10 Outsourcing Articles
10 Outsourcing Articles
Date: Thursday, July 24, 2003 1:03 AM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1:
http://www.insightmag.com/news/440179.html
The Jobbing of Americans
Article 2:
http://www.asiacomputerweekly.com/acw_ViewArt.cfm?Magid=1&Artid=20533&Catid=2&subcat=107
Oracle India takes on bigger services role
Article 3:
http://news.independent.co.uk/business/news_analysis/story.jsp?story=425807
Pink elephants can't halt the jobs stampede as UK plc outsources to
India
Article 4:
http://makeashorterlink.com/?E17851355
Original link:
http://timesofindia.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=84981
Daimler to outsource parts from India
Article 5:
http://news.com.com/2100-1012_3-5047540.html
Study: Software makers head offshore
Article 6:
http://www.dfw.com/mld/startelegram/business/local/6349542.htm
Going abroad
Article 7:
http://money.cnn.com/2003/07/22/technology/ibm_jobs.reut/index.htm
IBM execs look to move jobs overseas
Article 8:
http://www.nytimes.com/2003/07/22/technology/22JOBS.html?hp
I.B.M. Explores Shift of White-Collar Jobs Overseas
Article 9:
http://releases.usnewswire.com/GetRelease.asp?id=145-07212003
500,000 U.S. IT Jobs Projected to Move Overseas by Year-End '04;
IEEE-USA Sees Continued Loss in U.S. Economic Competitiveness
Article 10:
http://www.wokr13.tv/news/local/story.aspx?content_id=EC2223A4-EE2F-43B9-AA3F-688A37DB3DF3
Economic Pressure Means Off Shoring For Many Companies - Like Kodak
http://www.insightmag.com/news/440179.html
Insight on the News - Fair Comment
Issue: 07/22/03
Fair Comment
The Jobbing of Americans
By Paul Craig Roberts
The United States continues to lose jobs. Since President George W.
Bush has been in office, 2.5 million manufacturing jobs and nearly
600,000 service jobs have been lost for a total decline in
private-sector employment of 3.1 million. The unemployment rate has
risen to 6.1 percent. If this is recovery, what is going on?
Pundits call it "the jobless recovery." The economy is growing, but
jobs are not. Why? One economist recently blamed the absence of job
growth on high U.S. productivity. Those who are working are so
productive, he said, that their output meets demand, making additional
jobs superfluous. His solution, apparently, is to make people less
productive.
I think that the jobless recovery is an illusion and that the U.S.
economy is creating jobs - but not for Americans. Those 2.5 million
manufacturing jobs have not been lost. They have been moved offshore
and given to foreigners who work for less money. The service economy
was supposed to take the place of the lost manufacturing economy. Alas,
those jobs, too, are being created for foreigners. It turns out it's
even easier to move service jobs abroad. For example, 170,000
computer-system-design jobs recently have been shifted abroad. Keeping
knowledge-based jobs in the United States is proving as difficult as
keeping manufacturing jobs.
Outsourcing, offshore production, work visas and the Internet make it
easy for U.S. companies to substitute cheaper foreign employees for
U.S. employees. Entrepreneurs in India have created firms that
specialize in supplying skilled labor to U.S. corporations. The growth
in the U.S. economy thus brings about a growth in foreign employment,
not in U.S. employment. If this analysis is correct, U.S. job-seekers
no longer will be able to tell the difference between recovery and
recession. In the old economy, people lost jobs when the Federal
Reserve caused a recession by curtailing the growth of money and
credit. In the new economy, they lose their jobs because foreigners
work for less.
This development has produced a disconnect between economic policy and
employment. The Fed's low interest rates and Bush's tax cuts cannot
bridge the difference between wages and salaries in the United States
versus those in China and India.
When U.S. companies move their production for U.S. markets offshore,
U.S. incomes and gross domestic product decline and foreign income
rises. When the offshore production is shipped to the United States to
meet consumer demand, it becomes imports.
A country that produces offshore for its home market is going to have a
big import bill, as those goods come on top of goods that foreign
companies export. In 2002, the United States had a trade deficit in
goods of $484 billion and a current account deficit of $503 billion.
