomplished masters athlete.
The Epic approach works for some people and not for others. All
employees are expected to embrace the culture, often working long hours
or brainstorming late into the evening. Those who do love it. Others
quickly move on.
At the same time, Faulkner does not believe in marketing and has a
limited sales force, preferring to let customers spread the word about
Epic's products. The company doesn't issue press releases or toss its
name around on billboards. It has turned down repeated offers at
sponsoring local events.
It's precisely that lack of public exposure that has sparked all kinds
of whispers about the company and Faulkner herself. Making the move to
small-town Verona, where everyone seems to know everyone else, has only
added to the tittle-tattle: "She's a nut," "their software is junk" and
"they don't pay very well" are just some of the gossip.
But those who know Faulkner and Epic dismiss the criticism as petty
jealousy of a company that could one day pass American Family Insurance
as the Madison area's largest private employer.
"I think a lot of that talk is just people who are envious of Judy and
the success they've had," said Tom Still, president of the Wisconsin
Technology Council, a group that promotes business development in the
state. That Epic Systems chose to build its new 420,000-square-foot
headquarters on 348 acres of farmland west of Verona still rankles
some. Madison officials tried without success to help Epic find space
to consolidate operations now scattered in 20 buildings, including the
former Odana School behind Westgate Mall.
Faulkner's decision to build outside the urban core didn't come as a
surprise to John Cuningham, a Minneapolis architect who previously
worked on a redesign of Epic's current headquarters. Cuningham said he
understood completely Faulkner's goal of building an environmentally
correct campus that would stand in contrast to traditional corporate
office complexes.
"Judy really liked the rural atmosphere and wanted to make sure they
have enough space to expand," he said.
Cuningham called the Epic project "unprecedented on a lot of levels,"
including having individual offices for all employees, not just the
managers. It's an approach used at Microsoft's campus in Redmond,
Wash., where Faulkner's son has worked.
The new Epic campus is designed like a village. A wind generator will
create half of the needed electricity; each office will have operable
windows and individual temperature control panels; and geothermal
heating and cooling will be used throughout. Other unique touches
include:
The Tree House Conference Room. No phones, computers, or modern
conveniences. It is designed for intense, creative brainstorming and is
connected to the main campus area by a swinging rope bridge.
Themed office buildings. Each has a theme, from a rambling
farm-inspired setting to a jungle paradise.
Conference/Education Center. With seating for 3,500, the facility
is large enough to host the company's annual user's group meeting,
where Epic trains and listens to customers.
Epic hopes to move into four of the new buildings by the end of 2005.
Phase 2, including the Commons and another office building, are just
getting started and will be ready by 2006, said spokeswoman Terri Leith
Statz.
Madison-based Findorff is the general contractor for the project, which
President Rich Lynch acknowledged hasn't been the easiest they've ever
tackled. Plans have evolved after ground was broken, adding to costs
and construction delays.
"It's a new challenge every day," he said.
Already the project is changing the face of western Dane County. A new
ramp from U.S. 18-151, designed specifically to ease the commute for
Epic employees, is now open.
A new subdivision has popped up directly adjacent to the Epic site, in
anticipation of employees who want to live next to the campus. One real
estate insider predicted that home prices in Verona will rise 20
percent next year alone just because of the Epic move.
It's not only the real estate market that is feeling the impact of the
Epic Systems success. Business development insiders see Epic Systems as
helping to put Madison on the map nationally as a high-tech player.
They draw comparisons, albeit cautiously, to what Dell Computers did
for Austin, Texas, and Microsoft has done for Seattle.
"If they haven't hit a home run yet they're at least circling the
bases," said Still. "The No. 1 thing is they are creating a lot of jobs
at a time when the public sector here is cutting them."
But experts also caution that the software business can be fickle. If a
competitor comes out with a better product that sells for less, the
playing field can change dramatically.
Mike Klein, publisher of the Wisconsin Technology Network, recounted
other software products that were once on top of the world but no
longer exist, including Word Perfect and Harvard Graphics.
"I wouldn't wish any of that on Epic, but there are risks in the
software industry," said Klein. "When they go down, they go down fast."
There are certainly no signs of that yet. The company's products -
including its "MyChart," which allows patients to track their own
health records - has met with tremendous success.
Epic products continue to win awards for innovation and ease of use. In
2004, EpicCare EMR was named Best Overall product in the KLAS Top 20.
It was the sixth year in a row that an Epic product won the Best
Overall award from KLAS Enterprises, a research firm that monitors
health care information technology
While the company enjoyed steady growth during the 1990s, the big break
came in 2003 when Epic forged a deal to provide software to Oakland,
Calif.-based Kaiser Permanente.
"Nobody outside the industry had heard that much about Epic before, but
the contract with Kaiser really put them on the map," said John
Santilli, a health care business analyst with Knowledge Source in
Turnbull, Conn.
Last year the company turned more heads by landing a deal with Philips
Electronics of the Netherlands. Philips will be installing Epic
software in its medical equipment and also promoting Epic products to
an international market.
There have been some blips along the way, however.
In 2001, the UW Medical Foundation and Epic were sued by competitor IDX
Systems of Burlington, Vt., a case that was eventually settled out of
court. IDX filed suit after the medical group replaced its software
with Epic products. It claimed Epic received "blatant favoritism" in
the selection process since the foundation's vice president of business
office and information systems, Mitchell Quade, and the foundation's
director of information systems, Michael Rosencrance, were former Epic
employees.
