13 Outsourcing Articles
13 Outsourcing Articles
Date: Monday, August 18, 2003 2:08 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1:
http://www.charlotte.com/mld/charlotte/business/6499902.htm
States' contracts ship work to India - Food stamp users, including in
Carolinas, call foreign help desks
Article 2:
http://www.vdare.com/roberts/trade.htm
Jobless in the USA
Article 3:
http://news.com.com/2100-1006_3-5063639.html
Intel to boost Malaysian R&D
Article 4:
http://www.ecotalk.org/SERVEaccenture.htm
Accenture Offshore Company Captures Online Military Vote
Article 5:
http://www.washingtontechnology.com/news/18_6/outsourcing/21010-1.html
Florida to ink outsourcing deal with Accenture
Article 6:
http://economictimes.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=133574
Big time IBM IT recruitment in the offing in Kolkata
Article 7:
http://www.dallasnews.com/sharedcontent/dallas/business/stories/081003dnbusosramnafta.976fe.html
Factory bucks trade trend with Mexican move
Article 8:
http://www.southbendtribune.com/stories/2003/08/14/local.20030814-sbt-MARS-A2-Manufacturers_say_U_.sto
Manufacturers say U.S. trade policies costing Indiana jobs
Article 9:
http://www.ctnow.com/business/hc-pratt0813.artaug13,1,1701633.story?coll
=hc-headlines-business
Union Sues Pratt Over Outsourcing Plan - Machinists Fight To Keep 150
Jobs
Article 10:
http://straitstimes.asia1.com.sg/topstories/story/0,4386,204489,00.html
Britain may lose 30,000 top jobs to low-cost centres
Article 11:
http://www.madison.com/captimes/opinion/editorial/54519.php
Wisconsin editorial: Collapse of manufacturing
Article 12:
http://www.computerworld.com/managementtopics/management/outsourcing/story/0,10801,83859,00.html
BellSouth eyes offshore outsourcing of up to 900 workers
Article 13:
http://www.rediff.com/money/2003/aug/11nortel.htm
Nortel to increase outsourcing from India
http://www.charlotte.com/mld/charlotte/business/6499902.htm
Posted on Sun, Aug. 10, 2003
States' contracts ship work to India
Food stamp users, including in Carolinas, call foreign help desks
STELLA M. HOPKINS
Staff Writer
Nationwide and in the Carolinas, food stamp recipients rely on customer
service centers in India -- a little-known but widespread government
use of a controversial cost-cutting tactic.
Government agencies, squeezed by tight budgets, are following a growing
business trend of using less expensive foreign workers. In 40 states
and Washington, people collecting food stamps use foreign help desks,
according to an Observer survey.
But help desks are just part of the overseas move. For example,
programmers in India are helping revamp South Carolina's unemployment
tax system.
The shift makes white-collar employees vulnerable to the erosion seen
as U.S. factory jobs moved to low-wage countries. That resonates
painfully in the Carolinas, where textile jobs have been hard hit. Last
month, Pillowtex Corp. shut down, eliminating 4,800 jobs in the states.
Backlash is building. An N.C. Senate bill would stop some foreign work
on state contracts.
States' officials say contracting rules don't let them exclude vendors
for doing work overseas. They say they can save money and time and
sometimes get better quality with contracts that include workers
abroad.
Critics say government shouldn't hire foreign workers.
"It's outrageous to use taxpayer dollars to erode your tax base," said
Steve Kreisberg, an associate director with the American Federation of
State, County and Municipal Employees, representing 1.4 million
workers. "A public operation shouldn't be engaging in that kind of
behavior."
By one estimate, the United States will lose $136 billion in paychecks
by 2015 as it sheds 3.3 million service jobs overseas.
The projection, by Forrester Research in Cambridge, Mass., includes but
doesn't break out government jobs. As of July 30, the country had
nearly 130 million jobs, 20 million of them in government, according to
the Bureau of Labor Statistics.
Forrester's job loss estimate, which uses 2000 as a starting point,
comes to 220,000 service jobs a year. In the past 12 months, the
country lost 404,000 jobs overall, said bureau economist Michael Wald.
Still, in the past 20 years, the United States added more than 39
million jobs -- an average of nearly 2 million a year.
Because of its well-educated, English-speaking population, India is
expected to get the majority of exiting service jobs.
Companies in the United States and other high-wage countries already
use Indian workers for such jobs as processing mortgage applications,
reading X-rays, preparing tax returns and conducting financial
research. Microsoft, IBM and Charlotte's Bank of America Corp. are
among companies tapping Indian expertise.
The government move to foreign workers has been largely unnoticed, but
that's changing.
In North Carolina, the governor's legal counsel is reviewing the
state's purchasing rules. The state is seeking ways to encourage
agencies to give preference to N.C. companies with in-state workers,
said spokeswoman Cari Boyce.
State Sen. Eric Reeves, a Democrat in Raleigh, introduced legislation
in April to ban foreign call centers on state contracts. The proposal
passed the Senate and awaits House consideration.
"I don't think you should be contracting away functions of your state
to other countries," Reeves said. "It's a terrible idea."
"It's a discomforting trend for me," said S.C. Senate President Pro Tem
Glenn McConnell, R-Charleston, who was unaware of the state's foreign
contracts. "We as legislators are going to have to ask questions to
understand where this is going."
Food stamps go electronic
In 1996, federal legislation mandated all states switch from paper
food-stamp coupons to electronic benefits, or EBT, similar to a debit
card.Before the switch, retailers made 1.7 million deposits per month
of paper coupons in more than 26,000 banks, according to the U.S. Food
& Nutrition Service. Retailers and bankers had to count and safeguard
the coupons at each step.
With EBT cards, all accounting is electronic -- just like tapping the
ATM or using a gift card. Benefits are automatically credited to the
cards on the same day, every month -- no more trips to the food-stamp
office for coupons. Recipients have a PIN code, making theft harder.
Lost cards can be replaced, benefits intact.
The electronic move, which includes welfare cash benefits in many
states, means new business for EBT system providers.
The EBT industry leader is Citicorp Electronic Financial Services Inc.,
part of financial giant Citigroup Inc. Clients include South Carolina.
North Carolina has a $25 million, five-year contract with Arizona-based
eFunds Corp.
