What Should a Documentary Filmmaker Ask About Offshoring?

Philadelphia-area development economics and finance student Rachel Anderika and her associate, programmer/filmmaker Krishnan, are making a documentary about the effects of offshore outsourcing. Their "still under construction" Web site, Project Outsourced, gives you more information about their work. They're interviewing economists, bankers, anti-outsourcing advocacy groups, pro-outsourcing CEOs, columnists, and others. Where you come in is helping Rachel and Krishnan come up with good questions to ask. We'll forward 10 - 15 of the highest-moderated ones posted here (within the next 24 hours) to them. Expect summaries (and possibly audio or video clips) of the answers in late May, and news about the finished film this Fall.

Comments

Outsourcing on Slashdot: Fair and Balanced?

[mr.henry]

I think /. should have a disclaimer on every outsourcing related story that mentions that their parent company, VA Software, has sent American jobs overseas.

V
Valence Technology
VA Software
Veritas
Verizon

Here is a list of companies that use outsourcing.

Re:Outsourcing on Slashdot: Fair and Balanced?

[Anonymous Coward]

I hear rumors Linux kernel development was outsourced to Finland at some point.

Re:Outsourcing on Slashdot: Fair and Balanced?

[ajs]

Note: I would not put much stock in the CNN list when it comes to VA. I'm not saying that they DON'T outsource, but VA bought machines that were assembled overseas to re-sell in the US, and that's not quite the same thing, IMHO, as laying someone off in order to send their work overseas.

Now, if VA is *currently* sending work overseas, I'd be interested in hearing about it from the horse's mouth... horse?

Re:Outsourcing on Slashdot: Fair and Balanced?

[MORTAR_COMBAT!]

Think about it, even reporters, lawyers and medical work is being outsourced to other countries.

Which is why we should tariff the import of intellectual property. Businesses want their intellectual property protected just as if it were actual physical property (DMCA, copyright law, patent law, etc), but they import intellectual property in the form of code, legal advice, chemical formulas, genetics research, etc, into the country without paying any value-based tariff.

Either it's property or it isn't. If it is, keep your copyright and patent laws, and pay up when you bring this property into the United States just as you would if you brought a truck load of goods. If it isn't, then say goodbye to its legal protection, and finally say hello to inexpensive AIDS medication, "legal" pirate operations for CD and DVD sales, etc.

Re:Outsourcing on Slashdot: Fair and Balanced?

[Saeed al-Sahaf]

Which is why we should tariff the import of intellectual property. Businesses want their intellectual property protected just as if it were actual physical property (DMCA, copyright law, patent law, etc), but they import intellectual property in the form of code, legal advice, chemical formulas, genetics research, etc, into the country without paying any value-based tariff.

Bingo! It's a double standard. IP is now an imported product just like everything else we consume. We as a nation (and I understand that not all Slashdot readers are from the USA) need to look out for and support our "middle class". If this means making it cost more to "outsource" and thus keep more jobs here, it's something we need to do.

Re:Outsourcing on Slashdot: Fair and Balanced?

[jedidiah]

All ivory tower economist fantasies.

The real issue is gross domestic salary. Is the buying power of American consumers at large at least remaining steady or is it in rapid decline?

What is the social impact of retraining highly experienced specialists that may have spent 10 or 20 years developing their skills? What is the economic impact when those people suddenly can't continue the level of consumption they had previously?

What do we do when the tradesmen and laborers that those professionals allowed to be employed are also on the unemployment line?

Re:Outsourcing on Slashdot: Fair and Balanced?

[cdyson37]

Which is why we should tariff the import of intellectual property.
Does this mean /. will have to pay to host my comments submitted from the UK?

Re:Outsourcing on Slashdot: Fair and Balanced?

[spirality]

What's wrong with free markets?

Anyway that really wasn't your point here. If people can't patent things (like AIDS medication) they will not invent it because they will never recoup their R&D costs if it is to be just given away or "legally pirated". Music and drugs are entirely different...

Any two bit idiot can't play music and the cost of creating and producing it is nowhere near to the costs of researing and producing a drug. For every drug that comes to market there are about 10 that do not. The drug companies have to make back their money somehow. Now, that said, sure they may be gouging us in some respects, but still things can not, will not and should not be free. History has proved this economic model fallacious.

-Craig.

Re:Outsourcing on Slashdot: Fair and Balanced?

[gfxguy]

I'm wondering then, where the problem begins.

So if VA were to start off assembling computers themselves, decide they can't compete financially with companies that are buying assembled computers from Taiwan, so they close their assembly line and buy from Taiwan, then that's bad.

However, if they never employed anyone to assemble computers in the U.S. at all, then that's OK?

How about this: they keep assembling computers in the U.S., and go out of business because everyone is buying from vendors who "outsourced" to Taiwan?

Re:Outsourcing on Slashdot: Fair and Balanced?

[krb]

For every drug that comes to market there are about 10 that do not. The drug companies have to make back their money somehow.

Funny you should phrase it that way... the current music and pharm industries aren't that different after all. For every album that turns a profit, there are dozens that lose big. The record companies make their money on a very small percentatge of their catalog, which get big enough (due to marketing dollars, in large part) to offset the losses they're dealt by the vast majority of their contracts.

The scale is different, but the model is very, very similar.

Incidentally, the reason they're similar is that 50+ years ago, those two bit idiots couldn't get a hold of good equipment and the cost of production was many orders of magnitude out of normal people's reach, similar to pharma now. The music industry has held tight to their model, past it's sensible end point, because computers and cheap electronics have made production costs negligible... well within the reach of average people.

I'm not guaranteeing that in 50 years, we'll all have gene sequencers and personally matched pharma, but, technology has a way of obsolescing business models. At some point, laws need to change to reflect new environments.

People do need to be incentivized to produce... that's a good reason for IP law. But there need to be limits to how much control they have, and for how long, in order for greater society to benefit. The commons always need to be addressed. If the laws benefit the few, to the detriment of the many, then they are unjust, and should be modified.

Re:Outsourcing on Slashdot: Fair and Balanced?

[arvindn]

I like your attitude.

When toxic computer components are exported and dumped in third world countries, do you protest "American computers" being sent abroad? Firecrackers are produced by 4-10 year old kids in India under horrible conditions. Do you protest the offshoring of the manufacturing of these "American firecrackers"?

Yet when it comes to IT (and previously electronics), these jobs are "American". The comfy, well paying ones. Your God given right.

