14 Articles Worth Reading
14 Articles Worth Reading
Date: Friday, December 03, 2004 4:25 PM
JOB DESTRUCTION NEWSLETTER
December 03, 2004. No. 1153
Article 1:
http://www.boston.com/business/articles/2004/11/17/offshoring_accelerating/
Offshoring accelerating
US study puts number of jobs sent overseas in 2004 at 406,000, double
the estimates
Article 2:
http://inhome.rediff.com/money/2004/nov/20bpo.htm
Foreign BPOs list expansion plans
Effective Teleservices, the first American company based at
Gandhinagar's Infocity, has announced its expansion plans and will
scale up its operations by over 1,000 seats. According to NASSCOM the
US will outsource over 6 million high tech jobs to India by 2005.
Article 3:
http://seattlepi.nwsource.com/opinion/200846_visaed.html
Stealth lawmaking
It was so convenient for Congress. Instead of debating an increase in
U.S. visas for foreign high-tech workers, the politicians slipped the
measure into the giant spending bill. If it was a good idea, the
authorization for an additional 20,000 visas should have been done in
the full light of day.
Article 4:
http://www.dailytarheel.com/vnews/display.v/ART/2004/12/01/41adc32d3f632
Congress restructures visa limits
"With my own experience, every single H-1B or L-1 who has come into the
U.S. has had the effect of creating jobs for other U.S. worker"
(Opponents of the bill) are missing the big picture," he said. "They
are seeing it as a zero-sum game, but (the visa holders') presence in
our economy has an exponentially beneficial effect."
Article 5:
http://timesofindia.indiatimes.com/articleshow/940559.cms
Give techies more visa power: India
Most visa programmes of western countries are designed for a less
tech-friendly age. That's why you have the collective elation and grief
that accompany H1-B visa caps in the US. To free visa rules from the
whims of governments, Indian IT industry has proposed a "professional
services visa" category at the WTO's GATS negotiations. Free of any
artificial caps, this category will not be employer-dependent.
Article 6:
http://heather.cs.ucdavis.edu/CACM.pdf
Globalization and the American IT Worker
Exporting IT jobs and importing IT workers not only harms U.S. IT
workers, it also harms U.S. firms and the broader economy. On the
legislative side, labor importation must be addressed, not only for its
direct effect but also because it plays a central role in offshoring;
most offshoring software projects include a key onshore component
staffed by H-1Bs and L-1s in the U.S. The visa holders serve as
liaisons to offshore staff or are offshore workers temporarily in the
U.S. for training (for full text go to website).
Article 7:
http://www.cnn.com/2004/TRAVEL/11/30/bt.visa.us.business.reut/
Tight visa rules hurt U.S. business
Special work visas, called H-1Bs, have been used to recruit foreign
nationals, from programmers to actors. Congress has agreed to exempt
from the limit 20,000 foreign students with degrees of masters or
higher from U.S. universities, but lobbyists said that is far from
enough. "It's counterproductive to educate these students and then
force them abroad to compete against us," said Sandra Boyd, Chairwoman
of CompeteAmerica alliance, a lobbying group.Two dozen U.S. chief
executives, including Steve Ballmer of Microsoft Corp., Carly Fiorina
of Hewlett-Packard and Craig Barrett of Intel Corp. urged Congress in a
letter dated Nov. 10 to end the quota system.
Article 8:
http://www.theinquirer.net/?article=20009
Multinationals use offshore subsidiaries to avoid law
But outsourcing unstoppable, report claims
India is the biggest recipient of IT job imports, followed by Communist
China. Other countries benefiting include Brazil, Mexico, Malaysia,
Poland, Romania and Russia. Top of the IT outsourcing pops are the USA
and Japan, Germany is set to blaze a trail, but it's trailed by the
United Kingdom and France. The jobs to go include customer support,
tech support, software development, network admin, hardware development
and testing, quality assurance and help desk
Article 9:
http://itmanagement.earthweb.com/career/article.php/3422581
Author Says Offshoring 'Real WMD' for U.S.
America's high-end, high-paying IT jobs are increasingly moving to
India, threatening the U.S.'s predominant position in the world and
setting India up to become the next superpower, according to the author
of a new book, Rising Elephant. Ashutosh Sheshabalaya, a former
journalist and technology consultant who heads Allilon, an IT services
firm in Europe, is issuing a warning that the offshoring of U.S.
high-tech jobs marks the remaking of the American workforce, as well as
the world economy. While offshoring IT jobs has raised concerns and
voices in the high-tech community, Sheshabalaya says it's a far more
complex and dangerous issue than most Americans understand. He predicts
that this relocation of high-value jobs will ''erode the foundations of
Western supremacy.'' Sheshabalaya calls this the "real weapon of mass
destruction."
Article 10:
http://masl.gnomehack.com/?Z1B661CE9or
http://www.computerworld.com/careertopics/careers/labor/story/0,10801,97945,00.html
Gartner: Half of U.S. IT operations jobs to vanish in 20 years
Predicts improvements in data center technologies will lead to job cuts
In an eyebrow-raising forecast, Gartner Inc. researchers said they
believe that as many as 50% of the IT operational jobs in the U.S.
could disappear over the next two decades because of improvements in
data center technologies.
Article 11:
http://www.denverpost.com/Stories/0,1413,36%257E23827%257E2570792,00.html
State shipping jobs and dollars out of country
Call-center work goes to India, Mexico in bid for cheaper labor
When Colorado welfare recipients using a food-stamp debit card need to
talk to someone about their accounts, their calls are routed to India
for English speakers and to Tijuana, Mexico, for Spanish speakers.
Article 12:
http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20041120/BUSINESS04/411200312/1029/archive
Maytag hopes design center in China will help improve finances
Newton-based Maytag plans to open an appliance design center in China
to supplement research and development operations in the United States,
chief executive Ralph Hake said Friday. He also warned that two U.S.
factories must improve performance to assure their long-term viability.
The center will increase Maytag's design capabilities, but at lower
costs than in the United States. Six Chinese engineers can be hired for
the price of one American engineer, Bob Hardin, Maytag vice president
of research and development, told the analysts.
Article 13:
http://moneycentral.msn.com/content/CollegeandFamily/Moneyinyour20s/P92987.asp
Pick a job that wont go overseas
Professionals now face the same pressure from lower-paid competition
that factory workers have long felt. Here's how to compete in the
global job market.