With production and employment moving out of the United States, the
ability of the nation to pay for its imports with exports declines. In
the end, there is nothing to bring about a balance between imports and
exports except a collapse in the dollar's value. When that happens,
cheap goods from abroad become expensive, and the living standard of an
import-dependent population drops.
During the short period of time Bush has been in office, the dollar has
lost 27 percent of its value in relation to the new European currency,
the euro. Considering that European economies are not doing well and
that the euro is an untested currency, the dollar's decline is not a
good sign.
When we import $500 billion more than we export, foreigners must
finance our deficit. They do this by using the dollars we pay them to
purchase our assets, or they lend the money back to us by purchasing
government or corporate bonds. Either way, Americans lose to foreigners
the future income streams from stocks, real estate and bonds, and this
worsens our current-account deficit in subsequent years.
Foreigners' willingness to finance our current account deficit with
their direct investment in the United States has declined from $335.6
billion in 2000 to $52.6 billion in 2002, a decrease of 84 percent.
This dramatic drop in the willingness of foreigners to hold U.S. dollar
assets is the likely explanation for the drop in the dollar's value.
If U.S. companies cannot profitably employ costly U.S. labor to produce
for U.S. consumers, it is unlikely U.S. companies will be able to
export a lot of goods made with U.S. labor. As our manufacturing sector
moves abroad, our ability to trade declines as we produce fewer
products to offer in exchange for our imports.
The dollar is the world's reserve currency, which gives us the ability
to finance trade deficits that no other country could afford. When an
alternative reserve currency appears, the United States will undergo
wrenching economic, social and political adjustments.
Meanwhile, a rising stock market is consistent with "jobless recovery"
as the lower labor costs of foreign employees drive profits. The
growing gap between average incomes and executive compensation will
handicap the Republican Party and weaken its resistance to a leftward
turn in American politics.
Paul Craig Roberts is a Florida-based columnist whose syndicated
columns focus on economics, culture, politics and issues of political
liberty. He served as assistant secretary of the U.S. Treasury under
the first administration of Ronald Reagan.
http://www.asiacomputerweekly.com/acw_ViewArt.cfm?Magid=1&Artid=20533&Catid=2&subcat=107
Oracle India takes on bigger services role
Pankaj Mishra, Jul 21 2003
Bangalore: Oracle will more than double its workforce in India from
around 3,200 at present to over 6,000 in the next few years.
A new development centre is being planned in Hyderabad, to be opened in
2004. The company would also move more backend jobs to the country in
the areas of management accounting and data management.
India has a clear lead in software services and I also see more
professional services moving to the country, said Oracle CEO Larry
Ellison, addressing Oracles customers and partners in India via
satellite from the companys global headquarters in Redwood Shores,
California.
Along with China, India is set to become the fastest growing market for
Oracle in two years. At present, India is Oracles fifth largest
market in terms of revenues, up from tenth two years ago.
Both Indian and Chinese economies are running rapidly and there is a
growing competition between the two, with a certain amount of overlap.
But most companies are going for outsourcing of manufacturing
activities to China and outsourcing of services to India, he said.
During the interactive session with Oracles Indian customers and
partners, Ellison had to face an irate customer, who claimed that the
companys database (including Oracle9i) has failed.
The customer, a tax commissioner from Madhya Pradesh (an Indian State),
added that he invested over US$2 million in Oracle software during Q2
last year and the company had not replied to earlier complaints.
Referring to the anti-offshore sentiments in the US, Ellison said that
globalisation has helped both India and Oracle.
I know globalisation is controversial in some spots in the world people
protest it regularly. But isnt it remarkable that right now, Oracle
employs 3,200 Indian citizens, paying constantly increasing salaries,
providing a very high standard of living, and helping to create a new
middle class?
Ellison also announced the launch of an E-Governance Centre of
Excellence along with Hewlett-Packard. The centre will support the
e-governance initiatives of central, state and local government bodies
in India, and provide a platform for the development of model
e-governance applications.
http://news.independent.co.uk/business/news_analysis/story.jsp?story=425807
Pink elephants can't halt the jobs stampede as UK plc outsources to
India
By Clayton Hirst
20 July 2003
Union activists stamped their feet and paraded a 10ft pink elephant in
protest, but there was precious little they could do to stop what is
becoming a modern-day business phenomenon.
