8 Outsourcing Articles
8 Outsourcing Articles
Date: Tuesday, August 05, 2003 3:32 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1:
http://www.csmonitor.com/2003/0729/p01s03-usgn.html
White-collar jobs moving abroad
Article 2:
http://www.time.com/time/magazine/article/0,9171,1101030804-471198,00.html?cnn=yes
Where the Good Jobs Are Going
Article 3:
http://economictimes.indiatimes.com/cms.dll/xml/uncomp/articleshow?msid=98044
Outsourcing row gets hotter, wider
Article 4:
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/07/30/BU272273.DTL
More and more tech jobs moving overseas
Consultant calls trend permanent, irreversible
Article 5:
http://www.cnn.com/2003/TECH/internet/07/30/jobs.oversees.reut/index.html
Report: 1 in 10 tech jobs may go overseas
Article 6:
http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_2104190,00.html
Passage to India - High-tech jobs moving abroad, lured by country's low
costs, skilled labor
Article 7:
http://www.msnbc.com/news/947478.asp?0sl=-41&cp1=1
Jobs Go Global - Tech jobs are moving overseas at an alarming rate.
Other fields may soon follow. Why is it happening?
Article 8:
http://www.usatoday.com/money/workplace/2003-08-05-outsourcing_x.htm
USA's new money-saving export: White-collar jobs
http://www.csmonitor.com/2003/0729/p01s03-usgn.html
from the July 29, 2003 edition -
http://www.csmonitor.com/2003/0729/p01s03-usgn.html
White-collar jobs moving abroad
A spate of new studies points to an exodus of skilled labor, from
high-tech to financial services.
By Stacy A. Teicher | Staff writer of The Christian Science Monitor
For decades, Americans watched as manufacturing plants set up shop
overseas to capitalize on cheap labor. Ross Perot immortalized the
anger many workers felt, vividly terming the potential exodus of jobs
to Mexico that "giant sucking sound."
Now a growing number of US firms are sending coveted high-tech and
service jobs "offshore" in a move that's reviving a debate about the
future of the American workforce.
No longer is it just Disney toys and Nike shoes made in Haiti and
Indonesia. It's software engineering, accounting, and product
development being "outsourced" to India, the Philippines, Russia, and
China.
The result is a growing backlash from unionists, contract workers, and
erstwhile techies with time on their hands. More broadly, the trend
raises a pointed question in an age of globalization: Is sending
certain jobs offshore - even high-tech ones - better for the US
economy, or does it just amount to more pink slips for American
workers?
"Manufacturing is a small slice of the economy, and when people saw
globalization creating instability there, a lot said, 'It's not my
problem,' " says Josh Bivens, an economist at Washington's Economic
Policy Institute. "Now white-collar workers are feeling it."
The number of such jobs now outsourced - from information technology
(IT) to architecture - is less than half a percent of the US workforce.
But it may grow fast:
Half a million IT jobs - roughly 1 in 20 - will go abroad in the next
18 months, according to Gartner, a research firm in Stamford, Conn.
Nearly 5 percent of human- resources jobs have moved offshore in the
past year, and by 2007 that number will climb to at least 15 percent,
says Jay Whitehead, publisher of HRO Today magazine, which tracks
outsourcing.
By 2015, 3.3 million US high-tech and service-industry jobs will be
overseas, according to Forrester Research in Cambridge, Mass. That's 2
percent of the entire workforce, and $136 billion in US wages. Oracle,
for instance, already has 2,000 employees in India and expects to move
2,000 software-development jobs, plus accounting, payroll, and
customer-service positions.
Competition or a zero-sum game?
Granted, projecting to 2015 is risky. And even if these numbers pan
out, some say there's no reason to panic: By staying competitive, the
theory goes, companies will strengthen their positions in the new
global order.
"If you look at history, we create new jobs in new areas to make up for
what is outsourced," says Richard Hundley, lead author of a recent
report by RAND's National Defense Research Institute. North America
will still lead the technology revolution, the report says, partly
because of a willingness to engage in "creative destruction" to stay on
the innovative edge.
But others - particularly those whose jobs are lost - see overseas
outsourcing as a zero-sum game, with US workers sacrificed for
corporate profits. "America's leading companies are sending our
best-paying jobs to cut labor costs.... I don't buy the idea that new
jobs will be created," says Marcus Courtney, organizer of the
Washington Alliance of Technical Workers (WashTech) in Seattle, an
affiliate of the Communications Workers of America.
In the past six months, as his union has led protests against
offshoring plans at Microsoft and elsewhere, its e-mail list has grown
from 2,000 to more than 15,000. Last week, the group publicized a
recording - received from an IBM employee - of IBM senior executives on
a conference call in March, talking of the need to send more jobs
overseas, though acknowledging that it would upset domestic workers.
India: land of spices and IT jobs
It's unclear how much offshoring contributes to job cuts, despite
anecdotes of techies who now work at Starbucks, pouring lattes with the
precision of an engineer's eye. Mr. Hundley of RAND attributes job loss
to the current economic doldrums, and says it will ebb. But Gartner's
July 15 report estimates that through 2005, fewer than 4 out of 10 IT
workers whose jobs go overseas will be redeployed by their own
companies.
And the potential that some jobs are gone for good raises the question
of how the economy can weather what seems, in turns, a boon and a blow.
Critics caution that while executives are under extreme pressure to cut
costs, some of them may be too quick to outsource jobs higher up on the
spectrum of creativity and skill. Companies are training developing
nations' workforces to become America's competitors, says Basheer
Janjua, CEO of Integnology Corp in Santa Clara, Calif., which offers
domestic IT outsourcing.
"What's going to be the incentive for our future generations to get a
degree in electrical engineering?" he asks. "We have to ask if we're
ready to give up our pioneering position in the world."
Even offshoring's proponents agree that its real effects on US jobs
need to be analyzed. WashTech recently persuaded two of the state's US
representatives to call for a study by the General Accounting Office.
But people shouldn't be concerned about the best jobs leaving the
country, says Mary Jo Morris, president of the Global Transformation
Solutions Group at Computer Sciences Corporation (CSC), an IT
outsourcing firm in Falls Church, Va. Offshoring, she says, is an
irreversible trend, but "roles that create a lot of value will not go
overseas, and more of those will develop as the industry matures."