Call centers are just one aspect of the EBT systems, which include
everything from providing cards to crediting accounts with money and
paying retailers.
About 7 million of the nation's 9.2 million families and individuals
receiving food stamps live in the 40 states using foreign EBT help
desks. Most of the 7 million are using EBT. They make more than 22
million calls a month about their benefits, according to the Observer
survey. About 95 percent of the calls are simple, such as checking
balances, and are handled by automated units.
Call center operators deal with such issues as canceling stolen cards
and replacing lost ones. In the states served by foreign help desks,
recipients talk with operators a total of more than 700,000 times a
month, according to the states contacted.
Officials in some states served by Citicorp said they thought the
company used domestic and foreign call centers.
Citicorp referred questions about EBT call centers to its
subcontractor, MsourcE, based in California and owned by an Indian
company. MsourcE has two Indian call centers, in Pune and Bangalore,
and one in Mexico, which serves Spanish-speaking customers, said
spokeswoman Amy Binder. The company does not operate domestic call
centers, she said.
EFunds, in addition to its direct state clients, is an EBT call-center
subcontractor to Citicorp. Last year, eFunds moved its EBT call center
work to India from Wisconsin. This month, the company will begin taking
Spanish-speaking calls at a Wisconsin center, which also can handle
overflow from India, said Liz French, an eFunds executive. Spanish
calls had been sent to Canada.
New Jersey cries foul
Industry outsourcing of computer and other service jobs has drawn
criticism globally, but the government trend has attracted little
attention. A New Jersey case is the exception.
The eFunds call center move to India last year upset welfare
administrators in the state, which contracts with the company for food
stamp and welfare EBT.
They thought it was the wrong message to use foreign workers for the
type of job that could have gone to people in their welfare-to-work
program. "It didn't seem like we were living up to our part of the
bargain," said agency spokesman Andy Williams.
A New Jersey senator proposed legislation to prohibit the use of
foreign workers on state contracts. The proposal passed the state
Senate but stalled in a committee in the lower house.
Meanwhile, New Jersey welfare administrators paid eFunds to open a call
center in the state, in a bank basement. The center employs nine
operators and two supervisors, Williams said. The operators start at
about $12 an hour and came from job programs used by welfare recipients
and others, he said.
The New Jersey jobs came at a price. The state expects to pay nearly
$900,000 extra a year for the in-state center.
"That is an inefficient use of taxpayer dollars," said Dan Griswold, an
associate director at the Cato Institute, a Washington think tank. "It
would have been better to continue with the contract and use the
savings in more productive ways."
Following the outcry in New Jersey, Iowa rejected a bid for an EBT help
desk in Mexico. Instead, the state's vendor, Affiliated Computer
Services Inc., answers calls in Utah.
Affiliated, based in Dallas, also bid on North Carolina's EBT system.
The bid included a call center in Omaha, Neb., but the per-case-cost
was 24 percent higher than eFunds. Affiliated's technical score, which
accounts for up to 60 percent on the bid evaluation, was lower than
competitors.
"You've got to get the best deal for the state," said Joanne
Cunningham, the N.C. EBT project director. Personally, the issue raises
conflicts. "As a consumer, I always look for the best deal. I do have
feelings about patriotism, too. It was many years before I bought a
foreign car. Then reality sets in."
Other projects up for bid?
While food stamp call centers are widely used, other state projects are
potentially larger users of foreign outsourcing.Government, like
business, needs to replace old computer systems and update software.
Users also want more services, such as online capabilities. North
Carolina, for example, is reviewing computer systems -- some 20 or more
years old -- that include human resources, payroll and retirement
benefits.
Late last year, North Carolina's chief information officer, George
Bakolia, told the governor's staff that the state needs to decide
outsourcing's role in solving its information technology needs. He
would like to require outsourcing vendors to provide local jobs.
"The last thing we want to do is ... have people employed here lose
their jobs," Bakolia said.
Larry Johnson, the S.C. deputy chief information officer, doesn't
expect heavy state spending on foreign IT work. Remote work isn't right
for many projects, and managing foreign operations adds costs that can
eat up savings, he said.
Bakolia cited Florida's $278 million, seven-year outsourcing contract
as a possible model for North Carolina. Florida is outsourcing its
human resources operation. That's everything from payroll for 117,000
workers to online searches for state jobs. In its bid request, the
state specified that work be done in Florida.
The winning bidder, Cincinnati-based Convergys Corp., has extensive
foreign outsourcing operations. But Convergys is handling the Florida
project locally and hired about 525 people, said Chris Emerick, a
company vice president.
Florida's move eliminated 971 positions through attrition and job
transfers, said Towson Fraser, a state spokesman.
Billion-dollar business
State and local government information technology spending is expected
to increase from $41.4 billion this year to $47.4 billion in 2006,
according to Connecticut research firm Gartner Dataquest.
Rishi Sood, a Gartner analyst, expects that government IT outsourcing
will grow to $7.15 billion in 2006, or 15 percent of total IT spending,
from about 9 percent this year.
The New Jersey case and growing concern about industry outsourcing has
made overseas work "a political hot potato," Sood said. Long term, he
said government is likely to embrace the cost savings of work abroad.
Some states already use foreign expertise to modernize IT systems.
South Carolina chose Covansys Corp. to build a new system for its
unemployment tax collection. The Michigan IT consultant bid $2.5
million compared with a high bidder at $12 million. Covansys is using a
combination of workers in India and onsite at the S.C. agency.
Unless legislators change procurement rules, agencies can't exclude
qualified bidders just because work is done overseas, said S.C.
spokesman Michael Sponhour.
"It's worthy of investigating," said S.C. House Speaker David Wilkins,
R-Greenville, who did not know of the state's foreign work. "I would
prefer it to be South Carolinians doing South Carolina work."
Stella Hopkins: (704) 358-5173 or shopkins@charlotteobserver.com.
VDARE.COM - http://www.vdare.com/roberts/trade.htm
August 05, 2003
Jobless in the USA
By Paul Craig Roberts
Throughout history peoples have been overcome by trends and forces that
they were unable to recognize. Could the US be losing its economy to
forces economists mistake for benevolent free trade?