Almost every week another blue-chip British company announces it is
outsourcing jobs to India. At BT's annual meeting last Wednesday, the
Communication Workers Union vented its anger at plans to employ 2,200
people there. But the very next day Tesco joined the likes of British
Airways, Prudential, HSBC and Powergen by announcing its own plans to
move 350 jobs to Bangalore.
The combination of low wages and a skilled labour force means companies
can no longer afford to ignore the savings that can be made in India.
IT group LogicaCMG is to be the next big company to launch an expansion
programme in India. It already employs 350 people in Bangalore,
developing software and providing customers with telephone and internet
support. By the end of the year it intends to increase the workforce to
500. According to Bob Fawthrop, the company's managing director of
global outsourcing, LogicaCMG will employ "at least" 1,500 in the
country by 2005.
"We are saying to our customers: we will deliver a service to you
wherever you are," he explains. "We will use a blend of different
people to offer the cheapest cost. There is no risk to the customer. It
is our risk."
India's potential was first identified by General Electric in the mid
1990s when it shifted thousands of back-office jobs to the
subcontinent. According to the consultants McKinsey, 203 of the Fortune
1,000 companies have now outsourced there. And what has today become a
$1.5bn (#945m) industry for India is predicted to grow to $21bn by
2008, accor- ding to property consultants Cushman & Wakefield.
The biggest attraction is the savings to be made on wage bills: an
Indian worker is paid on average a fifth of the salary of a British
worker. But the Indian government and business community have been
quick to develop the new industry. For the past few years the
Confederation of Indian Industry (CII) has sent an annual delegation of
senior businessmen to Britain. During their last visit, earlier this
month, CII members met British business leaders and even managed a few
minutes with the Trade and Industry Secretary, Patricia Hewitt.
Sunil Bharti Mittal, chairman of Bharti Enterprises, a leading telecoms
operator in India, says: "This was my third CII visit to Britain and I
have seen a dramatic improvement in how businesses view India. The
Indian brand is getting recognised. We don't have to sell it that hard
now. Companies realise there are huge costs to be taken out; there is a
big soft belly to be punctured. Will the unions put up resistance? Yes.
But eventually companies will realise that there are smarter ways of
doing things."
However, there are signs that India is starting to fall victim to its
own success. Unemployment, which kept a lid on wage inflation, is
falling, and some companies are reporting difficulties in recruiting
staff. Indian firms are beginning to outsource to other countries,
notably China. LogicaCMG's Mr Fawthrop confirms that his company is
also looking at opportunities in China, through "an Indian business we
have contact with".
But whether jobs are lost to India or China, unions in Britain plan to
campaign hard on the issue of outsourcing. On BT, the Communication
Workers Union says: "We have no argument with India or Indian workers.
Our issue is with BT.
"BT is a UK company that derives its profits from UK customers and is
therefore obliged to support the UK economy ... Savings made by moving
work to India are minimal when compared to the billions the BT board
lost while pursuing its recent ill-thought-out overseas acquisition
strategy."
http://makeashorterlink.com/?E17851355
Original link wrapped to 2 lines:
http://timesofindia.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=84981
Daimler to outsource parts from India - The Times of India
Daimler to outsource parts from India
PTI[ SATURDAY, JULY 19, 2003 09:23:53 PM ]
BANGALORE: German-based global auto major DaimlerChrysler AG plans to
outsource components valued at over $70 million during 2003 from India
for its manufacturing units in the US and Germany, a top company
official said on Saturday.
"Last year, the exports from 28 suppliers in India was about USD 65
million. This year we intend to export components worth over $70
million," DaimlerChrysler India Board Member Suhas Kadlaskar said here
at the launch of the "Mercedes Benz C-class Kompressor" luxury car.
Admitting that the initial export of 3,500 cars during 1999-2000 from
India directly competed with DaimlerChrysler's car units in Europe and
US, he said, the company had changed its strategy to exporting
components which were 10 per cent to 15 per cent cheaper than produced
elsewhere.
Kadlaskar said the company had 28 firms in India which supplied
components for its global operations.
DaimlerChrysler has invested over Rs 600 crore at its manufacturing
unit in Pune and reported a revenue of Rs 320 crore and profit before
tax of Rs 39 crore during 2002.
The German auto major has sold over 8,000 cars in India with last year
sales at 1,250 units. "We plan to sell over 1,550 cars this year,"
Kadlaskar said.