Globalization's thorn in the side
Corey Goode, for one, has become a self-proclaimed thorn in Microsoft's
side. Since June, when he watched his $40-an-hour contracting job sail
to India and learned that the jobs of permanently employed colleagues
in Las Colinas, Texas, would probably do the same, he's launched a
website to protest offshoring and the use of skilled foreign labor in
the US through special visas. Mr. Goode insists he's not out to stir up
xenophobia. But he wants companies to see American employees as more
than numbers. "Globalization is here to stay, and we're experiencing
the growing pains," he says.
His is just one voice in a chorus gaining strength - and numbers - as
offshoring gains steam. About half a dozen states are considering laws
to make sure state contract work is performed within US borders. "If
you want to enjoy the benefits of an unfettered free market, you can
try to cushion the downside as well," says Mr. Bivens of the Economic
Policy Institute. Goode - and plenty of others - will clamor for
government to do just that.
http://www.time.com/time/magazine/article/0,9171,1101030804-471198,00.html?cnn=yes
Monday, Jul. 28, 2003
Where the Good Jobs Are Going
Forget sweatshops. U.S. companies are now shifting high-wage work
overseas, especially to India
By JYOTI THOTTAM
Little by little, Sab Maglione could feel his job slipping away. He
worked for a large insurance firm in northern New Jersey, developing
the software it uses to keep track of its agents. But in mid-2001, his
employer introduced him to Tata Consultancy Services, India's largest
software company. About 120 Tata employees were brought in to help on a
platform-conversion project. Maglione, 44, trained and managed a
five-person Tata team. When one of them was named manager, he started
to worry. By the end of last year, 70% of the project had been shifted
to India and nearly all 20 U.S. workers, including Maglione, were laid
off.
Since then, Maglione has been able to find only temporary work in his
field, taking a pay cut of nearly 30% from his former salary of
$77,000. For a family and mortgage, he says, "that doesn't pay the
bills." Worried about utility costs, he runs after his two children, 11
and 7, to turn off the lights. And he has considered a new career as a
house painter. "It doesn't require that much skill, and I don't have to
go to school for it," Maglione says. And houses, at least, can't be
painted from overseas.
Jobs that stay put are becoming a lot harder to find these days. U.S.
companies are expected to send 3.3 million jobs overseas in the next 12
years, primarily to India, according to a study by Forrester Research.
If you've ever called Dell about a sick PC or American Express about an
error on your bill, you have already bumped the tip of this "offshore
outsourcing" iceberg. The friendly voice that answered your questions
was probably a customer-service rep in Bangalore or New Delhi. Those
relatively low-skilled jobs were the first to go, starting in 1997.
But more and more of the jobs that are moving abroad today are highly
skilled and highly paid the type that U.S. workers assumed would
always remain at home. Instead Maglione is one of thousands of
Americans adjusting to the unsettling new reality of work. "If I can
get another three years in this industry, I'll be fortunate," he says.
Businesses are embracing offshore outsourcing in their drive to stay
competitive, and almost any company, whether in manufacturing or
services, can find some part of its work that can be done off site. By
taking advantage of lower wages overseas, U.S. managers believe they
can cut their overall costs 25% to 40% while building a more secure,
more focused work force in the U.S. Labor leaders and nonunion
workers, who make up most of those being displaced aren't buying that
rationale. "How can America be competitive in the long run sending over
the very best jobs?" asks Marcus Courtney, president of the
Seattle-based Washington Alliance of Technology Workers. "I don't see
how that helps the middle class."
On the other side of the world, though, educated Indian workers are
quickly adjusting to their new status as the world's most sought-after
employees. They have never been more confident and optimistic as
Americans usually like to think of themselves. For now, at least, in
ways both tangible and emotional, educated Americans and Indians are
trading places.
Uma Satheesh, 32, an employee of Wipro, one of India's leading
outsourcing companies, is among her country's new elite. She manages 38
people who work for Hewlett-Packard's enterprise-servers group doing
maintenance, fixing defects and enhancing the networking software
developed by HP for its clients. Her unit includes more than 300 people
who work for HP, about 90 of whom were added last November when HP went
through a round of cost-cutting.
"We've been associated with HP for a long time, so it was an emotional
thing," Satheesh says. "It was kind of a mixed feeling. But that is
happening at all the companies, and it's going to continue." Satheesh
says that five years ago, computer-science graduates had one career
option in India: routine, mind-numbing computer programming. Anything
more rewarding required emigrating. "Until three years ago, the first
preference was to go overseas," she says. Nowadays her colleagues are
interested only in business trips to the U.S. "People are pretty
comfortable with the jobs here and the pay here"--not to mention the
cars and houses that once seemed out of reach. Employees in her group
earn from $5,200 a year to $36,000 for the most experienced managers.
And as American companies have grown more familiar with their Indian
outsourcing partners, they have steadily increased the complexity of
work they are willing to hand over. Rajeshwari Rangarajan, 28, leads a
team of seven Wipro workers enhancing the intranet site on which Lehman
Brothers employees manage personal benefits like their 401(k) accounts.
"I see myself growing with every project that I do here," Rangarajan
says. "I really don't have any doubts about the growth of my career."
Her experience with a leading brokerage will probably help.
Financial-services companies in the U.S. are expected to move more than
500,000 jobs overseas in the next five years, according to a survey by
management consultant A.T. Kearney, and India is by far the top
destination. U.S. banks, insurance firms and mortgage companies have
been using outsourcing to handle tech support for years. Now these
firms are using Indian workers to handle the business operations say,
assessing loan applications and credit checks that the technology
supports. Kumar Mahadeva, CEO of the thriving outsourcing firm
Cognizant, explains the appeal: "It becomes logical for them to say,
'Hey, you know everything about the way we do claims processing. Why
not take a piece of it?'"
The next logical step, says Andrea Bierce, a co-author of the A.T.
Kearney study, is jobs that require more complex financial skills such
as equity research and analysis or market research for developing new
business. Evalueserve, a niche outsourcing company in Delhi, already
performs research for patent attorneys and consulting firms in the U.S.
In April, J.P. Morgan Chase said it would hire about 40 stock-research
analysts in Bombay about 5% of its total research staff. Novartis
employs 40 statisticians in Bombay who process data from the drug
company's clinical research.