Article 14:
http://www.ciol.com/content/news/recruitment/2004/104111101.asp
Keane to be 5,000 in India
To increase from its present 1,350 and inaugurates a software testing
facility and a back office services unit in Hyderabad with an
investment of $4 million.
http://www.boston.com/business/articles/2004/11/17/offshoring_accelerating/
Offshoring accelerating
US study puts number of jobs sent overseas in 2004 at 406,000, double
the estimates
By Kimberly Blanton, Globe Staff | November 17, 2004
FAIRHAVEN -- Michael Brightman is reminded daily that workers in New
Delhi do the same job he does. His Indian counterparts routinely direct
AT&T customers to him for long-distance billing problems that the New
Delhi workers can't answer.
Brightman and 139 others will be laid off Friday from AT&T's call
center on Massachusetts' southeastern coast. AT&T said the workforce
reduction resulted from a July decision to phase out residential
long-distance service. ''This work did not move. It went away," said
spokeswoman Tracey Belko. ''We are not moving any of these jobs
overseas."
Brightman and coworkers picketing here last month don't buy it. To
them, jobs are being lost in the United States, while increasing
overseas. Union officials said AT&T gave information on its offshore
activity in January showing one in four AT&T customer calls was handled
by independent US contractors employing 1,400 workers overseas. In five
years, AT&T has cut its national call-center employment by half, to
3,270, the union said. ''Is it coincidental, or is it a shift?"
Brightman asked about his layoff.
Data on numbers of US jobs moving overseas in recent years are
scattered and unreliable. As the AT&T example shows, jobs may be cut in
the United States, and employment may increase overseas, but companies
are reluctant to draw connections between the two, while unions are
only too willing to do so. Groups such as the US Chamber of Commerce
peg the number at perhaps 200,000 jobs a year. But a new report
commissioned by a bipartisan congressional commission said 406,000 US
jobs will migrate overseas this year, double the conventional wisdom.
This trend is expected to continue for several years as a greater
variety of jobs are offshored, including to Latin America and the
Caribbean.
Job movement overseas ''is absolutely accelerating, and it's changing
in its nature," said Kate Bronfenbrenner, a professor in Cornell
University's School of Industrial and Labor Relations, who prepared the
report for the US-China Economic and Security Review Commission.
''Whereas in 2001 it was almost all in manufacturing, now we see an
increase in information technology, communications, financial services,
and white-collar work, from research and design to back office." The
report will be presented at public hearings in Seattle in January.
Some economists cite growing numbers of US jobs transplanted overseas
as the main reason for slow employment growth during the current
economy recovery. Another 400,000 jobs added to the total 1.8 million
jobs created in the United States in 2004 would be ''a big deal," said
Stephen Roach, Morgan Stanley's chief economist. ''Offshore labor pools
have become increasingly attractive," he said, and ''more and more of
the new hiring incrementally is occurring offshore."
But Shang-Jin Wei of the International Monetary Fund argued when a
company employs people overseas, lower costs and high profits enable it
to hire elsewhere in the organization. ''We create one job for every
job lost," he said.
Greater ease in Internet and phone transmission, spiraling healthcare
costs to cover US employees, and more experience employing people in
foreign lands are fueling overseas hiring for jobs that once would have
remained here. The most compelling incentive remains the disparity
between wages earned in the United States and in less-developed
nations. In India, a computer programmer with a college degree and two
or three years' experience earns about $20,000 a year, said firms that
employ workers there. Indian workers who process financial transactions
make $12,000 to $15,000. Call-center workers there earn about $1,200 a
year, compared with Brightman's $40,000 salary from AT&T.
The joint report, by Cornell and the University of Massachusetts at
Amherst, is the first to look at offshoring in all industries and to
use the same method to compare two years, 2001 and 2004. Private
consulting firms have examined specific industries. An often-cited
study by Forrester Research last spring estimated 225,000 white-collar
US service jobs would locate overseas in 2004, bringing to 540,000 the
total of those jobs now overseas. A 2004 study by Deloitte Research
said 850,000 financial jobs could be headed overseas by 2010. The new
report found that 204,000 jobs were moved overseas in 2001, doubling to
406,000 this year.
There is no reliable government data. The US Bureau of Labor Statistics
surveys employers on job relocations, but those data are widely viewed
as too low. In the first quarter of 2004, the bureau reported 4,633
jobs were moved offshore. The bureau said it could not estimate
second-quarter activity, due to incomplete information from employers.
''Companies are very reluctant to say what they're doing," said Ronil
Hira, professor of public policy at Rochester Institute of Technology.
''They don't want to take the public-relations hit."
To estimate blue- and white-collar job movements, Bronfenbrenner and
UMass professor Stephanie Luce tallied reports of job transfers in the
United States and foreign, English-language media in the first quarter
of 2004. They then applied a multiplier to increase the job estimates
and adjust for the underreporting.
In Mexico, for example, they estimated fully two-thirds of production
shifts in 2004 were reported by the media, because all of the jobs were
in manufacturing and were publicized by unions or confirmed by business
filings to the US Securities and Exchange Commission, government
applications for worker assistance under the federal Trade Adjustment
Act, and state plant-closing notifications. In contrast, only one-third
of jobs moving to Asia are reported, they said, because the region
attracts smaller employers less likely to be in manufacturing and
unlikely to report movements.
The US Chamber of Commerce's chief economist, Martin Regalia,
criticized the 406,000 job-loss estimate in 2004 as at the ''high end
of any estimates out there." The multiplier was arbitrary, he said,
because it was not based on hard data. ''I don't think starting with
news reports is the way to do scientific research."
Bronfenbrenner defended her data as ''extremely conservative" and said
firms go to great lengths to suppress or downplay in the US press any
jobs shifts, though they may publicize them in the country where they
are relocating.
For example, the report cites the US consulting firm of Accenture Ltd.,
which last year told the Press Trust of India it would add 5,700
employees there by the end of 2004. Early this year, it laid off 90
employees at its Delaware software development office. While Accenture
told The News Journal in Wilmington, Del., that India ''is one of the
areas we're looking at," it was never made clear whether the jobs were
ultimately moved, the report said. The researchers ultimately could not
produce a firm figure on job movement overseas in this case; the
multiplier, she said, is intended to account for situations such as
Accenture's.