Free markets work both ways. Regardless of whether the global market is really free, whatever America gets, you're only getting what you asked for.

Re:Outsourcing on Slashdot: Fair and Balanced?

[Clay201]

What's wrong with free markets?

The same thing that's wrong with the Tooth Fairy; they're a nice enough fantasy, they just don't exist.

No country simply allows market forces to rule; everyone controls these forces as much as they can through tariffs, subsidies, regulation, state ownership, and so on. In countries that have fewer restrictions on what may be bought and sold - i.e. South American and Asian countries forced to "liberalize" their economies - crushing poverty and authoritarian regimes are the norm. And for very simple reasons. If you allow anything to be bought and sold, foreign investors quickly buy up everything worth having; land, natural resources, etc. (Indeed, that's the whole point of "liberalizing" a country's economy; to "attract foreign investment"). That's why we have "outsourcing" (here I'm using the term "outsourcing" to denote *any* job that a US company sends to another country, not just IT or other skilled jobs), because businesses are allowed to move their factories to any one of several dozen countries. That's what we call "investing" in the country even though the companies don't pay much in the way of taxes and their profits go back to their home countries or to banks in the Bahamas.

If people can't patent things (like AIDS medication) they will not invent it because they will never recoup their R&D costs

They don't need to recoup their R&D costs because you and I will pay for those through our tax dollars. Science has always been a seven monkeys / seven typwriters / seven years sort of affair. You have to have lots of scientists in lots of labs working on a lot of stuff and only a small percentage of this work will actually produce something that's comercially viable. And furthermore, there's no way of identifying ahead of time which line of research that will be. From a business standpoint, it's a total disaster.

That's why we have universities, grants, NASA, and, most importantly, massive amounts of Pentagon funded research and development. Without all this taxpayer supported R&D, the internet, CD players, jet airplanes, and a long list of other technologies might not exist. Or, anyway, if they did, we'd have to import them from other countries that had the sense to publically fund their R&D. Which would include all the other developed countries.

But it's interesting to me that the "people only do things if there's a profit motive" argument should rear its head on Slashdot of all places, a universe where everyone, it seems, insists most emphatically that non profit-motivated user participation is essential for creating quality software. Open source software is one of the best arguments against profit motive I've seen. Indeed, you could make a pretty good argument that the very principles of science and technology (objectivity, the sharing of information, the constant pursuit of better explanations and methods, etc.) aren't compatible with free markets (every-capitalist-for-himself, proprietary technology and ideas, etc.) and use the Microsoft vs. open source story as a case in point.

Clay

I'm not clever enough to come up with a signature line. Sorry.

Re:Outsourcing on Slashdot: Fair and Balanced?

[dslbrian]

The "Project Outsourced" people should also try and see if they can find anyone to offer arguments like this,

Answers on Outsourcing - A finance professor argues against placing blind faith in outsourcing.

which has some very clear and understandable arguments against outsourcing.

Re:Outsourcing on Slashdot: Fair and Balanced?

[spirality]

Here's a little piece I wrote a while back:

Some people labor for the love of it, while many more of us are not apt to do a thing unless we can foresee some kind of reward for our efforts. In so far that copyright has harnessed one of humanity's most base characteristics, namely greed, it has been wondrous, yet for a society to tolerate any kind of monopoly there must be an overwhelming reason to do so.

Perhaps copyright's best effect has been to allow artists the ability to make a living pursing their passions. Without copyright it is plain to see that an artist's works would be taken and reproduced or distributed by the unscrupulous. The artist could at worst be left with nothing but the memory of his creation. An artist whose works make money for someone should not himself be poor unless by his own choosing.

Copyright recognizes that the creator of a particular work has, for a limited amount of time, the exclusive right to it. Surely this is the antithesis of capitalism, which abhors a monopoly. Yet, most of us believe, and rightly so, that capitalism is the best economic system available. So what is the justification for this anomalous thing called copyright?

People who create things of value will likely create other things which are also valuable. Therefore, if we want them to create more things it behooves us to ensure that they are rewarded for their original creations. Copyright has at least ensured that artists have a right to their works, and for a great many of them this has been enough to become quite rich. Without a doubt society benefits when a great artistic achievement is made. What would the world be like without the likes of Shakespeare?

Artistic achievement enriches our entire society and it is useful to encourage it. Even the framers of the Constitution, although they did not invent copyright, realized that protecting intellectual property was important. This was so clearly recognized that one of the enumerated powers of Congress is "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries". 1 However, copyright, which is so contrary to one of our most fundamental economic principles, that of granting a monopoly, should be approached with great caution.

In 1790 the First Congress passed legislation that allowed authors the rights to a particular work for fourteen years. In addition, the copyright could be renewed for another fourteen years. Since then the term of a copyright has been increasing. Currently, a copyright lasts for the life of the creator plus seventy years.

It is hard to see how current copyright law adheres to the spirit of the Constitution. Certainly seventy plus years is a "limited" time in the most strict sense of the word, but in terms of human life it is nearly forever. For example, a work published right now will be protected for a minimum of seventy years, assuming also that the creator dies now as well. This can not be construed as limited in any practical sense. A seventy year copyright seems unconstitutional.

It is also terribly immoral. Encouraging people to create is necessary, but allowing the heirs of the creative to live at the expense of society for no particular achievement of their own is despicable, and instances of this abound. There is no reason whatsoever that the heirs of Martin Luther King Jr., Ernest Hemingway, J.R.R. Tolkien, or George Orwell should profit from their ancestor's works. By now the works of these great men should belong to society at large.

Obviously we want people to create, and I do not dispute the need for copyright, but there is a point where these monopolies cease to serve anyone except the heirs of great men and corporations. Society in no way benefits from granting these copyrights. It is actually damaged because anyone who might wish to create a derivative work is prohibited from doing so. For a monopoly to even be tolerated it must be of some critical imp

Re:Outsourcing on Slashdot: Fair and Balanced?

[rw2]

No, on the other hand, pure capitalism can only work where everyone is selfish and where everyone expects others to be selfish.

If as a customer, I expect companies to try to screw me over, I take full responsibility if a company successfully screws me over, and I don't usually let it happen again.

It's the same thing with my environment, if a company messes up my surrounding envrionment, I take full responsibility for chosing the location I live in and I take full responsibility for moving away and/or making them stop.

Yes, that's the principle. It doesn't scale though. No one has time to investigate all the companies they do business with to the extent required for pure capitalism to work.