But as educated workers in India are finding new opportunities, those
in the U.S. feel the doors closing. Last week Bernie Lantz drove 1,400
miles from his home in Plano, Texas, to begin a new life in Utah. He is
58 years old, a bachelor, and had lived in the Dallas area for 24
years. "I'm leaving all my friends," he says with a sigh. "It's quite
an upheaval." Lantz used to earn $80,000 a year as a troubleshooter for
Sabre, a company based in Southlake, Texas, whose software powers
airline-reservations systems. But over the past two years, Sabre has
gradually standardized and has centralized its software service. As
Sabre began to outsource its internal IT services, Lantz says, he
became convinced that jobs like his were becoming endangered. He was
laid off in December. (A company spokesman denies that Lantz's firing
was related to outsourcing.)
Discouraged by a depressed job market in Dallas, Lantz realized he
would have to do something else. In the fall he will begin teaching
computer science at Utah State University in Logan, and in the meantime
he has learned a lesson of his own: "Find a job that requires direct
hands-on work on site," Lantz advises. "Anything that can be sent
overseas is going to be sent overseas."
Pat Fluno, 53, of Orlando, Fla., says she, like Maglione, had to train
her replacement a common practice in the domestic outsourcing industry
when her data-processing unit at Germany-based Siemens was outsourced
to India's Tata last year. "It's extremely insulting," she says. "The
guy's sitting there doing my old job." After 10 months of looking, she
is working again, but she had to take a $10,000 pay cut.
To protect domestic jobs, U.S. labor activists are pushing to limit the
number of H-1B and L-1 visas granted to foreign workers. That would
make it harder for offshore companies to have their employees working
on site in the U.S. "Those programs were designed for a booming
high-tech economy, not a busting high-tech economy," says Courtney of
the Washington Alliance of Technology Workers. Courtney and his allies
are starting to get the attention of lawmakers. Several congressional
committees have held hearings on the impact of offshore outsourcing on
the U.S. economy, and lawmakers in five states have introduced bills
that would limit or forbid filling government contracts through
offshore outsourcing.
Stephanie Moore, a vice president of Forrester Research, says companies
are concerned about the backlash but mainly because of the negative
publicity. "The retail industry is very hush-hush about its
offshoring," she says. But within the boardroom, such outsourcing
enjoys wide support. In a June survey of 1,000 firms by Gartner
Research, 80% said the backlash would have no effect on their plans.
The advantages, businesses say, are just too great to ignore. They
begin with cost but don't end there. Jennifer Cotteleer, vice president
of Phase Forward, a Waltham, Mass., company that designs software for
measuring clinical-trials data for drug companies, has for the past two
years used offshore employees from Cognizant to customize the
application for specific drug trials. Lately she has been relying on
their expertise to develop even more-tailored programming. "I certainly
couldn't have grown this fast without them," Cotteleer says. Her
company is growing 30% annually, on track to reach $65 million in
revenue this year. "What I've been able to do in very tough economic
times is manage very directly to my margins," she says. "I'm providing
job security for the workers I do have."
Creative use of offshore outsourcing, says Debashish Sinha of Gartner
Research, offers benefits that outweigh the direct loss of jobs. In an
economy that has shed 2 million jobs over two years, he contends, the
200,000 that have moved overseas are less significant than the
potential for cost savings and strategic growth. But he concedes that
"when you're a laid-off employee who can't find a job, that's hard to
understand."
Perhaps some will follow the example of Dick Taggart, 41, of Old
Greenwich, Conn. After 18 years in financial services, most recently at
J.P. Morgan Chase, he now works for Progeon, an affiliate of the Indian
outsourcing giant Infosys, as its man on Wall Street. One week out of
every six or seven, he takes securities firms to India to show them the
savings that are possible. He knows the transition is painful for the
workers left behind, but he has seen it before. "It was the same thing
when we moved from Wall Street to New Jersey and then to Dallas," he
says. "Guess what? This is next."
With reporting by Sean Gregory/New York City
http://economictimes.indiatimes.com/cms.dll/xml/uncomp/articleshow?msid=98044
Outsourcing row gets hotter, wider
K YATISH RAJAWAT
TIMES NEWS NETWORK[ MONDAY, JULY 28, 2003 09:05:36 AM ]
MUMBAI The backlash against offshore outsourcing to Indian IT companies
in the US, till now driven by newly-formed unions or unemployed tech
workers running websites, may acquire a wider political dimension.
Industry observers and analysts say that remarks by US ambassador
Robert Blackwill and former secretary of state Henry Kissinger could
indicate a change in the nature of the backlash problem. Last week,
media reports quoted Mr Blackwill telling a CII gathering on business
process outsourcing that opposition in the US to outsourcing could soon
become a political problem. Speaking on Indias refusal to send its
troops to Iraq, he went on to say that though the US was disappointed
with Indias decision, it would not affect Indo-US relations.
Mr Kissinger, for his part, used a Computer Associates event in Las
Vegas last week to air his views on the offshore outsourcing issue. Mr
Kissinger was scathing about the growing global trend in outsourcing
particularly of information technology, which has seen countries like
India develop a large market in software development, call centres and
accounts processing. He said he was not a fan of moving work, such as
computer programming and support, overseas.
The question really amounts to whether America can remain a great power
or a dominant power if it primarily becomes a service economy, he said.
And I doubt that. He went on to say that the movement overseas called
for some careful thought of national policy of how we can create
incentives to prevent that from happening.
While the Indian government has decided against sending troops to Iraq
to support and replace US troops there, the talk of any link between
these two issues is sending jitters through IT companies CEOs in the
country. Most of the CEOs that ET contacted did not want to be quoted
on the issue.One of them said, off the record, that linking Indias
foreign policy with an economic issue like outsourcing is being used by
these diplomats to bring the Indian government under pressure. This is
not going to work as offshoring of work from US is being driven by
corporates in the US, and unlike in other trade and foreign policy
issues, this cannot be controlled by the US government.
Analysts at research firm Gartner also support this view. Offshore
outsourcing is a global mega trend and legislation by governments
cannot stop this, they say. The US government has the power to make
things difficult for Indian companies by changing its visa policy or by
reducing the number of visas.