Sundaram Motors Vice President Sharath Vijayaraghavan said Bangalore
was the fastest growing market for Daimler, with over 200 Mercedes cars
booked for this year.
http://news.com.com/2100-1012_3-5047540.html?tag=fd_top
Study: Software makers head offshore
By Ed Frauenheim
Staff Writer, CNET News.com
July 21, 2003, 7:53 AM PT
http://news.com.com/2100-1012-5047540.html
Lured by low labor costs, more than eight in 10 software companies are
shipping work offshore today or will do so in the next year, according
to a study to be released Monday.
The report, written by investment and research firm Sand Hill Group,
also found that software company leaders aren't terribly concerned
about theft of intellectual property abroad.
Sand Hill Group co-founder Madhavan Rangaswami likened the trend of
software companies sending work overseas to the way the Internet took
those companies by storm a few years ago. "It's really started to
blossom in just the past two years," he said.
Software companies arranging for code to be written overseas or using
foreign-based techies to do implementation work is part of a broader
push to export information technology and business tasks offshore.
Sometimes businesses set up their own facilities overseas, but they
also contract with service providers. Under pressure from fast-growing
Indian IT services companies, U.S.-based IT giants such as Electronic
Data Systems and Hewlett-Packard are expanding their offshore
operations.
The trend is controversial, especially in the midst of a still sluggish
economy in the United States. The New Jersey Senate has approved a bill
to permit only citizens or legal residents of the United States to work
on certain state contracts. Another argument against outsourcing abroad
is that face-to-face communication is critical to IT projects.
The Sand Hill report, which surveyed executives from 51 software
companies, concluded that communication problems were a risk to
offshore arrangements. Most respondents said that they would be keeping
senior-level technical positions in the U.S. but hiring lower and
midlevel workers only overseas.
As evidence that software leaders were not very worried about their
intellectual property being swiped abroad, Rangaswami pointed out that
nearly half of the companies were shipping out strategic tasks such as
core product development work and software implementation support.
The study found that 63 percent of companies are currently involved in
offshore initiatives. In addition, 21 percent are in the process of
sending work offshore and will have such processes in place within a
year.
http://www.dfw.com/mld/startelegram/business/local/6349542.htm
Posted on Mon, Jul. 21, 2003
Going abroad
More U.S. technology companies are shifting jobs to India where
cheaper, educated labor is plentiful
By Andrea Ahles
Star-Telegram Staff Writer
TECHNOLOGY JOBS TO INDIA
Jobs have been hard to find for three years in tech centers like Plano
and San Jose, but not in places like Mumbai and Bangalore.
Dell Computer, Electronic Data Systems, i2 Technologies and Microsoft
are among a growing number of U.S. companies opening customer care and
software development centers in India.
Tech workers in India are smart, technically adept and, most of all,
cheap. And as budget-cutting became increasingly important on Wall
Street in the past two years, more companies are looking to India to
provide software support at a fraction of their present costs.
But some workers' advocate groups are questioning these expansions to
India and other underdeveloped countries, saying U.S. companies are
simply eliminating some of America's highest-paying engineering jobs.
Forrester Research predicts that in the next 15 years, 3.3 million U.S.
service-industry jobs, including 472,000 in computer services, will
move to other countries like India. That translates to $136 billion in
wages, the Cambridge, Mass.-based market research firm says. Some
industry observers say that 80 percent of all offshore information
technology services work is done in India.
"Twenty years ago, the Indian government put a focus on teaching people
technical skills, so there is a pretty good educational infrastructure
in place," said John McCarthy, group director at Forrester Research.
"Now what's happening is U.S. companies are making a much more
strategic investment in India."
Although Fortune 500 companies like General Electric began moving
operations to India in the early 1990s, the trend has picked up
momentum in the past two years.
Last week, Microsoft confirmed that it is testing a support unit in
India and, depending on the success of that unit, may move more jobs to
India and possibly out of the company's call center in Irving.
Plano-based Electronic Data Systems opened a new customer care center
in Mumbai last month and employs 900 people in the country. The company
also announced in October that it would move 1,500 jobs from
higher-cost customer care centers in the United States and Europe to
lower-cost centers in India, Brazil, Ireland and the Czech Republic.