Let's see, I've done very little today from a consumption standpoint, what would my list be:

I had two slices of toast and some peanut butter for breakfast.
I took an ibuprofen for my knee.
I took some vitamins for my other parts.
I had a very simple lunch (roasted chicken).
I bought a drip waterer for my garden.
I played ultimate at lunch.
I had a handful of peanuts from the snack cube.
I drank some bottled water.

It seems unlikely that even I, someone who cares, would be able to investigate that many purchases, but it's actually worse than it first appears. Just take my breakfast.

That two slices of toast breaks down to:
A bread company.
The suppliers to the bread company (we'll assume they are all producers and not middlemen for the sake of the simplicity of this example).
the company which supplied the wheat
the company which supplied the butter
the company which supplied the eggs
the company which supplied the yeast
the company which supplied the water
the company which supplied the machinery (ovens, mixers...)
The peanut butter company.
The supplier to the peanut butter company.
The supermarket.

The common lore is that market economies are supposed to be efficient. What is more effecient about every single person doing that kind of leg work than having a legal system which says you must pay a minimum of $n/hr, you must adhere to osha rules, you must not dump your junk in the public's rivers?

Pure capitalism is every bit a nightmare that pure socialism is. I care and I don't think I could keep up with the research necessary to live in that world. What about the 95% that don't care? Consumer Reports, for example, is a fairly reliable organization, but how many people bother to check what they have to say before making a major purchase that effects them directly? Why should we believe that these same people who don't do the homework necessary to protect *themselves* would suddenly, in a pure capitalistic system, do the homework necessary to protect themselves, the workers they do business with and the environment?

We shouldn't.

We built things like osha, epa, fda and others because the business community showed themselves willing to maim, pollute, sell snake oil and a myriad of other reprehensable things if left to their own devices.

We shouldn't go back to that. We tried it, it didn't work.

Practice of outsourcing (not a question)

[Anonymous Coward]

I am appalled the companies would shift labor to lower-cost locations. This practice should not be tolerated. Now excuse me as I will get into my Honda and drive to nearest Wal-Mart for that 2-for-1 sale on Nike shoes and shirts, can't miss a deal like that.

Re:Practice of outsourcing (not a question)

[Penguinisto]

Err, I may be wrong, but didn't Honda "Outsource" their labor to the United States (as it was cheaper to hire American workers to build cars for sale in the US than to build 'em overseas then ship the things via ocean freight?)

It seems that this outsourcing thing can and does work both ways, no?

(err, cue massive down-modding by disgruntled outsourced IT workers...)

Re:Practice of outsourcing (not a question)

[millahtime]

"Err, I may be wrong, but didn't Honda "Outsource" their labor to the United States (as it was cheaper to hire American workers to build cars for sale in the US than to build 'em overseas then ship the things via ocean freight?)"

For the japanese it is much less expensive to produce a car here. They use very strict processes that have cause for little waste, high quality (so they don't have nearly as many bad parts made and don't have to do the same amount of testing) and they don't use unions.

Re:Practice of outsourcing (not a question)

[DAldredge]

A large portion of the cars made at the Honda plants in the USA are made for the US Market. Also, it is/was due to Reagans tarrifs that they located here in the first place.

There is a difference between having a factory in an other country to serve that country and exporting most/all of that factories output to the USA.

Hell, it can't continue much longer due to how our income tax system is setup. If you make less than a certin amount you pay NO income tax, and most of the new 'service' jobs pay less than that amount.

Re:Practice of outsourcing (not a question)

[fermion]

We had one the first Hondas. The primary issue was not cost. It was the fact that Honda gave us a better warranty. It was also a time when the car industry had yet to discover that women's money was just as valuable as men's money. Both of these issue drove us, as many others, away from the US car dealers.

The Walmart example, OTOH, is very appropriate. You sacrifice your self respect to shop there. Of course, since the owners and management have already sold thier sould to the devil, it matters little.

Re:Practice of outsourcing (not a question)

[Dorktrix]

It had less to do with ocean freight than the cost of tariffs on sedans... Ironically, most of these tariffs are artifacts of the "free trade" Regan administration in an attempt to save American car makers from the Japanese car makers during the 80s.

Re:Practice of outsourcing (not a question)

[Grishnakh]

Not only that, American labor (non-union, at least) is actually cheaper than Japanese labor.

The problem, the way I see it, is that there's a difference between first-world countries (Europe, Japan, US) trading with each other, and us trading with third-world countries.

If we buy Japanese or European products, we can feel safe that we're buying from companies that compete on a level playing field with our own: the cost of living is roughly comparable, and environmental and labor laws are fairly similar. Companies in Japan or Europe aren't able to lower their prices by simply hiring sweatshop workers or dumping toxins in the nearest river; they have to do things properly and keep themselves efficient.

But when stuff gets outsourced to third-world countries, these protections are absent, which allows companies there to keep their costs extremely low. How can an American manufacturer compete against one that can pay their workers pennies a day, and dump their waste wherever they please?

Re:Practice of outsourcing (not a question)

[laigle]

I'd say it seems outsourcing CAN work both ways. Japan is a good example of where outsourcing does work. Two nations with strong trade ties both derive benefits from outsourcing labor. Japan doesn't just get cheap products, they get more market access for their goods as well.

But look at somewhere like El Salvador. If you ship a car plant there, we get cheaper prices on labor. But we don't get the subsequent increase in revenues because El Salvador doesn't represent a good market for American cars. So the net effect is to push down wages at home and ship our investment capital overseas. The benefit that gets touted is usually prices, but the truth is that most goods maintain price levels because they were within the public's buying envelope anyways. It's only the high end luxury goods that get their prices lowered.

This is why bilateral, negotiated trade is the way to go. It doesn't make sense to have the same trade policy with every country.

Re:Practice of outsourcing (not a question)

[Misch]

Correct. Many Hondas sold in the US are made in the US. If you want to check, look at the first character of the vehicle VIN. If it is 1 or 4, then it was made in the US. My Honda Civic Hybrid's first character is "J", indicating it was made in Japan. Here is a partial decoder.

Re:Practice of outsourcing (not a question)

[ekuns]

What elitist crap. Ignoring such a pejorative term as third world, how then does a "third world" country improve its lot if the world's richest nations refuse to do business with the 3rd world country?

Wow, calm down! You're only the second person I've encountered who thought the term "Third world" was pejorative. I rather doubt it's being used in any such sense here.