Most Indian companies are prepared for a reduction in visas. They say
it will temporarily affect their business, but it will also shift more
work offshore, if they do not get visas for deploying people onsite in
the US. If the offshore component increases then they will be able to
offer lower prices to their US customers, thus making them more
competitive, officials in IT companies say.
The US chapter of the IEEE (Institute of Electrical and Electronics
Engineers) with 3,80,000 members spread across the world has also been
campaigning to reduce the number of visas. IEEEs US wing has around
2,35,000 members. IEEE US has begun lobbying to cut down the number of
H1B visas. It has suggested that the number of H1B visas should not
exceed 65,000. It also wants the income from fees for this programme to
supPORT 66,69,254,99,134,105
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Wednesday, July 30, 2003
)2003 San Francisco Chronicle | Feedback
URL:
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/07/30/BU272273.DTL
A growing number of technology jobs could move overseas by the end of
next year, according to a new report, accelerating a trend that could
have major negative repercussions for the industry and U.S. workers in
the long term.
One in 10 technology jobs at companies that specialize in information
technology, or IT, services -- and 1 in 20 at ordinary firms -- will be
sent to low-cost overseas companies by 2004, predicted technology
advisory firm Gartner in a report released Tuesday.
Most Bay Area employers have already jumped on the offshore outsourcing
bandwagon, including Intel, Hewlett-Packard, Oracle, PeopleSoft and
Bank of America.
The trend is unstoppable and permanent, in Gartner's view. Less than 40
percent of U.S. workers whose jobs are taken over by lower-paid
overseas counterparts will find other roles at their companies, the
study predicts. The rest will be thrown into the already hard-knock job
market.
"If you're in the IT profession right now and all you've got going for
you is a series of technical skill sets, then you're at risk," said
Diane Morello, author of the report.
Kim Berry, a computer programmer and an opponent of sending tech work
overseas, is one of the endangered species. He works for Sacramento's
Prestwood Software, a company that develops Web and business software
on a contract basis for other companies.
Based on his own experiences, he thinks Gartner's predictions are
reasonable.
"We're hoping to be part of the 9 in 10 by cutting wages, but it's not
pleasant," Berry said.
There has been much debate in recent months over the accelerating trend
of using lower-paid foreign workers, with disgruntled employees such as
Berry facing off against U.S. companies and firms that specialize in
moving work overseas. Companies say they are making use of low-cost
computer professionals in India and other developing nations in order
to survive. U.S. workers say they are being betrayed after years of
study and work.
Gartner's report is an interesting addition to the debate because it
acknowledges that there may be an economic downside to the transfer of
jobs. Companies that send work overseas too hastily risk undermining
the pool of tech talent in the United States, which could backfire on
them when the companies want to hire locally in the future, the report
said.
As engineers in Silicon Valley lose their jobs to Bangalore, India, the
next generation of potential innovators will be watching, Morello said.
"Younger people may be looking at this industry and say, 'Why would I
want to work so hard getting a degree in this when the industry is so
precarious?' " Morello said.
In addition, companies that show an excessive disregard for the welfare
of their American workers "may find that their reputation gets sullied
and people will not want to work for them," she said.
Local workers who blame the use of foreign workers for their loss of
job security use similar reasoning to argue that companies should stop
sending work overseas. But Gartner is not advising clients to stop
moving work offshore. In fact, the company recently hosted a conference
in Los Angeles to help companies learn more about the practice.
"It's an irreversible trend," Morello said.
Instead of turning back the tide, Gartner is advising companies to
tread carefully. They should be careful not to cut loose experts with
hard-to-find skills. They should avoid the temptation to keep the
company's plans secret from employees, and instead tell workers up
front how long they are likely to have left on the job before they have
to start polishing their resumes.
Morello acknowledges that knowing when you're going to lose your job
doesn't make the experience a walk in the park.
"There's nothing I can see that's going to dampen the anger," she said.
"What you can do as a manager is speak honestly, respect people and
give them the dignity they need."
E-mail Carrie Kirby at ckirby@sfchronicle.com.
http://www.cnn.com/2003/TECH/internet/07/30/jobs.oversees.reut/index.html
Report: 1 in 10 tech jobs may go overseas
NEW YORK (Reuters) --One out of 10 jobs in the U.S. computer services
and software industry could shift to lower-cost emerging markets such
as India or Russia by the end of 2004, a top computer consultancy said
on Tuesday.
Gartner Inc., the world's biggest high-tech forecasting firm, said in a
report entitled "U.S. Offshore Outsourcing: Structural Changes, Big
Impact" that 500,000 of the 10.3 million U.S. technology jobs could
move just in 2003 and 2004.
While professionals in the computer industry itself are likely to bear
the brunt, the report predicts that one in 20 tech jobs in
industry-at-large also could be moved overseas.
Most affected fields
This is especially true in industries with high concentrations of
knowledge workers such as banking, health care and insurance, the
author of the survey said.
"Suddenly we have a profession -- computer programming -- that has to
wake up and consider what value it really has to offer," Diane Morello,
a Gartner vice president and research director who studies work force
issues said in an interview.
"Offshore outsourcing" is the euphemism the computer industry uses to
describe the transformation of software development, computer services
and customer call-center work.
As a global economic recession has hit hard over the past two years,
U.S. companies have embraced as never before a decades-old trend to
hire educated workers overseas who can be employed for a fraction of
the cost of U.S.-based programmers.
Jobless tech recovery?
Just last week, software maker Siebel Systems of San Mateo, California
said it would cut 9 percent of its work force, or 490 jobs, and planned
to move some operations overseas.
Executives of the world's largest computer and services company,
International Business Machines Corp. were quoted recently as saying
they had no competitive choice other than to expand software and
semiconductor development overseas. The comments came to light in a
recording supplied by a union seeking to organize IBM workers and
supplied to Reuters. IBM now employs 5,400 workers in India out of a
total work force of 316,000.
The debate by economists over whether the United States may now be
experiencing a jobless economic recovery echoes disputes over high-tech
job losses that heated up during the last technology recession a decade
ago. These petered out quickly in the Internet boom of the late 1990s.
Becoming political
The recent acceleration of job losses actually began during the late
1990s when shortages of qualified U.S.-based workers led companies to
turn overseas to countries such as India, Ireland and elsewhere for
computer and Internet project work.
The mounting job losses are heating up as a political issue, with bills
put forward by legislators in five U.S. states that would require
workers hired under state contracts be American citizens or fill a
special niche citizens cannot fill.