To make a connection between a layoff in the United States and job
expansion in India is ''simplistic," said Fred Hawrysh, a spokesman for
Accenture. Hawrysh said Accenture's US employment overall rose last
year.
Dallas-based Texas Instruments has operated in Attleboro, Mass., since
the 1920s. It is now laying off 1,180 in the plant, which makes
pressure and temperature sensors. The jobs are being transferred to
Texas Instruments plants in South Korea, Mexico, Malaysia, and China,
said spokeswoman Linda Megathlin. The layoffs are part of a conversion
of Attleboro from a manufacturing to a marketing and research facility.
To staff the office, the company plans to hire about 100 engineers,
technicians, and managers, she said.
Attleboro Mayor Kevin Dumas is philosophical about layoffs in his city.
While Texas Instruments is no longer Attleboro's biggest employer,
''We're also seeing an influx of new jobs coming open in the city," he
said.
All Jay Carvalho knows is he could make a good living, without a
college degree, working for AT&T. Facing layoff, the 26-year-old has
''no idea" what is next but said it won't be easy to improve on this
job, which pays about $40,000 a year, with benefits. ''I'll be happy if
I get $10 an hour," he said.
Kimberly Blanton can be reached at blanton@globe.com.
http://inhome.rediff.com/money/2004/nov/20bpo.htm
Foreign BPOs list expansion plans
Piyush Pandey in Ahmedabad | November 20, 2004 | 13:59 IST
With the uncertainty over the US president long settled, foreign
outsourcing and information technology enabled services companies have
begun scaling up their Indian operations.
Before the US election, there was a fear that a Democratic president
might put stricter rules on outsourcing there by pulling the plug on
the fledgling BPO sector.
To begin with, Effective Teleservices, the first American company based
at Gandhinagar's Infocity, has announced its expansion plans and will
scale up its operations by over 1,000 seats. This expansion is
estimated at $3 million.
India and Outsourcing: Complete Coverage
"We have already invested over $2 million in India and planning to
invest another $3 million in scaling up our Indian operations," A C
Smith, president, Effective Teleservices Inc told Business Standard.
The US-based Everest Group, which set up its first research and
development and consultancy office at New Delhi in December last year,
expects to generate revenue of over $10 million in the first three
years of its Indian operations.
The business process outsourcing consultancy firm is well established
as a tier I provider of strategic sourcing advisory services.
According to NASSCOM the US will outsource over 6 million high tech
jobs to India by 2005. And as per to the Gujarat chapter of CII, as
many as 26 companies are doing business process outsourcing with the
state. The state earned a revenue of Rs 25 crore (Rs 250 million) in
2001 from this sector.
The BPO business has been growing at a rate of 70 per cent a year and
its net worth in India is around $6 billion. The sector employs around
100,000 people.
According to projections made by McKinsey, if BPO grows by 27 per cent
by 2008, the activity will deliver a revenue of $17 billion, employing
1 million people in the process.
MphasiS, the leading information technology and business process
outsourcing service provider has decided to set up its third centre in
the country at Mangalore by the end of the current year to cater to the
huge demand building up from its overseas clients.
The company will recruit over 1,000 professionals for the new centre at
Mangalore and will and ramp up operations to touch the 25,000-employee
mark in the next three years.
Similarly, Asite SolutionsLtd, a UK-based public listed software
company has inaugurated its first branch office in July this year plans
to set up satellite centres at various other important cities such as
Bangalore, New Delhi, Mumbai, Kolkata, Chennai and Hyderabad amongst
others. The company plans to invest over Rs 10 crore (Rs 100 million)
in the next two years and to employ over 500 professionals in the next
three years.
"Our business operating system supports a wide range of B2B processes
with a focus on procurement and project management. We automate key
processes, creating an extended network that promotes more efficient
interaction and better communication between businesses," said Anil
Malhotra, Asite Solutions Limited.
http://seattlepi.nwsource.com/opinion/200846_visaed.html
Stealth lawmaking
Wednesday, November 24, 2004
SEATTLE POST-INTELLIGENCER EDITORIAL BOARD
It was so convenient for Congress. Instead of debating an increase in
U.S. visas for foreign high-tech workers, the politicians slipped the
measure into the giant spending bill.
If it was a good idea, the authorization for an additional 20,000 visas
should have been done in the full light of day. Representatives and
senators should have voted their consciences on the issue, not let it
be slipped into 3,000 pages of spending decisions.
The evolution of a relatively free global trading system poses tough
issues for policy-makers, companies and individuals. The adjustments
will go best if decisions are made openly.
In the improving economy, many U.S. high-tech professionals have
re-entered the work force. The Institute of Electrical and Electronics
Engineers' U.S. branch credits a reduction in the maximum number of
special H-1B visas for foreign workers to 65,000.
The congressional bill allows an additional 20,000 visas for foreign
students who graduated recently from U.S. master's or doctorate degree
programs. High-tech firms would like many more.
If more foreign workers would benefit the economy, the idea should be
considered. But attention must be paid to timing so that American
workers don't lose opportunities when the economy is still tenuous. And
Congress needs to act in the open, so political leaders and the public
can consider the inconvenient issues, including the reasons American
students are lagging in some advanced fields.
http://www.dailytarheel.com/vnews/display.v/ART/2004/12/01/41adc32d3f632
Congress restructures visa limits
BY BROOKE M. GOTTLIEB
STAFF WRITER
December 01, 2004
The visa reform bill passed by Congress this month will give 20,000
internationals with U.S. graduate degrees a better chance to obtain
temporary jobs in the United States.
Congress passed the L-1 and H-1B Visa Reform Act on Nov. 20 for the
2005 fiscal year in an effort to admit educated foreign workers into
the country.
An L-1, or intracompany transferee, works for a company that has
locations in the United States and in another country. For example, an
American company would be able to recruit an executive from an overseas
branch with an L-1 visa for three years.
According to the U.S. Citizenship and Immigration Services Web site,
"The H-1B is a nonimmigrant classification used by an alien who will be
employed temporarily in a specialty occupation or as a fashion model of
distinguished merit and ability."
In other words, a U.S. company that seeks a specialist from overseas
can hire someone for six years as an H-1B. The legislation would
maintain the yearly cap for H-1B visa holders at 65,000.
But the first 20,000 applicants with a master's or doctoral degree will
not be included in the cap, allowing more people to obtain a visa.
