10 Articles Worth Reading
10 Articles Worth Reading
Date: Friday, January 14, 2005 10:01 AM
JOB DESTRUCTION NEWSLETTER
by Rob Sanchez
January 14, 2005 No. 1178
Article 1:
http://moneycentral.msn.com/content/Banking/FinancialPrivacy/P90682.asp
Your financial secrets are headed overseas
More credit, mortgage and tax files are being handled abroad. Nothing
suggests your data are more vulnerable -- but an identity thief 10,000
miles away is virtually untouchable. Your best friend may not know how
much you made last year or whether youve been late with a
credit-card payment -- but an office worker in India might.
Article 2:
http://www.forbes.com/2005/01/05/cx_pp_0105outsourcing.html
When Not To Outsource
Outsourcing is often viewed in black and white terms--a boon for
corporate America and a bust for U.S. workers. Every job and every
business strategy is seen as potential fodder for the outsourcing mill,
with the assumption that the cost savings reaped from the practice will
simply pour back into the company coffers. Not so fast.
Article 3:
http://www.startribune.com/stories/561/5161903.html
Editorial: Students wanted/World's best are needed here
Bright young immigrants, fresh from U.S. graduate schools, are key to
helping this nation meet industry's galloping demand for engineers and
scientists, at a time when the number of American high school students
preparing to enter those fields is dwindling. That's why congressional
action is needed now to ease the way for foreign students into American
universities once more.
Article 4:
http://www.azcentral.com/arizonarepublic/business/articles/0103resorthelp.html
Ski areas recruit workers abroad
"I wouldn't want to degrade the U.S. workers, because they're
phenomenal," he said. "We have to go farther to find enough of those
people." The problem is that the resorts don't fill their jobs with
just anybodies. They want elegant bodies with sophisticated social
skills. "We're trying to perform this five-star service level and the
employable in the U.S. that are out of work just don't really fit that
standard," said Rich Jensen, recruiting manager at Deer Valley. "Not
that you don't get any good U.S. applicants, but you get a lot of
really quality kids from out of the country."
Article 5:
http://www.ksat.com/news/4050461/detail.html
Based Company Admits Providing Illegal Workers
An employment agency pleaded guilty to falsifying forms to get illegal
immigrants jobs at the nation's top producer of U.S. military
battlefield rations.
Article 6:
http://newstodaynet.com/07jan/bu2.htm
Biz school in MoU with Yale
Chennai-based Great Lakes Institute of Management (GLIM) and Yale
University, US, have formed a joint venture for the establishment of a
management research centre in India. Yale-GLIM Centre for Management
Research will undertake management-related research activities and
consultancy projects,
Article 7:
http://www.siliconindia.com/shownewsdata.asp?newsno=26570
Orange to outsource 1,500 jobs to India
Orange, Britain's largest mobile phone operator, has announced plans to
outsource 1,500 jobs, or 12 percent of its British workforce, to India
as part of a drive by its parent company, France Telecom, to cut costs.
Article 8:
http://www.cheboygannews.com/articles/2005/01/10/news/news1.txt
Worker shortage looms
Cap on H-2B visas could translate into fewer Jamaican employees during
the coming summer tourist season
The supply of seasonal Jamaican workers, considered to be a key
component of Mackinaw City's summer work force, will be considerably
less this year because of restrictions on H-2B visas.
Article 9:
http://www.theatlantic.com/doc/prem/200501/cohen
(full article not available online)
State of the Union
Shaken and Sirred
The United States is about to experience economic upheaval on a scale
unseen for generations. Will social harmony be a casualty?
Article 10:
http://www.mercurynews.com/mld/mercurynews/business/10548353.htm
Opponents of practice cite risks, ethical issues
If William Shakespeare had written ``Henry VI'' under today's economic
circumstances, he might have penned that famous line as: ``The first
thing we do, let's offshore all the lawyers.''
1. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://moneycentral.msn.com/content/Banking/FinancialPrivacy/P90682.asp
Your financial secrets are headed overseas
More credit, mortgage and tax files are being handled abroad. Nothing
suggests your data are more vulnerable -- but an identity thief 10,000
miles away is virtually untouchable.
By Liz Pulliam Weston
Your best friend may not know how much you made last year or whether
youve been late with a credit-card payment -- but an office worker
in India might.
Tax returns, mortgage applications, even credit-bureau files are among
the sensitive financial data that cost-conscious American firms are
quietly shipping overseas. Consider:
As many as 500,000 U.S. tax returns could be prepared in India next
year, says tax outsourcing expert Gary Boomer of Boomer Consulting in
Manhattan, Kan. Thats up from about 25,000 in the 2002 tax year and
100,000 for 2003. The individual and business returns come from a wide
range of U.S. sources, from single-CPA offices to Big Four accounting
firms, including Ernst & Young and Deloitte.
TransUnion, one of the three major credit bureaus, plans to send all
consumer disputes to a processing center in India. The company expects
a significant increase in such disputes as U.S. consumers take
advantage of a new law requiring bureaus to provide free annual credit
reports, and says outsourcing the work is its most cost-effective
option. Rival bureau Equifax currently outsources some dispute work to
Jamaica. Credit-bureau files contain some of your most sensitive
financial data, including your Social Security number, credit account
numbers, the amounts you owe and your payment history.
U.S. companies are expected to outsource $3 billion this year in such
"business processing," which also includes insurance-claims handling,
transcription of personal medical files and credit-card processing,
according to research firm Gartner. That total represents a 65%
increase from the year before. India, the Philippines and China are
among the countries taking on the bulk of this work.
The mighty buck vs. your privacy
The motivator is simple: Money. Overseas processors often can do the
work for a fraction of what it would cost domestically.Get organized
with
Microsoft Money 2005.
Order it now.
For example, an accounting graduate who would earn $3,750 a month
working for a Big Four firm in the United States earns about $300 a
month in India. That allows Indian companies to charge U.S. accountants
$75 to $150 per return, Boomer said. The U.S. preparer can turn around
and bill the client for two to five times that amount.
And theres no law that requires the U.S. accountant or firm to tell
you that your return was prepared by someone else, let alone someone
overseas. Likewise, most of the other business processing thats
handled abroad is done without the consumers knowledge or consent.
Privacy experts are understandably concerned about the risks your data
may face overseas. Some of their worst fears were realized last year
when a Pakistani medical transcriber threatened to post on the Internet
confidential patient files from a San Francisco hospital unless she was
paid money she said she was owed.