Traditionally, free trade has required a countrys work force to
compete indirectly against the work forces of other countries in the
markets for traded goods and services. Fears in the post-WW II era that
U.S. wages and living standards would be undermined by imports made
with cheap foreign labor proved to be wrong. U.S. labor was better
educated and worked with more and better capital and technology, which
made American labor much more productive. Higher productivity protected
U.S. wages and employment from cheap foreign labor.
The collapse of world socialism and the rise of globalism have made
U.S. capital, technology, and business know-how highly mobile. Today it
is as easy - and far less expensive - for a U.S. firm to produce abroad
for U.S. markets. Instead of locating its capital and technology in
Ohio, California, or South Carolina, the company locates its facility
in China, for example.
By locating in China, the firm substitutes a work force that is paid
less than a dollar an hour for U.S. labor that costs $26 an hour. By
locating in China, the firm also avoids expensive regulations, torts,
employment taxes, and discrimination lawsuits.
The mobility of capital and technology means that American labor now
faces direct competition in global labor markets. This is a new
development.
A Chinese person working with U.S. capital and technology is just as
productive as an American. The Chinese worker can be hired for much
less, because living standards and the cost of living are far lower in
China.
The huge labor surplus in countries such as China and India means that
wages are not likely to rise very rapidly in those countries. U.S.
firms that substitute Chinese and Indian labor for U.S. employees are
building in lower labor costs for years to come.
Eventually, as China and India become fully employed First World
economies, wages will be bid up and labor will be paid according to its
productivity. By then the U.S. might be a Third World country.
Existing mortgages, cost of living, and accustomed living standards
prevent U.S. wages from falling to levels that would be competitive
with Chinas. Americans have to seek work in their next best
alternative when they lose their well-paying manufacturing and
high-tech knowledge and service jobs to foreigners. By definition,
these are less productive jobs paying less.
When jobs move out, skills move with them. At the rate at which the
U.S. is losing software and computer engineering jobs, for example, how
much longer will U.S. engineering schools be offering this major?
When manufacturing jobs are lost, so are jobs in trucking, warehousing,
banking and insurance. There is a chain effect that reduces the overall
productivity of the U.S. as a location of economic activity.
The loss of high productivity jobs takes away the ladders of upward
mobility and wipes out human capital. A displaced U.S. software
engineer cannot move to China or India to seek employment in his
profession.
Retraining is not an answer, because almost the entire range of
knowledge jobs can be outsourced. The Internet permits U.S. employers
to hire people in India, China, and the Philippines as stock analysts,
accountants, researchers, designers, engineers, radiologists - any
occupation that doesnt require hands-on, face-to-face, local
presence.
Economists assume that the substitution of foreign labor for U.S. labor
is the benevolent workings of free trade. But what is being traded when
U.S. employers move jobs out of the country? Many of our imports are
products made for American markets by U.S. firms.
Economists mistake the free movement of factors of production for free
trade. Raised on the theory of comparative advantage, economists know
that free trade is mutually beneficial. They dismiss without thought
any concerns that seem to call free trade into question. The case for
free trade has been unassailable for so long that economists have
overlooked that todays circumstances do not comply with the
assumptions of the theory.
The gains from trade flow from each country focusing on what it can do
best and trading for other goods. The idea that there are comparative
advantages in production is based on countries having different
endowments of immobile factors of production. When the theory was
developed, agricultural output was an important component of Gross
Domestic Product, and a countrys advantages resided in its climate
and geography.
David Ricardo discovered the principle of comparative advantage in the
early 19th century. Ricardo recognized that the principle did not hold
if all factors of production are internationally mobile. Mobile factors
of production would migrate to countries that had the greatest absolute
advantages. Those countries would gain and all others would lose.
Climate and geography cannot migrate, but capital and technology can.
Today, absolute advantage resides in an abundant supply of cheap and
willing labor. Now that Asia is safe for capitalism, capital and
technology flow to countries where labor costs are lowest.
The global mobility of factors of production is a new development.
Until recent years, it was not safe for capital and technology to
migrate outside North America, Western Europe and Japan. No first world
country had an absolute advantage in labor cost.
The collapse of world socialism changed circumstances overnight. U.S.
labor now faces direct competition in global labor markets. The excess
supply of labor in these markets will drive down wages, salaries and
employment in the U.S. As the dollar is likely to lose value under
pressure from our growing trade deficit, the decline in wages will not
be compensated by a decline in prices, and U.S. living standards will
fall.
It is irresponsible for economists to dismiss these concerns by citing
empirical evidence from historical correlations. New developments are
not reflected in historical data.
Economists dismiss as anecdotal evidence the news reports of millions
of high-paying U.S. white-collar jobs being moved overseas and filled
by foreigners. American high school and college students are far more
realistic than economists as they search for careers that cannot be
shipped out or given to foreigners on work visas.
U.S. labor no longer has the advantage of education, training,
technology and capital over its foreign competition. Existing wage
levels, however, assume that Americans still have these advantages. The
extraordinary wage differences between the U.S. and Asia mean that jobs
will flow out of the U.S. into Asia. Tax cuts and low interest rates
cannot compensate for the huge wage differences.
U.S. corporations have made a strategic decision to move jobs abroad.
What corporations will employ the displaced U.S. employees?
Paul Craig Roberts is the author with Lawrence M. Stratton of The
Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are
Trampling the Constitution in the Name of Justice
http://news.com.com/2100-1006_3-5063639.html
Sources: Intel to boost Malaysian R&D
By Reuters
August 14, 2003, 5:37 AM PT
Intel, the world's largest chipmaker, will invest around $80 million in
a new research and development facility in Malaysia, sources close to
the deal told Reuters on Thursday.
The sources said the investment was part of a plan by the U.S. giant to
add value to its existing Malaysian manufacturing operations. "It will
launch design facilities at the Penang plant," one of the sources said.
Craig Barrett, Intel's chief executive officer, is expected to announce
the plan when he visits the country later this month.
Intel Malaysia officials declined to comment.
The California-based company has invested $2.3 billion over three
decades in Malaysia, where it runs two of its largest overseas sites in
northern Penang and Kedah states.
The two plants, where about 8,000 employees, or some 10 percent of
Intel's global workforce, are employed, make among other things the
latest Pentium 4 chips and a key subset, the ICH4M, for the Centrino
product line.
http://www.ecotalk.org/SERVEaccenture.htm
Offshore Company Captures Online Military Vote
by Lynn Landes 7/16/03
Last year, while President Bush marshaled U.S. forces for the invasion
of Iraq, the patriots at the Department of Defense awarded the contract
for a new online voting system for the military... to an offshore
company.