In addition, the bill will no longer allow L-1 workers to be
subcontracted to third-party employers. They also will be required to
work for their petitioning employer for at least one year, instead of
the six months previously required.
Gerry Chapman, an immigration and nationality lawyer from Chapman Law
Firm in Greensboro, said that the improving economy allows employers to
hire more workers, but that the H-1B cap already has been reached.
But he said that if there are not enough qualified employees in the
United States, a company should be able to hire specialists from
overseas.
"With my own experience, every single H-1B or L-1 who has come into the
U.S. has had the effect of creating jobs for other U.S. workers," he
said.
The bill is a trade-off between supporters and opponents of increasing
the number of H-1B visas issued to foreign workers.
"(Opponents of the bill) are missing the big picture," he said. "They
are seeing it as a zero-sum game, but (the visa holders') presence in
our economy has an exponentially beneficial effect."
But the Institute of Electrical and Electronics Engineers-USA opposes
the bill.
"We're against the fact that (Congress) granted the additional 20,000
exemptions," said Chris McManes, senior public relations coordinator
for the organization's U.S. branch.
"With an abundance of American workers looking for employment, we don't
think that additional foreign workers (are needed)."
A report released by the IEEE-USA on Nov. 19 states that unemployment
in the United States dropped between the first and third quarters this
year after the H1-B cap was lowered from 195,000 for the 2004 fiscal
year.
"You have to look at the people who lost their jobs," McManes said.
"(In addition), when you increase the number of workers in any field,
you can suppress wages."
He also said the institute is concerned with the unfair treatment of
foreign workers.
He said it does not want temporary foreign workers to be abused with
insufficient salaries or the threat of losing their visas.
"We're not against foreign workers; we're not anti-immigrant," he said.
"We just feel that if U.S. companies want to bring in workers from
overseas, they should be given a better opportunity to become U.S.
citizens."
Contact the State & National Editor at stntdesk@unc.edu.
http://timesofindia.indiatimes.com/articleshow/940559.cms
Give techies more visa power: India
INDRANI BAGCHI
TIMES NEWS NETWORK[ TUESDAY, NOVEMBER 23, 2004 09:51:21 AM ]
NEW DELHI: Most visa programmes of western countries are designed for a
less tech-friendly age. That's why you have the collective elation and
grief that accompany H1-B visa caps in the US. To free visa rules from
the whims of governments, Indian IT industry has proposed a
"professional services visa" category at the WTO's GATS negotiations.
Free of any artificial caps, this category will not be
employer-dependent. It will cut across a select group of industries and
have only a limited validity. Since this visa would be a multilateral
agreement, individual countries would have only limited shut-off
rights.
Vice-president of Nasscom Sunil Mehta said this proposal by India is
slowly gaining currency in western countries, with US predictably being
more receptive to the idea than European countries.
The US has reasons to consider a large-scale overhaul of immigration
laws. According to conservative estimates, US is heading for a
17-million shortage in its working population by 2020. Professional
visa category finds resonance with US corporates who are constantly
involved in fire-fighting with the US Congress to keep their lines open
to import skilled foreign professionals.
What has also necessitated out-of-the-box thinking on tech visas is
that most visa categories are totally inadequate in addressing specific
issues of technology professionals, who now need visas for 3-6 months
rather than for just a month. This results in unhappy situations,
particularly in countries like the Netherlands and other European
destinations who end up harassing Indian professionals arriving at
their doorsteps.
http://www.cnn.com/2004/TRAVEL/11/30/bt.visa.us.business.reut/
Tight visa rules hurt U.S. business
NEW YORK (Reuters) -- Tightened border security has tripped up business
plans in ways that threaten to hurt U.S. companies, and that problem
has only been getting worse three years after Sept. 11, companies and
immigration lawyers said.
For example, a high-profile China Business Summit organized by Dow
Jones & Co. and Harvard University for this week was abruptly canceled
because key people from China were not able to obtain visas in time.
About five to ten people from China had to drop out at the last minute,
according to spokesman Julian Chang at the Kennedy School of Government
at Harvard University, who declined to name those who were unable to
book their trips.
"While interest in the summit remains high, travel and visa
complexities prevented many key speakers and delegates from attending
the event," a statement posted on Dow Jones Conferences' website said.
Speakers scheduled for the China summit included the chief financial
officer of China's largest computer maker Lenovo Group, Mary Ma, and
the general manager of China's leading beverage producer Wahaha Group,
Zong Qinghou.
In the past, Chinese officers holding business passports did not need
to appear in person for visas, but now the United States is insisting
they appear.
"If they are CFOs and CEOs of companies, it's clear that no one is
going to come and stay -- they only want to visit and do their
business," said Freddi Weintraub, a lawyer at the world's leading
immigration law firm, Fragomen, DelRey, Bernsen & Loewy.
"I think the bar has been set too high," Weintraub added. "This results
in loss of revenue in the U.S."
In addition to visitors, Washington has also made it more difficult for
U.S. companies to hire foreign nationals.
Special work visas, called H-1Bs, have been used to recruit foreign
nationals, from programmers to actors.
Congress raised the cap on H-1B visas to 195,000 a year for the
financial years ending in 2001 to 2003, but reduced it to 65,000 for
fiscal years 2004 and 2005. That limit was reached in one day in the
current year.
Congress has agreed to exempt from the limit 20,000 foreign students
with degrees of masters or higher from U.S. universities, but lobbyists
said that is far from enough.
"It's counterproductive to educate these students and then force them
abroad to compete against us," said Sandra Boyd, Chairwoman of
CompeteAmerica alliance, a lobbying group.
More than half of the post-graduate degrees in U.S. universities in
math, science and engineering are awarded to foreign nationals,
according to Compete America.
Two dozen U.S. chief executives, including Steve Ballmer of Microsoft
Corp., Carly Fiorina of Hewlett-Packard and Craig Barrett of Intel
Corp. urged Congress in a letter dated Nov. 10 to end the quota system.
Semiconductor makers like Texas Instruments Inc. are highly dependent
on foreign electrical engineers.
"If 70 percent of the people you can hire are foreign nationals, you
have to hire them, it's a big competitive issue," said Paula Collins,
Texas Instrument's director of government affairs.