The transcriber quickly rescinded her e-mailed threat, and UCSF Medical
Center fired the contractor who hired the subcontractor who was
ultimately responsible for the Pakistani womans work. But the
incident exposed the fact that the hospital wasnt keeping track of
exactly where its medical records were going or who had access to them.
Limits to privacy protections
Of course, whether your financial information is more vulnerable abroad
than it is at home is an open question. Some of the foreign data
processors have security systems that would put their American
counterparts to shame.
On a recent visit to Bangalore, New Delhi, Mumbai and other Indian
cities, for example, Boomer, the CPA, saw guarded facilities that
required fingerprint scans for employees to enter. Briefcases, purses
and knapsacks werent allowed inside, he said, and the workers had no
access to printers or the Internet. The computers they worked on even
lacked hard drives, disk drivers or other removable media that could be
used to store or transport information.
"The places we saw had far more security," Boomer said, "than any
(U.S.) CPA firm youd see."
But the fact remains that U.S. privacy laws arent enforceable
overseas, and the few law enforcement resources devoted to identity
theft here probably cant be stretched to cover data-stealing in
other countries.
"If there is an identity theft case (abroad), theres virtually no
likelihood that there will be any investigation," said Beth Givens,
director of the Privacy Rights Clearinghouse in San Diego.
Is the U.S. really any better?
Of course, the chances an identity thief will be caught at home
arent all that great, either. Just one in 700 U.S. identity-theft
cases leads to a prosecution, according to a Gartner estimate. By
comparison, FBI statistics show nearly half of all violent crimes were
"cleared" in 2002 (i.e., someone was arrested and turned over for
prosecution in 46.8% of the cases), while the clearance rate for
property crimes was 16.5%.
Meanwhile, many domestic businesses do a lousy job of protecting your
information.
Michigan State University professor Judith Collins studied more than
1,000 identity-theft cases where the thief was identified and
prosecuted. She found that as many as 70% of those cases started with a
crooked, usually low-level employee stealing personal data from a
workplace such as a bank or health-care provider.
Collins hypothesized that most identity theft is, in fact, an inside
job. Of course, another interpretation of her findings is that insiders
are easier for law enforcement to track and catch. Dumpster-divers and
computer hackers may be much more difficult to find.
But either way, her study vividly illustrates how sloppy many domestic
firms are with their customers data. Dishonest employees often can
easily access, copy and walk away with reams of confidential
information that can be used to commit identity theft. Companies are
frequently unwilling to invest in security measures such as encryption
or restricted access based on fingerprint scans or other biometric
identification.
Thats starting to change, however, partly in response to a new
California law that requires companies to tell customers when their
private financial data has been illegally accessed. Rather than face
public disclosure of hacking and other data theft, security experts
say, more companies are now investing in ways to keep the data safe in
the first place.
Fessing up can be good for business
Disclosure is a solution that could work for offshore outsourcing as
well.
Instead of banning the practice, lawmakers could simply force companies
that outsource to tell their customers and get their consent.
Boomer believes accountants could disclose their outsourcing policies
without alienating customers by stressing the benefits to those
customers, such as faster processing times. (Indian firms processing
U.S. tax returns often promise 24-hour turnarounds, even during the
peak of tax season.)
Honesty certainly has been the best policy for Internet lender E-Loan.
Starting in February, the company gave home-equity borrowers the option
of shaving two days off their loan-processing times if they would agree
to let Indian workers handle their applications. A few borrowers insist
on domestic processing, but E-Loan spokeswoman Laurie Azzano said fully
87% have opted for the faster offshore route.
Knowing that your customers are going to hear about your outsourcing
arrangements also could be a powerful motivator to make sure those
arrangements are secure. Givens believes any firm thats considering
outsourcing should visit the country and company handling the contract,
so they know exactly whats happening with their data. U.S. companies
need to know if there are safeguards in place -- or if a disgruntled
worker in a makeshift home office abroad could cause them a scandal
with a single e-mail.
"It behooves U.S. companies that outsource to very carefully check out
the companies they are outsourcing to," Givens said. "I think thats
absolutely critical."
Liz Pulliam Weston's column appears every Monday and Thursday,
exclusively on MSN Money. She also answers reader questions in the Your
Money message board.
2. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.forbes.com/2005/01/05/cx_pp_0105outsourcing.html
When Not To Outsource
Penelope Patsuris, 01.05.05, 6:00 AM ET
Outsourcing is often viewed in black and white terms--a boon for
corporate America and a bust for U.S. workers. Every job and every
business strategy is seen as potential fodder for the outsourcing mill,
with the assumption that the cost savings reaped from the practice will
simply pour back into the company coffers.
Not so fast. Companies are beginning to realize that there are plenty
of cases in which outsourcing is not the best business strategy--even
when it comes to manufacturing, a realm that's generally considered
well suited to the practice.
TPI, a consulting firm based in the Woodlands, Tex., often tells
clients to steer clear of outsourcing. "When people come to me with
their outsourcing ideas, I usually advise them against 30% or 40% of
the initiatives that they had in mind," says TPI project director Paul
Schmidt, "even though that doesn't maximize my sales."
Some deals will continue to make sense. Companies as diverse as Best
Buy (nyse: BBY - news - people ), Procter & Gamble (nyse: PG - news -
people ), Verizon Communications (nyse: VZ - news - people ) and Ford
Motor (nyse: F - news - people ) are reaping tremendous strategic
advantages thanks to the practice. "The issue isn't that less will be
outsourced," says Harvard Business School professor Rajiv Lal. "It's
just going to be a matter of what is outsourced."
It takes a complex calculus to determine whether outsourcing makes
sense, so there are few hard and fast rules. But the general theme that
underlies our guidelines is simple: The option that offers the biggest
cost savings isn't always the best one.
3. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.startribune.com/stories/561/5161903.html
Last update: January 2, 2005 at 8:03 AM
Editorial: Students wanted/World's best are needed here
Published January 2, 2005
A stroll through the research labs at the University of Minnesota
anytime in the last couple of decades would have shown how important
foreign students are to the scientific enterprise of this state and
nation. A majority of the graduate students populating many a lab were
born in other countries.
That means there is a big Minnesota stake in reversing a worrisome
trend: Enrollment of foreign graduate students on American campuses
dropped 6 percent this year, and applications fell 28 percent. For the
first time in 30 years, the number of foreign students fell on all
American campuses, undergraduate and graduate. The number of students
in China and India who took the Graduate Record Exam, a prerequisite to
studying in U.S. graduate schools, was down by 50 percent last year.
As the New York Times reported on Dec. 21, one reason for the change is
that the academic competition in other countries is getting tougher.