It gets worse.
Secure Electronic Registration and Voting Experiment (SERVE) is the
system and Accenture (formerly Andersen Consulting of Arthur
Andersen/Enron bankruptcy fame) is the company. And although Accenture
has not been officially implicated in the Enron scandal, they have
created a reputation of their own that is already raising eyebrows.
This is hot off the newswire -- 7/15/03 "NEW YORK (CBS.MW) -- Accenture
Ltd., the former Andersen Consulting, disclosed Tuesday that it might
have violated the U.S. Foreign Corrupt Practices Act. Chairman and CEO
Joe Forehand, on an earnings call with analysts and reporters Tuesday,
said the consulting firm's Middle East operations could be in
non-compliance with the Act, which prohibits the bribery of foreign
government officials by U.S. persons."
The Canada-based Polaris Institute published a scathing report on
Accenture, saying, "Accenture's efforts in government outsourcing have
often been very expensive and/or of poor quality. There is good reason
to question Accenture's track record in outsourcing of government
services."
Accenture is the leading offshore beneficiary of government contracts
whose main business is the privatization of government services,
according to Lee Drutman of Citizen Works, a non-profit founded by
Ralph Nader. Accenture has a troubling track record, a close business
relationship with Dick Cheney's Halliburton, and 2500 partners - more
than half are not U.S. citizens.
Since 2001 Accenture and Election.com have been strategic partners "to
jointly deliver comprehensive election solutions to governments
worldwide," according to their press release. Last month Accenture
bought the public-sector election assets of Election.com, which
suffered its own scandal this year when it was discovered that Osan
Ltd, a firm of Saudi and other foreign investors, bought controlling
interest in it. According to Mark Harrington of NewsDay.com, "Several
shareholders of the company said they were surprised by the recent
buyout and have asked for securities regulators to investigate."
Election.com has had other problems. In January 2003, during Canada's
New Democratic Party leadership convention, the Canadian Broadcasting
Corporation reported, Earl Hurd of Election.com said he believes
someone used a "denial of service" program to disrupt the voting
paralyzing the central computer by bombarding it with a stream of data
service was restored, then "Toronto city councilor Jack Layton's
victory on the first ballot surprised many, who had expected a second
or even third round of voting before a leader was chosen from the pack
of six candidates."
For election security experts, a strong and growing suspicion is that
computer glitches or disruptions are actually vote rigging. A surprise
election result should raise a red flag.
Accenture is big. It has more than 75,000 employees in 47 countries,
and generated net revenues of $11.6 billion for the fiscal year ended
Aug. 31, 2002. On their Board of Directors is Steve Ballmer,
Microsoft's CEO and known to many as Bad Boy Ballmer for his ruthless,
if not illegal, business practices. Microsoft has been sued by the
federal government and several states for monopolistic business
practices which were designed to destroy their competition.
Massachusettss Attorney General is still pursuing Microsoft. In
March 13, 2000 Andersen Consulting (now Accenture) and Microsoft signed
a "$1 Billion Pact To Form Joint Venture and Expand Global Alliance."
What's the alliance? To control voting systems around the world?
A sense of civic duty isn't high on Accenture's list of priorities.
According to an article last year in TheDailyEnron.com, "Accenture is
lobbying furiously on Capitol Hill to defeat a measure that would deny
federal contracts to US companies that move offshore to escape US
taxes. Accenture, you see, has incorporated in Bermuda. But, Accenture
also holds nearly $1 billion in government contracts in the US. The
company earned nearly $700 million last year working for Uncle Sam and
- ironically - is currently under contract with the Internal Revenue
Service itself to redesign its online and Internet operations."
Then theres the Accenture connection to Halliburton, vice president
Dick Cheneys former employer. Halliburton is widely criticized for
doing business with brutal regimes and was the subject of a SEC
investigation and several lawsuits surrounding their accounting
practices during and after Cheneys tenure at the helm. The Polaris
Institute says that in July 2000 David Lesar succeeded Dick Cheney as
Chairman and CEO of Halliburton Company. Before joining Halliburton,
Lesar was employed by the Arthur Andersen, Accenture's former parent
company. Polaris says, "while defending Halliburton's accounting
practices, David Lesar publicly acknowledged that Cheney knew about the
firm's accounting practices..."
In an October 2001 press release, Halliburton and Accenture announced a
major expansion of their longstanding relationship with the signing of
an alliance between Accenture and Landmark Graphics Corporation, a
wholly owned business unit of Halliburton.
And unlike the words of the U.S. military's anthem, "I'm proud to be an
American , Accenture owes its allegiance to "partners" outside of the
USA.
In a letter to the editor of the Austin Chronicle last year,
Accenture's Director of Corporate Communications, Roxanne Taylor wrote,
"When Accenture's parent company, Accenture Ltd., was first
incorporated last year, the organization's 2,500 partners, more than
half of whom are non-U.S. citizens, decided to incorporate in Bermuda.
With thousands of partners and employees of many nationalities, it was
important commercially and culturally for the organization to select a
neutral location such as Bermuda for its parent company.
How very global of them.
Potentially, 6 million U.S. military and civilian voters could soon be
using the military's new online voting system. According to computer
voting security experts, any online system will be easy to rig by
company insiders and vulnerable to attack by outsiders. Apart from that
reality, does the U.S. military really want a company owned by non-U.S.
citizens in charge of their vote?
Can anyone at the Pentagon spell "national security"?
Lynn Landes is a freelance journalist at EcoTalk.org. Formerly Lynn was
a radio show host, a regular commentator for a BBC radio program, and
environmental news reporter for DUTV in Philadelphia, PA. (215)
629-3553 / lynnlandes@earthlink.net
http://www.washingtontechnology.com/news/18_6/outsourcing/21010-1.html
Florida to ink outsourcing deal
06/23/03
Florida plans to award a groundbreaking outsourcing project for
information technology services to two firms later this summer, said
Kim Bahrami, Florida's chief information officer.
The award of the MyFlorida Alliance project will follow a 60-day period
in which the state will validate the financial aspects of the contract
it's negotiating with Accenture Ltd. of Hamilton, Bermuda, and
BearingPoint Inc. of McLean, Va., Bahrami said in a June 6 interview.
