Who's afraid of IndianITES?

Date: Thursday, June 12, 2003 1:43 PM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

Just for the record, Chidanand Rajghatta is the one that said that
H-1Bs are "code coolies". I like that term and will use it in future
newsletters.

This article says that Americans are exaggerating how many jobs that
India is taking, but then concludes by saying that "Americans may have
to look for a new future." He said that the reason for the "hoopla and
hysteria" is that Americans don't have the education to compete with
Indian code coolies (note: my first official use of "code coolies").

Rajghatta didn't consider the possibility that the hysteria might be
caused because Americans resent that fact that India thinks it's their
right to destroy our middle class life style. Worse yet the US
government is aiding and abetting them.

I was willing to ignore Rajghatta's rants until he said that Phoenix
and Portland were medium sized cities. THEM'S FIGHTIN' WORDS! I decided
to see just how medium sized Phoenix is since it's the 6th largest city
in the USA. Here is a population comparison:

Mumbai - 18,042,000
Calcutta - 12,900,000
Delhi - 11,680,000
Hyderabad - 6,833,000
New York City - 7,322.600
Phoenix - 1,500,000 (metro area: 3,500,000)
Portland - 553,000

* http://www.world-gazetteer.com/

OK, I'll concede that Rajghatta is right about the size of Phoenix
compared to the cities in his overpopulated country, but he is wrong
about the reasons for the "hoopla and hysteria." Thank goodness he is
right about Phoenix - it's crowded enough as is.

http://timesofindia.indiatimes.com/cms.dll/xml/uncomp/articleshow?artid=11990

Who's afraid of IndianITES?

[ SUNDAY, JUNE 08, 2003 12:55:26 AM ]

2015: 3.3 million US jobs may go offshore. 2003: The West waves banners
of protest. The big threat: India's backroom boys. Sunday Times on the
raging debate...

In the beginning they were just code coolies and call centre Charlies.
Dour drudges who wrote millions of lines of code for slave wages; and
distant drones who answered (in thick Indian accents) basic questions
about billing and ticketing in the (American) afterhours. For a while,
it had looked perfect a low-cost, 24/7 work cycle, freeingAmerican
workers to do more important stuff. Then, as the never-ending economic
downturn spiralled, it began to hurt. More so, when unemployment passed
6 per cent, putting some nine million Americans out of work.

Some of the figures are mind-boggling. Forrester Research estimates
that 3.3 million service-sector jobs will have left the US by 2015,
perhaps half of them to India. Deloitte analyst Christopher Gentle
predicts that firms in the major industrialised nations would move two
million jobs to low-wage countries over the next five years, again
mostly to India.

Sometimes you wonder if it is all an exaggeration. As things stand now
India has only around 100,000 call centre jobs, second to Australia
(135,000). India may have another 100,000 higher end jobs. India is
expected to overtake Australia in the next two years. After that,
with its burgeoning English graduate population, India will just run
away with the outsourcing ball. In fact, everything said about
outsourcing is based on projections.

That would still be okay (for the Americans) as long as they were those
boring call centre jobs. But the Indians are now beginning to get
non-talking tech jobs, number-crunching jobs, designing jobs and just
about every kind of work that required skill, speed and imagination.
For instance, accountants at Ernst and Youngs India office now case
US tax returns for the firms American clients. Indians process
claims for major US insurance companies, radiologists interpret CT
scans for Massachusetts General Hospital and molecular biologists
conduct research for pharmaceuticals.

Early this year, the management consultant company AT Kearney sent
shockwaves through the beleaguered American economy predicting that
over the next five years, financial services companies nationwide are
planning to relocate more than 500,000 jobs overseas nearly eight per
cent of US financial sectors work force much of it to India.

Kearney itself was stricken with Indianitis. Not only had the company
begun outsourcing its own work to India, but the firms study ranked
India as the best country overall for offshore business processing,
followed by Canada, Brazil, Mexico, the Philippines, Hungary, etc. It
put the final seal of approval on what had long been suspected going by
the numbers India is the place to go.

The move by financial companies is what has really rattled the
Americans. In fact, for several months, as long as lesser jobs were
slowly disappearing from middle American cities like Phoenix or
Charlotte, there wasnt much of a panic. But following the Kearney
study, everyone began looking at the big financial firms. JP Morgan
said it was hiring 40 junior stock analysts and other research staffers
to add to the hundreds in its Mumbai office this year. Morgan Stanley
said it too, as did CitiBank. Deutsche Bank AG joined the bash by
contracting work through Irevna Limited, a London-based consultancy.

Meanwhile, the American media also added to the concerns and now panic
with relentless coast-to-coast coverage about the job losses. In small
and medium-sized US cities such as Phoenix, Arizona, Portland, and
Oregon, the loss of even a thousand jobs attracts page one headlines.

Last month, the Portland Business Journal ran a five-part series on
outsourcing and its effect on the local economy (Intel is one of the
biggest local employers there and is ramping up at chip speed in
India). Cleveland Plain Dealer ran a story headlined Sending work to
India. Boston Globe followed with Passage to India. Indeed,
outsourcing is becoming a major issue in middle America and might just
become a political football in the build-up to the elections next year.
Take the case of a state like Arizona, whose two major cities, Phoenix
and Tucson, are home to some of the countrys biggest call centres.
In Tucson, whose 16,000 call centre jobs make up nearly 5 per cent of
the citys work force, theres gloom following moves by the parent
companies of the citys three largest call centres Convergys, Intuit
and America Online to move jobs to India.

Convergys, with 1600 seats in Tucson, now has a 3000-person facility
near Delhi, some of them providing technical support to Microsoft
Windows.

America Online has opened call centres in India and hired hundreds for
billing, tech support, and community action (to deal with users who
break AOL rules).

Intuit has contracts with Indian companies to provide weekend and
afterhours services out of India.

So just what the Americans are saying and doing now? Groups such as
Washtech Group, Programmers Guild and NomoreH1b.com have begun online
and street protests. They are writing to lawmakers and pressurising
them into considering legislation to reduce immigration and control
outsourcing. They are raising questions about security because of work
being done by foreigners. However, amid all the hoopla and hysteria
what the Americans wont tell you is...

A steep decline in the number of Americans enrolling in engineering,
technical and science schools created a genuine tech worker shortage in
the 1990s.

Outsourcing was primarily aimed at engendering a 24/7 work cycle and
still does that; typically calls go to India after the American
workday.

Foreign firms in the US create jobs. TCS, for instance, has 54 offices
and employs scores of Americans. If Americans were to cut out
immigrants and foreigners from its hi-tech world, it would collapse.

In many cases American firms themselves are setting up units in India.

Nearly three-quarters of American families invest in the stock market
and want companies to improve their performance. Deloitte analyst
Christopher Gentle says moving two million jobs to low-wage countries
could save the worlds 100 largest firms $138 billion a year by 2008.
The AT Kearney study says transfer of over 500,000 will result in
annual savings of $30 billion.

So what will happen now? Hard to say. In the 1980s and 1990s, American
workers, the blue-collar types, marched the streets to protest trade
agreements such as NAFTA and the movement of manufacturing jobs from
the US to Mexico and Asia. They were told the future lay in high-tech
jobs. Now Americans may have to look for a new future.

Chidanand Rajghatta

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