Houston - We Have a Problem!

Date: Sunday, November 17, 2002 1:33 PM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

More bad outsourcing news from Houston. Meanwhile, way up North in Dallas
reporters are totally clueless why so many high tech people are losing jobs.
Notice in the second article that there is not one mention of outsourcing or
H-1B. Perhaps those Dallas reporters should call Houston control and find
out what's going on.

http://www.chron.com/cs/CDA/story.hts/business/1662936

Nov. 15, 2002, 12:17AM

Call centers steadily leaving town
Operations cheaper overseas
By L.M. SIXEL
Copyright 2002 Houston Chronicle

A decade ago, Houston's economic developers promoted the growth of call
centers, believing they would help diversify the city's energy-rich economy.

But now some are leaving town in search of cheaper rents and lower labor
costs in the Philippines and India.

American Express, J.P. Morgan Chase & Co. and VarTec Telecom are just a few
that have recently announced they are moving their call centers or are
testing the waters overseas.

If this effort to move continues, Houston stands to lose thousands of good
positions at a time when its sputtering economy can use all the jobs it can
get. It could also kill the momentum in a growth industry that has been
building for nearly a decade.

The Houston area got its first large call center in 1994 when MCI hired
about 600 employees in Sugar Land to sell phone service to residential and
small-business customers.

The call center industry has become important to cities like Dallas and
Houston. It doesn't pollute, pays fairly well and fits in with a high-tech
image that many cities try to create.

Houston, like Dallas, has tried to capitalize on its call center-friendly
attributes -- it's in the Central time zone, snowstorms aren't a worry, and
it has a large and educated multicultural work force.

Houston has about 50 centers with 20,000 employees working banks of phones
answering customer billing questions, scheduling flights and solving
personnel problems for companies as varied as Continental Airlines, United
HealthCare and Hewitt Associates.

Drawn to Houston because of the city's skilled and multilingual job pool,
call centers pay up to $9 an hour, plus bonuses and a full array of
benefits, said Deborah Mostert, marketing executive at the Greater Houston
Partnership.

Call centers also provide a good career ladder for those without college
degrees, Mostert said.

But now, it seems those talents and language skills can be found overseas
paying cheaper wages and lower rents.

American Express, for example, is closing its 98-employee emergency travel
call center in West Houston in March and has hired a company in the
Philippines to provide the service as a test.

Chase, which has been ditching high-priced New York in favor of lower-priced
Texas during the past few years, is conducting tests on providing telephone
customer service using a third-party overseas company.

The bank has 1,000 employees at its call center in Houston and another 2,500
in San Antonio and Arlington, spokeswoman Kristen Batteria said.

The bank also will begin shifting a small number of commercial loan
technology support processing jobs in Houston to India over the next few
months.

Chase already has employees in more than 50 countries, including India,
Batteria said.

In another cost-cutting move, VarTec Telecom, which has call centers in
India, Germany and the United Kingdom, shuttered the former Excel
Communication's center in West Houston in June, scattering the 220 positions
to other sites.

Earlier this year, VarTec purchased Excel Communications, which had come
into Houston with fanfare six years ago, attracted by the wide variety of
languages Houstonians speak, especially Vietnamese.

At American Express, where employees say they earn between $25,000 and
$45,000 a year, the tensions are so heated about the company's decision to
shift some of the work to the Philippines that managers and employees were
reportedly yelling at each other during a recent meeting.

"Why not change the name to Philippines Express?" suggested one employee who
asked not to be identified.

"This is a game that's been played for some time," said Barton Smith,
director for the Institute for Regional Forecasting at the University of
Houston. Companies in the so-called "footloose industries" -- such as call
centers, which don't need a port or natural resources -- chase after the
lowest wages they can find.

Call centers in Dallas are also moving to India, Philippines and other
English-speaking nations, said Bob Arnold, assistant director of
institutional advancement of the Bill J. Priest Institute for Economic
Development in Dallas, part of the Dallas County Community College District.

The wages for call center workers in India are only 15 percent of what they
are in the United States, said Arnold, whose institute trains call center
workers.

And it's a big savings because the typical call center spends 55 to 60
percent of its budget on manpower, according to Outsource2India, a Web site
that says it helps companies find an outsourcing partner in that country.