Anyway, I don't believe anyone (a few extremists ignored) is talking about "First" or "Second" world nations simply refusing to do business with other nations. I believe that people are rather talking about the desire to have economies that are sustainable for all countries involved. If the US, for example, outsourced all of its skilled labor to other countries where the labor and pollution laws are more lax and salaries are lower, that would have a devestating affect on the US economy. While some business would profit in the short term, they would end up with no consumers.

THAT concept is what bothers people. If you take it as an elitist or arrogant, you're missing the point of most people's arguments. Of course, there are some who are arrogant or elitist, but I'd bet that most people in this discussion are trying to be reasonable in a topic that causes heated disucssions.

What field next

[onyxruby]

The one question I have never been able to get a straight answer on. What field should the millions of displaced American IT workers get trained in?

It is always sais that people should be responsbile and learn new skills and train in a new field. When the farm economy shifted to manufacturing, people learned factory work. When manufacturing started to be offshored people were advised to get into IT. What field should people start to train in? Bush talks about training displaced workers, but I haven't heard anything about what their supposed to train in. What is the next new economy, retail?

Re:What field next

[Anonymous Coward]

Nursing pays well. Not get-a-new-porsche well, but $30-40 an hour for a male nurse in night shifts is a regular pay.

With baby boomers nearing their middle age and taxpayers voluntarily covering Medicaid and other programs that are heavily abused, nursing is not a bad field to get into. There will always be people sick and dying, so market is there.

Re:What field next

[Anonymous Coward]

For me, I've found that providing IT SERVICES to local Philaldelphia-area merchants and lawyers has been a great business. Please move here and take some of the overload off my hands. You will be expected to be hands-on, professional, and fluent in the local language. Provided India can't helicopter in workers from international waters, these IT service jobs should remain secure.

Re:What field next

[Lil'wombat]

Anything in the service arena. With the huge savings my company received from offshoring development, I finally got that new lexus I wanted. What I'm noticing, is that the lack of quality amoung local car wash workers is really terrible. I think we could retain some of the VB code monkeys into excellent window washers and wipe-down workers. In fact I think we should return to the days of the full-service gas station. It annoys me to have to keep getting out of my big SUV and fill it with permium gas. There should be people who do that for us.

Re:What field next

[Akki]

Two words: soylent green.

Or maybe just fertilizer.

Re:What field next

[red floyd]

And you thought you got screwed over as a developer?

Nurses get all the shit, all the repsonsibility, and none of the respect. The hospitals try to keep the number of RNs to a minimum, giving nurses up to 15 patients at a time.

My wife is an RN, and she's told me horror stories about this sort of shit.

If the hospitals could outsource nursing care, they would. Actually, they do. It's called "registry nurses".

Re:What field next

[Killswitch1968]

Business and management. IT gets outsourced because, well, it's not that hard a skill compared to other professional degrees. If you want to make even $50K/y you had better convince your employer you are actually worth that much. And generally that means IT isn't enough. Have you considered an MBA?

Re:What field next

[cluckshot]

The parent here is a fool lost in the smokescreen the "Outsourcing" crowd puts out. Nurses don't earn that kind of money in the first place except in extremely high priced regions like San Francisco. Second the industry is outsourcing. You see I am an RN who left the profession because of outsourcing and the criminally bad management of the industry. I retrained as Software Engineer.

The "Shortage" of Nurses is entirely smoke and mirrors put out to justify what currently is UNLIMITED H-2 visas being issued by the BICS for NURSES. They even took 3 years as work in any medical field as equal to 1 year of College for RN. Thus you could have someone soon caring for you who knows nothing about nursing except cleaning beds. But Ignorant fools like the parent of this post will not learn until it is they themselves who get no care or are hurt. By then they will be too weak and too broke to be able to fuss.

I personally watched in Nashville Tn while the heads of Columbia HCA were arrested for RICO Violations in a "No Knock Raid" on their HQ near Centennial Park. I have seen their actions first hand and know how illegal they are. The claims of Nursing Shortages and High Wages are put out by people those kind of people.

Re:What field next

[seichert]

Anecdote : I know one guy, at my local gun club, who lost his job to 2 people in India and 1 in Mexico. It was literally cheaper to hire 3 people than to keep paying him to do this particular IT job. He had a life long interest in automotive electrical systems and decided to pursue a 2 year degree from a local community college. His reasoning : 1) You can't outsource car repair to India, 2) There is high demand for a person with skills in this area, 3) He really loves doing it. I also read another article recently about demand for automotive technicians being quite high and supply being quite low. The article suggested that this situation was the result of a generation of parents not wanting their kids to grow up to become "grease monkeys". These parents did not realize that automotive technicians are really computer technicians (as most modern vehicles are computer controlled) and can earn a comparable salary to an I/T person. There are many great good paying careers outside of I/T. If you think that your days as an I/T person are over then it would be worth it to look around.

Re:What field next

[jasno]

You covered most of what I was going to say but let me elaborate a bit.

Most economists/capitalists used to say that the market will sort this sort of thing out. Their highly simplified models of humans tell them that when labor markets shift and jobs go overseas, unemployed workers can simply retrain. However real people aren't always retrainable. Sometimes the 52 year old factory worker can't go out and learn something new. Also, most jobs with a similar skillset might become filled rather quickly. For instance, many people suggest unemployed IT workers should start a local IT support business. That may work for a while, but soon that market is saturated.

I think in the end there is a real unavoidable cost for outsourcing and it would be great to hear an economist admit it instead of simply glossing over it with tales of the invisible hand. Then we can consider what measures society/government can take to bridge the gap between economic theory and reality.

I'm not against outsourcing, however I think there needs to be a great deal of focus on retraining, extending unemployment compensation, incentives for early retirement... whatever a more detailed study than I'm willing to undertake would prove effective in helping the newly unemployed.

Re:What field next

[AsbestosRush]

Anyone who says that auto techs are really computer techs is just blowing smoke. The majority of repairs that I've seen come into shops are because the person who owns the vehicle just put fuel in it and drove the piss out of it. Most of the computer stuff is either "it works" or "a sensor isn't working". Hell, the diagnostic computer you hook to the car to read the computer will usually suggesst what needs to be replaced.

The following is a true story:

Guy gets his current model year Toyota 4Runner with 60k miles up to a shop, and says he wants a new engine. The mechanic looks at him like he's grown a third head, and asks who told him that he needed a new engine. The customer refers the mechanic to the Toyota dealer.

Mechaic calls the dealer and starts trying to figure out what exactly happened. Dealer mechaic says that due to a lack of maitenence, the warranty won't cover it.