Companies say they might be enticed to send work abroad if they cannot
find enough qualified workers in the United States. "If we cannot get
them to come to us, then we will go to them," said Christopher
Lockheed, chief marketing officer of software maker Mercury
Interactive.
http://www.theinquirer.net/?article=20009
Multinationals use offshore subsidiaries to avoid law
But outsourcing unstoppable, report claims
By INQUIRER staff: Thursday 02 December 2004, 11:31
MARKET RESEARCH firm Frost and Sullivan claimed that global outsourcing
from so called "high cost" regions of the world is unstoppable.
And, according to analyst Jarad Carleton: "Multinational corporations
can and will use offshore subsidiaries to circumvent the law in other
parts of the world when profitability is at stake, provided executives
cannot be held liable in the home country".
Carleton said that when a company is based in a country without any
restrictions about exporting IT jobs and sells products and services in
a country with restrictions, that gives it a distinct market advantage.
Carleton did not detail which multinationals in which countries are
"circumventing" the law.
Governments attempting to reverse the trend through legislation will
fail, the marketeers - currently based in London, England, said.
"The nation that places restrictions on the export of IT jobs will
hobble its own business and could be inadvertently legislating the
destruction of millions of additional jobs in the future," he said. Any
plan to introduce legislation in developed countries would have to be
formed by a global alliance and that's unlikely, Carleton said.
India is the biggest recipient of IT job imports, followed by Communist
China. Other countries benefiting include Brazil, Mexico, Malaysia,
Poland, Romania and Russia.
The Chinese government has introduced initiatives to narrow the gap
between it and India, which has a highly literate English speaking
base.
It claims that it has put together qualitative info on 14 countries in
its report for the period 2002-2004. IT jobs, it predicts, increased by
a compound annual growth rate of 5.9 per cent between 2002 and the end
of 2004.
In real terms, this means that 826,540 IT jobs will be outsourced by
France, Germany, Hong Kong, Japan, the UK and the US to countries where
people are paid less. The total value of jobs exported is a staggering
$51.6 billion.
Top of the IT outsourcing pops are the USA and Japan, said Frost and
Sullivan. Germany is set to blaze a trail, but it's trailed by the
United Kingdom and France.
The jobs to go include customer support, tech support, software
development, network admin, hardware development and testing, quality
assurance and help desk, said Carleton. 5
http://itmanagement.earthweb.com/career/article.php/3422581
Author Says Offshoring 'Real WMD' for U.S.
By Sharon Gaudin
October 15, 2004
America's high-end, high-paying IT jobs are increasingly moving to
India, threatening the U.S.'s predominant position in the world and
setting India up to become the next superpower, according to the author
of a new book, Rising Elephant.
Ashutosh Sheshabalaya, a former journalist and technology consultant
who heads Allilon, an IT services firm in Europe, is issuing a warning
that the offshoring of U.S. high-tech jobs marks the remaking of the
American workforce, as well as the world economy.
While offshoring IT jobs has raised concerns and voices in the
high-tech community, Sheshabalaya says it's a far more complex and
dangerous issue than most Americans understand. He predicts that this
relocation of high-value jobs will ''erode the foundations of Western
supremacy.''
Sheshabalaya calls this the "real weapon of mass destruction."
''Entire chunks of the Western economic system may be eroding at a
faster pace than few believed possible only a few years ago,''
Sheshabalaya contends. ''The consequences of the relocation process
remain unfathomable.... momentous.''
The author points out that while U.S. workers have suffered through the
offshoring of textile and manufacturing jobs, this will be the first
time the economy has had to deal with the loss of high-value jobs. This
is a direct assault on the American middle and upper-middle class. And
there should be no mistake, he adds, that India has any intention of
simply pulling in low-end call center and programming jobs. High-value,
high-tech jobs are equally at risk -- only the timing is different.
India's focus, Sheshabalaya says, is a ''full sweep of high-value
white-collar services.'' He calls it the Great Displacement.
And the relocation movement quietly began about 20 years ago, starting
in the mid-1980s and then slowly picking up in the mid-'90s. The
dot-com boom masked some of this movement. Workers and industry
analysts were too caught up in the wave of big salaries, bigger bonuses
and more jobs than the U.S. workforce alone could fill to notice. With
a down economy and the death of the dot-com boom, the fog has cleared
and the statistics on offshoring are mounting.
According to Forrester Research, an industry analyst firm, 3.3 million
American jobs will move overseas by 2015. Sheshabalaya notes that means
800 American IT jobs will move to India every day for the next 11
years. Another analyst firm, Gartner Group, predicts that one in 10
U.S. tech jobs might be moved out by the end of this year.
Technology employment in the southern Indian city of Bangalore has
overtaken that in Silicon Valley.
In a one-on-one interview with Datamation, Sheshabalaya talks about the
failings of the American government to deal with this crisis, what
happens when U.S. students stop studying computer science and America's
waning days as a superpower.
Q: You say India is positioning itself to become a world power -- a
superpower. Is this really possible?
It is not only possible -- in many senses, it's inevitable. The
question is over what time frame will it happen. This isn't an
accidental success story that India is doing well in IT. There is a
massive consensus in India that this is a good way to leapfrog over all
the challenges of development of a very poor country. What is very
important about IT is that it cuts across all the major interest groups
in India as being one of the most crucial possibilities for the country
to become a big power and then a superpower.
Q: How soon do you see this happening?
By the year 2040 or 2050. It's going to be a paradigm shift. It won't
be tomorrow and it also won't be very dramatic. It will take a
generation or two in international politics... The use of the words
'great displacement' is very important. This will take some time. This
will be more subtle than you might think.
Q: Do you see India and the United States being superpowers at the same
time, or do you see America's global influence waning because of the
job exodus?
It's a transition. I'd say it's a matter of one going up and one going
down. Europe is going down faster. The U.S. is figuring it out faster
than Europe. The displacement isn't a one-way street. There will be a
lot of up and down for both sides in this process... By 2050, the U.S.
will not be where it was at the turn of the millennium. It will no
longer be the case that the U.S. will always get its way.
Q: You use the phrase "the real weapon of mass destruction" when
talking about this job relocation. Are you saying that India pulling in
high-skill jobs is virtually a WMD for the U.S., along with many
European countries?
Actually, this is a quote from the Washington Times. But I do agree. It
seems to have numbed and paralyzed many already.
Author Says Offshoring 'Real WMD' for U.S.