Morello said her study did not speculate on where such jobs were
moving. But she indicated that India, Russia and other countries in
Southeast Asia were the most likely locations.
She also pointed to how Canada has moved recently to position itself as
a "nearshore" alternative to companies who have trouble shifting jobs
to more distant "offshore" locales.
Seeking 'Best Shore'
Electronic Data Systems of Plano, Texas, the world's second largest
computer services provider, has already reached into Canada and many
points beyond. EDS has begun promoting its "Best Shore" strategy of
positioning software and customer service work in what it says are the
most cost-effective locations around the globe.
EDS has 16 centers that range from New Zealand to India to Egypt,
Poland, Brazil, and Canada.
The Gartner analyst said that based on her preliminary calculations
that one in 10 software services jobs are at stake at computer vendors
and 5 percent of technology jobs in the wider corporate world, at least
500,000 jobs will be moved.
http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_2104190,00.html
Passage to India
High-tech jobs moving abroad, lured by country's low costs, skilled
labor
By Steve Caulk, Rocky Mountain News
July 12, 2003
Denver high-tech businesses are chasing customers and competitors
halfway around the globe to India, where low costs have breathed new
life into struggling firms.
But Denver firms that have engaged in offshore outsourcing contend that
their strategies have actually preserved jobs. Even the term
"outsourcing" has been banned from public relations lingo when talking
about the subject.
Metro-area companies J.D. Edwards, Ciber and TeleTech have initiated
ventures in India this year, adding to the long list of U.S. businesses
that have found financial refuge overseas.
Businesses across the country have been taking advantage of India's
high-skilled, low-paid labor pool for years, much to the concern of
domestic labor advocates in the United States. And the practice has
increased, experts say.
By 2015, about 1.7 million U.S. jobs will have moved to offshore sites
that include China, Russia, the Philippines and, of course, India,
according to Forrester Research.
Chasing work to India
Mac Slingerlend, chief executive officer of Ciber in Greenwood Village,
makes a compelling case as he describes an incident that occurred
before Ciber's establishment of a joint venture with a partner in
India.
"We have customers in the U.S. doing work in India who say, if (Ciber
consultants) can't help with that work, we'll lose it," said
Slingerlend. Ciber is a consulting firm that helps companies integrate
their computer systems.
"American Express used to be a major customer of ours in Phoenix," he
said. "They sent more than 50 percent of their software development to
India. We couldn't support the Indian development work, so not only did
we not get that work, but we lost the U.S. work at the same time."
"One could put a reverse spin" on the issue of job losses to other
countries, Slingerlend said. "By having the ability to do work
offshore, we're actually retaining U.S. jobs."
Evolving Systems, a Douglas County telecommunications software firm,
estimates that its joint venture in India has saved the company 40
percent on software development costs due to the low cost of labor.
The figure is typical throughout the high-tech industry. The average
salary for a software engineer in India is $5,880.
One woman in India, working in the offshore call center for a major
U.S. telephone company, says she makes $6.50 for an 8 =-hour shift,
an amount she considers unreasonable, especially when her Indian
company makes $4 per call. She asked not to be identified either by
name or company affiliation, but she goes by the name "Michelle" when
dealing with customers on the phone.
A 1 =-year veteran at the call center, Michelle says she remains
enthusiastic about her work, but she notes that the salary puts a
single beer at the local pub outside her budget.
She receives a $1 bonus anytime she rings up a long-distance sale
during a service call.
Teaching U.S. accents
Typically, U.S. companies teach their new Indian partners to speak with
an American accent in hopes of putting customers more at ease. Michelle
has adopted a Southern lilt - one that she has "lost" a couple of times
during moments of impatience with angry customers.
"Each of us goes through accent neutralization training for three or
four weeks," she said.
Since India is about 12 hours ahead of the U.S., companies often ask
offshore workers to work the graveyard shift.
"The first few days (on the job) were real bad, as if I have been
sleep-deprived for months," Michelle said.
Some companies take advantage of the time difference by letting their
offshore partners work during the day. It complements work done in the
U.S., essentially giving the U.S. company round- the-clock operations.
The strategy allows Evolving Systems to cut its response time to
customers almost in half, said Stephen Gartside, executive vice
president.
"What we ship offshore is coding and testing," said Gartside. "The
project is managed in the U.S., so it's worked on in short intervals
that allow for a 24-hour workday. Things in India take place
overnight."
Software developers in the U.S. do their part, ship it overnight to
India via the Internet, then return to the office the next morning with
the testing complete. Full team meetings are generally conducted about
6 to 7 p.m. Denver time.
Evolving agrees with the pro-offshore argument that the practice saves
jobs.
Telecommuting from India
In 1999, seven-year Evolving employee Giri Tirumale decided it was time
to return to India with his wife and two children. Determined to keep
one of his best software developers, Chief Executive George Hallenbeck
suggested a compromise. Overseas communication and document transfers
had become dependable enough to allow Tirumale to set up an office in
his home country. The Indian branch is like a "virtual office,"
Tirumale said.
"Before, communication used to be the biggest problem" for offshore
sites, he said. "The Internet has changed the whole spectrum. We are
using the Internet right now, which you could not have thought about
eight to 10 years ago."
The offshore strategy allowed Evolving to address a labor shortage in
the Denver area four years ago. Since then, the issue has changed to
one of cost-cutting, but the offshore partnership still works for the
company.
"A successful offshore program is a key element in the survival of
Evolving Systems," said Gartside. "It's been instrumental in allowing
Evolving Systems to deliver what our customers want and still produce a
small net income. Without it, Evolving Systems might not have continued
to exist. It's a key to our continuing profitability."
Evolving Systems has 92 employees in its Douglas County headquarters.
Squeezing U.S. workers
Critics of offshore outsourcing don't buy the win-win argument that
proponents put forth. Marcus Courtney, president of the Washington
Alliance of Technology Workers, said he wants to know what companies
have done to keep the jobs in the U.S.
"They're saying the only way to be successful is to seek out the lowest
cost labor for production," he said. "I don't believe it's true. During
the '90s, we had the largest economic expansion in America. How could
they be successful four years ago and now they can't make profits?
That's ridiculous."