While many states, including Minnesota, have nickeled and dimed higher
education, China has made the upgrading of its research universities a
national priority. American-style degree programs, taught in English,
are popping up in universities all over Europe. It's becoming more
attractive for the world's best and brightest students to study at
home.
But a more immediate -- and more easily remedied -- explanation arose
in the wake of the 9/11 attacks. Obtaining a visa to study or teach in
the United States became a more complicated and time-consuming process,
with a less predictable result.
In a letter to the state's congressional delegation, David B. Laird
Jr., the head of the Minnesota Private College Council, cited an
example of what Minnesota colleges are experiencing. He had just
returned from a November trip to China. "In China, if we want to invite
a university president or government educational leader to visit us in
Minnesota, the process would have to begin six months in advance of the
intended visit and likely would need to be repeated two or three times
before achieving success. That person would likely have to travel
hundreds of miles for a two-minute interview and probably be turned
down on the first attempt.
"Our attempts to work with embassy personnel have been nearly as
frustrating. Only when one or more members of our congressional
delegation have intervened have we been able to alter the process or
the results." Laird went on to warn: "There are clear indications that
many longtime partner nations have decided to shift resources and
people to other competitor nations throughout the world."
Once new patterns of student exchange are established, altering them
will be very difficult. And the loss to this state and nation if the
best foreign students study elsewhere will be keenly felt. Bright young
immigrants, fresh from U.S. graduate schools, are key to helping this
nation meet industry's galloping demand for engineers and scientists,
at a time when the number of American high school students preparing to
enter those fields is dwindling.
That's why congressional action is needed now to ease the way for
foreign students into American universities once more. Minnesota Sen.
Norm Coleman introduced such a bill last summer. That bill should
become a matter of priority when the new Congress begins its work this
month.
4. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.azcentral.com/arizonarepublic/business/articles/0103resorthelp.html
Ski areas recruit workers abroad
Michael Kiefer
The Arizona Republic
Jan. 3, 2005 12:00 AM
Bruno Barcellona spends his days working on his English language skills
as he fits tourists with boots and skis at Deer Valley Resort, an
upscale Utah ski area.
The exuberant 20-year-old engineering student is on his summer break
from a university in Argentina.
A mile down the road at Park City Mountain Resort, Paula Infante, 22,
sells lift tickets, greeting the skiers with her charming Chilean
accent. She also studies engineering, but at a university in
Valparamso, Chile.
Twenty years ago, Rocky Mountain ski resorts recruited heavily in the
Midwest, reasoning that young people from Minnesota and Iowa were more
polite than New Yorkers and more likely to show up for work than
Californians.
Now they have to go much farther to find enough well-groomed and
well-mannered young people to greet guests and to staff the restaurants
and rental shops: the Southern Hemisphere.
"There has been a trend over the years to employ seasonal workers from
elsewhere in the world," said Michael Berry, president of the National
Ski Areas Association. "In the east it's South Africa. We've
traditionally seen a bunch of people come up seasonally from Australia
and New Zealand."
They come on student visas or on visas for seasonal or skilled workers.
Vail Resorts employs 1,200 to 1,300 Australians and New Zealanders,
many of them ski and snowboard instructors at its four ski areas on
Colorado's Front Range.
"That's down at least 300 to 400 from past years," said Kelly Ladyga, a
Vail spokeswoman.
Aspen/Snowmass has 300 to 400 international employees at its four
mountains in Colorado, Aussies more than South Americans.
And Deer Valley and Park City have more than 400, recruited mostly from
Peru, Chile, Argentina and Brazil. And that's not to mention the South
Americans working the other hotels and restaurants in town.
"The resorts tend to be in rural parts of the world," Berry said. "And
as the resorts have gotten larger, the population base isn't there to
supply a regular and steady flow of workers. So the industry looks
elsewhere.
"First they look for the kids who are looking to take a year off from
college here in the states, but that's dwindled," Berry said. "People
are not as interested in taking a year off before they get on with
their professions."
Chris Lampe is human resources manager at Park City Mountain Resort.
"I wouldn't want to degrade the U.S. workers, because they're
phenomenal," he said. "We have to go farther to find enough of those
people."
The problem is that the resorts don't fill their jobs with just
anybodies. They want elegant bodies with sophisticated social skills.
"We're trying to perform this five-star service level and the
employable in the U.S. that are out of work just don't really fit that
standard," said Rich Jensen, recruiting manager at Deer Valley. "Not
that you don't get any good U.S. applicants, but you get a lot of
really quality kids from out of the country."
Jim Laing, vice president of human resources at Aspen Skiing Co.,
agreed.
"We have very specific standards regarding grooming, appearance,
presentation, interaction with the guests," he said. "The guests do
expect a certain experience and have come to expect that experience
because of our promises, and we definitely want to deliver on that."
Then, he said, he has to convince the U.S. government that he can't
find those workers here and has to look elsewhere.
Of course, where there's a need, there are businesses springing up to
meet it, including companies that take resort recruiters on free
junkets to student job fairs from Sydney to Santiago.
Maria Fagersten, winter programs coordinator for CCUSA, a student
recruiting firm, said her company represents about 90 ski areas,
setting up interviews and arranging visas for Southern Hemisphere
university students who want to work abroad during their December-March
summer breaks. Her firm is based in Sausalito, Calif.
"The participants are all educated, they have work experience, they all
have legal paperwork to work," Fagersten said, "whereas all of our
immigrant population here may not be legal or educated."
Barcellona had about 25 ski resorts and casinos to choose from. Infante
chose Park City over Jackson Hole, Wyo., and Copper Mountain and
Steamboat Springs in Colorado "because of the benefits (a ski pass she
hasn't had time to use yet) and also because of the Sundance (Film)
Festival." Both ski during their own winter at Portillo, Chile.
Resort spokesmen say the foreigners rate well with their clientele,
including increasing ski visitors from Latin America.
Laing noted that more than 20 percent of Aspen/Snowmass visitors are
from other countries.
"Our workforce really is reflective of our guest population," he said.
Reach the reporter at michael.kiefer@arizonarepublic.com or (602)
444-8994.
5. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.ksat.com/news/4050461/detail.html
S.A.-Based Company Admits Providing Illegal Workers
Tollin Group Agrees To Maximum Penalties
POSTED: 12:48 pm CST January 5, 2005
McALLEN, Texas -- An employment agency pleaded guilty to falsifying
forms to get illegal immigrants jobs at the nation's top producer of
U.S. military battlefield rations.
James Echensberger, vice president of San Antonio-based Tollin Group
Inc., on Tuesday pleaded guilty on the company's behalf to one count of
conspiracy to provide false and fictitious statements during an FBI
investigation.