By Sharon Gaudin
October 15, 2004
Q: What do you see happening to the U.S. economy because of offshoring?
Never before in history have high-end jobs moved out. The biggest risk
for the U.S. is that it gets caught by surprise in being a renter
economy. The U.S. could end up doing the final branding and packaging
for the world market, while the work is actually be done elsewhere. You
cannot have an economy that does not have a skills base of its own...
The worry for me is that... nobody is clearly putting across what comes
after these high skill jobs leave. Try to explain what will replace
these high-skill sets. The U.S. has long been the place where
everything happens. It was a place for discoveries. If these skills go
someplace else... there could be a very big snapping of elasticity of
the way it held everything together.
Q: Won't high-level IT jobs need to remain here in the U.S.? Won't
companies need project managers and architects within the company's
walls?
People who are facing the customers, facing the decision makers in
large corporations are going to be required. They need to actively
redefine their roles. Over the next 40 years, there will be a very big
drift... Those roles will start shifting outside the United States.
When that happens, I'd say the process will accelerate very quickly.
Q: Are you saying that U.S. IT workers will end up moving to India to
find work?
For me, that is very much an undercurrent that has not been looked at
realistically. It's the only thing that carries its own solution. There
is no reason why high-skilled workers can't move to India where the
work will be done. There will be a high-level physical transfer. They
will be connecting with the Indian high-tech machine. In the next five
years, it will happen virtually. Americans will be working for an
Indian company but still will be based in the United States. Later on,
the choice may be for American IT people with a high-level of
familiarity of the American market to actually go to India.
Q: But if companies are largely sending work to India because it's
cheaper there, wouldn't U.S. workers going to India expect a huge pay
cut?
There will be a lot of upward leveling of pay in India. There also will
be an encouragement for people to take lower wages but benefit from
lower taxes. And they would benefit much more by working in India than
in having no job.
Q: Do you think the U.S. government could be, or should be, doing more
about this situation?
Definitely. This is one of my biggest complaints. Someone should have
been explaining what is going on so people aren't side swiped. The
government is pretending there is no problem or that they can block the
problem out of existence with legislation. Not allowing job insurance
for the IT profession is a problem. There is an absolute need for that.
If this wave is accepted as being inevitable, then it's important to
try to ride the wave... They need to give incentives to Indian
companies to hire people in the U.S. and that's just not happening.
Q: In your book, you say U.S. students will stop majoring in computer
science when they see that there are fewer jobs available to them here.
Is the U.S. moving toward a time when offshoring isn't a choice but a
necessity because we no longer have trained people who can do the job
here?
If students stop studying IT, there will be no choice but to go even
faster into India. It becomes a self-fulfilling prophecy. Students
should not be looking just at jobs here in the U.S. Why don't they look
beyond the U.S.? There are a lot of jobs -- they just might not be
here.
Q: It sounds like you're predicting that the United States is moving
into what will be a difficult time.
Oh, definitely. There is no question about that... Somebody needs to
start talking about what is in the next stage. There obviously is a
kind of numbing about what is happening here. There is a profound
structural crisis coming. What must be figured out is how this can be
proactively handled.
http://www.computerworld.com/careertopics/careers/labor/story/0,10801,97945,00.html
Gartner: Half of U.S. IT operations jobs to vanish in 20 years
Predicts improvements in data center technologies will lead to job cuts
News Story by Patrick Thibodeau
DECEMBER 01, 2004 (COMPUTERWORLD) - LAS VEGAS -- In an eyebrow-raising
forecast, Gartner Inc. researchers said they believe that as many as
50% of the IT operational jobs in the U.S. could disappear over the
next two decades because of improvements in data center technologies.
Donna Scott, a Gartner analyst, said IT workers face a situation
similar to that in the manufacturing field, which has lost jobs over
the past several decades as automation has improved. Similarly,
standardization of IT infrastructure, applications and processes will
lead to productivity improvements and a major shift in skill needs, she
said.
"There will be more room to automate, and that means there will be
reduced labor cost," said Scott. "This is a long-term change."
Gartner calls this change "real-time infrastructure," which involves
service-oriented architectures, the elimination of communications
barriers and dynamic alignment of IT with business priorities.
Technologies enabling the shift have less need for human intervention
because they are more intelligent and can automatically provision
services and self-heal.
IT operations, which encompass areas such as systems administration,
incident response and change management, today account for about 55% of
an IT department's labor cost, said Scott, who spoke at the Stamford,
Conn.-based research firm's annual data center conference here.
But as companies improve automation, IT operations become "more like a
factory," said Scott. Demand will grow for employees who have IT
architecture skills as well as those with business and customer-liaison
knowledge. Project management's percentage of IT labor costs, for
instance, will rise, she said.
There were some 1,500 people at the conference, and reaction to
Gartner's vision of a highly automated data center varied.
"Like most of the Gartner stuff, it's sort of a Utopian state -- we're
certainly not there yet," said Stevan Lewis, director of enterprise
planning for BMO Financial Group, a 34,000-employee financial services
company in Scarborough, Ontario.
Lewis said he believes that some operational jobs will shift to other
IT areas but that it will be about 25% and will affect mostly low-end
work.
The Gartner forecast prompted Ken Wagner, manager of the data center at
Kawasaki Motors Corp. in Irving, Calif., to talk about the changes he
has seen in IT over the 35 years he has been in the business --
especially those brought by the Web. "There's been so much change in
the last 10 years ... it's amazing," he said.
Considering these IT changes, Gartner may be right about the future of
operational jobs, said Wagner, "but I don't know if anyone knows the
real direction."
But Walter Wilson, deputy CIO for Ventura, Calif., is training his IT
staff to handle different, more sophisticated jobs in the city's data
center, which supports more than 8,000 users, particularly as they
begin virtualizing IT systems.
"It's a training issue more than anything else," said Wilson, "because
all these people are very capable."
http://www.denverpost.com/Stories/0,1413,36%257E23827%257E2570792,00.html
State shipping jobs and dollars out of country
Call-center work goes to India, Mexico in bid for cheaper labor
By Chip Yost
9News
Thursday, December 02, 2004 -
When Colorado welfare recipients using a food-stamp debit card need to
talk to someone about their accounts, their calls are routed to India
for English speakers and to Tijuana, Mexico, for Spanish speakers.
