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Outsourcing As A Source Of U.S. Jobs
An anonymous reader writes "The Economic Times, India's leading financial newspaper, reports that Diana Farrell, Director, McKinsey Global Institute during her speech at Nasscom 2004 said that Bureau of Labour Statistics is predicting a job gain of 22m in the US by 2010, against a job loss of 2m, due to offshoring. You can read the full article here."
US unemployment right now is 5.6%, the lowest it had been in 2 years.
Silicon Valley will ad 17,000 jobs this year and 33,000 next year.
in the long term, a foreign country succeeding will make the entire world better...
of course in the long term, we'll all be dead.
My worry is that the economists say "Oh don't worry, we'll replace those jobs." But not with anything I've remotely studied to do. A job at my current level may not be available or even practical. Most places won't let you get a second bachelors degree. And somehow I don't think a university will accept me for a chemistry masters program when I have a degree in Computer Science. Sometimes I get the feeling that to these economists going from being a skilled worker to a Deliverator is acceptable as long as I'm employed.
I used to think the reality portrayed in Snow Crash was just current trends taken to some unreal extreme. Now as I watch the destruction of the middle class I'm not so sure.
"Where quality is like a dead stinking rat - you just can't miss it."
First of all I'm Chinese American so don't mistake this as a racist rant... anyways being that the US's physical goods are being made in China and the US's abstract products are now being made in India - who profits in the US? I only see high ranking execs (CEO's, etc...) and people who own a ton of stock - making any money. What happens to the middle class? Will the US keep having a middle class?
The largest percentage of the outsourced jobs are high-paying; perhaps we'll eliminate a single 80k job and replace it with 4 20k jobs? Or does somebody think that American business is going to hire local techies to architect products and the humble outsource labor forces will selflessly implement the design?
I have nothing against India or the programmers that are taking advantage of the avarice of American companies in order to better themselves. I would do the same thing in their shoes.
I do, however, blame an American business culture where todays stock prices have become more important than the ultimate survivability or long-term health of the company. After all, on a long enough timeline, everyone's surviveability is zero, eh?
Thinking outside my Head
- Job loss in the last few years has continued unabated in the tech sector. By all reports, the new jobs created have been nontechnical, particularly in construction.
- This doesn't account for the fact that many people have dropped out of the labor market altogether (going back to school, early retirement, panhandling).
- Economists have a pathetic record for prediction. Right now we're in what's been termed a "jobless recovery." If that's a recovery (I remain unconvinced) then just where does Ms. Farrell see those 22 million jobs coming from in the next 6 years, and just when does she think they'll appear?
- Additionally, Ms. Farrell claims that cost savings from shipping jobs overseas will be passed on to the consumer. Ignoring the tendency of corporations to pass cost savings on to executive compensation rather than to stockholders or even (gasp!) consumers, just how would consumer savings help the average unemployed Joe on the street get a new productive job?
- On top of this, consider the setting for the comments. Ms. Farrell is telling a group of people in India not to feel bad about taking our jobs because eventually we'll turn out better than we started out. This is yet more bull in an article already reeking of manure. All it is designed to do is assuage someone's conscience.
It's one thing to say something substantive on the subject, but all that's been presented is trite expressions of hope that things will get better. I'm sure I'm not alone in hoping that they do get better, but until something meaningful is said, it's only so much bull.What is your Slash Rating?
been thinking about this lately. (I am still employed, but my company is having a pretty rough time right now.)
We are going to see more jobs. If Bush gets his way, most of them are going to be in competition with 'undocumented' (Ahem..), I mean ILLEGAL workers. So, we all know those are not going to pay well. Lots of people are going to be devalued for sure.
Jobs that involve people skills are going to become more important. Somebody needs to manage the teams, make deals, and other things. I have been seeing another trend along these lines as well.
Working professionals are forming groups to cut overall costs. So far I see this happening with law, accounting, taxes and other similar traditional services, but maybe technically oriented groups have a chance doing this as well.
Having your own in-house technical people may be too expensive, but buying some quality time locally, sans language and distance issues might be worth a small price premium. Personally, I hope this is an area that Open Source can begin to play a little harder.
I can't help but wonder what effect the growing license fees companies, like Microsoft, ask each year have on the job market. There are a lot of dollars going to one place that used to go elsewhere.
With Open Source working as it should and some greater degree of acceptance, perhaps some of this money will be distributed more evenly. Companies could choose to keep minimal staff and pay high license fees for one size fits all software, or...
They can choose to employ some more staff and combine that with services from a number of competing firms to solve their problems. The greater number of potential solutions might yield competetive advantages as well depending on who is involved.
If this sort of thing begins to really happen, polishing up those people skills might be the way to go. Your technical background will be valuable for advising execs on critical decisions and evaluating potential partners.
I have been getting some experience doing this on the side for a little while now. Once the execs learn there is a cheaper way, they need people to facillitate getting it done for them. Being able to work hands on, in a pinch, helps as well. I sort of ended up doing this for a couple of people I met when I began networking a couple years ago. (fear drives a geek to do strange things, I know!)
Thinking along these lines seems better than a long job search in any case. So, here it is, for what it is worth.
Anyone doing anything similar? Have any luck? Suggestions? I just might need them soon!
Blogging because I can...
"Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs."
What higher paying, more creative, more value generating jobs?
Wansu, th' chinese sailor
Manufacturing jobs (but we already knew that).
And now thanks to the Internet, intellectual jobs, which would include (but is certainly not limited to) programmers, tech support, accountants, scientific research, financial research, and eventually, executive positions within companies.
The only jobs that won't eventually export are those which require a physical presence, such as police, fire fighters, doctors, auto mechanics, retail sales clerks, burger flippers, etc. (But I'm sure we can import some people for those jobs, or replace them with robotic telepresence... eventually.)