Investigators found that Tollin, which does business as Remedy
Intelligent Staffing, was trying to cover up hundreds of fraudulent
"I-9" employment eligibility documents. The illegal workers were hired
by Wornick Co., which packages high-calorie "meals ready to eat" for
troops in Iraq.
The FBI initiated the investigation after an al-Qaida operative
arrested in 2003 was found with information indicating that McAllen and
Wornick could be terrorist targets. Wornick had a $47 million
Department of Defense contract to deliver more than 1.1 million meals
between February and May 2003.
"Although no direct link to terrorism was found in this case, companies
that place short term profits above potential threats to national
security will be held accountable for their illegal conduct," U.S.
Attorney Michael Shelby said in a news release.
Remedy has agreed to pay a $500,000 fine, $414,000 in civil penalties,
and serve five years of probation -- the maximums under federal
sentencing guidelines.
6. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://newstodaynet.com/07jan/bu2.htm
Biz school in MoU with Yale
NT Bureau
Chennai, Jan 7:
Chennai-based Great Lakes Institute of Management (GLIM) and
Yale University, US, have formed a joint venture for the establishment
of a management research centre in India. Yale-GLIM Centre for
Management Research will undertake management-related research
activities and consultancy projects, contributing to the development of
basic and advanced knowledge with practical applications. Commenting on
the joint initiative, Dr Bala V Balachandran, founder and honorary
dean, GLIM, said, 'this first-of-a- kind interaction with an Ivy League
institute like Yale will help in cementing a mutually synergetic bond
between US academia and Indian industry'.
One thrust area of the Yale-GLIM research will be an in-depth
empirical analysis of the Indian financial markets spearheaded by
professor Shyam Sunder, an authority on experimental economics at Yale
University.
'The purpose of cooperation between Yale School of Management
and GLIM is to develop capacity for research and scholarship at GLIM
for it to become a fountain of new ideas, scholarship, research papers,
books and thought leaders in the discipline of management, said Shyam
Sunder.
An MoU has been entered into for the joint venture between Dr
Richard C Lewin, president, Yale University and Dr Bala V Balachandran,
along with unveiling of a stone foundation to mark the occasion in the
presence of corporate personalities.
7. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.siliconindia.com/shownewsdata.asp?newsno=26570
Orange to outsource 1,500 jobs to India
Tuesday, January 11, 2005
NEW DELHI: Orange, Britain's largest mobile phone operator, has
announced plans to outsource 1,500 jobs, or 12 percent of its British
workforce, to India as part of a drive by its parent company, France
Telecom, to cut costs.
The company is beginning trials with two specialist sub-contractors,
Convergys and Vertex, in which 215 call centre workers in Delhi will
answer customer service inquiries during peak periods.
An Orange spokesman told the media: "A final figure on the numbers we
intend to outsource will not be decided until these trials are
complete. The steps we are taking will not lead to site closures and
redundancies.
"This outsourcing is intended to help Orange Customer Services cope
with high demand and ensure the company continues to offer customers
the high level of service they have come to expect over the last 10
years."
Call centre staff make up half of Orange UK's 12,000-strong workforce,
with the lion's share working in the North-East in Darlington,
Peterlee, and North Tyneside.
The group is also making 200 staff redundant from the technical
department at its Bristol headquarters, where it has offered some
information technology staff one-year salary deals.
According to the Communication Worker's Union, 33 large companies -
including Barclays, British Airways, LloydsTSB, Prudential, and Reuters
- have collectively outsourced 52,000 jobs serving British customers.
The Confederation of British Industry recently warned there would be no
jobs for unskilled workers in Britain in 10 years because of
outsourcing, while Amicus has predicted that 200,000 jobs could be lost
to offshore outsourcing by 2010.
Orange UK's plans could cause further bitterness towards France
Telecom, which some insiders say considers its British operations a
soft target for job losses because the British unions are less powerful
than those in France.
8. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.cheboygannews.com/articles/2005/01/10/news/news1.txt
Worker shortage looms
Thursday, January 13, 2005
Cap on H-2B visas could translate into fewer Jamaican employees during
the coming summer tourist season
By MIKE FORNES
Tribune Staff Writer
MACKINAW CITY - The supply of seasonal Jamaican workers, considered to
be a key component of Mackinaw City's summer work force, will be
considerably less this year because of restrictions on H-2B visas.
For the second time in 10 months, federal authorities have enforced a
cap on the number of temporary workers allowed in the country using the
visas, granted by the U.S. Citizenship and Immigration Services, the
sub-agency of the Department of Homeland Security charged with
enforcing the nation's immigration policies. On March 1, 2003, the
Immigration and Naturalization Service transitioned into the Department
of Homeland Security.
The move will force hundreds of Northern Michigan employers who rely on
foreign workers during the summer to seek help elsewhere. Under federal
law, no more than 66,000 H-2B visa holders can enter the country
annually. The U.S. Citizenship and Immigration Services began counting
toward the cap on Oct. 1, the start of the federal fiscal year.
But businesses can't apply for H-2B visas until 120 days before they
need the workers, and this year, all the visas for the current fiscal
year - October through September - had been distributed before some
summer employers could even send in the paperwork.
"Some year-round businesses were successful," said Mackinaw Area
Visitors Bureau Director Brad Jones, "but to my knowledge all seasonal
businesses in Mackinaw were denied. I would think that will affect
probably 280 to 300 workers in Mackinaw City. Our hoteliers have been
notified that the cap has been met."
Jones said the enforcement will diminish the work force in surrounding
resort communities including Mackinac Island, St. Ignace, Boyne City,
Traverse City and even Sault Ste. Marie.
"Multiple communities will be affected, everybody's in the same boat,"
Jones said. "It definitely hits Mackinaw City harder than most places
because of our small population."
One hotelier said his hands were tied by the application rules for the
H-2B visas.
"The key is the 120-day window," explained Craig Bonter, who operates
the Ramada Inn and Convention Center and planned to employ 12 Jamaican
workers. "It makes it difficult to plan and it will be difficult to
open the hotel. I can limp along until the Europeans get here at the
end of June."
European workers, who also come to Northern Michigan for summer jobs,
operate on a different visa arrangement than Jamaican laborers who are
here for a longer period of time. European students also typically look
for situations where they can work for three months, then tour the
United States for a month before returning to their studies.
Mackinaw City Village President Robert Heilman, a business owner
himself, said the options are few.