Bahrami heads the Florida State Technology Office.
Under the proposed contract, Accenture will provide applications
management in support of the state portal as well as manage the
delivery of e-government services. BearingPoint will provide desktop
management, e-government services and desktop services for maintaining
and improving services delivered through the state technology office's
data center.
Bahrami declined to provide an estimated value of the contract,
although research firms that track state government IT opportunities
believe the seven-year project to be worth $80 million.
The contract likely will be a mix of traditional time-and-materials and
shared-risk plans, Bahrami said.
http://economictimes.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=133574
Big time IT recruitment in the offing in Kolkata
ECONOMICTIMES.COM
[ SATURDAY, AUGUST 16, 2003 09:19:08 PM ]
KOLKATA: Here's good news for IT students and professionals in Kolkata.
The City of Joy is high in the list of IT and ITeS companies that are
planning to either start operations or ramp up their presence in the
country.
The city is emerging as the next stop for outsourcing of Time and
Material contracts by the global Tier-1 information and technology
companies. If the trend continues the city could even take over from
metros like Bangalore and Hyderabad.
Which translates to: it is hiring time again for the citys IT
professionals. After that heart wrenching IT-sector job meltdown
IBM, which plans to add 10,000 more professionals to its India staff,
has identified Kolkata, along with Bangalore, as expansion points. The
company now has about 800 people working at its software facility in
the city.
IBM Global Services (IBMGS) inherited the Kolkata centre after its
global acquisition of PricewaterhouseCoopers (PwC). The Indian
operations of PwC are being integrated into IBMGS.
Though IBM's official spokesperson in the country refused to comment
industry sources said the company may hike its staff strength by around
250 per cent in the next 18 months.
According to WDC Ltd executive director Rahul Sharma, a company which
currently contracts out as many as fifty such professionals to the
likes of IBM Global, Kolkata is fast becoming a hub of highly talented
IT professionals ready to be engaged by the top IT companies.
Sharma said that the skill levels have also started growing which
augurs well for the IT sector in Kolkata. Also the presence of global
majors like IBM, IGS, PWC, Wipro, etc. is a clear indication of the
winds of change blowing in this part of the country.
Companies like TCS and Cognizant as well as new BPO firms coming up in
the city are also on the hiring mode.
Among the BPO firm are the Miami-based Epixtar Corp. which plans to set
up a 1,000-seat call centre by the year-end and another Miami-based
captive BPO, databazaar.com.
The turn in the tide has also added to the export earnings kitty of the
IT companies based on the city.
http://www.dallasnews.com/sharedcontent/dallas/business/stories/081003dnbusosramnafta.976fe.html
Factory bucks trade trend with Mexican move
02:16 PM CDT on Friday, August 15, 2003
By KATHERINE YUNG / The Dallas Morning News
MONTERREY, Mexico In a tidy industrial park a few miles from this
city's international airport, Ken Kindness encountered skepticism about
his company's new Mexican factory from an unlikely source.
During interviews with job applicants earlier this year, one candidate
after another asked: "What is it you don't know about Monterrey?"
NAFTA NOW
April 13: Tattered trade hopes
May 11: U.S.-Canada timber feud spotlights NAFTA's shortcomings
July 13: Foreign firms' suits are messy for environmentalists
Aug. 10: Factory bucks trade trend with Mexican move
Aug. 10: Get the trucks across the bridge
None of the potential new hires understood why anyone would want to
start up production in this industrial center, 142 miles south of
Laredo. Companies were either fleeing for cheaper labor in China and
other countries or consolidating production elsewhere in Mexico.
"Everybody was getting out," noted Mr. Kindness, a 60-year-old Osram
Sylvania Inc. manufacturing executive.
Everyone, that is, except Osram.
On the eve of the 10th anniversary of the North American Free Trade
Agreement, the world's second-largest lighting company is bucking the
trend. Osram is one in a handful of manufacturers that have recently
shifted production from the United States to Mexico to take advantage
of lower labor costs.
But don't expect the exodus of U.S. factories to Mexico one of the
most visible and controversial outcomes of NAFTA to sputter to a halt
anytime soon. The migration south of the border is likely to continue
during the trade agreement's second decade, experts predict. Osram's
story helps show why.
"There's still going to be growth," said Martha Tovar, president of
Solunet: Info-Mex Inc., the El Paso publisher of Twin Plant News. "It's
just not going to be in these huge volumes."
When NAFTA began in 1994, few could have imagined that nearly a decade
later, opening a factory in Mexico would be viewed as a daring, even
radical, move.
But that's exactly what's happened as the number of U.S. companies
transferring production to Mexico in recent years has ebbed to a
trickle from a once mighty gusher.
In the former "Promised Land for American manufacturers," labor is
still cheap but not as cheap as in China and some other developing
countries. And Mexico's lower-wage rivals have evolved into more
enticing places to do business.
John Sevigny / Special contributor
Workers assemble circuit boards at the Osram Sylvania plant in
Monterrey, Mexico.
Yet for some U.S. manufacturers, assembling products south of the Rio
Grande still makes plenty of sense.
Many companies produce bulky items too costly to ship across long
distances, said John Christman, a director at the economic consulting
and forecasting firm Global Insight Inc. in Mexico City. The list of
products includes refrigerators, automobiles, hospital equipment and
big-screen TVs.
Mr. Christman predicts that by 2008, the number of plants in Mexico
making goods for export primarily to the United States factories
known as maquiladoras will return to levels reached in 2000.
But geography can be just as important for some manufacturers of
smaller products, as Osram's experience reveals.
In late May, after 15 months of planning, countless plane trips and a
few minor hiccups, Osram began cranking out the first of what will
eventually be millions of thin metal wires and electronic ballasts
the stuff that makes light bulbs and lamps work in what used to be a
distribution center for heavy truck parts in Monterrey.
By early June, about 100 workers were scattered about the cream-colored
plant's factory floor, women in brown coats and men in blue ones.
Ballast workers and their L-shaped assembly line took up half the
space.
On the other side, the wire workers monitored the output of more than
two dozen welding machines, each set up on its own stand like home
sewing machines.
The ballasts small rectangular boxes housing circuit boards full of
wires and electronic parts provide the pulses of energy needed to
start all kinds of lamps. The wires, thinner than a strand of spaghetti
and made of copper, nickel or other metals, carry electricity inside
light bulbs.