Mechaic talks to the customer. Apparently, the customer *NEVER CHANGED THE OIL* in the vehicle. Removing the oil pan drain plug confirmed this, as the oil was mostly gelatonous (sp?) black sludge. It's kind of hard for a regular oil pump to move stuff the consistancy of jello.

Re:What field next

[silas_moeckel]

I have to say that if the guy enjoys his work he should be doing it. I have worked in three fields and can safely tell you that you need to find the field that fits you not the one that might allow you to make the max income. I have worked in construction while I enjoy the work I enjoy working with computers more (Consulting Network Arch) and never enjoyed working retain at a local amusement park. I have seen people that dislike there jobs and most often there performnce shows it.

In the long run I think it's still a question wether or not these are short term losses as other economies absorb work due to high enemployment and low wages. But it's still a question wether or not this will in the long term reduce the standard of living of the US to make it more in parity with other contries or if those other contries can ramp up quicly enough to parity with the US so that again we will be on similar footing.

Re:What field next

[johnjay]

A friend of mine tried working for a registry. The hospitals in the area would call up for 15+ nurses just to make sure they had enough to cover the shifts of nurses who called in. When the hired employees showed up for their shifts, the registry nurses were told to leave. No guarantee of work or anything. Sounds even worse working for a registry than it is to work for one hospital.

I don't know if my friend is still working for a registry. I know she started looking to get a regular job as soon as she realized how messed up the system was. I don't see how registrys can keep treating their nurses that way and hope to retain employees.

The situation with nurses seems ripe for unionizing--high demand for workers and poor treatment of employees.

Re:What field next

[Simonetta]

What is the next new economy, retail?

The death industry.

The systematic selection of troublesome individuals, their removal from their community, and the necessary legal and moral stategies for justifing the selection and elimination of this individual.

With the population rapidly expanding at a far faster rate than ability of current political and economic systems to absorb these new young people, the death industry will be the fastest growing new industry of the twenty-first century.

There will be many new opportunities for lawyers to devise legal justification for murder, new openings for religious leaders to develop theologies endowing God's grace on murder (built opon the initial explorations in this field by Wahabi'ists of Saudi Arabia to justify the mass murder of Americans and Israelis through terrorism), new positions for technicians to design and maintain the machines of murder, and scientific and academic positions for modifying the crude 20th century weapons of mass destruction into the focused depopulation engines of tomorrow.

If you find yourself bothered by the reminants of morality and conscience when transistioning to your new career, you'll find the recent development of powerful psychoactive drugs designed to neutralize this area of brain chemistry most helpful.

Re:What field next

[mdfst13]

"But it's still a question wether or not this will in the long term reduce the standard of living of the US to make it more in parity with other contries..."

No, that's not how it works. Our standard of living is set by how much we get. Trading with another country can't reduce our ability to get stuff, only increase it (we still retain the ability to make more stuff by employing the unemployed).

If you want to worry about something decreasing our standard of living, worry about something that will *decrease* imports. That could happen by a fall in exports (people become less interested in buying our stuff) or if we stop producing the world currency (we get a certain amount of free imports because we produce the world currency; same reason that the Federal Reserve Bank always runs a surplus).

Imports are problems for companies, as domestic companies compete with foreign companies for sales (note though that domestic companies also get benefits from imports, as they have to purchase stuff too). In terms of the country as a whole, they are good, as they transfer stuff to us. Exports are bad (except in that they fund imports) as they transfer stuff away from us.

Imports are a tiny part of our economy. Focusing on them just takes away resources that could be spent looking for ways to produce more stuff for us. Especially important are areas that are currently expensive: housing, oil, etc. Falling prices in those areas would allow the Fed to pump more money into the economy, which would provide more funds for companies to use to hire workers...including IT workers.

Re:What field next

[Golias]

What field should the millions of displaced American IT workers get trained in?

Pyramid Schemes. I will be happy to train you in the lucrative field of scamming people out of their money for $2000 + 10% of what you eventually collect from the trainees you go out and recruit for yourself (and 10% of your 10% take from them, and so on and so on...) If you are at a loss as to who to recruit, start with everybody you've ever known. Once they stop talking to you and begin to specifically dis-invite you from parties, turn to spam. Bothering people in coffee shops is good, too. It can't fail!!!11!1!

Or you could teach English in Japan. It hardly pays anything, and the hours are insane, but rumor has it that American men are considered very sexy over there... even the geeky ones! It's a nerd paradise, where grown-ups play video games, everybody has cell phones, and there's no shame in loving bad J-pop music and anime! Woo-hoo!

Or you could just stay in the IT industry and wait another month or two. Seriously now, the company I work at is already hiring a bunch of new people, and I hear from the people on my "job network" that the situation is similar all over the place right now.

Re:What field next

[MarkRebuck]

If you look at the personality types which are well suited to nursing, they are almost the exact opposite of those well suited to engineering. In myers-briggs terminology, nursing is usually for ESFJ (extroverted, sensing, feeling, and judgemental) types, and engineering is for INTP (introverted, intuitive, thinking, and perceiving) types... So asking an engineer to become a nurse is very much like asking them to change the very nature of who they are. It won't work.

Re:What field next

[cluckshot]

The most rational set of questions to ask start with the most imporant ones to Investors.

[1] How many dollars of dividends has your company been able to pay to their shareholders as a result of "Outsourcing?"

[2] How much has your compensation risen including all factors since you began "Outsourcing?"

[3] How many dollars of payroll did you save as a result of "Outsourcing?" Be sure to include any Executive Raises as countervailing factors.

[4] Have you had any of your Intellectual Capital Stolen as a result of "Outsourcing." This is probably the biggest and worst part but it never gets talk.

[5] What Liability does my company incurr if data handled in "Outsourced" facilities is diverted to ILLEGAL Purposes such as Identity theft?

[6] What legal devices do we have to deal with employees who misuse data we "Outsource" the processing and service of.

[7] If the data or programming serviced is "Outsourced" what does it do to National Security. This is a common problem with Defense Contractors now. Most outsourcing functionally becomes Industrial Spying for the company Hired to service in the other country.

[8] Does outsourcing this service cause the development of competition which may destroy the operation?

After the issues of Company profitablity are discussed then get down to the other issues.

[1] Are you Receiving assistance to be in business from State or Local Governments such as Industrial Development Bonds etc?

[2] Do you meet the US EEOC requirements in the employement of all of the Outsourced employees? (Age Sex etc discrimination) Most Outsourcing actually is a masquerade for some form of racism or sexism.