It's hard to know exactly how many call centers Houston has because many are
hidden, Mostert said. Some of the call centers are imbedded inside
companies -- such as help desks -- while others are independent operations
but prefer to stay anonymous.

The industry is even bigger in Dallas, with Arnold estimating that 100,000
people were working in call centers three to four years ago, the last time a
survey was taken.

"We were almost swatting them away three to five years ago," Arnold said.

Although overseas countries offer lower wages and some other costs, there
are drawbacks. While overseas call center workers speak English, many are
hard for other English speakers to understand.

It cuts into productivity levels, said Arnold, and companies, including
American Express, are forced teach the overseas workers to speak in an
American accent so customers from Orlando to Seattle can understand them.

Ex-tech workers pick up the pieces
Forced to adjust when the boom turned to bust: "I went from junior
executive to just 'Junior'"

10/16/2002

By IEVA M. AUGSTUMS / The Dallas Morning News

Victor DiBlasi Jr. once laughed at the thought of working in his father's
Far North Dallas sandwich shop.

Now the 31-year-old ex-technology marketing director finds himself at
Jersey Joes Deli and asking daily, "Do you want that Italian-style or not?"

"I went from junior executive to just 'Junior,' " said Mr. DiBlasi, who
returned to Dallas after being laid off in August 2001 by software company
Always-On Inc. in New York. "Not exactly the career move I had in mind."

CHERYL DIAZ MEYER / DMN
Former high-tech worker Victor DiBlasi Jr. says he's happy in his new role,
helping his father run a deli. He says the atmosphere is more relaxed and
the people are friendlier.
On a micro level, Mr. DiBlasi represents a U.S. economy in transition.

He and hundreds of thousands of Americans lived out overnight success
stories created by the technology boom of the late 1990s, only to lose
their jobs in the ensuing tech bust of the last two-plus years.

Dallas' unemployment rate stood at 8.8 percent in August, more than double
the 4.3 percent of two years earlier. In Richardson – home of the Telecom
Corridor – the rate was 5.5 percent, up from 2.3 percent over the same
period two years earlier.

With work scarce and the industry's long-term outlook still dim, many
high-tech job seekers are having to look far outside their previous career
fields. Their search often takes them to jobs with lower wages, less
glamour and little resemblance to the posts they left behind.

Their personal odysseys reflect the human cost of the large shifts under
way in the American economy since the tech-and-telecom bubble burst after a

long expansion.

In economic terms, it's nothing remarkable. If the tech sector is going to
shrink, employment elsewhere is inevitable. That kind of shakeout always
accompanies a change in the business cycle.

But that's the textbook theory. Up close, the transition looks like this:

Former telecom executive Misty Henry now sells industrial chemicals.

After 10 years in information technology and four in telecom, Dick Nash is
relying on his own wits as an inventor, pushing a small, portable water
detector aimed at finding home leaks.

A matter of degree

Joel Pechauer once managed projects for Telecom Corridor titan Nortel
Networks in Richardson. Now he prowls an auto showroom.

IRWIN THOMPSON / DMN
Joel Pechauer was forced out of high tech and into new-car sales because of
layoffs.
"If you would have told me I would be selling cars at the age of 38, I
don't think I would have believed you," said Mr. Pechauer, who's been
selling cars at Park Place Lexus in Plano for the past month. "So much for
my business administration degree from SMU."

Finding jobs that meet and fulfill past work expectations is nowhere near
as easy as it used to be.

Not long ago, the North Texas tech sector anchored by the Telecom Corridor
screamed for more workers. Companies bid up salaries and perks to attract
and retain employees.

Those once-fast-growing companies are now virtually out of the hiring
market.

At the beginning of 2002, tech companies accounted for almost 20 percent of
all information technology hiring, according to the Information Technology
Association of America.

By July, that figure had dropped to less than 5 percent.

Mr. DiBlasi thought he would be able to land another job in New York City.

And like many former Telecom Corridor employees, Mr. Pechauer, who was laid
off in February after four years with Nortel, spent months looking for
another high-tech job in Richardson.

The two men quickly realized that their chances of being hired by another
technology or telecommunications company were slim.

Hope on the horizon?

"There were many other people out there who were more qualified than me for
those few spots that were out there," Mr. Pechauer said.
Signs of optimism are still faint.