Courtney wants to know the extent of pay cuts that executives have
offered to take, and he wants to know how closely management has worked
with employees to make adjustments that would allow job retention.
"This isn't about companies trying to find the best way and best
processes to become efficient," he said. "It's about unilateral
decision-making to squeeze workers and increase profits, and doing it
with our highest- skilled, best-educated employees in the country."
Legislators in some states have expressed similar concerns, and New
Jersey has a bill pending that would prohibit the state from
outsourcing jobs overseas.
Many countries have attracted U.S. jobs in recent years, but the
situation has become especially worrisome to Courtney as it relates to
high-tech positions in India.
"What you're starting to see is, the Indian tech industry is
experiencing a bubble similar to what the American industry did in the
'90s," he said. "It raises the question of the sustainability of that
bubble."
Nonsense, says John Challenger, a human resources expert at Challenger,
Gray & Christmas in Chicago.
"First there was this outrage that we could see manufacturing and
unskilled jobs moving to Mexico and China, and then there was the
outrage over these skilled jobs," he said. "How arrogant are we to
think that we can't move skilled jobs overseas? Our educational system
is not the best in the world. Other educational systems put out great
engineers and technology people as well."
He said the partnerships with other countries will ultimately benefit
the U.S.
"Where we're seeing the back and forth of workers, not only will it
heat those economies up and create demand for our goods and services,"
he said, "but those people who work with us are going to develop a
perspective turned this way. These people will be some of our biggest
trading partners in the next 10 years."
Matter of costs
Douglas County-based Tele-Tech established a partnership with Bharti
Televentures in New Delhi, India, early this year, and TeleTech expects
to have several hundred people there working on the company's behalf
within a couple of months, said spokeswoman Carol Hahn.
"Having capabilities in India will allow TeleTech to remain competitive
in the global marketplace," she said. "Customers today are looking for
blended solutions. And this additional location rounds out our
worldwide solution."
In other words, TeleTech's customers who use the company for their
customer service functions can rely upon the Indian workers' language
skills and the country's time-zone advantages.
The Indian venture will save TeleTech 30 percent on the cost of
services conducted there, Hahn said.
The savings, however, won't keep the company from trimming jobs. On
Thursday, the company said that as part of a cost-reduction plan, it
would cut about 300 jobs from its global work force.
Greenwood Village-based First Data Corp. has an undisclosed number of
full-time workers and contractors in India, partly as a cost-effective
measure.
But Vice President of Merchant Communications Rodney Bell emphasized
that India is one of only 195 countries or territories in which First
Data operates. And he said the number of workers is extremely small in
comparison with the 29,000 that the company has worldwide.
"We look at talent (in the offshore site) as well as
cost-effectiveness, and perhaps being close to market," Bell said. "If
we're looking at projects that are delivering international products,
it might make sense to have resources dedicated to those markets."
Picking the right words
The controversial nature of the offshore outsourcing made some firms
reluctant to provide information about their strategies. For instance,
Qwest declined to reveal the extent of its cost savings in India.
"It's not about savings," said spokeswoman Kate Varden. "It's about
making sure we're improving our customer experience."
She bristled at the use of the word "outsourcing" and said she would
not use the word "partnership" to describe Qwest's contract with the
firm in India, called -TATA, that provides work for the telco. She
emphasized that the work is "temporary," on a project basis, and
"cycles back into Qwest" at the end of the project.
The arrangement with TATA began in 1995, when the company was U S West
and when U S West was trying to take advantage of the H-1B visa
program. The program allowed high-tech companies to hire foreign
workers during labor shortages.
J.D. Edwards announced its partnership with Indian firm Covan in Mumbai
early this year, and J.D. Edwards has received "zero" complaints about
the program, said company spokesman Victor Chayet.
"We're very dedicated to maintaining Denver as the central location for
developers at J.D. Edwards," he said. "It's unlikely we would simply
eliminate domestic jobs in favor of jobs in India. There is still a lot
of domain knowledge that we can't walk away from here in the U.S."
TeleTech's offshore strategy also has generated no controversy -
"absolutely none" - says TeleTech's Hahn.
"We are excited about this addition to our existing client portfolio,"
she said.
http://www.msnbc.com/news/947478.asp?0sl=-41&cp1=1
Jobs Go Global
Tech jobs are moving overseas at an alarming rate. Other fields may
soon follow. Why is it happening?
By Laura Fording
NEWSWEEK WEB EXCLUSIVE
Aug. 3 Looking for a high-paying tech job? Good luck. Offshore
outsourcing the exporting of jobs that were once done in-house has been
on the increase, to the point where a report by Gartner Inc., an
information technology research firm, calls the movement of
tech-related jobs an irreversible megatrend.
By 2004, predicts another Gartner study, more than 40 percent of
companies will have already shipped some tech-related work overseas or
will be testing the idea. Many of those jobs are moving to India, where
costs for employee salaries can be significantly reduced. Other
countries stand to benefit as well. And, while the tech industry seems
to be the most widely discussed thus far, other white collar types of
jobs are also at risk.
RON HIRA, A post-doctoral fellow at Columbia Universitys
Center for Science, Policy and Outcomes, has testified before the House
of Representatives Committee on Small Business on this issue.
NEWSWEEKs Laura Fording asked Hira, a soon-to-be assistant professor
of public policy at Rochester Institute of Technology, for his take on
whats happening:
NEWSWEEK: How rapidly is offshore outsourcing expected to grow?
There has been quite a bit of press about it in recent weeks.
Ron Hira: Six months ago, I didnt think that things were
moving that fast. But Ive been tracking some of the announcements by
major U.S. technology companies and almost daily, it seems, they are
talking about moving work overseas to cut costs. Forrester [Research
Inc.] came out with a study that said that 3.3 million white collar
jobs will go overseas by 2015. Its hard to forecast out one year,
let alone 12, so Im a bit wary of real numbers. But I do recognize
that it is real, and is gaining momentum every day.
Is cost savings driving the trend?
Cost is one thing driving it, but I think there is another
aspect: businesses follow what other businesses do. So as more
businesses do it, more will be sucked in to thinking its the right
move.
What kind of jobs do you think will be most affected by it?
