Textile Workers of the Future

Date: Monday, April 07, 2003 9:49 AM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

Richard Holcomb has started many software companies in North Carolina
but his new mission is to move jobs out of that state in order to
exploit Vietnam's "eager programmers." Holcomb gave his co-founders a
fond farewell and a kick in the face by saying, "No offense, guys, but
programmers are the textile workers of the future."

Raleigh Entrepreneur Michael Lai Le has 38 programmers in Ho Chi Minh
City, Vietnam, and plans to open operations in Australia and China. Le
says that outsourcing high tech jobs "is an irreversible reality."

Free trade advocates like Lai Le try to perpetuate the myth that
outsourcing cannot be stopped. Global corporatism is a social
experiment that is very new in the history of mankind, and one thing
history has proved over and over again is that nothing is inevitable.
If U.S. workers ever united to stop the destruction of their jobs, Lai
Le would find out just how fast his reality could be reversed.

http://newsobserver.com/news/story/2407528p-2241912c.html

Tech jobs leave area, go overseas

Nguyen Ngoc Hung, far left, senior developer of International IT
Services-Vietnam Ltd., meets with his team in Ho Chi Minh City. The
company was founded in the Triangle last year.
AP Photo by Doan Bao Chau

By CHRISTINA DYRNESS, Staff Writer

Software companies started by Richard Holcomb over the past two decades
have employed scores of Triangle programmers.

But with money tight and customer expectations high, Holcomb's latest
venture, a Web services software company called StrikeIron, will design
its product in Durham but send the rest of the work to eager
programmers in Vietnam.

"No offense, guys," Holcomb told his co-founders, "but programmers are
the textile workers of the future."

In the past decade, big companies from Nortel Networks to Bank of
America have shifted information technology jobs to places such as
India and Eastern Europe to save money. Nearly all Fortune 500
companies do some offshore outsourcing, and a report by Forrester
Research, a Massachusetts firm that tracks technology trends, predicts
that 500,000 tech jobs will go overseas over the next decade.

Now technology start-ups, figuring they can save 50 percent or more on
salaries, are embracing the idea. And firms with overseas expertise are
springing up in the Triangle to help them. But those new firms do not
offset the thousands of jobs lost by the Triangle's tech sector in
recent years.

The shift overseas is a slap in the face for software developers, who
rode the tech boom in the late 1990s to high salaries -- until the
bottom dropped out. Triangle tech companies have laid off more than
7,300 workers in the past two years, and those out of work for months
are wondering whether the jobs will ever come back.

"What do I need to train myself for so I can have a job next year?"
asks 57-year-old Jim Budelman of Cary, who was a software and system
developer with Unisys until late 2000, when he took an early retirement
buyout to avoid being laid off. He is updating his skills and has had a
handful of job interviews. He says he would gladly work for a fraction
of the pay he made during the boom years.

"There are a lot of people who don't have jobs, and they ship them to
India," Budelman said. "I don't know what to do next."

The trend further weakens the state's fragile job base. North Carolina
has lost more jobs as a result of free trade than any other state, many
of them in textiles. As of January, 141,000 low-skill jobs in the state
have gone overseas since 1994, according to the U.S. Department of
Labor.

Mirsad Hadzikadic, dean of the College of Information Technology at the
University of North Carolina at Charlotte, is studying the issue and is
concerned.

"It's not the same as losing textile and manufacturing jobs,"
Hadzikadic said. "With those, there was this promise of better
opportunity with high-tech. This time, there's no such promise."

While state government officials are aware of the exodus of high-tech
jobs, there's no data to say just how many have been lost.

Joan Myers, president and CEO of the N.C. Electronics and Information
Technology Association industry group, says she wishes the state would
do more to help.

"These are the highly paid, highly skilled jobs that we don't want to
move out of North Carolina borders," Myers said.

The association supports legislation to increase the state's research
and development tax credit as a way to improve the business climate for
high-tech companies. "We don't want to see the next wave of outsourcing
be the [research and development] component -- that's your heartbeat."

But even those who are alarmed by offshore outsourcing say that
businesses are only reacting to the realities of a global economy, and
that the future will bring more of the same. Tech research firm IDC
says money spent on global outsourcing will grow from $56 billion in
2000 to $100 billion in 2005.

Entrepreneur Michael Lai Le, for example, started International IT
Services in Raleigh in October, already has 38 programmers in Ho Chi
Minh City, Vietnam, and plans to open operations in Australia and
China. Le, a native of Vietnam who moved to the Triangle in 1994 as a
consultant with IBM, points out to critics that his company is a U.S.
company paying U.S. taxes, even though it has only six U.S. employees.

Setting up an offshore development center, Le says, has become an
accepted practice in the information technology industry. "It is an
irreversible reality," Le said. "It's no longer a trend; it's strategic
to these companies."

Serenus Technology Services of Durham has a similar model, aiming to
help start-ups work with programmers in Russia.

Le says that since start-ups can now take advantage of low-cost
offshore programming, the local economy will get more new companies. He
also suggests that companies who pay the $20,000 Vietnam salary for
programmers, rather than the $100,000 paid stateside, will have more
money to retrain workers for more advanced or management-level tech
jobs.

Proponents of offshore outsourcing also stress that high-level jobs --
project managers and experienced programmers who oversee software
development -- will stay here.

Alan Tharp, head of N.C. State University's computer science
department, got the message from the school's strategic advisory board
-- technology executives who advise the department on its curriculum --
that programmers need to be able to do more than write code. This fall,
NCSU will add a leadership skills course.

"We want our students to have skills to separate them, and allow them
to remain gainfully employed," Tharp said.

Still, Matthew Marotta, chief executive officer of a 12-employee
software company in Cary, Data-craft Solutions, worries that
universities are filled with students studying tech while the jobs are
going overseas. "I have strong feelings about making sure our Americans
are at work," Marotta said.

Jeff Boynton, vice president of Trans Logis Systems, hears that
sentiment often. Boynton runs the outsourcing division for the Apex
business software company, which has a development lab in India.

Boynton said that several executives, including Marotta, said, "No
thanks" when Trans Logis suggested they save money by giving work to
its programmers in India. "There's a groundswell of support for local
hiring," Boynton said. As a result, TLS has added programmers in Apex,
doubling its development staff from three to six people -- compared
with 32 programmers in India.

Still, there are those like Bob Tanzi, who throws up his hands and gets
a little heated when he talks about the exodus of tech jobs.

Two years ago, Tanzi, president of R.M. Tanzi & Associates, a contract
software development and information technology services firm, was
handing out high-paying tech jobs like candy canes.

But when GlaxoSmithKline, his main client, put its contracted tech
services out to bid, Tanzi could not compete with companies that sent
work overseas. He went out of business.

"When do we say enough is enough?" asked Tanzi, who has gotten out of
technology and now recruits motocross sponsors with his new company,
HTMX Racing of Durham. "I guess what I'd like to see is the first
people we take care of is our own."

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