Dallas-based i2 Technologies, which was co-founded by India native
Sanjiv Sidhu, moved research and development jobs back to India in 2002
as part of a restructuring of its operations. And Austin-based Dell
Computer, which unveiled plans for a customer support center in Fort
Worth in 2000 only to later back away, opened a call center in India
last year to serve its U.S. customers.
Companies that hire third-party IT providers such as EDS for their IT
services or software development can save 30 percent to 60 percent if
that work is performed offshore, industry analysts say. And by locating
centers in India, IT companies can have ongoing, 24-hours-a-day
software development between programmers in the United States and Asia.
In addition to the cost benefits, tech companies say that their Indian
software development and customer facilities are crucial to remaining
competitive in the global market. IT firms such as IBM Global Services,
EDS and HP are facing stiff competition from Indian-based outsourcing
companies.
"In the systems engineering or the program developer area, it is
extremely competitive, particularly in India," said Dan Zadorozny,
president of EDS Applications Services. "Customers are demanding we
deliver the same service and in a much more cost-effective fashion."
For example, last fall, Swedish telecommunications company Ericsson
sold its software development center to Indian-based Wipro, which will
develop software for Ericsson's maintenance and operations.
Despite the competitive and cost-efficient claims by companies, U.S.
workers' groups are concerned that too many jobs are going overseas,
particularly in technology.
"All facets of software production are currently in the works to be
moved offshore," said Marcus Courtney, president of WashTech, a
Seattle-based workers' group affiliated with the Communications Workers
of America union. "People are really not yet fully aware of the
magnitude of what's going on and how this is really transforming
America's economy."
Courtney said his organization is concerned that technology companies
are only the first of the service industries to move jobs to
underdeveloped countries.
Now accounting, engineering, health care and engineering companies are
investigating the possibility of locating facilities in India, Courtney
said, which would affect thousands of white-collar workers in the
United States.
Although outsourcing to India may be popular on Wall Street today,
outsourcing consultant Jeff Elam said it may not be a cost-efficient
strategy for everyone.
Most companies don't realize there are telecommunications
infrastructure costs and project management issues that need to be in
place before a project or business process is moved overseas, he said.
"The cost savings, particularly on the development side, are not as
much as expected," said Elam, a principal at North Highland Group. "You
still need to have people in the U.S."
Atul Vorha, president of India-based Majesco Software, concedes that a
company needs one or two U.S.-based employees for every five in India.
But American workers and companies need to realize that the trend of
outsourcing to India is "unstoppable," he said, just like the overseas
movement of U.S. manufacturing jobs in the 1980s.
Majesco Software, which was founded 20 years ago and has its U.S.
headquarters in Irving, provides customized technology solutions for
companies and has partnered with several companies that have located
operations in India.
Vorha, who splits his time between India and the United States, adds
that the money an American company saves by outsourcing projects to
India usually gets reinvested in the United States, creating even
better jobs.
"The business of America has always been innovation and creativity,"
Vorha said in a telephone interview from Mumbai.
"All that India is doing is helping make the back office more
efficient."
Destination: India
Companies that have shifted information-technology services and
software development to India in the past two years:
Oracle: Moved more than 2,000 development jobs to India and is
shifting accounting and payroll operations.
i2 Technologies: Opened a development center and offered to move
expatriates back to India to jump-start the center.
Hewlett-Packard: Shifted 1,200 Compaq customer-service jobs from
Florida to an existing HP center in India.
Dell Computer: Opened a call center in India to support U.S. home
and small-business customers and handle Malaysian and Australian
customer-support jobs.
Ericsson: Sold its software-development center to India-based
Wipro.
EDS: Opened a center in Mumbai last month. Will move 1,500 jobs
from the United States and Europe to low-cost centers in India.
BNSF: Worked with Indian-based Infosys to develop software for
BNSF. The railroad replaced more than 100 contract computer programmers
as a result of the agreement.
Source: Forrester Research, Star-Telegram archives
http://money.cnn.com/2003/07/22/technology/ibm_jobs.reut/index.htm
IBM execs look to move jobs overseas
On conference call, two officials say the firm needs to shift
white-collar jobs to stay competitive.
July 22, 2003: 6:42 AM EDT
NEW YORK (Reuters) - Two senior officials at IBM, the world's largest
computer maker, said the company needs to speed its efforts to move
white-collar jobs to India and elsewhere overseas, according to a
published report Tuesday.