I know most about information technology [IT] jobs and
engineering-type jobs, because thats my specialization. The first
moves overseas were call centers, where people handle customer requests
or complaints. Or technical support. I know theres been talk about
doing tax returns and processing claims forms and other types of
white-collar work abroad. Companies are also considering offshore
outsourcing for routine kinds of things that have been done in back
offices for years. Theyre thinking: Why do it in Fairfax, Va. when
we can do it cheaper somewhere else? But you can imagine that
multinational [corporations] that already have a presence overseas will
have occupations that move over more rapidly. My cousins in India tell
me that the job market in India has never been so good the IT market is
in a frenzy right now. Im most concerned about research and
development. If you have more and more high level research and
development being done abroad, what are then the ramifications here?
What does this shifting of jobs overseas mean for the U.S.
economy?
We really dont know. One of the problems is that the rhetoric
on one side has been somewhat alarmist: These shops will leave and we
wont be able to do anything about it. Its probably not entirely
correct but there is some truth to what they say. On the other side,
companies dont really want people to know whats going on. Policy
makers seem to be at a loss at what to do. They may say that this an
irreversible trend, its just global capitalism at work, free trade.
I think its a bit of a red herring. This is not all beneficial to
the U.S. economy, as some seem to be arguing.
How could this potentially affect workers in these jobs?
Lots of workers, in lots of occupations, will be displaced.
Economists may say that these people will find other work. But the jobs
they find may pay significantly lower wages. Or they may have given up
trying to find an IT job. Whats dysfunctional about policy-making in
the United States is that the Washington elite have been pushing the
idea that we have a shortage of scientists and engineers.
What is being done to address these concerns at the federal
level?
There has been legislation introduced to reform temporary visa
programs to try to curb some of the abuses. Many of the companies that
are very good at offshore outsourcing have actually utilized these visa
programs to move work offshore more rapidly. Some companies bring
workers in on these visas, train them, and then send them back to their
country to replace American workers who trained them. And the American
workers, in order to get their severance pay, basically have to do the
training.
If more research and development and other jobs that demand
highly-skilled workers go overseas, wont it have significant
long-term implications?
Theres a perception, and I think its a correct one, that
technology has been the driver of economic growth and change, and if
you are not on the cutting edge, if you dont have a large number of
people working in technology, you have to wonder about your military
capabilities going forward. Theres also a lot of discussion about
intellectual property and security concerns associated with sending
work overseas. But companies have to decide whether its worth the
risk and whether those countries have the right kind of intellectual
property [laws] and enforcment.
Should college students steer clear of IT, computer science and
engineering degrees?
Lets hope not. But there are a lot of engineers who are not
recommending these degrees for their children, or nephews or cousins or
friends. The risk involved is too great its better to go into a
safer occupation. These are our best and brightest so they can pretty
much go into any occupation they choose. But when your best and
brightest are out of work, you have to start wondering whats going
on.
Have you spoken with a lot of IT workers? What are their
responses?
Whats interesting about IT people and engineers is that they
tend to have a libertarian streak, ideologically. They believe in
meritocracy. Theyve made it through engineering school many of the
others failed and theyve made it on their own merit. So some view
any government intervention or unions in a negative way. Then you have
a number of other people who are just outraged. And then have others
who say, What do we do about this? How do we move forward? I would say
fear is another big reaction. There is a lot of insecurity out there.
You go to local IEEE [Institute of Electrical and Electronics
Engineers] meetings and the first topic of discussion is jobs.
What do you think the long range consequences of all this will
be?
Its really a hard call. If we can come up with some smart
policy, this can be a positive on both ends. The United States does
have a vested interest in seeing other countries grow and seeing other
people get good jobs, but we cant abandon people here. Whether or
not we lose our prowess depends a lot on what companies and
policymakers do.
) 2003 Newsweek, Inc.
http://www.usatoday.com/money/workplace/2003-08-05-outsourcing_x.htm
USA's new money-saving export: White-collar jobs
By Stephanie Armour and Michelle Kessler, USA TODAY
White-collar employees have long believed their jobs were safe from the
economic forces that have shifted millions of factory jobs to foreign
countries in the last 30 years.
Not anymore.
It's not just clothing and electronics being made by workers in India,
China and similar places. Now, office and professional jobs are being
shipped out raising the specter that skilled white-collar workers
could face the same devastating job losses that decimated the
manufacturing industry.
Almost any professional job that can be done long-distance is suddenly
up for grabs. Jobs done by financial analysts, architectural drafters,
telemarketers, accountants, claims adjusters, home loan processors and
others at higher levels of the labor food chain are being farmed out to
workers in other countries.
"We're not just talking about call-center jobs, but all kinds of jobs,"
says Deloitte Consulting analyst Christopher Gentle. "It doesn't leave
any part of the corporation untouched."
These include high-paying, highly sought-after jobs that often require
advanced degrees and years of study to attain. But instead of paying
six-figure salaries to trained workers in America, more companies are
shelling out $10,000 to $20,000 to get cheaper employees an ocean away.
Major U.S. companies, including such giants as IBM, Microsoft and
Procter & Gamble, are leading the pack. Tens of thousands of jobs
already have been shipped out, and analysts project that millions more
will go in coming years.
Employers say outsourcing jobs to foreign countries makes them more
competitive because they can reap enormous savings in labor costs. They
argue that most of the jobs now going abroad are positions many
Americans snub, such as telemarketing. Farming out that work leaves
better, higher-paying jobs for American employees to do.
The trend represents a potentially seismic shift: In the next 15 years,
American employers will move about 3.3 million white-collar jobs and
$136 billion in wages abroad, according to Forrester Research. That's
up from $4 billion in wages in 2000.
Financial services companies alone plan to move more than 500,000 jobs
offshore in the next five years, says consulting firm A.T. Kearney.
Deloitte Consulting expects 2 million jobs worldwide to eventually move
to countries such as India.
A warning from organized labor
To labor unions, farming out white-collars jobs is more than just
another way for businesses to cut costs. They say the trend has the
potential to plunder American jobs, prolong the weak job market that
has characterized this jobless economic recovery and pose a long-term
danger to the employment security long enjoyed by white-collar workers.
Critics now are trying to mount an offensive.
"We see it as a threat to America's middle-class workforce, in terms of
wages and benefits," says Marcus Courtney, president of Washington
Alliance of Technology Workers in Seattle. "The service sector is not
immune to the forces of globalization. We're talking about highly
skilled, best-paying jobs. It's raising the concern of workers."
