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bsharma writes "The next round of globalization is sending upscale jobs offshore. They include basic research, chip design, engineering--even financial analysis. Can America lose these jobs and still prosper? Who wins? Who loses?" News.com has a related story about outsourcing.
The bottomline: If we don't send jobs abroad and reduce our costs, we'll end up sending customers to other countries!
Wouldn't that be worse? Let us say there is a law against American companies having their work done by foreign workers. Let us also assume that we stop all immigration, since most people who want the former want the latter too. That would make American products much more costlier.
So, foreign companies will develop the same products with lower costs and end up hijacking the marketshare. Is that really better for American prosperity?
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As you might expect, this worries me a lot. I'm fairly secure (I think), because they need at least one person here that knows English and Java and can understand the customers and do the face-to-face, but in the long run more and more places are going to look at the savings and ship the work overseas.
I've got two kids, 9 and 12, and I'm at a loss for what direction to steer them in career-wise. I used to think Engineering was the answer, since I've really enjoyed my, what, 20-odd years of slinging code. But by the time my kids are college-age, god knows what will be left in the US besides burger flippers, doctors, and lawyers.
-- ac at work
Is this somewhat painful? Yes. Does it help in the long term? Most definitely.
Do you really think that the mid east would be in the situation it is today if there was a wide diverse economy over there?
Blockquoth the poster:
America makes its money by being at the ultimate junction point of capital, intellectual property, communications, and business management. We're the deal-makers and the facilitators. We don't build anything ourselves because we're content to skim a little bit off the top of everything that passes through our hands.
However, sooner or later, all those other countries to which we've outsourced our industrial base will realise that they really don't need us. When they get their acts together, they'll just start dealing directly with each other. And when that happens, watch this Pax Americana come to a screeching halt.
I predict it will happen within the next 50 years, if all things continue as they are now...
It should be no big surprise. As we keep pushing things out of the US we have less and less real value.
We, as a nation, actually build very little on our own shores.
Besides the Natural Resources for Farming and Mining there is nothing here that needs to stay here. As we look for ever cheaper methods of production and higher profit margins, we will move the work to other nations.
We don't actually make anything of any value anymore. We are a nation of lawyers and marketing types. All we need now is an army of telephone sanitizers and we'll be all set.
Will there be U.S. Steel plants? Refineries? Agriculture? No. Will any durable good be manufactured in the U.S. No.
The only thing that other countries can't compete with the U.S.: the creation(in the loosest sense), distribution, and consumption of U.S. made MassMedia.
The war on terrorism is already a poor excuse for a reality-TV show, the war on drugs is an effort to direct your 'escapes' to more profitable, advertising-rich video and movies; the war on piracy is nothing more than a giant squeezing blood from a stone.
When all that is real has been lost to a soft, dehumanized, videodrone people - that is when the countries who have made the shovels, dug the ditches, grown the food, built the roads and cities in the U.S. - that is when those countries will walk in and quietly pick up the fallen reins of America, and sense may return.
I think I just choked on a pretzel.
I posted a dupe! I'm ready to be an editor!
The article is pretty much spot on. By decree of some department head somehwere, 1/3 of the people in each gruop have to be GDC employees (GDC is the termed used for the 2 companies we outsource work to - InfoSys and Tata) - which means if you have 30 people in your group, 10 must be contractors, and 2/3 of those must be off shore.
What's really depressing is that these changes aren't being done to get BofA back in the black or because it's going down the drain. It's so that they can show 7% (or 4% or something, I can't remember) more profit than they did last year.
This is absolutely *killing* morale. People worry about jobs. A lot. Our group has actually lucked out a bit - due to the closing of remote offices and a couple people leaving for their own reasons, we've been spared - Our manager is fantastic, he's doing everything possible to keep from laying any of us off. But other groups aren't so lucky. Quite a few people were laid off today, so the rumor mill says.
It's tough. It's one thing to be laid off for poor performance - it's a whole other ballpark when you're simply getting replaced with somebody a little cheaper.