Inside the plant, employees were gradually getting used to their
various tasks, from testing the ballasts to adjusting the machines that
spit out the wires.
These workers, and the 625 others to be hired at this factory over the
next few years, owe their jobs to a variety of competitive forces, some
of them beyond Osram's control.
Well before the current vogue, the company based in Danvers, Mass.,
took the China route. Nearly a decade ago, it launched a factory in
Panyu, near Hong Kong, which now produces the majority of its ballasts.
But over time, it came to realize that China alone wasn't good enough.
Two of its biggest customers for ballasts Acuity Lighting Group and
Cooper Lighting launched factories in Monterrey during the last eight
years. Quickly meeting those customers' needs proved almost impossible.
Unlike computer microchips, a boxful of ballasts weighs too much to
affordably ship by air. The only alternative: hauling them across the
Pacific in a boat, a journey that takes three weeks.
"If you have a product issue, it can take a month before you can
address it," Mr. Kindness said.
Downsides
The company also discovered other drawbacks to manufacturing in China.
Communication often requires more time. When Alan Weiss, the Osram
executive who oversees its ballast division, gets into his office in
Lake Zurich, Ill., at 7 a.m., it's already 8 p.m. in China. Most
Chinese workers have long since left their factories and offices.
On the other hand, Monterrey and Chicago share the same time zone.
"There's a lot to be said for coincident business hours," Mr. Weiss
said.
And while Monterrey is only a three-hour flight from Chicago, flying to
China takes an entire day.
Osram executives also quickly realized that automation doesn't pay off
in China. In the world's most populous country, labor is so cheap that
it's difficult to recoup the investment in fancy equipment to handle
tasks ordinarily performed by humans.
But Mexico's higher wage rates will enable Osram to add more automation
to the process of building ballasts, Mr. Weiss said. That will reduce
the need for manual labor, generating savings over the long term.
All of these efficiencies help to offset China's labor cost advantage
over Mexico, said Mr. Weiss, a 22-year Osram veteran. "We can be very
competitive here in Monterrey," he said.
Then there's the comfort factor. The severe acute respiratory syndrome
epidemic didn't disrupt operations at Osram's China plant, but it has
made Mr. Weiss more leery about relying so much on one factory for the
bulk of his ballast production.
Something like SARS "could have a devastating effect on our supply
chain," he acknowledged.
But Osram's decision to invest in Mexico involved more than just
convenience.
For the last 33 years, the company had produced about 500 types of
metal wires at a factory alongside Interstate 95 in Bangor in northern
Maine. The wires were of such superior quality that the company was
able to keep the plant in the United States by charging higher prices.
So it didn't seem to matter that the Bangor workers earned seven times
more than what their counterparts in Mexico would have made.
But in recent years, Osram executives began noticing that wires coming
from Asia, Mexico and Eastern Europe had made tremendous strides in
quality. The Bangor-made wires were slowly losing their competitive
advantage.
Maine to Monterrey
Osram executives decided they only had one choice: Move production to a
low-wage country.
The Bangor workers have "done everything we've asked them to," said Bob
Bennis, vice president of operations for Osram's Precision Materials &
Components division. "Their productivity is good. Their quality is
good. They've just gotten better year after year. In spite of the work
they did, ultimately we just couldn't take enough costs out of the
basic rates to offset the differential."
But lowering labor costs wasn't Osram's only concern. Executives also
wanted the new factory to be as close as possible to Osram's U.S.
customers. The obvious choice: Mexico.
Over the next year, Osram will phase out production at its Bangor plant
as it ramps up the assembly lines in Monterrey. Eventually, all 97
Bangor workers will lose their paychecks in a region already hard hit
by factory shutdowns.
But in Mexico's third-largest city, Osram is bringing new hope to some
of the area's laid-off manufacturing workers. Its new factory
eventually plans to employ about 725 workers.
In Monterrey, Osram found no shortage of empty factory buildings. It
even picked up a bargain on a used soldering machine from an
electronics company going out of business.
Most of all, "there's a wealth of talent down there that was out of
work," said Mr. Kindness, the Osram ballast manufacturing executive.
Big attraction
At 8:30 a.m. one June day, the small lobby of Osram's Monterrey plant
is filled with workers waiting to be interviewed for jobs that had yet
to be advertised. Word of mouth had quickly spread the news that
positions paying an average of $7 to $8 a day were available.
"It's not hard to find workers," said Apolonio Vallejo, the plant
manager overseeing ballast production. "A lot of other plants have
closed."
Mr. Vallejo knows firsthand what that's like. The 38-year-old Monterrey
native worked for a decade at an Emerson Electric factory that built
power suppliers for telecommunications equipment. When orders began
falling off two years ago, Emerson closed the plant and consolidated
production at a less costly factory in Reynosa.
Though Emerson asked him to move, Mr. Vallejo turned the offer down.
The prospect of living along the border rather than in more prosperous
Monterrey didn't appeal to him, he said.
Mr. Vallejo understands why companies are leaving Mexico for China and
other lower-wage countries. "Costwise, China is more convenient," he
acknowledged.
But he hasn't lost faith in his country. And he believes manufacturers
should continue to choose Mexico over China.
Why? "Proximity to customers and better quality."
E-mail kyung@dallasnews.com
http://www.southbendtribune.com/stories/2003/08/14/local.20030814-sbt-MARS-A2-Manufacturers_say_U_.sto
Manufacturers say U.S. trade policies costing Indiana jobs
By MIKE SMITH
Associated Press Writer
Bauer
INDIANAPOLIS -- A group of small and mid-size manufacturers told a
newly created panel of state lawmakers, business lobbyists and labor
leaders Wednesday that U.S. trade policies were costing Indiana
thousands of jobs.
They said the policies must be changed or at least enforced at the
federal level, especially those involving China, but told the Interim
Indiana House Committee on International Trade and Labor Issues it
could play a role.
"Where this group can help is to carry our message to Washington," said
Jody Fledderman, president of Batesville Tool & Die Inc., a
Batesville-based company that makes metal stampings for the auto
industry.
State Rep. Chet Dobis, D-Merrillville, said the committee would hold
hearings across Indiana to gather more comments about the effect trade
practices are having on Indiana. He also said he would invite U.S.