In a recording of a conference call given to the New York Times by a
labor union, top employee-relations executives said IBM needed to make
the same moves its competitors have made to save money by shifting
service jobs away from the United States.
The Times article cited Forrester Research as estimating 450,000 U.S.
computer industry jobs could be transferred overseas in the next 12
years, representing 8 percent of U.S. computer jobs.
IBM executives on the March conference call worried that broader
unionization could arise as the trend strengthens, the paper reported.
"Governments are going to find that they're fairly limited as to what
they can do, so unionizing becomes an attractive option," said IBM
(IBM: Research, Estimates) director for global employee relations Tom
Lynch on the recording.
"You can see some of the fairly appealing arguments they're making as
to why employees need to do some things like organizing to help fight
this."
The Seattle-based Washington Alliance of Technology Workers gave the
recording, which was on an internal company Web site, to the newspaper
after getting it from a company employee who was upset about its
content, according to the Times.
http://www.nytimes.com/2003/07/22/technology/22JOBS.html?hp
July 22, 2003
I.B.M. Explores Shift of White-Collar Jobs Overseas
By STEVEN GREENHOUSE
ith American corporations under increasing pressure to cut costs and
build global supply networks, two senior I.B.M. officials told their
corporate colleagues around the world in a recorded conference call
that I.B.M. needed to accelerate its efforts to move white-collar,
often high-paying, jobs overseas even though that might create a
backlash among politicians and its own employees.
During the call, I.B.M's top employee relations executives said that
three million service jobs were expected to shift to foreign workers by
2015 and that I.B.M. should move some of its jobs now done in the
United States, including software design jobs, to India and other
countries.
"Our competitors are doing it and we have to do it," Tom Lynch,
I.B.M.'s director for global employee relations, said in the call. A
recording was provided to The New York Times recently by the Washington
Alliance of Technology Workers, a Seattle-based group seeking to
unionize high-technology workers. The group said it had received the
recording which was made by I.B.M. and later placed in digital form
on an internal company Web site from an I.B.M. employee upset about
the plans.
I.B.M.'s internal discussion about moving jobs overseas provides a
revealing look at how companies are grappling with a growing trend that
many economists call off-shoring. In decades past, millions of American
manufacturing jobs moved overseas, but in recent years the movement has
also shifted to the service sector, with everything from low-end call
center jobs to high-paying computer chip design jobs migrating to
China, India, the Philippines, Russia and other countries.
Executives at I.B.M. and many other companies argue that creating more
jobs in lower cost locations overseas keeps their industries
competitive, holds costs down for American consumers, helps to develop
poorer nations while supporting overall employment in the United States
by improving productivity and the nation's global reach.
"It's not about one shore or another shore," an I.B.M. spokeswoman,
Kendra R. Collins, said. "It's about investing around the world,
including the United States, to build capability and deliver value as
defined by our customers."
But in recent weeks many politicians in Washington, including some in
the Bush administration, have begun voicing concerns about the issue
during a period when the economy is still weak and the
information-technology, or I.T., sector remains mired in a long slump.
At a Congressional hearing on June 18, Bruce P. Mehlman, the Commerce
Department's assistant secretary for technology policy, said, "Many
observers are pessimistic about the impact of offshore I.T. service
work at a time when American I.T. workers are having more difficulty
finding employment, creating personal hardships and increasing demands
on our safety nets."
Forrester Research, a high-technology consulting group, estimates that
the number of service sector jobs newly located overseas, many of them
tied to the information technology industry, will climb to 3.3 million
in 2015 from about 400,000 this year. This shift of 3 million jobs
represents about 2 percent of all American jobs.
"It's a very important, fundamental transition in the I.T. service
industry that's taking place today," said Debashish Sinha, principal
analyst for information technology services and sourcing at Gartner
Inc., a consulting firm. "It is a megatrend in the I.T. services
industry."
Forrester also estimated that 450,000 computer industry jobs could be
transferred abroad in the next 12 years, representing 8 percent of the
nation's computer jobs.
For example, Oracle, a big maker of specialized business software,
plans to increase its jobs in India to 6,000 from 3,200, while
Microsoft plans to double the size of its software development
operation in India to 500 by late this year. Accenture, a leading
consulting firm, has 4,400 workers in India, China, Russia and the
Philippines.