[3] Do you deal with the US Government directly or as a subcontractor? If so how do you expect the government to be able to pay your contract if everyone avoids paying US Taxes by "Outsourcing"?

[4] Do you expect the United States Government to protect your operations using if need be Military Forces to make sure your trade is safe? If so how do you expect to have it paid for when you avoid paying the taxes which support it by "Outsourcing?"

[5] Can you point to any nation which has benefitted by lowering wages and reducing its standard of living?

[6] Do you like trading in the lucrative market in the USA? If so how do you think that it will remain lucrative with you and others "Outsourcing."

[7] Are you as an American Incorporated Company benefiting by US Laws, Currency and infrastructure? If so how do you expect this to be maintained if you continue "Outsourcing."

Then you can come down to the issues such as the effects on Citizens generally. These include:

[1] Do you believe that United States Citizens have any rights in their own land that arise from Citizenship? If so what are they? If so how do your actions affect these rights?

[2] What value do you believe should be placed on loyalty to your fellow countrymen?

[3] How important is the USA to world safety and prosperity with regards to the cost of lives and treasure from US Taxpayers taken to pay for these actions and conditions?

The whole set of issues here address the matter indirectly but they completely attack the reasoning behind the "Outsourcing" game.

Re:What field next

[Kohath]

What is the next new economy, retail?

Here's a suggestion: Don't chase the "next new economy". Do something you like. Do something you care about. Do something you're good at.

If you can't find anything like that, then you're stuck with what you get.

Re:What field next

[aastanna]

That's just like in the Grapes of Wrath where all the farmers went to California to pick fruit during the great depression and found that the promises they were getting in Oaklahoma were just to drive down the cost of labour for the fruit growers. Facinating that this still goes on ~75 years later, of course now I suppose people who do this get arrested for RICO violations...if they are caught.

Re:What field next

[wcrowe]

I see. So individuals who typically have poor "people" skills, should go from careers in which they rarely deal with others, into a field in which they regularly deal with sick, whiney, helpless people all day?

Right.

Summary

[Slashdot Hivemind]

Geek jobs come under threat. Suddenly geeks lose libertarian leanings* and belatedly side with the ex-manufacturing workers who bullied them through High School

*For ENTIRELY unrelated reasons, obviously. No hypocrisy here at all

Documentary perspective

[BWJones]

A documentary is important and I would fully support one being created (Disclaimer: my first major in college was documentary film), but perhaps more importantly, that documentary would be made much stronger if it would include some hard numbers and studies including rigorous statistics on just how offshoring is helping (or hurting) the 1) corporation, 2) worker, 3) consumer. Perhaps not just the viewpoint in the US as an interesting perspective could be made from the person getting the job.

So, here is the deal: Documentaries are often about perspective but ideally, they are about finding the truth and revealing that truth to your viewer. Political perspectives are going to be difficult to get, but contact someone like Robert Reich who could place you in touch with a variety of folks in and out of the political scene.

bob@RobertReich.org
Robert Reich
P.O. Box 381483
Cambridge, MA 02238
(617) 547-2206
Fax: (617) 498-0048

Re:Documentary perspective

[the argonaut]

. . .how offshoring is helping (or hurting) the 1) corporation, 2) worker, 3) consumer.

How about instead we just ask how it's helping or hurting people. The well-being of the corporation is irrelevant, since a corporation is a means not an end, or at least that's the way it should be. The purpose of the corporation should be to improve the lives of people, and should corporations fail to achieve that, they should be reformed or abolished. If corporations are hurting but the overall lot of humanity is improving, then so be it. I can certainly live with that.

Re:Documentary perspective

[NDPTAL85]

Won't somebody PLEASE think about the corporations!?!?!?

The biggest question...

[Pi_0's don't shower]

What sort of responsibility to create jobs should a company have to the nation that purchases/has a demand for the goods they're producing?

Re:The biggest question...

[gfxguy]

Perhaps wal-mart is the largest retailer is because a large portion of it's customers can not afford to shop at other stores?

But Walmart is still giving people what they want - it is obvious that lower prices are more important than the perceived threat to their communities, or they wouldn't shop there. I answered the question: what responsibility does the company have to the consumers in the nation to which it supplies goods? And let me tell, a new "Super" Walmart opened recently in my community, and while I haven't perused the parking lot, I need to pass by it. It has significantly altered traffic patterns (to their detriment), and I see all manner of cars going into the parking lot: from old beater Ford Fiesta's to Lexus SUVs. People ARE CHEAP.

It's usually a catch 22: companies can outsource overseas and give the consumers the lower prices that the consumers are demanding, or they can keep higher prices and perhaps advertise that the items are 100% locally made.

Let's be honest, if they do the latter they will lose money and eventually go out of business because competitors are charging less. The consumers demand the cheapest prices. It's been shown time and again.

Let's look at the airlines, for example: how many people pay for first class? How many airlines have cut food service? How many have reduced row spacing to cram in more people? We all complain about it, but then we get the absolute cheapest price we can. When most people get a ticket, what is their first question? Is it "how much legroom on your planes?" Please.

People, in general, are just not being realistic. They want low prices, but they want to keep the higher paying jobs here. They want more room and better service on the plane, but they only buy the cheapest ticket they can find. They want Walmart prices, but then complain that Walmart is ruining their community. Too bad... pick one and suffer the consequences. We already have; the American consumer has spoken, and he wants the cheap price even if he's treated like crap to get it.

This may not represent you, it's certainly doesn't represent me (there's a number of stores I will not shop at for these reasons and more), but it IS the majority of American consumers. They demanded Walmart, they got it, and they should stop whining about it.

Re:The biggest question...

[vsprintf]

The responsibility to give them the low prices they demand, or go out of business (because no will buy their higher priced products) and cost the nation even more jobs.

Given that logic, every American worker should be replaced because someone in the world will work for less, and some company might save a nickel. B of A was highly profitable when it began outsourcing jobs; they were in no danger of going out of business.

So, if it really bothered people, back in the 70's (anybody but me remember way back then?), when the U.S. automotive industry was on the verge of collapse from competition from foriegn competitors. How did they survive? Was there a groundswell of patriotism that caused people to buy higher cost, lower quality products? Keep dreaming.

Yes, I remember. The government placed quotas on foreign imports. The government raised tariffs on foreign imports. The government bailed out Chrysler with $4 billion. The difference is that back then it was the American companies being hurt. Now it's just the American worker being hurt by American companies, and that's okay with the government.

Re:The biggest question...