The number of workers thrown out of work in the U.S. telecommunications
sector has fallen by more than 77 percent in the last four months,
according to an analysis of technology job cuts by Challenger, Gray &
Christmas, a Chicago outplacement firm.

In September, there were 6,956 job reductions in the telecom sector, down
from 30,455 in June.

For the entire July-to-September quarter, there were 91,450 technology job
cuts, compared with 132,953 in the previous three months.

"Some companies may be down to bare bones now and cannot afford to
eliminate any more jobs without going out of business," said John
Challenger, chief executive of the outplacement firm. "It's probably too
early to celebrate, considering that several high-tech indicators have not
shown much promise."

Indeed, the tech refugees looking for work outside their field are finding
that competition for all jobs is on the rise, according to Jerome Watters,
regional economist for the U.S. Bureau of Labor Statistics in Dallas.

A bureau report showed that 9.9 million workers lost their jobs between
January 1999 and December 2001. That compares with 7.6 million displaced
workers in the previous three-year period.

As of January 2002, about 66 percent of the 9.9 million displaced workers
had found new jobs.

"Unfortunately, those jobs may not have been their preferred job choice,"
Mr. Watters said.

'A niche market'

Laurie Larrea, president of WorkSource for Dallas County, which administers
government-funded job-training programs, said the number of job seekers has
remained steady since the agency saw an influx of ex-telecom employees in
July 2001.
"It was rough back then, and there's no doubt it's tough right now," Ms.
Larrea said. "This city has a niche market, and people need to keep their
options open."

Ms. Henry knew she was taking a risk in finding better employment when she
left her senior account executive position with XO Communications Inc. in
July. The phone and Web service provider filed for Chapter 11 bankruptcy
protection this year, and the Flower Mound native feared losing her job.

"As a single mother of an 8-year-old, I needed to find a job that was going
to support us," said Ms. Henry, 28, who now sells acid replacement drain
openers, mold- and fungus-killing enzymes and insecticide for Ranger
Industrial in Dallas. "It's a completely different job. I knew nothing
about the business. I had to learn a lot."

Time on his hands

Mr. Nash, 57, also left his job this year after deciding that his company
and other local phone companies were struggling to stay afloat. He's
relying on more than 14 years of technology expertise to help him land
another job.
Still unemployed, the former account executive with Time Warner Telecom in
Dallas spends his days working in his Lake Highlands garage. He's
assembling an invention, The LeakFrog, a portable water-leak detector.

The concept is simple: Place the green, frog-shaped device anywhere there
is a potential for water to leak, stand or overflow. When it detects water,
an alarm sounds.

"What value does an idea have if you don't do anything with it?" asked Mr.
Nash, who is trying to place his product in local hardware stores. "I
accepted the fact that telecom was going to be dead for a while, and I
wanted to do something I thought I would be good at and enjoy."

Those options span an array of career choices. Some tech workers depart
with a severance check that cushions the job search; others hit the street
in need of a paycheck right away.

Some choose to work for another employer; others strike out on their own.
Some wait for the ax to fall; others leave their jobs ahead of a pink-slip
blizzard, hoping to get a head start in the hunt for new work.

A new respect

In Mr. DiBlasi's mind, being employed – even outside the tech industry – is
better than being unemployed while trying to stay in the field.
"Yes, I am living and working with my dad, but I am not ashamed of it. I
now have a lot of respect for what my dad does and the business," said Mr.
DiBlasi, who still relies on many of his marketing skills to run the
sandwich shop at Dallas Parkway and Arapaho Road.

Growing up in a restaurant family, Mr. DiBlasi was insistent of setting out
on his own. After graduating from Southern Methodist University, he worked
for a tax software company, was a technology consultant and eventually
became a marketing director for a technology company in Carrollton.

But Mr. DiBlasi wanted more, so he left for New York in February 2001.
Seven months later, he came back.

Turning the corner

Strapped for money, he moved in with his father and began working at the
sandwich shop in January. After he spent a couple of months showing up to
work in jeans and a T-shirt and working the lunch-hour shift, the laid-back
personalities of his co-workers and fun atmosphere of the shop grew on him.
"I wouldn't say I would never consider another high-tech job, but it would
have to be a great, legitimate job to make me leave this place," Mr.
DiBlasi said.

E-mail iaugstums@dallasnews.com

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