Critics worry that such moves will end up doing more harm to the
American economy than good.
"Once those jobs leave the country, they will never come back," said
Phil Friedman, chief executive of Computer Generated Solutions, a
1,200-employee computer software company. "If we continue losing these
jobs, our schools will stop producing the computer engineers and
programmers we need for the future."
In the hourlong I.B.M. conference call, which took place in March, the
company's executives were particularly worried that the trend could
spur unionization efforts.
"Governments are going to find that they're fairly limited as to what
they can do, so unionizing becomes an attractive option," Mr. Lynch
said on the recording. "You can see some of the fairly appealing
arguments they're making as to why employees need to do some things
like organizing to help fight this."
The I.B.M. executives also warned that when workers from China come to
the United States to learn to do technology jobs now being done here,
some American employees might grow enraged about being forced to train
the foreign workers who might ultimately take away their jobs.
"One of our challenges that we deal with every day is trying to balance
what the business needs to do versus impact on people," Mr. Lynch said.
"This is one of these areas where this challenge hits us squarely
between the eyes."
Mr. Lynch warned that with the American economy in an "anemic" state,
the difficulties and backlash from relocating jobs could be greater
than in the past.
"The economy is certainly less robust than it was a decade ago," Mr.
Lynch said, "and to move jobs in that environment is going to create
more challenges for the reabsorption of the people who are displaced."
The I.B.M. executives said openly that they expected government
officials to be angry about this trend.
"It's hard for me to imagine any country just sitting back and letting
jobs go offshore without raising some level of concern and
investigation," Mr. Lynch said.
Those concerns were pointedly raised on June 18, when the House Small
Business Committee held a hearing on "The Globalization of White-Collar
Jobs: Can America Lose These Jobs and Still Prosper?"
"Increased global trade was supposed to lead to better jobs and higher
standards of living," said Donald A. Manzullo, an Illinois Republican
who is the committee chairman. "The assumption was that while
lower-skilled jobs would be done elsewhere, it would allow Americans to
focus on higher-skilled, higher-paying opportunities. But what do you
tell the Ph.D., or professional engineer, or architect, or accountant,
or computer scientist to do next? Where do you tell them to go?"
The technology workers' alliance is highlighting I.B.M.'s outsourcing
plans to help rally I.B.M. workers to the union banner.
"It's a bad thing because high-tech companies like I.B.M., Microsoft,
Oracle and Sun, are making the decision to create jobs overseas
strictly based on labor costs and cutting positions," said Marcus
Courtney, president of the group, an affiliate of the Communications
Workers of America. "It can create huge downward wage pressures on the
American work force."
Mr. Mehlman, the Commerce Department official, said companies were
moving more service jobs overseas because trade barriers were falling,
because India, Russia and many other countries have technology
expertise, and because high-speed digital connections and other new
technologies made it far easier to communicate from afar.
Another important reason for moving jobs abroad is lower wages.
"You can get crackerjack Java programmers in India right out of college
for $5,000 a year versus $60,000 here," said Stephanie Moore, vice
president for outsourcing at Forrester Research. "The technology is
such, why be in New York City when you can be 9,000 miles away with far
less expense?"
Company executives say this strategy is a vital way to build a global
company and to serve customers around the world.
General Electric has thousands of workers in India in call center,
research and development efforts and in information technology. Peter
Stack, a G.E. spokesman, said, "The outsourcing presence in India
definitely gives us a competitive advantage in the businesses that use
it. Those businesses are some of our growth businesses, and I would say
that they're businesses where our overall employment is increasing and
our jobs in the United States."
David Samson, an Oracle spokesman said the expansion of operations in
India was "additive" and was not resulting in any jobs losses in the
United States.