"There may be a lot of overtime for some employees, and some business
owners may spend more time at their workplaces than they have been,"
said Heilman, who operates the Fort Fudge Shop. "Some businesses really
rely on foreign employees. Most of ours come back each year, so we
really haven't had to deal with it."
Hardest hit could be owners of multiple properties, who may find
themselves looking for replacements for 100 workers among various
business interests.
Heilman said that U.S. Representative Bart Stupak, D-Menominee, has
been contacted to help find a solution. But a recent attempt to
increase the 66,000-visa limit by U.S. Sen. Edward Kennedy, D-Mass.,
who represents the tourism area of Cape Cod, was rejected by Congress.
Meanwhile, Congress recently agreed to allow high-tech businesses to
hire 20,000 more foreign workers under the H-1B program because all
65,000 visa slots were taken on the first day of the new fiscal year,
according to the Associated Press. Those workers must have earned
master's degrees or higher at American universities to qualify for a
work visa.
Under the current H-2B visa program, Michigan is disadvantaged because
its warm-weather season starts much later than other parts of the
nation. Since companies can only apply for the visas four months before
the workers are needed, most of the visas are long gone by March 1,
when Michigan businesses would normally begin filing applications for
workers to start on July 1 - the beginning of the busy tourism season.
With modern shoulder seasons extending tourist operations from May
until well into October, Mackinaw City employers still didn't stand a
chance. To bring workers in early, companies would risk breaking the
law.
The H-2B visa application period for 2005 began on Oct. 1, the start of
the new federal fiscal year. On the first day alone, 10,400 of the
66,000 visas allocated were spoken for. Last year, the visa cap was
reached on March 9.
In December, the agency announced it had received requests for 61,000
H-2B visas. For various reasons, an average of one in three H-2B
applicants approved for entry by the U.S. Citizenship and Immigration
Services never arrives in the United States. As a result, the agency
planned to continue processing applications until it received requests
for 100,000 workers. Those numbers have been reached just three months
into the fiscal year.
Before the H-2B visa category was created in the early 1990s, hotel
managers often worked 18-hour shifts in the summer and never took a day
off, covering for employees' days off and college students not yet home
or headed back to school. Those days may return unless a solution is
found.
Heilman said he is meeting with Mackinaw City business representatives
to seek an answer.
"There's a lot of research still happening," Jones concluded. "We've
got to find a pool of workers - American, Canadian, whomever."
9. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.theatlantic.com/doc/prem/200501/cohen
The Atlantic Monthly | January/February 2005
State of the Union
Shaken and Stirred
The United States is about to experience economic upheaval on a scale
unseen for generations. Will social harmony be a casualty?
by Stephen S. Cohen & J. Bradford DeLong
.....
It has become conventional wisdom that class politics has no legs in
the United States today -- and for good reason. Regardless of actual
circumstance, an overwhelming majority of Americans view themselves as
middle-class. Very few have any bone to pick with the rich, perhaps
because most believe they will become rich -- or at least richer --
someday. To be sure, the issues of jobs and wages inevitably make their
way into our political campaigns -- to a greater or lesser extent
depending on where we are in the business cycle. But they seldom divide
us as much as simply circle in and out of our political life. Lately
anxiety about the economy has been palpable, but for the most part it
has not evolved into anger or found specific scapegoats.
Economic insecurity could well divide us in the future, however. We are
on the cusp of an economic era whose challenges will be unfamiliar to
most Americans of working age. It is likely to erode the psychological
pillars on which class unity has rested in this country: personal
economic stability for the middle class, and the promise of at least
some upward mobility for most Americans. The most likely division --
besides that between the truly rich and the truly poor -- will be
between those in the middle class who are able (through agility or
luck) to manage economic risk and those who find themselves helpless
before the economic pressures of a new age.
nce upon a time, or so it is said, America was a place with lots of
upward but little downward mobility. In the really old, pre -- Civil
War days you could start out splitting rails, head west, make a success
of yourself on the frontier, and perhaps even wind up as president. In
the relatively recent, post -- World War II expansion you could do well
by landing a blue-collar job in a unionized manufacturing industry or a
white-collar job at a large, stable American corporation such as IBM,
AT&T, or General Electric -- which offered job security, high salaries,
and long, steady career ladders.
There was always as much mythology as truth to this image of America.
Lighting out for the West was expensive; covered wagons did not come
cheap. More generally, although many terms could be used to describe
economic life in the nineteenth and early twentieth centuries, "stable"
and "secure" are not among them.
But there was considerable truth to the image as well, particularly
after World War II. Regardless of education level or family background,
many Americans who valued stability and security really did have the
chance to grasp it; jobs with "a future" -- that is, with steadily
rising wages and solid retirement plans -- were plentiful. And even for
many of those who were fired, the economic risks were fairly low: the
unemployment rate for married men during the 1960s averaged 2.7
percent, and finding a new job was a relatively simple matter. During
the first decades following World War II, to the astonishment of
interviewing sociologists, a majority of Americans began to define
themselves as middle-class.
This post -- World War II period stands as a reference point in our
popular economic history -- a gold standard for rapid growth and shared
prosperity. It lingers in our national memory, and remains an important
source of confidence in the unity of our culture and the awesome power
of our economy. But although it engendered our current economic
expectations, our sense of "the way things ought to be," in reality the
postwar era was probably an aberration, a confluence of events never
before seen in our history and unlikely to be seen again.
Most obviously, it was an era defined by the isolation of America's
continental market from the devastation of World War II. In the early
postwar decades foreign competition exerted virtually no pressure on
our economy. (In 1965, for example, imports of automobiles and auto
parts came to less than $1 billion -- about a fortieth of what they are
today, after adjusting for inflation.) At the same time, domestic
manufacturers benefited from an enormous pent-up demand for
mass-produced goods: cars, washing machines, commercial aircraft,
refrigerators, lawn mowers, television sets, and so on. New highways
gave rise to new suburbs, and to a resulting construction boom.
These economic conditions, along with successful federal efforts to
maintain full employment through loose monetary policy, created an
environment exceptionally friendly to workers. With little foreign
competition on the one hand and a very tight labor market on the other,
American firms were willing and able to offer workers strong incentives
-- such as pensions and first-rate health insurance -- in order to
attract and retain them. (Generous tax breaks from the federal
government encouraged the roll-out of these benefits.)
Meanwhile, the Great Depression had given rise to a system of
government programs and policies that came into full force and maturity
only after World War II -- among them Social Security, unemployment
insurance, welfare, and high marginal tax rates. The rise of communism
abroad could only have strengthened commitment to workers' welfare, as
a means of demonstrating that the American capitalist system offered a
humane alternative.