If you don't like seeing companies leave to US, why do you not spend more time considering the role of higher taxes in forcing companies to make the exodus? On a smaller scale, we are seeing people leave California due to high taxes and the cost of living.
The US govt. needs to get spending under control so it can stabilize it's tax base. Also, implimenting a "Flat Tax" would eliminate the 100,000 pages of our broken tax laws and take the politics out of paying taxes. Much of the power in Washington is directly tied to the trading of tax favors for campaign contributions.
This is probably good for humanity in general. As lesser fortunate countries economically and technically advance they will tend toward democratic processes, equalizing rights to women and children, lesser corruption, etc. Tribalism seems to hold sway with some but I look for the day when the whole world is roughly equal in terms of freedom, economic opportunities, educational access, and medical care for all not just my country, ethnic group, class, etc.
If there is someone out there who can do exactly what I do only cheaper, who am I to complain if a customer or employer chooses them?
My job is to insure that I can provide more value than the competition. This means that I have to do something that they cannot or I have to do something that they can do only better, meaning that I have to do it faster, cheaper, or with better quality.
That's just how it works folks. Deal with it and get cracking.
Any empire in history has subjugated the poor of other nations in order to sustain it's own wealth. The US is acting similar in this regard. Unfortunately for you and I, we do not get to reap the benefits alongside the corporations, we are merely discarded in the process. The term globalization does not mean that we will all live easier and everyone will have a job, it means that the empire will no longer have a home base, just as corporations have become a faceless entity to complain about, they are becoming a stateless entity that is no longer subject to the free market rules. These new global corporations may cut a large swath of productivity, but they move from third world country to third world country leaving devastation and ruin in their wake.
Today the beneficial country may be India and Singapore, but as wages there begin to climb, those same companies will pack up and move elsewhere to start the whole process anew. There is no ethics in that, and there is no sense of responsibility in global corporations who continue in such endeavors.
Hammer of Truth
What? From what I've read, most of the outsourced jobs, however white collar they may be in the 'States, are passed so that they can lower costs buy exploiting the workers in cheaper markets. Trust me, this was never about economic stimulation in third-world countries. Corporations are certainly more interested in the bottom line, and do you really think for one minute that their motivation is actually triggered by some huminitarian spark in their hearts? Hardly.
Think about all of the jobs in the steel industry and raw goods refining that used to be housed in the US. I was born in a region that housed booming towns that thrived on the steel, zinc, coal and cement in Pennsylvania. I can tell you firsthand that when refining was able to be done for 87 cents in Asia, the companies left town, the towns dwindled, and the equipment sat under 30 feet of water at the bottom of the quarrys. Was this good for us? The people that live there are just simple folk scrounging as best they can in small, dilapidated houses. Yeah, I guess they're only a mile from the nearest McDonald's, maybe they are better off than Hong Kong.
Oh, and guess what? A major factory and headquarters of Lucent (now Agere) used to be housed there, they even built a state-of-the-art Optoelectronics factory a few years ago. What happened when the bottom dropped out of optoelectronics? It was cheaper to manufacture in Asian countries, so tens of thousands lost their jobs. The new plant was sold for $40 Million in a fire sale, the grounds and any one of the many buildings were easily worth that much.
It's happening all over again now. Tell me how that's good for my town, Waterton Man.
--- What
Hmmm... yah. Can't be. Those inumerable people against globalisation must all be out of their minds.
The submission asks who wins and who loses. That's an easy one:
Winners
Overcompensated CEOs
Wealthy stockholders
Non-U.S. workers
Losers
American workers
Paying fair U.S. wages, while complying with U.S. regulations to protect the workers and the environment, costs money. So a company can gain a competitive edge by hiring workers in foreign countries where salaries are lower and where such rules do not exist. If some smoke-belching plant across a border can pay people $10/day and work them for 12 hour shifts, then the company using that workforce can realize lower operating costs and, hence, higher profits.