Sens. Dick Lugar and Evan Bayh to meet publicly with the panel.
Indiana House Speaker Patrick Bauer said he established the committee
because Indiana had lost tens of thousands of manufacturing jobs in
recent years, in part because of trade disadvantages with other
countries.
"Indiana has been hit hardest because we are -- or maybe I should say
were -- a major manufacturing state," said Bauer, D-South Bend.
He challenged the panel to seek solutions, "even if that only means
being a lobbying group to spread the message."
Fledderman said his company employs 407 people with a $10 million
annual payroll at its Batesville factory but has been forced to cut 80
jobs the past two years and open a plant in Mexico to stay competitive.
He said U.S. trade policies, or lack of their enforcement, were
tolerant of cheap wages paid in China and other Asian countries. If
major changes were not made, he said, he likely would be forced to
close the Indiana plant and move to either Mexico or China.
Officials with two furniture makers in Batesville and with Harcourt
Industries Inc., a Milroy company that makes and distributes school
supplies, also said unfair trade practices were hitting them hard.
"We need you to help us get the attention of people in Washington,"
said Jean Ann Harcourt, president of Harcourt Industries and a leader
within the Indiana Republican Party.
Dobis said Democrats and Republicans in Indiana, with support from
business, labor and agriculture, had cut across party lines to
restructure taxes in 2002 and pass a major economic-development package
this year.
"We hope whatever we can do now we can do in the same vain," he said.
"We have lost a lot, but there is still a lot more on the table to
lose."
State Rep. Cindy Noe, R-Indianapolis, agreed.
"These are not only answers that need to be forged but forged in a very
timely manner because time is working against us," Noe said.
from
http://www.ctnow.com/business/hc-pratt0813.artaug13,1,1701633.story?coll
=hc-headlines-business (Note: accessing this CT.now (Hartford
Courant website) now requires becoming a member, which simply requires
providing a userid and password)
Union Sues Pratt Over Outsourcing Plan
Machinists Fight To Keep 150 Jobs
August 13, 2003
By MICHAEL REMEZ, Courant Staff Writer
The Machinists union filed suit against Pratt & Whitney in federal
court Tuesday, seeking to stop the jet-engine maker from moving ahead
with plans to contract out warehouse and tool-crib work now done by
about 150 union workers in its Connecticut plants.
District 26 of the International Association of Machinists alleges that
Pratt failed to follow a provision in the contract that calls for the
company to work with union leaders to find alternatives to contracting
out what is known as "indirect work" - work not directly tied to
building engines.
Jim Parent, assistant directing business representative for District
26, said the contract agreed to in late 2001 - which ended an 11-day
strike - called for specific procedures intended to bring the union
into the process early if the company was thinking about contracting
out similar work. In essence, the union would be able to bid to keep
doing the work.
Instead, Parent said, Pratt gave the union notice in April that it had
decided to hire an outside contractor for the work, effective in six
months.
The company, he said, met with the union, but did not seriously
consider its alternative proposals to reduce the costs of the warehouse
operations.
Parent said a court injunction would buy time for additional talks. The
case was assigned to U.S. District Judge Christopher F. Droney.
"We don't like to go to court," Parent said, "but to us, this is the
last chance we have. Hopefully, the court will agree they violated the
agreement because once these jobs are gone, they are gone for good."
But Mark Sullivan, a spokesman for Pratt, said the company had not
violated the pact, and had offered the union a chance to save the jobs
- though at reduced pay. The average pay would have been reduced about
18 percent - from about $22 an hour to $18 an hour, still better than
the industry average for similar work, Sullivan said.
"We have met every provision in our contract to discuss this with the
union and make good faith proposals," Sullivan said. "We think it is
unfortunate the union chose to reject a proposal that would have saved
roughly 150 jobs."
Sullivan said the changes would save the company millions of dollars a
year, adding that he expects the contract with an outside vendor to be
in place by the end of the year.
"We have said continuously that our Connecticut operations would be
concentrated on high-skill, high-value-added work. Warehousing is not
part of that," he said.
But Parent said the union had proposed steps that could have saved the
company millions, as well, by consolidating the parts and shipping work
in one Connecticut plant and boosting the efficiency of the operations.
Together, he said, the company and the union could have calculated the
savings from those steps and then discussed what other concessions were
needed from workers to reach the company's cost-cutting goals.
AUG 13, 2003
http://straitstimes.asia1.com.sg/topstories/story/0,4386,204489,00.html
Britain may lose 30,000 top jobs to low-cost centres
In 'third wave' of job losses, positions in finance and insurance
industries may be lost to countries like India within 5 years
By Lee Su Shyan
FIRST, it was information technology jobs, then call centre jobs, now a
'third wave' of highly paid executive jobs in developed countries could
disappear to low-cost centres such as India.
A new British employment study has warned that at least 30,000
executive jobs in the financial and insurance industries in Britain
could shift to low-cost centres in India within five years.
And there are fears that this looming fresh wave of job migration could
hit Singapore hard too, given its relatively high salaries.
However, some recruitment experts argue that the greater efficiency of
the local financial industry, competitive tax rates and the ease of
hiring, mean that many jobs here may resist such a trend.
London's Evening Standard newspaper cites the British study as saying
the new threat is set to affect accountancy jobs that command salaries
of around #70,000 (S$198,380) in London but can be filled by
graduates in India for just the equivalent of #10,000.
Mr Raja Gopalakrishnan, head of banking and insurance at India's
second-largest bank ICICI, told the paper: 'We are in talks with almost
every British bank and insurance company, so the quantity and quality
of British jobs being mentioned do not seem unrealistic.
He added: 'If the first wave of offshoring was IT jobs, and the second
was call centres and financial and data processing, the third wave will
definitely be more senior accountancy jobs from Europe and the US.'
The newspaper said that according to Deloitte Consulting, the world's
100 largest financial services companies expect to transfer an
estimated US$356 billion (S$626 billion) of their operations and two
million jobs offshore by 2008 in a bid to cut costs.
In Singapore, recruitment firms have already noticed the start of such
a trend.
Associate director Florence Ng, with recruitment consultancy Michael
Page, said: 'Over the past couple of years, we have seen multinationals
moving their regional accounting functions to lower-cost countries like
Malaysia, India and China.'