Thus favorable macroeconomic circumstances, the absence of foreign
competition, and a historically unique political dynamic all combined
to allow postwar America many of the benefits of social democracy
without the costs. The economy did not stagger under the weight of
ample benefits and high taxes. Americans -- at least white male
Americans -- did not have to worry about tradeoffs between security and
opportunity, because the United States offered both. And it seemed that
this was the natural order of things.
"America's Changing Economic Landscape" (March 1985)
Is the decline in the industrial belt a step into perilous new
territory or is it merely a continuation of the ceaseless
transformation that built our prosperity? By James Fallows
"The Return of Inequality" (June 1988)
The great bulk of Americans are losing economic and political power,
while the affluent are gaining both. This is not a recipe for social
comity. By Thomas Byrne Edsall
he threat of downward mobility first hit America in a big way in the
1980s, when the old-line, unionized midwestern manufacturing companies
found themselves under enormous pressure from foreign competition, in
particular from export-oriented Japanese companies such as Honda,
Toyota, and Komatsu. The result was a hemorrhaging of unionized
manufacturing jobs and the emergence of the Rust Belt.
In addition, new technologies and consumption patterns were shifting
the U.S. economy's center of gravity from skilled, unionized,
mass-production industry -- which fashions products from expensive
materials and capital-intensive machinery -- to services and retailing,
where barriers to the entry of competitors are lower, labor costs more
significant, and competitive advantage more reliant on squeezing those
labor costs. The nation's largest private-sector employer today, of
course, is not General Motors or Ford but Wal-Mart. Wal-Mart is in many
ways a fine company, but its strategic goals and constraints are quite
different from those of the manufacturers of the 1960s. Between them
the automakers and the UAW offered workers a fairly robust "social
contract": pensions, good health care, high wages, long-term job
security. Wal-Mart makes no such offer.
By the early 1990s the nature of unemployment had changed as well. As
Erica Groshen and Simon Potter, of the New York Federal Reserve, point
out, temporary layoffs have become less common. Instead companies under
constant competitive pressure are more frequently making layoffs
permanent -- using advances in technology to eliminate some types of
jobs altogether.
At the same time, the rising cost of health care and the falling rate
of health insurance have left families much more economically
vulnerable in the event of a serious accident or illness. Many
Americans today are one lost job and one medical emergency away from
bankruptcy.
We do not want to overstate how bad things are. Not even white males
would be better off in the economy of the 1960s, when median real
household incomes were only about two thirds of what they are today,
and much of the medical care that we now fear we cannot afford was
unavailable at any price. In a sense we've merely returned to a more
natural economic state, in which jobs are not always secure and
progress is not always assured. And we've done so while improving the
opportunities and lifestyles available to most Americans. So far, in
other words, we've adapted reasonably well to increased risk and
reduced security. But we're not at the end of economic history -- and
the history that will be made in the coming decades is likely to be
substantially more turbulent than what we've seen in recent years.
lthough the impact of globalization on American jobs has been
overhyped in the past, its impact in the future will be hard to
exaggerate. Last spring saw a short political boomlet of worry over the
offshoring of white-collar jobs to India, China, and elsewhere. In the
next few years these issues will be raised at the political level once
again -- and loudly.
The basic storyline is simple enough: what formerly could not be
imported now can be. A compelling parallel can be drawn to the latter
half of the nineteenth century, when the steel-hulled oceangoing
steamship and the submarine telegraph cable revolutionized
international trade. Companies could now use the telegraph to tell
their agents in distant ports what goods to ship; moreover, powerful
steamships made it practical to export not only precious goods (such as
rare porcelains, spices, and tobacco) but also staple agricultural and
manufactured products: grain, hides, meat, wool, furniture, and
machines (which would eventually include motor vehicles, computers, and
consumer electronics). First in a great rush, and then at a somewhat
more measured pace, industrial and agricultural workers the world over
began to lose their jobs to more-efficient foreign competitors.
Illinois could grow wheat more cheaply than Prussia could grow rye.
Malaysia could grow rubber more cheaply than Brazil. Of course,
displaced workers could generally find new jobs, sometimes better ones.
And consumers benefited greatly from lower prices. But that did little
to dim the spectacle of immediate dislocation. The expansion of
international trade ushered in a century-long storm -- though many
Americans (perhaps owing to the anomalous calm following World War II)
seem to remember only the recent gusts that have buffeted our heavy
industries.
The transformation taking place today will have just as great an effect
on the world economy. The transoceanic fiber-optic cable, the
communications satellite, and the Internet are making much white-collar
service work as tradable as anything else. Broadband cables and
satellites can connect India or China or Bulgaria to the United States
instantly, seamlessly -- and almost without cost. A huge new swath of
American jobs is beginning to become vulnerable to foreign competition.
When the offshoring of services truly hits (and it will stretch out
over several decades), it is likely to deliver a much greater shock to
the U.S. economy than the offshoring of manufacturing did. There are
several reasons for this. First, in the 1970s Americans' incomes
exceeded those of the Japanese by a ratio of about two to one. The
ratio of American to Indian incomes today is more than ten to one.
Economists will point out that the gains from trade will thereby be
that much greater for the U.S. economy as a whole -- and they'll be
right. Indeed, more and greater openness will expand opportunities and
raise incomes for some Americans, producing many highly visible
winners. At the same time, the potential pay cuts for workers who lose
out in rich countries will also be that much greater.
Second, the coming global trade in services will potentially affect a
much larger proportion of the U.S. labor force. Even at its height
manufacturing constituted only 28 percent of all non-farm employment,
and large sectors of manufacturing (food processing, for example) are
closely tied to sources of supply and thus immovable. Service jobs
constitute 83 percent of non-farm employment in the U.S. economy today,
and every job that is (or could be) defined largely by the use of
computers and telephones will be vulnerable.
Third, the impact of foreign competition will be borne much more
directly by American workers than by their employers. In the 1970s and
1980s foreign imports threatened U.S. companies and workers equally.
The CEOs at GM and Ford were on the same "side" as the men and women
who worked on the factory floor. The coming wave of economic
dislocation will look very different: it will be something that
American CEOs do to their own workers.
Not that they'll necessarily have much choice; offshoring will in many
cases be necessary if American businesses are to remain competitive.