Folks, this isn't rocket science. All other things being equal, businesses will go with the cheaper source every time. What we need to do, as a country, is to level the playing field. We need tariffs, laws, and fines to discourage firms from outsourcing desirable jobs.
Screw pure capitalism. Unregulated capitalism doesn't work. That's why we have massive unemployment in the tech sector while desirable jobs are going to overseas workers in impoverished countries. And all the while, U.S. CEOs and other executives are receiving compensation packages that rival the net worth of some small countries. It's time we put our feet down and protected the vast majority of working Americans rather than pandering to the greed of multi-millionaire CEOs.
Maybe you'll then say that it's not the goverment but the wealthy fueling your conspiracy. Well, considering that of that 1% you're talking about, only 10% of their children will manage to do anything but piss that wealth away, I don't see a successful continuation there either. And what you're talking about implies generations of development.
Money flows downhill. It goes where things are cheap, and moves them where they are expensive. You'll never track it by looking for master manipulators, you'll find it by looking for people blatantly trying to make a buck.
Oh, what's that in your url? Subgenius? Aha, I see. Nevermind, you're a lost cause
As it sits now most of the wealth is in the hands of a few countries in while the rest of the world gets to be dirt poor.
Why shouldn't the wealth get spread out a bit? I mean God forbid someone in India gets a well paying job and gets to look forward to their children actually having a future.
"From what I've read, most of the outsourced jobs, however white collar they may be in the 'States, are passed so that they can lower costs buy exploiting the workers in cheaper markets."
How is offering a good job at a high wage (relative to the local economy) exploitation? Perhaps you ought to talk to some of the programmers who work in India and ask them what their other career options were like.
"It's happening all over again now. Tell me how that's good for my town, Waterton Man."
It may not be good for your specific town. And if that's all you can look at then you have a very narrow world view.
-- this post written by someone who lost their job to cheap Indian labor
Is it a scary time for a techie like me? Yes. But overall this is a good thing.
Because Japan (and now Korea, etc.) started making cars many US employees were initially displaced. But we now enjoy cars (from all countries including the US) which are far better and lower priced than we would have had without competition. (My 18 year old Tercel just crossed 200,000 miles but when I was a kid they didn't even bother with the sixth digit on the odometer.)
We have also enjoyed all sorts of inexpensive goodies like toys, home electronics and clothing that would have cost far more if all made here.
So the Indian programmer makes "only" $10,000 - that's still 20 times the average. His standard of living is probably pretty good. Outsourcing hurts our income but helps keep our costs down.
But there are bigger gains:
Peace - countries with close business ties almost never go to war.
Population - the wealthier a country gets, in general, the lower its birthrate.
Environment - of course the "first world" has a far from perfect environmental record but it is WAY ahead of the third world where fishing by pouring poison or tossing dynamite in the ocean is an accepted method, where "recycling" involves open fires to burn the plastics off of wire and electronics, and where the air is many times worse than in the worst US city. Something about not having to worry about the next meal allows one to consider the environment more seriously.
~~~~~~~
"You are not remembered for doing what is expected of you." - Atul Chitnis
It's about making the rich richer and the poor poorer.
Mod me troll if you wish, but the highest tax bracket before Reagan took office was almost 80%. That means the government taxed 80% of the income of the very richest people. Now it's down around 30%.
There are more rich and very rich people in the U.S. than in any time before in history, and they hold a much larger share of the wealth pie than the wealthiest few ever held before. NAFTA benefits the rich, and not the poor. The tax codes benefit the rich and not the poor. WIPO, Sales Taxes, "death" tax reductions -- it's all meant to guarantee that once the money is in the hands of the wealthy, it never leaves.
That giant sucking sound isn't the sound of jobs going overseas, it's the sound of money flyng out of your wallet.
What would you think if you went to a podiatrist mailing list and one of the topics of discussion was a debate over some complex memory paging algorithm for the linux kernel?
l
d en_Orde r/Hidden_Order_Chapter_20.html
The opinion surely come down as: either this is one bunch of smart podiatrists or, this is one bunch of cocky podiatrists who have no idea what they are talking about.