State tax dollars are being used to outsource jobs to countries all
over the world in an effort to save money by using cheaper labor.
Workers in countries such as India, Mexico and Canada all receive
paychecks courtesy of the state.
"I think it's deplorable," said state Sen. Deanna Hanna, D-Lakewood,
who was unaware that the call centers had been moved outside the
country. "We have qualified people to get the job done in Colorado. We
should keep our jobs in Colorado."
Other lawmakers, such as outgoing Republican Senate President John
Andrews, said outsourcing saves taxpayers money.
"We're in the global economy, and it's good for everybody," he said.
"Wake up and smell the coffee, Sen. Hanna."
State officials don't track the total number of outsourced jobs. In the
case of the food- stamp call centers, which are run by a subcontractor
of JP Morgan Electronic Financial Services, spokesman Brian
Kibble-Smith said, "no Colorado employment was displaced." He would not
comment on whether call-center jobs elsewhere in America were lost.
Hanna believes there could be many similar cases of state job
outsourcing that she is unaware of. Earlier this year she proposed
legislation, which died in a committee, that would have made it more
difficult for state contractors to move taxpayer-funded jobs outside
the country.
State officials say they have no choice in the matter. Under current
law, they are usually required to award contracts to the low bidder.
Recently, the Department of Natural Resources paid a Canadian company
$65,000 to print a book titled "Messages in Stone." The Canadian firm
underbid the next-closest bidder - a company from Highlands Ranch - by
about $15,000.
The secretary of state's office recently hired an Ohio company to take
about 30,000 pages of printed rules and enter the data so the
information could be viewed on computers. The Ohio company, Conway
Greene, outsourced the work to India, saving about half the cost.
Andrews thinks that's exactly how it should work.
"The way to contract for state services is low bidder," he said.
Hanna is considering introducing a revised version of her bill that
would restrict state contractors from outsourcing service jobs to other
countries.
Andrews says if such a policy is adopted, Colorado companies could face
retaliation from other countries. There's also the issue of cost.
If the India and Mexico call centers are brought back to the United
States, the state estimates they will cost about $600,000 more per year
to operate and will create between five and 10 jobs, but not
necessarily in Colorado.
The Department of Human Services says it is now reviewing its contract
with JP Morgan and its policies on outsourcing. Spokeswoman Liz
McDonough said outsourcing should be used only as "a last resort."
9News reporter Chip Yost can be reached at 303-871-1499 or
chip.yost@9news.com .
http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20041120/BUSINESS04/411200312/1029/archive
Maytag hopes design center in China will help improve finances
By WILLIAM RYBERG
REGISTER BUSINESS WRITER
November 20, 2004
Newton-based Maytag plans to open an appliance design center in China
to supplement research and development operations in the United States,
chief executive Ralph Hake said Friday.
He also warned that two U.S. factories must improve performance to
assure their long-term viability. Hake didn't name the Maytag plants,
but it's known that the company wants to see improvement at its washer
and dryer factory in Newton and a vacuum cleaner plant in North Canton,
Ohio.
Hake made the comments during a conference with analysts and investors
in New York, where top Maytag executives laid out strategies for
improving the company's overall financial performance.
Maytag expects to earn only 10 cents a share in 2004, as a result of
increased costs for steel and other raw materials and because of the
up-front costs of a restructuring plan designed to eventually save $150
million a year.
The company earned $1.53 a share in 2003, and expects earnings to
rebound to $1.50-$1.60 a share in 2005.
Maytag shares lost 59 cents, or 3 percent, Friday to close at $20.
Laura Champine, an analyst with Morgan Keegan & Co., attributed the
drop to a generally down day for stocks.
Hake told the analysts that Maytag has no plans for further closings of
U.S. plants, after closing a refrigerator plant in Galesburg, Ill.,
this year.
Hake added, however, that Maytag has "two plants that have to improve
their productivity, if they're going to be in our system long-term."
It's widely known that Maytag wants to see improvements in Newton and
North Canton.
The new Chinese design center is scheduled to open early next year,
said Lynne Dragomier, a Maytag spokeswoman in Newton.
The center will help the company develop and buy parts and products
from Asian suppliers, Dragomier said, like the vacuum cleaners it now
acquires from an Asian manufacturer.
The center will increase Maytag's design capabilities, but at lower
costs than in the United States. Six Chinese engineers can be hired for
the price of one American engineer, Bob Hardin, Maytag vice president
of research and development, told the analysts.
Dragomier said she didn't know whether the Chinese center would mean
job cuts at American design centers. Maytag does research and
development in several locations, including Newton and Amana.
http://moneycentral.msn.com/content/CollegeandFamily/Moneyinyour20s/P92987.asp
Pick a job that wont go overseas
advertisement
Professionals now face the same pressure from lower-paid competition
that factory workers have long felt. Here's how to compete in the
global job market.
By Liz Pulliam Weston
Starting a new career used to be so simple: Pick something you're good
at and go find a job. Now more and more jobs are being shipped overseas
to be done by lower-cost labor, and it's unlikely they will ever
return.
What can you do to protect yourself? Are there careers that are safe
from offshoring? If you think about it hard enough, you can imagine a
way that almost any job might be vulnerable to offshoring.
Doctors, for example, are usually given as an example of the type of
hands-on, close-to-the-customer job thats unlikely to be shipped
overseas. But some cost-conscious U.S. customers are already having
heart transplants done in India and cosmetic surgery performed in
Mexico.
Meanwhile, technologies have been developed that allow doctors to
monitor some patients remotely. So who says it has to be a U.S. doctor
who does the monitoring?
"If it can be done from 10 miles away," said offshoring expert Paul
Zellner of executive recruiting firm Russell Reynolds, "why not from
10,000 miles away?" Credit card interest
out of control?
Find a lower rate.
Or take prison guards. Youd think they would have some job security
as Americas inmate population continues to climb. But what if costs
mount to the point that some states decide to outsource their prisons,
not just to private companies, but to other countries?
How to ride the wave
If youre in college or otherwise about to embark on a new career,
these exercises in paranoia arent meant to depress you. They are
meant to keep you honest about how difficult it will be to find a job
thats entirely immune from the offshoring wave.
The key is to position yourself as someone who will survive or even
thrive on the inevitable changes to come. Consider:
A total of 830,000 U.S. jobs will have been shipped overseas by the end
of 2005, according to Forrester Research. Thats nearly a quarter of
a million more than Forrester predicted two years ago, when the company
published its first estimates.