Remember H. Ross Perot's "giant sucking sound"? In the early 1990s no
one spoke out more strongly against the prospect of job loss caused by
foreign competition. Yet on February 7 of last year the Times of India
reported that Perot Systems was going to double its employment in Asia
from 3,500 to 7,000 -- nearly half its total worldwide employment. If
the economic logic of foreign outsourcing is so overwhelming that Ross
Perot can't resist it, what American CEO will be able to?
one of this is to say that we face a future of permanent widespread
unemployment. It is a truth universally acknowledged (except in
campaign seasons) that the rate of employment in the United States is
set not by levels of imports and exports but, primarily, by whether the
Federal Reserve's monetary policy manages to settle aggregate demand in
that sweet spot where neither unemployment nor inflation is too high.
Moreover, during the course of any single year or business cycle the
effects of globalization on the U.S. labor market are small. Forrester
Research has estimated that by 2018 some 3.3 million jobs in business
processes are likely to go offshore. That's a little more than 18,000 a
month -- not a huge number in an economy of 140 million jobs.
But -- and this is a very big "but" -- even though imports and
offshoring do not determine the number of U.S. jobs over time, they do
powerfully influence the long-run level and distribution of real wages.
Eventually the offshoring of service jobs will exert a strong downward
pressure on wages and benefits in jobs that stay onshore, just as the
offshoring of manufacturing jobs did in the 1980s. Essentially, the
pool of workers competing for many service jobs will be increased by,
say, several million English-speaking college graduates in India, who
will work for a tenth to a fifth of a typical American salary.
In many cases the jobs in question are held by Americans unaccustomed
to layoffs or reduced incomes. Often they are high-paying white-collar
jobs. The people who hold them may believe that they are on top because
they deserve to be: they are smart and industrious; they worked hard in
school while others screwed around; they have been diligent and
successful in their careers. These people are likely to become very
angry when unexpectedly threatened by substantial downward mobility.
How will the country respond when a broad new array of classes and
professions are exposed to downward mobility -- particularly as others
benefit from new opportunities? Will existing class fissures be
exacerbated? What new ones might be created?
Winners and losers are unlikely to sort cleanly. People of similar
background and training may see their fortunes diverge greatly
depending on subspecialty, or on the presence or absence of some
idiosyncratic ability that is hard to replicate. But one can make a few
predictions. First, the new environment is likely to pit those who are
most flexible -- most able to shift jobs or careers, most able to
absorb unexpected blows, best positioned to benefit from unforeseen
opportunities -- against those who are less so. The contours of such a
divide seem predictable: young versus old, generalist versus
specialist, people with savings versus those who depend on their next
paycheck.
A second (and overlapping) split might open between those who are
highly educated and possess complex skills and those who are merely
well educated and skilled. An MIT education may still be hard to
imitate abroad. Can the same be said of a finance degree from a state
college?
Third, a divide may occur between those -- whatever their education or
income level -- who by disposition can tolerate unexpected income
swings across a lifetime and those who abhor uncertainty.
The last group is probably large. The dissatisfaction resulting from
falling wages is usually greater than the satisfaction resulting from
rising wages. People are not wrong to be risk-averse; for middle-class
Americans, just as for portfolio managers, life consists largely of
trying to manage risk. This, the Yale political scientist Jacob Hacker
thinks, is the source of middle-class Americans' unease with the
current state of the economy -- perhaps the primordial form of a
sharper discontent to come. "Voters say the economy isn't getting
better because, as far as they're concerned, it's not," Hacker writes.
"And perhaps the best explanation for this perception is that Americans
are facing rising economic insecurity even as basic economic statistics
improve."
The median annual household income twenty years ago was about $38,000
in today's dollars. Today it is about $43,000 -- 13 percent higher.
Yet, at least in Hacker's analysis, Americans typically feel that
increasing risk and rising inequality have hurt them at least as much
as increasing income has helped. Yes, if they are middle-class, they
have higher real incomes and living standards than their parents; but
the incomes are known to be insecure, and the prosperity is felt to be
fragile.
rom one viewpoint, economic risk is the flip side of flexibility,
entrepreneurship, and innovation -- the very things America does best.
In the 1980s, when Americans worried about whether the social
organization in Japan's export-manufacturing sector (morning
calisthenics, the company song, consensus, lifetime employment, and so
on) might offer a better way of doing business, The Atlantic's national
correspondent James Fallows answered with a resounding no. What
Americans needed, he argued, was to become "more like us" (the title of
his book on the subject), not more like them: America's competitive
advantage was rooted in disorder, constant change, flexibility,
mobility, and entrepreneurial zeal. In 1991 Robert Reich, about to
become Bill Clinton's first secretary of labor, looked at the
tremendous expansion of manufacturing and other export-related
employment elsewhere in the world and came to a similar conclusion.
How, he wondered in his book The Work of Nations, could Americans
preserve and accelerate economic growth if the market position and
efficiency advantages of America's largest firms came under threat? He,
too, concluded that we needed to shift our focus away from old-style
stable mass-production employment to high-knowledge, high-tech,
high-entrepreneurship fields. Workers, he argued, should expect to go
back to school to learn new skills for new industries.
But embracing change and uncertainty in this way does not come
naturally, in the United States or anywhere else, and the pollsters and
media-affairs people of the Clinton administration soon told Robert
Reich to be quiet: people did not like to hear their government telling
them that their jobs were going to vanish.
Economists rightly say that the rising wave of trade-driven service
globalization will, like the last waves of trade-driven manufacturing
globalization, benefit Americans and foreigners alike. At home more
will be won than lost. Fears that expanding trade will destroy jobs and
disrupt the economy also need to be counterbalanced by the knowledge
that reducing trade -- or even failing to expand it -- would reduce
national wealth potential, destroy future jobs, and ultimately disrupt
the economy even more. The social problems of a stagnant economy are
far greater than those of a dynamic one.
But economists too readily dismiss concerns about those who lose out,
saying merely that they can be compensated. In practice they seldom
are. The United States simply does not make the investments needed to
turn economic change into a win-win process -- investments in
retraining and rebuilding that would transfer some of the gains from
the winners to the losers (who've done nothing personally to merit
their loss). In the late 1970s and the 1980s little money was spent on
Flint and Detroit in particular, and Michigan in general, to cushion
the economic impact as Toyotas and Hondas came to America's shores.
Producers in Japan and car buyers in Boston and San Francisco pocketed
the gains, while producers in the Midwest absorbed the losses. As the
Princeton economist and New York Times columnist Paul Krugman puts it,
free trade is a salable policy only if accompanied by a well-built
social safety net and confidence in full employment. But our safety net
is full of holes.
Some companies have traditionally provided many of our social services,
particularly in the form of health insurance and retirement support.
Those companies will not continue to sustain that burden in the future.