International trade is a difficult subject. Often situations that seem bad for one country are actually beneficial, as first pointed by the great economist David Ricardo two hundred years ago. This holds across the entire field of economics, starting from the fact that trade is a win/win scenario, while most people think its a win/lose scenario.
If you are concerned about the impact of jobs moving abroad, I suggest you read up on economics, so you come to understand, for example, why not all jobs when to Mexico after NAFTA got signed, as Ross Perot predicted.
Here are a few useful links:
http://www.systemics.com/docs/ricardo/david.htm
David Friedman. Hidden Order: The Economics of Everyday Life, Harper-Collins, 1996.
http://www.daviddfriedman.com/Academic/Hid
Wait, let me get this straight. I'm assuming that your four-man operation replaces a three-or-four man operation in the U.S. Let's say salary costs are $50,000 per U.S. programmer, $15,000 per Indian programmer. A four-man U.S. team is $200,000 a year, while a one US, three Indian team is $95,000, for a savings of 48%.
Great! Your company now has an extra $105K to spend! Either you get a raise (not likely), or another team can be created, employing 8 programmers where four were employed before (and allowing your company to do more work). Of course, the real ratio is a little higher - you need slightly more support staff (management, office workers, etc) to support twice as many workers, on both sides of the ocean, so it's possible your company could jump from 4 workers to 10, for the same amount of money. Seems like a net good to me.
Further, the U.S. is the top market for high technology products, because we have the extra cash to spend on them. Increased employment in other countries raises their GDP, which means they can better afford high-end toys, which means they get cheaper and better for us, etc. etc.
Take a look at the numbers - globalization has been in full swing for a few decades now, and the U.S. has the lowest unemployment rate in years - lower than they thought possible a decade ago! Almost everyone wins when the people that can make a product the cheapest are allowed to do it. The only ones who lose, in the short run, are those who are displaced by the production move. The remedy for that is short-term government support, and the best way to get out is to acquire new skills.
Tell your children to become engineers. The problem-solving skills you learn will help them easily jump from career to career, as needed. Encourage them to take some liberal arts classes, too, to make them think more flexibly and excercise that right brain a little. May I suggest an economics class?
Anyone with even the most basic understanding of economics should dismiss this article as totally unsurprising and move on. The idea I'm already reading in comments that "jobs should stay in America" is idiotic. I want stuff to cost less, and if producing it elsewhere can do that then that's what globalization is all about! It's the same argument when it comes to trying to get rid of ridiculous farm subsidies. I don't want to pay more for corn just so people can continue to be farmers. Familiar Slashdot argument: if the business model of __________ (like being a programmer or a farmer) is untenable, then get out of it! The Constitution doesn't recognize a right to make money doing the activity of your choice.
Maybe someday, when smart use of technology has finally allowed us a balance between needs/wants and resource scarcity, large numbers of people will be able to say, "I feel like being a farmer" or "I feel like managing servers" and do it. But for now, that's just not how it works. Suck it up!
And by the way, this argument goes both ways. People living in the US just happened to have been born (or have been lucky enough to move to) one of the most resource-rich nations on the planet. How dare we even consider enacting policies that would deny these benefits to the rest of humanity? It's that kind of thinking -- or, at least, the perception by other that that's what we're thinking -- that has all these misguided, ignorant, and extremely poor Muslims trying to blow up our civilization
I think another word for that is "capitalism." We are simply achieving it at a much more efficient level, thanks to technology. We can still invent new technology, you know.
Maybe the problem is not that "higher level jobs" are being displaced but that these jobs are no longer as important, thanks to technology. Penmanship used to be a CAREER until technology displaced it. Maybe it is not good enough to JUST be a programmer anymore. I program in PERL all the time (and admin my own LAMP), and I am a freak'n Financial Analyst (majored in Economics).
But I enhance my productivity by leveraging PERL to "Invent" new tools for financial analysis.