US manufacturer Honeywell recently said that its finance, technology
and human resource functions will shift from Singapore to its new
headquarters in Shanghai.
In earlier efforts to cut costs, many big companies centralised
functions in Singapore in areas such as paying and billing accounts.
But increasingly, technology, manufacturing and financial services
companies are looking to set up cheaper centralised operations
elsewhere.
Ms Cynthia Chew, managing director of Adecco Personnel, said: 'This is
a trend that has gradually taken shape over the past few years.'
Recruitment consultants put the size of such centralised departments in
multinational companies as ranging from a team size of less than 10 up
to as many as 20 or 30 accountants. Once the function shifts out of
Singapore, anyone from a finance manager down to the assistant
accountant would be affected.
Still, Ms Ng points to many companies that are still choosing to base
their centres here.
She said: 'Companies know they will have no problems in recruiting to
fill various positions.' Also, accountants here may be speedier and
more efficient than their foreign counterparts.
Other factors in Singapore's favour, consultants said, are its
political stability and low tax rates for businesses. And even if
middle-level executive jobs are leaving, the top-level finance jobs are
staying put here. According to Mr Shaun Goh, managing consultant at BTI
Consultants, 'posts such as the financial controller and chief
financial officer are still firmly anchored in Singapore because of the
talent pool here'.
http://www.madison.com/captimes/opinion/editorial/54519.php
Wisconsin editorial: Collapse of manufacturing
August 11, 2003
Don't bother looking for the "Made in the USA" label. If the rapid
decline in American manufacturing continues for much longer, U.S.
factories won't be producing any clothing on which to attach the
labels.
Since George W. Bush became president, the United States has lost more
than 2 million manufacturing jobs. And a disproportionate number of
them - close to 50,000 - have come from Wisconsin.
In Wisconsin, the Bush presidency has paralleled the collapse of a
century-old cookware industry, and it is threatening what remains of
our auto industry.
But, as bad as things are here, it is worse in states that have
traditionally relied on textile employment.
Battered by corporate free trade policies, states such as North and
South Carolina, Virginia, Maryland and Pennsylvania are losing textile
jobs faster than you can say "cheap import."
The latest monthly job loss figures show that textile industries lost
18,000 jobs. That's a rate of roughly 600 layoffs a day.
The Bush administration and Congress continue to promote a free trade
agenda that - through the North American Free Trade Agreement,
permanent most-favored nation trading status for China and other
corporate-sponsored trade deals - is substantially to blame for
American job losses. Instead of backing off the free trade regimen,
however, Congress has just approved new trade deals for Chile and
Singapore. And they are working on a Free Trade Area of the Americas
deal that is referred to as "NAFTA on steroids."
America used to be a country that produced things. Now, under George W.
Bush and his conservative Congress, its primary product is becoming
layoff notices.
Published: 8:35 AM 8/11/03
http://www.computerworld.com/managementtopics/management/outsourcing/story/0,10801,83859,00.html
BellSouth eyes offshore outsourcing of up to 900 workers
By PATRICK THIBODEAU
AUGUST 08, 2003
BellSouth Corp. may save as much as $275 million in IT costs over
five years as the result of a plan to move its application development
and maintenance work offshore.
The details of the offshore plan, called Project Horizon, were included
in a BellSouth internal memorandum posted earlier this month on
Internalmemos.com. The company confirmed that the memo is genuine.
Whether BellSouth moves ahead with its plan will depend on the success
of a pilot program in India, said Elyse Hammett, a spokeswoman for the
Atlanta-based company. That program will continue until early next
month.
"Our current business case suggests moving 1/3 to 1/2 of our IT
application work offshore. This equates to 600-900 positions over the
next four years," the memo said.
BellSouth has outsourced its IT application and development work to
Accenture Ltd., its long-standing partner. In explaining what will
happen to workers, the company said that "as roles do transition,"
Accenture "will move people to other opportunities within their
organization based on business need and skills."
What BellSouth is doing isn't unique. Gartner Inc. recently reported
that by the end of next year, one out of every 20 corporate IT jobs and
10% of the positions at IT vendors and technology services firms in the
U.S. will have moved offshore.
The BellSouth memo offered insight into the cost-savings projections
and motives behind such a move.
"BellSouth is facing the challenge to reduce expenses across the
board," according to the memo. "Project Horizon is the program whereby
BellSouth will utilize resources offshore to provide IT maintenance and
development work on their applications. This program will allow
BellSouth to reduce IT costs while still maintaining the same workload
and service levels."
BellSouth said its $275 million estimate was based on a savings of 45%
to 70% in outsourcing costs.
According to the memorandum, India was chosen because it offers
low-cost, high-quality work, a stable infrastructure with redundant
communications links built to international standards, and a pro-U.S.
business environment.
Other countries considered include Spain, Canada, the Philippines,
Brazil and Australia.
Source: Computerworld
http://www.rediff.com/money/2003/aug/11nortel.htm
Nortel to increase outsourcing from India
PTI | August 11, 2003 | 16:11 IST
Global telecom equipment vendor, Nortel Networks, which has so far
outsourced R&D worth Rs 1,000 crore (Rs 10 billion) from India over the
past five years, is planning to increase its product research
development work locally in the core areas of switching and enterprise
voice.
"We have so far outsourced R&D in the core areas like switching,
wireless, enterprise voice, call centre applications and wireline,
worth Rs 1,000 crore over the last five years and it is going to
increase in the same areas," Ravi Chauhan, vice president, India and
Sarrc, enterprise solutions, Nortel Networks, told PTI on the sidelines
of a function to launch its latest products in New Delhi.
Even though the company does not have an R&D centre of its own in
India, it works with partners -- Infosys, Sasken and TCS -- where it
carries out its development work. Nortel provides its own engineers to
the partners for the R&D, he said.
"Our technology partners have delivered very good work. Though cost
competitiveness is one of the factors, it is quality, availability of
the talent, compatibilty with partners which has been responsible for
our strong development base here," Chauhan said.
The company does some R&D outsourcing from China. But India is on a
strong position on R&D outsourcing for Nortel.
As part of its strong India focus, Nortel announced the launch of
ethernet LAN switches for the Indian market for the service-centric
networks to carry voice, data and multimedia communications in a
converged network.
The switches are BayStack 425, BayStack 5000, Passport 8300 and
Passport 1600.
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