Actually, the only job in this country which is guaranteed not to be outsourced, is President of the United States. But I hear the pay is lousy and the hours are long.
They say the first thing to go is your penis. Well, it's either that or your brain. I forget which...
A data point on the quality of outsourced tech support:
My neighbor's HP Pavilion kept putting a window on her screen last week, saying her Windows license had expired, and that she needed to enter her credit card number and expiration to validate her copy of Windows, but not to worry because her credit card would not be charged.
My neighbor is in her 80s, but her memory is good and she didn't remember anything about an expiration date for Windows. So she called HP support and got a man with an Indian accent. She told him the problem, and he asked, "How old is your computer?" She told him it was a couple years old, and he said, "If it's that old, Windows could be expired. Try entering the information as requested and see what happens."
Fortunately, my neighbor is much smarter than HP's outsourced call center, and didn't take their advice. She called me and we cleaned mimail.s off her computer. She promises she won't buy from HP again.
If they buy land, then they buy it from somebody. The person that has sold the land now has the money in his (or her) pocket.
If they spend their money overseas, then it creates jobs in Italy or Taiwan, and the money is spent on video games made by Nintendo or Electronic Arts.
Which means these companies make a profit, which is good because otherwise your 401K would be empty and you wouldn't be able to afford to retire.
--- My dad's political betting
not $22 million in jobs.
Just to stay even with the number of new workers entering the workforce, the US needs to add 300,000 jobs per month. Multiply 300,000 by 12 months by 6 years (the difference between now and 2010) and you get 21.6 million, a number suspiciously close to the 22 million cited in the article. I'm guessing that the job creation number is based on horseshit.
Its not about the cash for them anymore. Its about points, being the top player in the game for the thrill of it, and staying in the game.
Given that it is about staying in the game, outsourcing jobs to India is irrational because it will ultimately put them out of the
Indian tech workers are smart, politically aware, and socially aware.
They will not be content with the American business colonialism of outsourcing.
They will use outsourced American jobs to build up funds and to learn how to run tech companies( or given our greedy, short sighted, overpaid American CEOs.....how NOT to run a tech company)
Once they do, they will form their own Indian owned tech companies.
Unlike the American tech companies paying Indian wages and selling their products at American prices these early Indian owned tech firms will sell their products at Indian prices.
They will either drive American Tech companies out of business or their competition will severly limit their profits.
In short, American CEO jobs will be outsourced to India in the end. They will be out of the game
Steve
Well I'm a software programmer in India working for a company that outsources. Most people working over here are pretty similar to you guys (which is the point that Wired was trying to make)...all college educated people happy to get a 'stable' job which pays really well and allows us all to be able to pay a decent rent and buy cars and stuff. We do feel awful about the fact that ppl in USA are going to lose jobs...but the fact is it's not our fault American companies are coming here to scout for work. We need jobs, and they are offering, so naturally we're gonna take them. And they are paying us MORE than what we would be making otherwise. It is cheaper than America, but HIGH and COMFORTABLE by Indian standards. That being said... most of the work we get here is "Grunt Work". I'm responsible for 'maintenance' i.e. fixing bugs between release 4.1 and 4.1.1. That kind of stuff. It's a rare day we get to sit down and design an operating system, say, or a piece of software which actually can do something worthwhile. Most of us here feel that those kinds of fun things are given to the Americans to do in America, and to only call us if things break(or if they get bored with their product)....Many of us actually want to go to America and live there...failing that, having America come to us was the next best option...and many people like these jobs because it gives them an opportunity to go aborad (necessary for technology transfer)...
That is the Software perspective... The call-centre perspective is totally different. Call-centre people have to work all kinds of awful hours (8 pm to 6am) they have no social life and all kinds of health problems. On top of that, they have to deal with unruly, irate customers, among other things. Not a SINGLE person working in a call-centre here loves his/her job. They are just doing it for the Money. To make ends meet. Most people working in call-centres are people with reasonable college degrees but no scope of getting employment elsewhere. Everyone who works in a call-centre knows s/he will quit in a year and do something else with their life - the churn rate is VERY HIGH. Anyway - THAT is the Indian Perspective and the ground reality. Guys there's nothing constructive we can say to you - We are truly sorry that your jobs are being taken, but we didn't do the stealing - your CEOs did. I've been fired, I know what that's like.
And the truth is, many of us feel it is a good thing because it is putting more money in our pockets, and giving us a better life...but unlike you guys, we have no social security benefits if we lose our jobs.. I don't expect any pleasant replies to this, just giving a point of view from the land of Kama Sutra, Cow-Worshippers, Towel Heads, Sand-Niggers, Curry Munchers....
If my high paying Programing job has been outsourced to India and I am now working for Wal-Mart for $5.50 an hour, what "Toys" would I be buying ? Isn't it more likely I would be trying to figure out how to pay rent AND eat this month ?
I believe preserving this country's standing as a dominant world power is morality enough...certainly equal to the morality of putting a hard-working American out on the street after 30 years of labor for a company. If it were only a question of morality, we would be dividing up our cumulative wealth and spreading it equally about the earth; but the reality is that is we MUST not do that, lest we be equally divided in national strength.
Well we can produce less as we ship it all overseas. I have been in the manufacturing industry in the past, and one of the larger problems is becoming finding tool and die makers. After all, it's nice to internet this and program that, but somebody has to make the die that stamps the case out for your computer. In the 80's, apprenticeship programs were eliminated left and right, as we would theoratically never need such "old style" skills anymore. Things were shipped overseas and the entire skill pool in this country evaporated. I can see the same thing happening across the board. Just extract this situation to its logical conclusion; every job here is outsourced to India/China/etc. What is left in the US?