Instead of picking one career, maybe you would be safer picking two. That way it might be easier for you to invent ("you" not necessarily referring to the parent).
Sdelat' Ameriku velikoy Snova!
On the other hand, as long as I can make a living, I'm not going to begrudge someone in India, Russia, or other place their ability to make a living. What I object to is when the savings from outsourcing do more than keep a corporation afloat, but actually continue paying obscene salaries for CEOs. Perhaps we need to outsource board-level jobs to India and Singapore and Bulgaria. It's only fair. Don't you think?
And I'm really sure that you always pay the extra for the brand name over the generic groceries, buy the triple cost pharmaceudicals instead of the generics, pay premiums above MSRP when buying cars, washing machines & other durables instead of taking advantage of sales...
Wealth begets wealth.
Yes, there's quite the imbalance between my salary and a Fortune 500 CEO's, and that's not changing much. What is changing is that people in other countries are ending up with more money to spend individually, and end up with their marketplace infrastructures being upgraded. India has Internet connections. FedEx delivers in India. The same countries getting the jobs are also becoming consumers and export markets. There is temporary pain like this for us, but there will eventually be ROI. It just sucks when you're the individual out of a job.
And what happens to us Americans if and when the US faces disaster? I'm not loyal to the US so much as I am loyal to a country that provides:
If the US crumbles in this endeavor (which I doubt), it will do so while a few other countries outdo the US in the areas listed... some would argue that there are other countries that already far exceed it in the areas that matter to them.
You too can play the globalism game.
Frankly, I have been expecting this for about a year or two: if you can/could telecommute, what prevented your employer to outsource your job?
The developed countries have been outsourcing blue-collar jobs to developing (really low-wage) countries, thanks to the development of international transportation for moving the goods all over the world. Those jobs go now wherever the workforce is the cheapest
Every single part of computer hardware you have in front of you, has been made in Anywhere But US/Europe/Japan(TM). I hope you enjoyed playing/working with your computer, because karma is a b*tch.
Today, the internet allows the transportation of knowledge, voice and data all around the world. Of course, your job will go elsewhere.
Heck, if you think about it, you can see that no one is really safe from this:
- lawyers (you just need some meat in the court house, everything else, including C&D
:), is outsourcable paperwork)
- doctors (the remote chirurgy we dreamed about with Internet2)
- teachers (online schooling anyone?)
- people in the movie/entertainment industry: Bollywood could cripple Hollywood (Selling low-priced non-crippled CD and non-DRM DVD should be straigthforward for the Indian majors)
Here is some food for thought:My predictions are:
So, what does it mean for me?
After WWII US dollar became the only currency left standing -- every other country that had an economy good enough to support international trade in its own currency was devastated, US remained ok (because it was separated from a war by the oceans, and please shut up about what others "owe" to the worst military among allies in WWII).
What followed was a horrible abuse of this "de-facto international currency" status, the (number of dollars abroad)/(amount of products traded abroad for dollars) was significantly lower than the (number of dollars in US)/(amount of products traded in US). In other words, everything was cheaper abroad and expensive in US, so US simply printed dollars (or, to be more precise, created them as Federal Reserve loans) and injected them in this system. The system worked through osmosis, it became easier to buy products abroad, sell them in US, pocket the profit and call yourself a rich company while producing nothing, and merely exploiting the slowness of trickling of dollars abroad by making it a bit faster.
Of course, due to this difference in prices, and efficiency of non-export parts of foreign countries' economies, US citizens could hear blood-curdling stories about low salaries abroad, when they were counted against US dollars, however it was nothing but a propaganda trick -- the prices difference was not taken into account, and the lack of reliable currency conversion rates for countries and products not involved in trade with US allowed for absolutely ridiculous numbers. Just look at GNP figures and think, how is it possible to have such a disparity, yet people don't starve everywhere abroad. So for US citizen there was no visible difference between indeed starving people in Cambodia and rather prosperous people of India.