[gfxguy]

I think the biggest reason wal-mart is so successful is that people are either uninformed as to their business practices, or they don't care about anything more than their own bottom line.

That is exactly my point. The question was what responsibility does a company have to the consumers buying the product. In other words, a company employs workers from some nation, and they sell products in that nation and make a profit. Great. However, along comes another company that uses outsourcing (or perhaps is simply entirely located overseas), and offers a similar product for less money.

The question is, which product will the consumer buy? The answer, in general, is that people buy the cheapest product that suffices. Is it always true? No, but it is almost universally true.

I mention the auto industry because it was the same thing: here the U.S. companies employed, or kept employed, tens of thousands, if not hundreds of thousands, if not millions of people in the U.S. When cheaper cars came along, were they rewarded with loyalty, or did people start buying the imports? Granted, the imports ALSO had better quality, but be realistic and ask yourself, if the quality was the same, which ones would the American public buy?

I answered the question: the company needs to satisfy the consumers in the country in which it sells it's products. If that means lowering prices by outsourcing, then the consumers have no right to complain as they are the ones demanding the lower price.

Re:The biggest question...

[gfxguy]

Given that logic, every American worker should be replaced because someone in the world will work for less, and some company might save a nickel. B of A was highly profitable when it began outsourcing jobs; they were in no danger of going out of business.

That's a ridicules extreme, something only someone losing an arugment would make. There is always a balance somewhere - sometimes we swing too far in one direction or another (B of A might be a good example of going too far), but marketplace keeps searching for that balance.

Yes, I remember. The government placed quotas on foreign imports. The government raised tariffs on foreign imports. The government bailed out Chrysler with $4 billion. The difference is that back then it was the American companies being hurt. Now it's just the American worker being hurt by American companies, and that's okay with the government.

You are proving my point. Consumers were demanding cheaper imports. Did it matter to the consumers that American jobs were being lost? It's the hypocrisy of the American consumer to demand the lowest prices and be paid the highest wages.

And you are failing to see (or choosing to ignore) that the American worker IS the American consumer. For the most part they are one and the same. They hypicritically demand the lowest prices while demanding the highest wages and job protection, and the vast majority will go to Walmart and buy something made in China if the similar item made in the U.S. costs more.

I'm not saying it's black and white - there are certainly a lot of greedy bastards at most companies. I'm not blind to that fact, but we are all consumers, and the question is: "What sort of responsibility to create jobs should a company have to the nation that purchases/has a demand for the goods they're producing?"

The answer is NONE if in doing so they will go out of business and lose ALL the jobs company creates in that nation.

The answer is that there is personal responsibility: your actions have consequences. If you buy from a company that is outsourcing, you are only going to encourage it. Enough people have encouraged it that it is now commonplace. And now all those people that encouraged it are whining and complaining about it.

Re:The biggest question...

[cluckshot]

The parent of this post has no idea what is going on or how the decision to build a WalMart is made or its effects on the community

WalMart does not build any stores. They get the local government through an Industrial development board to build the store. If the location lacks profits they simply move on leaving the store and its debt to the community. If the store makes a profit, the WalMart organization absorbs it.

WalMart gets this amazing deal because it promices increased tax receipts to the community. Usually the store is built with a Urban Development Action Grant (UDAG) which makes any rent coming back to the community for the store be a "repayment" of the grant that the Federal HUD supplied. In short the level of corruption here is very deep. The city gets money it never had. The WalMart gets a store it did not buy at rents well below any market rates and at no risk.

In this store even the machinery and shelving are purchaced under the IDB. This makes the interest on the money be very low and makes the purchace of the items be Sales Tax exempt.

So Walmart gets a store for free and you wonder why the Mom and Pop stores are dying out when they pay the taxes to support this? Free Enterprise it isn't. It is Faschism! Supporting this as Libertarian or such is pure ignorance. Walmart is using the power of the state to crush the ordinary businessman who has to pay his bills and taxes. This is not CONSUMER CHOICE! It is political choice.

The issue goes even further when you realize that Walmart extorts it's suppliers into stocking the store as "Vendors" so that they make a profit without even having to buy the inventory. They make about 5% a turn and do it 80 times a year. If Mom and Pop could get their inventory this way they might just match or beat Walmart but well lets just say they are too busy paying taxes that Walmart is not.

Walmart sets up offshore supply mechanisms to export the 400%+ ROI they are getting on somebody elses money so that under "Repatraition" under NAFTA and GATT they avoid even the Income Taxes on this massive income. They also avoid having to pay their stockholders any significant fraction of these earnings. They can set their profits at any level they want to fit the market because their real earnings for the family are many times that of what is publically reported.

This was what was at issue in Califoria recently when some people there actually said NO!

Re:Why India?

[Anonymous Coward]

"What is the end of the line for the capitalist? "

When every person on the whole planet makes at least 60,000$/year ??

Do overseas workers cause more problems than...

[Xystance]

Very simply, do overseas workers cause more problems than they create? When it comes to programming, coordinating projects between two centers in different facilities in a single country is hard enough. Adding culture and language differences to the mix while not being able to have direct and on-site meetings to architect a complex program, is that a recipe for disaster? With overseas call centers, do you keep enough future customers due to deficiencies in customer support to make it financially viable to continue offshoring support? How do you cooordinate high-level management objectives with an office across the world?

Re:Do overseas workers cause more problems than...

[millahtime]

"How do you cooordinate high-level management objectives with an office across the world?"

Well, if you want to know this ask, IBM, GM, Ford, M$ and hundreds more that are international companies and do this all the time. This isn't an outsourcing issue. Many compnaies have been doing this for years so to add another location isn't tough for them.

"With overseas call centers, do you keep enough future customers due to deficiencies in customer support to make it financially viable to continue offshoring support?"

In the US the average turn over for a call center employee is about 9 months. This is not enough time to get the level of training and on the job expereince to be really effective either. But, there is the language barrier. If a call center is put by say Ohio State (just an example) and used students to do the labor then it could be cost effective to do and get the same quality or maybe better than overseas.

"culture and language differences to the mix while not being able to have direct and on-site meetings to architect a complex program, is that a recipe for disaster?"

Well, just as an example, if you give then a software module to write and tell them the interface to the module then the input and output are defined so it doesn't matter how they code the inner workings. This is how cips in your computer from different manufacturers work. The interfaces are defined and a group at say one location integrates all of them but they need little or no technical communication with the parts. Just defined interfaces.

Ask the other side's arguments.