In addition to IDX, which counted revenues of $399 million last year,
Epic's other competitors include Cerner Corp. of Kansas City, $839
million in revenues, and Misys Healthcare Systems of Raleigh, N.C.,
$507 million in revenues.
Nationally, only 13 percent of hospitals and 28 percent of physician
practices reported they had some level of electronic systems for
patient records, according to a 2002 study, meaning the market remains
wide open.
"A lot of very aggressive companies are competing in that space," said
Klein.
But Faulkner said the ability of Epic to change with the times puts it
a step above. Initially, the company focused only on ambulatory
patients, but now it is focusing on in-patient record systems.
"I think our competitors were surprised how quickly we could shift
gears," said Faulkner. Not only does Epic go head-to-head with other
medical software companies, it also has to compete for employees. Epic
last year had 12 recruiters going around to 30 college campuses looking
for graduates.
In its search for talent, the company has embraced the use of foreign
work visas, which allow aliens to remain in the United States as long
as they are employed. It is second in Wisconsin in the number of H-1B
visas in effect, behind Compuware of Milwaukee, with about 20 percent
of its staff from another country.
The use of foreign nationals has left the company open to criticism
that it isn't providing jobs for the home folks. Will Thompson, a local
information technology worker with over 20 years of experience, said he
is frustrated that companies like Epic choose to hire from outside.
"It irritates me to no end that our government is subsidizing corporate
labor markets through these visa programs," he said. "Tech unemployment
is historically high and yet corporate America still cries there aren't
enough technically qualified IT workers."
Epic spokeswoman Statz counters that the "majority of people we hire
come from Wisconsin, especially Madison." She noted that many of the
computer science graduates from the UW are international students.
"We enjoy having foreign nationals as part of our staff because it
brings diversity and widens our horizons," she said.
There is little debate over whether the company is adding staff. Epic
Systems was third in Wisconsin in terms of entry level employers,
according to Heidi Hanisko of CollegeGrad.com, a national employment
tracking service based in Cedarburg.
All of the growth leads to the inevitable question of whether Epic
would ever entertain a Wall Street buyout.
But Faulkner is steadfast in her intentions to keep the company
private, quiet and based in Dane County.
"We vowed to never go public and never take any venture capital," she
said. "We don't even want to operate under the shadow of what that
means."
8. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://economictimes.indiatimes.com/articleshow/1005678.cms
20,000 H-1B visas on offer from Mar 8
TIMES NEWS NETWORK[ MONDAY, JANUARY 31, 2005 01:28:24 AM]
Sign into earnIndiatimes points
NEW DELHI: Watch out for the stampede. Applications for the 20,000
cap-exempt H-1B visas, set aside for holders of masters or higher
degrees from US institutes , will be accepted from March 8.
The rush for these visas will be considerable, which could give an
impetus to demands for increasing cap numbers or adding to the
exemptions list.
The rush is primarily because the cap of 65,000 H-1Bs has already been
reached. The allotted numbers for the current fiscal, October 2004 to
September 2005, were exhausted on day one itself.
However, what may make the rush a stampede is the eligibility
criterion. Anyone with a masters or higher degree from an US
institution is eligible to apply for these visas.
It really doesnt matter how long back the degree was awarded. So,
the pool of aspirants is expected to be sizeable.
Those hoping to land one of these coveted H-1B visas could be expected
to have an immediate start date. In other words, an applicant these
H-1B visas would begin work from March 8, 2005. For this fiscal, the
start date would have to be any time from March 8, 2005 to September
30, 2005. This is because the quota for the current fiscal is utilised
within the year.
9. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.nlectc.org/justnetnews/11111998.html#story8
"Prison Industries Go High Tech With Low Cost Labor"
Corrections Technology & Management Magazine Online (10/27/98); Siuru,
Bill
An increasing number of prison inmates are being used for computer data
entry jobs, as prison industries go high tech. One prison industry,
UNIGROUP, is using inmates to provide critical data conversion
services. Meanwhile, UNICOR trains the inmate population of the Federal
Bureau of Prisons for computer-oriented services ranging from word
processing to converting images, maps, charts, and drawings into
digital formats. UNICOR then markets the prisoners' skills to other
Federal government agencies. While many of the data entry jobs only
teach the inmates entry-level skills, inmates who perform higher
skilled jobs, including programming, web-site designing, or operating
CAD programs can generally secure higher paying jobs upon release.
However, there are many challenges to using high-tech prison labor.
Security measures, such as special computer safeguards, blacked out
screens, and training correction officers to monitor inmates, must be
taken. Also, questions remain regarding whether consumers want to deal
with inmates, whether prisoners' civil liberties are being violated,
and whether these jobs detract from groups outside the prisons.
10. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.registermail.com/news/topnews/b55in4apgid.html
Top 10 stories of the year
January 2, 2005
These are stories identified by the editorial staff of The
Register-Mail as the most important local issues of the past year.
Editors, reporters and photographers nominated stories and everyone
voted to determine the rating. We offer a brief description of each,
where the story stands now and what the future holds.
1. Maytag closes
What happened: Refrigerator production ended in Galesburg in September
as Maytag Corp. sent its last two refrigerator lines from here to
Mexico and Korea, ending another 800 to 900 local jobs at the region's
once-largest employer. Refrigerator-making had provided the livelihood
for generations of families for 54 years.
Where it stands: About 50 people still work at the warehouse on
Maytag's complex at Linwood Road and Monmouth Boulevard. A Chicago real
estate firm is trying to sell the 850,000-square-foot warehouse for $8
million. No specific plans for Maytag's manufacturing facility or
office building have been announced.
What's next: Warehouse operations will end in February and move to
Iowa.
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