The Communications Workers of America this spring began pressing
Congress to authorize an investigation into the growing number of jobs
being shifted abroad. High-tech workers have handed out leaflets and
held demonstrations protesting the trend in states such as Texas,
Washington, Massachusetts and New York.
Critics are pushing for legislation that would halt projects from being
sent abroad if they're funded by tax dollars. Others want tax
incentives to help keep business on U.S. soil.
The worry: Increasing profit pressures and the ease of information
exchange provided by the Internet will turn the wave of companies
shipping out work into a tsunami potentially affecting every sector of
the white-collar labor force.
Among concerns:
Benefits and pay. Secure in the knowledge that they can get cheaper
workers abroad, American companies might begin slashing benefits here,
critics say. Even U.S. workers who get jobs could see wages slashed
because of the competition posed by their counterparts abroad, they
say.
Companies have already been curbing benefits as labor costs driven
largely by health care costs escalate.
Pay has also suffered as companies cut back on raises in a sluggish
economy. As more companies start tapping workers abroad, critics say,
U.S. workers will lose the last vestiges of their bargaining power.
At 123jump.com, a Miami Beach provider of investment advice, the
company's 32 financial analysts live in India, Bulgaria and Argentina,
earning $15,000 to $20,000 a year.
CEO Manish Shah says he could shell out $150,000 or more to hire
analysts here. But why? His analysts usually have MBAs and speak fluent
English.
"Can we stop (globalization)? No," Shah says. "We go to the cheapest
possible cost with the best possible product."
Loss of American jobs. Labor unions and consultants fear a repeat of
what happened in the manufacturing sector, which has lost more than 2.6
million jobs in the past three years.
The scope and type of jobs being farmed out show how vulnerable many
professional positions are. J.P. Morgan Chase expects to have 40
research analysts in Mumbai (formerly called Bombay), India, by year's
end. Deloitte Consulting has about 1,000 employees in Mumbai and
Hyderabad, India, many handling research work. A.T. Kearney uses
workers in New Delhi for research and office support.
IBM has expanded offices in Bangalore, India, to handle engineering
work, and is reportedly considering a big offshore push.
Hewlett-Packard has 5,000 employees in India, doing research,
developing software and staffing call centers. The companies say
they've had Indian workers for years.
An unstoppable force. While the overall percentage of jobs being farmed
out to workers abroad is still small, the advantages to U.S. companies
are so attractive that labor unions fear any congressional efforts to
curtail the practice will be doomed.
Already, major companies are able to work around the clock because of
their presence in other countries.
Oracle has two big development centers in India, and 4,000 employees
will be stationed there by year's end. Programmers there pick up
projects when their American counterparts leave for the day, and vice
versa. That way, Oracle is working 24 hours a day.
The numbers are continuing to swell. Consulting firm Brulant recently
surveyed 38 large companies about outsourcing plans. While only 18%
were seriously considering it, "100% of them were evaluating it," says
CEO Len Pagon Jr.
Once gone, jobs won't return
If outsourcing takes off, it's unlikely to stop, experts say. "The jobs
aren't coming back, that's for sure," says Forrester Research analyst
John McCarthy.
While the trend has been underway for years, only now as the pace of
outsourcing picks up and new projections show its use continuing to
grow is debate about the practice increasing. One reason for the
attention is the recent economic doldrums. With unemployment at 6.2% in
July, more white-collar workers are becoming anxious about job
security. While many have been shaken by layoffs, workers' new concern
that jobs could be lost permanently to other countries is sounding an
alarm.
Says Josh Bivens, an economist at the Economic Policy Institute in
Washington: "This will cause more churning and concern higher up the
professional food chain. Blue-collar workers have been used to this for
years."
Since the first migration of white-collar work involved tech jobs,
other employees in professional jobs thought they were immune. Now,
office jobs many thought could never be done abroad are being farmed
out.
In recent years, the Internet has made it easy to pass data and
documents around the world. In India, deregulation of the telephone
industry has caused rates for some international calls to fall as much
as 30%. That's made it possible for telemarketers and customer service
agents to work seamlessly with U.S. customers. Many assume an American
name and take training in U.S. customs, making it hard to distinguish
between a call from Houston or Hyderabad. "In India, it's a very
respectable job," says Chaitra Aiyar, 23, who works at Cellbion, a call
center near Mumbai. She goes by the name Cindy Newman when making
calls.
Workers who have never been in a U.S. office are handling such
sensitive areas as payroll and benefits. Procter & Gamble handles
payroll, travel, benefits administration, accounts payable, invoice
processing and other work at offices in San Jose, Costa Rica; Manila;
and Newcastle, United Kingdom. About 7,000 people work in these
offices, which opened in 1999.
Companies say their offices abroad are run as tightly as those in the
USA. But critics disagree.
"There are real security risks," says John Guinasso at Data Systems
Security in San Jose, Calif. "Corporations here don't have control over
who has access to information once it gets out of their hands. There
are real concerns."
Are the fears real?
Is all the hand wringing overblown? Labor groups say no, but companies
and some analysts argue that shipping white-collar jobs abroad is
hardly a menace to American jobs.
"The recession is making all sorts of people insecure. I don't see this
as a huge threat to the U.S. economy," Bivens says.
Since labor and land in countries such as India can be cheap, the cost
savings can become "extraordinary," says A.T. Kearney Vice President
Andrea Bierce.
An MBA with three years experience in India will make about $12,000 a
year, compared with $100,000 in the USA, she says; a programmer will
make $5,000, compared with $60,000. "There are an awful lot of
companies thinking about this," Bierce says.
But Bierce warns that the savings aren't immediate for many companies.
The cost of moving part of a business abroad can, at first, be higher
than the cost of keeping it in the USA, experts say.
But it's the fact that workers abroad are so cheap over the long term
that has detractors crying foul. It even gnaws at some employers.
David Stixrood, president of Dallas-based Corp-Wireless, which provides
broadband wireless connectively to the Internet in truck stops, opted
not to use an overseas help desk even though it was cheaper partly
because he's concerned about what outsourcing will do to American jobs.
"We're going to lose all those jobs," Stixrood says. "People are losing
their jobs to overseas markets. Unfortunately, we live in a very
competitive world, and sometimes competition is very cruel."
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