However everything comes to an end. "Osmosis economy" can't run forever, and just buying stuff while racking up trade deficit becomes more dangerous, and other currencies (mostly Euro) issued beyond the US control are becoming used in international trade. However US companies can't expand the production within the country -- educational system and media prepared only consumers for them, there aren't enough people that can and are willing to produce something, they would rather accept sliding quality of life for themselves. So US proclaims itself to have "service economy" (aka doing each other's laundry) and "high technology" (aka having a lot of engineers). The problem is, "service economy" is big fat zero unless it supports production of something, and engineers in US meet just as much competition from foreign engineers as US workers did before, therefore all the outsourcing you can see.
So US as a whole became an arrogant, unskilled and incapable of supporting itself nation by abusing currency machinations -- something that often happened to individuals and now happened to the country as a whole. And here is the sucky part -- crook that lost his money does not harm millions of people that ARE capable of productive work yet happened to live in a country where the macroeconomic processes deny them this work.
If US wants to restore its currency system to something usable, sooner or later it must significantly devalue dollar, and possibly tie it to valuable commodities (say, gold) and stop the "osmosis" forever. If US wants to restore its production capability it must rebuild its educational system. And if US wants to get people capable of doing productive work now and not in 20 years, it must reduce barriers to immigration. All of those measures will without any doubt decrease "quality of life" -- at leasr temporarily, and at least for some parts of the population. However the only alternative to them is accelerating slide into poverty, and turning the country's economy into an equivalent of giant failed dotcom, like flooz.com x 1e6.
Contrary to the popular belief, there indeed is no God.
One of these days, Chairman Mao is going to call the President of the United States and tell him to surrender.
Chairmain Mao will explain that Chinese Corporations are the subcontactors to the subcontractors to the subcontractors of the Department of Defense Subcontractors and furthermore; China now makes ALL the key components for ALL of America's military weapons and machines.
Then he will let out an evil sounding Chineese Laugh! (The kind you hear in James Bond movies.)
How can the US maintain it's power if all it's strategic manufacturing capability is located offshore? Recently, we nearly lost the US Steel Industry and it's not over yet.
Sure we have rules and laws which on paper prevent this sort of problem, however as the FDA recently found out in the "Tainted Strawberry Harvest", these rules are not always followed. In this specific case the FDA had rules that all food used in school lunch programs must be grown in the United States. The subcontractors decided to ignore the rule and subcontract from Mexico and imported 1.7 million pounds of Hepatitis laced frozen Strawberries. The good news is that the fraudulent company was the lowest bidder and we saved tax dollars.
I won't even comment on the strategic technology which has been leaked to other countries by defense subcontractors.
Greed will destroy us!
I think what Americans may not realize is that they are pricing themselves out of work and assuming that the rest of the world can't possibly develop the technology, skills and resources to do what America has. That is a shocking bit of arrogance, and likely the cause of the current "crisis". If there is an exec candidate from Bulgaria that will work for a third of what some American then guess which is a better business choice? All things being equal aside from salary demands makes the choice pretty simple.
The other nifty thing about a free market is that change isn't always to YOUR benefit, but it may be for the benefit of the system itself. Its like an ecosystem. You are selecting yourselves out of jobs. Its like a predator that can only eat a certain type of high-quality meat and only if it is fresh and only if variable A, B, C, and D are in place. Guess what? A predator that isn't so damn picky is going to flourish unless something else exists in that ecosystem to keep it in check. You could try to legislate the problem away while the rest of the world learns to adapt, resulting in isolation. The risks are obvious if you look at the issue from this perspective, so I won't try to lay them out further.
The answer could very well be in the CEO salaries, but somebody in charge deserves credit for success. Back to the ecosystem perspective, consider this: the biggest lion gets the most meat. Even if that meat is rotting and the rest of the pride can't survive. Eventually that big lion dies too. Basically what I'm saying here is that I don't entirely disagree with you specifically.
perl -e 'print $i=pack(c5, (41*2), sqrt(7056), (unpack(c,H)-2), oct(115), 10)'