At the same time, our limited system of government benefits will not be
adequate to the changes that we'll face -- leaving aside the
possibility that it may be weakened or removed completely, as some
politicians propose. That system was designed to protect the poor and
the aged, and to tide the rest of us over in case of (temporary) job
loss. What we need now is far more career-transition assistance for the
middle class, and perhaps more government funding and (surely)
portability for the benefits -- notably health care -- that the private
sector increasingly fails to provide. America's economy will need
flexibility in order to compete, but we can provide this protection
without sacrificing our flexibility.
Because we are facing an economic transformation that will hit not over
the course of a few years but over the course of the next generation,
we have time to do what needs to be done. We will need all this time,
because the approaching economic shock will be greater in magnitude
than anything in recent historical memory.
10. +++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.mercurynews.com/mld/mercurynews/business/10548353.htm
Posted on Sun, Jan. 02, 2005
Opponents of practice cite risks, ethical issues
By Karl Schoenberger
Mercury News
If William Shakespeare had written ``Henry VI'' under today's economic
circumstances, he might have penned that famous line as: ``The first
thing we do, let's offshore all the lawyers.''
That version of the drama is appealing to Ajit Gupta, chief executive
of Speedera Networks, who complains about the thousands of dollars an
hour he spends on fancy U.S. patent lawyers when his network
infrastructure company gets into legal sword fights. He's entertaining
the idea of looking to India, where Santa Clara-based Speedera has a
subsidiary, for a cheaper alternative.
``I'm willing to try anything that can reduce my costs,'' Gupta said.
``We're a global company that focuses on the bottom line. We have to be
competitive, even if it means taking some risks.''
Offshoring legal work is the latest play in the rapidly changing and
increasingly global theater of business, where all kinds of
white-collar jobs -- from software engineering to tax-preparation
services -- are being sent abroad. It's still not clear how big legal
offshoring will be, and skeptical audiences question the ethics
involved in sending legal casework and privileged client information
overseas.
But Gupta's Speedera is not alone among technology companies taking the
cue on legal offshoring. Cisco Systems arranged with a U.S. law firm to
have technical writing done by engineers in India for some of its
patent applications. Microsoft had patent research done in India.
General Electric has experimented with a legal team in India to draft
contracts and other legal documents.
In Palo Alto, the Mumbai-based law firm Nishith Desai Associates
recently raised the curtain on IP Pro, an offshoring service
supplementing its core business of advising U.S. clients on India's
legal system. IP Pro already has three or four ``big name'' clients who
are ``trying us out,'' said the firm's Vijay Sambamurthy. Its staff of
eight paralegals in India drafts U.S. patent claims, which are checked
for quality by a domestic law firm.
``The potential is huge,'' Sambamurthy said. ``You can cut your costs
by at least 40 percent.''
Some of the biggest Silicon Valley companies are waiting in the wings.
``It's not consistent with our past practices, but we certainly would
be open to evaluating it going forward,'' said Intel spokesman Chuck
Mulloy. Intel's overseas subsidiaries have relationships with foreign
law firms, he said, but its legal department in Santa Clara hasn't
farmed out work to offshore contractors yet.
``The devil is in the details. It all depends on what kind of legal
work we're talking about. Some of it wouldn't make sense.''
Online records
Steven Lundberg, a Minneapolis lawyer specializing in
intellectual-property issues, said his firm first turned to India when
it couldn't find enough qualified local talent to proofread patent
applications.
``Since all our records are online, it was easy to send them over
there,'' Lundberg said. ``The quality has been great, and the prices
are great.'' He expanded the offshore work to searches of
public-records data, but drew the line at confidential client
information.
The dialogue on legal offshoring is a sensitive one that many companies
want to avoid because of a backdrop of cutbacks and job-security
worries among employees. So it's hard to assess how many companies are
offshoring legal work.
But a growing number of U.S.-based companies are selling the services
of skilled Indian professionals, who perform such basic tasks as patent
research and document preparation. In-house corporate legal departments
and large patent law firms are their star customers, they say.
Abhay ``Rocky'' Dhir, a Dallas lawyer and entrepreneur, thinks there
are very few jobs his three lawyers in Bangalore can't perform.
For a bargain hourly rate as low as $60 (compared with $350 at the low
end of the typical U.S. scale), Dhir's Atlas Legal Research can study
legal precedents in state law to craft arguments in a trial brief. It's
possible because U.S. case law is available online, and India's
English-educated lawyers work in a common-law legal system similar to
ours.
Dhir said the Indian lawyers he has recruited and trained are fully
qualified to compose legal briefs, which he carefully screens and edits
to maintain quality. He thinks they offer advantages other than their
low cost.
``Because they weren't trained in this jurisdiction, they have a fresh
perspective,'' said Dhir, 28, whose company has about 50 clients and
grossed $160,000 last year. ``They approach the law in a very
innovative way and see solutions even I don't see.''
Research, not advice
Leon Steinberg, who runs the legal offshoring firm Intellevate in
Minneapolis, said his Indian lawyers in New Delhi and Bangalore provide
research for law firms and in-house corporate lawyers, but they stay
clear of legal opinions.
``We will not produce the final work product, and we don't give legal
advice or draw conclusions,'' said Steinberg, who added that many of
his clients were tech companies in Silicon Valley. ``What we do is
provide U.S. lawyers with information so they can use their own
training and legal experience to make legal conclusions.''
The ethical questions depend on the type of work offshored, said
Matthew Powers, head of patent litigation in the Redwood Shores office
of Weil, Gotshal & Manges.
``My view is that legal services are no different than any other
services -- there are some that can be commoditized, like data
collection and low-level legal research,'' he said. ``But there are
some that can never be outsourced, especially when it comes to
exercising legal judgment.''
But having legal work done in India involves risks for the American
lawyer, no matter what the level of service may be, said Mark Tuft, a
legal-malpractice defense lawyer with the San Francisco firm Cooper,
White & Cooper.
``There are a lot of risks and ethical issues that have to be
managed,'' Tuft said. ``The domestic lawyer has the duty of supervising
any work done overseas. You have to ask what this does for client
confidentiality and other lawyer responsibilities. Is it the client or
the lawyer who benefits from the lower costs involved? Who's
responsible if you're sued for legal malpractice when the work is done
offshore?''
The benefits apparently outweigh the risks for the legal offshoring
companies, which include Lawwave.com, Quislex and Office Tiger, all
based in New York, and Lexadigm Solutions of Grandville, Mich. But the
firms have fewer than a dozen lawyers on each of their payrolls in
Chennai, Bangalore and suburban Delhi.
``We're just at the starting line with this,'' said Tuft. ``We don't
know how far it is going to go. But I think law firms are going into
this very slowly and very cautiously.''
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