By 2015, Forrester predicts 3.4 million jobs will have moved offshore.
Another consulting firm, A.T. Kearney, found that by 2008, financial
services companies planned to offshore 500,000 information technology
jobs -- a total that represents 8% of all banking, brokerage and
insurance positions.
Nearly half of the companies Hewitt Associates recently interviewed had
some operations overseas, and 71% of those that had yet to offshore
planned to do so in the future.
What started as the movement of relatively simple and repetitive jobs
-- customer relations, computer help desks and manufacturing among them
-- is increasingly spreading to complex, creative and
judgment-dependent work.
Indias accountants and attorneys, who started with simple returns or
briefs for cost-conscious U.S. companies, are taking on more
sophisticated projects. Highly-skilled computer programming work is
being sent to Eastern Europe and China. Brokerages are hiring stock
analysts in Mumbai and Johannesburg, South Africa. The media is joining
in: Reuters recently announced it would be moving some reporting and
data collecting jobs to Bangalore, India.
Opportunities higher up the ladder
Even when the higher-level jobs remain, the outsourcing of so much
entry-level work may pose challenges for U.S. college graduates trying
to get their foot in the door.
"That first rung on the (career) ladder might be harder to find,"
Zellner said.
Just because some functions of a profession are being outsourced,
however, doesnt mean the career itself is a dead end.
The accounting firms that are sending tax preparation overseas, for
example, are still hiring lots of new accountants, said Gary Boomer of
Boomer Consulting, an expert in accounting offshoring. (See chart below
for more jobs less likely to go overseas.)
"We dont have enough people entering the profession today," Boomer
said. "With the number of retirements occurring over the next 10 years,
I just dont see outsourcing having any negative impact" on the
profession.
Some 'safe' jobs
So how can you increase the odds that your career will stay on these
shores? It can help if your chosen work falls into one or more of the
following broad categories:
High-skill, high-touch. If the job involves sitting in front of a
computer and talking on the phone, it often can be done almost
anywhere. If, on the other hand, most of your day is spent in
face-to-face encounters, your job is probably more difficult to
outsource. Examples: sales, executive recruiting, police work,
teaching, hotel management, health care that involves hands-on
interaction with patients. (Warning: Low-skill, high-touch work is
susceptible to automation and pressure from immigration. Those
self-check machines at some grocery and home improvement stores, for
instance, may make the cashier an endangered species).
Culturally aware. Work that requires an intimate knowledge of U.S.
culture should be relatively resistant to offshoring. Examples:
marketing, advertising, some aspects of the entertainment industry.
(Its hard to imagine a group of writers in Bangalore creating a hit
U.S. sitcom, for example.)
Multicultural management. Thanks to offshoring, there will be growing
demand for managers who can oversee projects with far-flung workers.
These managers will need to be expert communicators and sensitive to
the nuances not only of the clients culture but those of the
workers countries as well.
Keep your mind and options open
Even if your field falls outside these zones, theres still a lot you
can do to make yourself a valuable player in an increasingly global
economy. Some suggestions:
Add a few courses. Regardless of your major, think about taking a
course in entrepreneurship, Zellner advises. Todays workers need to
be flexible, enterprising and tuned to their markets regardless of
which company currently employs them. Other helpful courses: sales,
marketing, communications, psychology, project management,
multicultural studies.
Dont overspecialize. Whether youre picking a major or a career,
focus on skills that can be adapted to changing conditions. Many
business school students in the 1980s spent years learning Japanese,
for example, convinced that country would dominate world trade. Some
profited, but many would have been better off studying a variety of
different cultures and hiring translators.
Never stop learning. You dont have to bring your career to a
screeching halt while you go back to school to retool. You should be
adding new skills and knowledge constantly by taking courses at night
(or online), attending conferences and asking your boss for
opportunities to take on new challenges.
Be a little paranoid. Even after youve landed a job, keep looking
for ways your position might be vulnerable and shore up your defenses.
Keep a wide view, because the trends that could transform your field
might have little to do with technology or offshoring.
A few years ago, for example, telemarketing was a vibrant, growing
field -- and a grudgingly accepted scourge of everyday living. Who
could have predicted that a pro-business Congress and president would
have approved a do-not-call list that imperiled nearly a third of the
industrys 6.5 million jobs?
As support for the federal registry grew, however, smart telemarketers
started looking for other jobs that used their skills in sales.
You, too, should keep in mind that no matter how good you are at your
job, you could be out of work if demand for your industry falls. Stay
tuned to the trends, and be prepared to change jobs, companies or
fields if conditions demand.
Jobs least likely to go overseas
The following jobs will be in high demand in coming years and will be
relatively difficult to export. Because these positions require
extensive education or training, they are also less vulnerable to
low-wage competition from immigration.
Professional, management & financial
Accountants & auditors
Tax attorneys
Financial planners
Management analysts
Marketing managers & executives
Advertising managers & executives
Education
Post-secondary teachers
Preschool education administrator
Math and science teachers
Health care & related fields
Physicians
Surgeons
Registered nurses
Veterinarians
Geriatric care managers
Mortician
Emergency medical technicians
Travel & hospitality
Hotel managers
Chefs
Caterers
Casino managers
Flight attendants
Public service
Police officers
Firefighters
Social workers
Construction, design & skilled trades
Interior designers
Landscape architects
Construction supervisors
Auto mechanics
Plumbers
Carpenters
Heating & air conditioning installers
Heating & air conditioning mechanics
Electrician
Source: U.S. Department of Labor and MSN research
http://www.ciol.com/content/news/recruitment/2004/104111101.asp
Keane to be 5,000 in India
To increase from its present 1,350 and inaugurates a software testing
facility and a back office services unit in Hyderabad with an
investment of $4 million.
Thursday, November 11, 2004
HYDERABAD: U.S. business consulting and outsourcing firm Keane Inc. is
setting up a software application services testing facility and a
back-office services unit in Hyderabad.
The Boston-based firm will invest $ four million in the project,
Laurence Shaw, Senior Vice-President, International Operations, said at
the inauguration of the facility.
He said he expected Keane's employee numbers to rise to 5,000 over the
next few years from 1,350 currently.
The company already has a back-office service facility in Gurgaon near
New Delhi.
www.ZaZona.com
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