"Our aim here is not cost-driven," he said. "It's to build a 24/7
follow-the-sun model for development and support. When a software
engineer goes to bed at night in the U.S., his or her colleague in
India picks up development when they get into work. They're able to
continually develop products."
http://releases.usnewswire.com/GetRelease.asp?id=145-07212003
500,000 U.S. IT Jobs Projected to Move Overseas by Year-End '04;
IEEE-USA Sees Continued Loss in U.S. Economic Competitiveness
7/21/03 5:30:00 PM
Contact: Pender M. McCarter for IEEE-USA, 202-785-0017, ext. 8353;
e-mail: p.mccarter@ieee.org; web: http://www.ieeeusa.org
WASHINGTON, July 21 /U.S. Newswire/ -- One-half million jobs, or 10
percent of the U.S. information technology (IT) professionals currently
working in IT services firms, will be displaced in the next 18 months
as their jobs move overseas, according to Gartner, Inc., the Stamford,
Conn.-based research firm. The Gartner projection, in a 15 July
research note by Diane Morello, would bring total IT job losses to one
million, when added to the 500,000 IT professionals estimated by the
Bureau of Labor Statistics to have lost their jobs in the United States
since 2001.
In addition, Gartner urged business executives not to "trivialize" the
impact of offshore outsourcing on their businesses and employees,
stating that executives should pay attention to the loss of future
talent and intellectual assets, as well as the potential negative
impact of outsourcing on organizational performance.
Commenting on the projection of U.S. IT job losses, IEEE-USA
President-elect John Steadman said: "In the rush to cut costs through
offshore outsourcing and increased use of guest workers, companies are
undermining the U.S. IT profession and are increasing the vulnerability
of their core competencies and knowledge base."
Dr. Steadman, who will become IEEE-USA's president in 2004, added: "The
emphasis on outsourcing to cut costs may help boost quarterly earnings,
but it is also putting our nation's long-term economic competitiveness
and national security at risk as we give up our technology edge for
short-term profits."
IEEE-USA leaders are also concerned about increased industry reliance
on non-immigrant high-tech guest workers resulting in more offshore
outsourcing.
According to IEEE-USA R&D Policy Committee chair Ron Hira, "Many
high-tech guest workers are brought here specifically to facilitate
offshore outsourcing arrangements." Dr. Hira added: "Other guest
workers are taking the acquired knowledge of U.S. technology and
business practices home with them, combining that know-how with low
labor costs to help foreign businesses compete more effectively with
U.S. companies."
IEEE-USA is an organizational unit of The Institute of Electrical and
Electronics Engineers, Inc., created in 1973 to advance the public
good, while promoting the careers and public-policy interests of more
than 235,000 electrical, electronics, computer and software engineers
who are U.S. members of the IEEE. The IEEE is the world's largest
technical professional society. For more information, go to
http://www.ieeeusa.org.
http://www.usnewswire.com/
-0-
/) 2003 U.S. Newswire 202-347-2770/
http://www.wokr13.tv/news/local/story.aspx?content_id=EC2223A4-EE2F-43B9-AA3F-688A37DB3DF3
Economic Pressure Means Off Shoring For Many Companies
Rochester, NY - (07/22/03) - It is expected that Eastman Kodak will not
deliver good news when it announces second-quarter results Wednesday.
The company continues to blame the poor economy which results in
increasing pressure to cut costs.
The lure of cheap labor in Mexico and China has helped to drive 10,000
manufacturing jobs out of Rochester. Last month Kodak moved its single
use camera operations overseas. Kodak will not comment on rumors it
will move more jobs, including white-collar positions, overseas.
However, other companies do it so much, it's become a trend called
off-shoring.
White-collar, professional jobs are being off-shored with alarming
frequency.
When The Sutherland Group, a Rochester-based company, wanted to expand
its technical operations two years ago, it created 2,000 jobs--in
India.
Software engineers in India earn $5,000 a year.
"Its a well educated workforce and in general terms most of our
clients are saving 35 to 40 percent." said a representative of the
Sutherland Group.
Some estimate that within 12 years, two percent of American jobs will
be performed overseas, including eight percent of the nation's computer
jobs.
The reality is, its easier to move information than to move people.
I'm aware of several companies in Rochester who are looking to
outsource their operations overseas," said the University of
Rochesters Abraham Seidmann.
Although Kodak won't comment on rumors about moving operations to India
to cut costs, analysts see it as a logical progression.
"I'll say the same thing I said about manufacturing jobs, said one
local businessman, Its a damn shame, but its inevitable.
Computer programming, medical research, and accounting jobs are all
examples of positions now being off-shored to China, India, and Asia.
Estimates predict 3.3 million American jobs will be lost to overseas
workers by the year 2015.
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Rob Sanchez is board member of NAEA - www.NAEA.US
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