[b-baggins]

Ask the arguments of the other side as questions.

For example, ask the anti-outsourcing advocates what the cost in non-visible jobs is by engaging in protectionism of the highly visible tech jobs lost to outsourcing.

Then ask the pro-outsourcing folks a question like how will the economy absorb the displaced workers resulting from outsourcing.

This will make each side actually defend their position instead of using you as a sounding platform for their agenda.

Ya know, I thought something was strange...

[artemis67]

when the "Cowboy Neal" option started being replaced with "Bhagavad Neal"!

Just one question

[Rosco P. Coltrane]

her associate, programmer/filmmaker Krishnan

Dear Krishnan,

Where will the film be produced?

while you're over there doing research and such...

[maxbang]

can you find me a job?

I will probably lose karma for this

[realdpk]

(but who cares)

My question is .. has the standard of living, for those working for American companies, increased at all? Or are the jobs just barely paying the bills like any other job might?

Re:I will probably lose karma for this

[realdpk]

Crap. I meant the standard of living for those living in India working for American companies.

India has a high education level

[unassimilatible]

At least in some castes, they are real sharpies. We might be exporting jobs there, but we import a lot of their brains from their best technical schools.

Africa doesn't have the education levels, yet. But when they do, we'll be there.

Re:India has a high education level

[AresTheImpaler]

and I might add that, in the US at least, the education is going down. Being one if not most powerful nation, we should not allow this to happen. We have too much to lose by doing so.

Re:India has a high education level

[The Tithe]

I may be wrong, but I seem to recall that the importing of brain power from India has been going on for several years. However the exporting of work to India only started recently. Once more organizations export their work to India the flow of people coming from India will decrease, as they won't have to leave their country to find work.

Economy..

[DarkBlackFox]

Is outsourcing seen in the public eye as helping or destroying an economy? I mean, on the one hand, we're loosing jobs locally, but on the other hand it's creating thousands of jobs in 3rd world countries. I heard someone say before every one job here is worth three jobs offshore, for the same amount of money. I guess the question is, are companies benefiting by getting more bang for the buck out of employees helping the economy locally, if not the job market, while at the same time helping the economies of other countries by creating jobs? A penny saved is a penny earned, potentially spent locally.

What kind of car do the complainers drive?

[PseudononymousCoward]

Seriously.

I am so sick of people whining "outsourcing sent my job to India" then walking out the door to climb into their Toyota. I'm sorry that your job has been outsourced, I am. But don't you realize that your decisions sent others to the same fate--where was your sense of moral outrage then?

Re:What kind of car do the complainers drive?

[Spectra72]

What if the Toyota was actually made in America?

On the outrage meter, where should I be on this one? 1? 10? .... 11?

Re:What kind of car do the complainers drive?

[trmj]

to climb into their Toyota

Just nit-picking here, but for a while, Toyotas have been made in Mexico, and within the past year or so have moved their base of operations into the US.

Nissan is also locally made, in Texas and Mexico. Next time, try ranting with Honda, Daihatsu, or some other obscure company that makes bad cars :-p

Re:What kind of car do the complainers drive?

[technos]

Toyota and Honda have the highest percentage of US made parts in them last I checked. Plus they're assembled right here in the US. Big Three? Mexican and Canadian parts, lots of Canadian assembly.. There's a federally required paperwork on all new cars that shows where they came from. Go to one of those combo dealers, (You know, one of those Buick/Honda/Chevrolet/BMW megadealers) compare your average Honda Civic with a Chevrolet or Ford..

(An oddity I noticed.. The Big Three only go so far as say "US/Canadian parts content" where the Honda I looked at listed them as seperate entries.)

Re:What kind of car do the complainers drive?

[Anonymous Coward]

Joe Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m. While his coffeepot(MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA). After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE
IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) and continued his search for a good paying AMERICAN JOB.

At the end of yet another discouraging and fruitless day, Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can't find a good paying job in ..... AMERICA .....

Re:What kind of car do the complainers drive?

[TopShelf]

"Hmm, I didn't realize a owning Toyota was a social statement."

While most registered voters don't actually take to the polls on Election Day, your purchasing activity on a daily basis is an incredibly powerful statement of your personal preferences. Corporations spend billions of dollars annually trying to better understand these preferences and more profitably satisfy them. What people fail to realize in this whole debate is that "fault" (I prefer to think of it as causality) lies not with the PHB or the low-paid outsourcer, but rather with the Almighty Consumer, which sends a clear message to the marketplace: Price Matters Above All Else.

If "Buy American" campaigns actually resulted in people changing their spending habits, you'd see offshoring initiatives dry up. But they don't - given the choice, consumers have consistently gone for lower prices instead.

Re:What kind of car do the complainers drive?

[NDPTAL85]

So Americans are supposed to settle for substandard low quality cars out of patriotism?

Re:What kind of car do the complainers drive?

[drinkypoo]

Are you aware of the scads of Japanese parts on Harley-Davidsons? Did you know that a large majority of lower-end american cars are made up of american bodies and interior, and japanese powertrains and suspension? For example many many Ford Motor Company vehicles are based on the Mazda 323 platform (Escort and Tracer for example) and the Ford Courier truck which was around for aeons is a Mazda. Ford Aspire is a Kia (and cost some $3,000-5,000 more than the Kia, and had a shorter warranty which was well-deserved.) US Automakers are purchasing Gas-hybrid technology from Toyota instead of developing it themselves which would have created American jobs assuming they did the research here. Many Dodges (Chrysler Corp. in general) are really Mitsubishis and in general most small-engined Dodge vehicles have Mitsubishi engines. The second fastest production Dodge from recent years, the Stealth R/T AWD Turbo, is a Mitsubishi 3000GT VR4 minus some options. And where do you think Chevy Geos come from?

But those things aside, basically every light switch and other electrical part in an American car is made in Japan, and it's usually a commodity part too, it's not even specific to the US cars. Hell even Dunlop is owned by a Japanese tire maker (Sumitomo I believe.)

So given that even American cars are made of Japanese parts, but the only American involvement in Japanese cars is that they buy our recycled steel for pennies per ton, how is "buy american" even relevant any more? Especially with american automakers picking up big stakes in the Japanese ones, making it further irrelevant?

Re:What kind of car do the complainers drive?

[Jabber3776]

Yeah it all sucks, but one part of this equation is that no one has looked at where the parent company is located. All of the core money, profits, and taxable income will go to the country where the company is located/incorporated.

Yeah, your car may be made in the USA, by good ole' American people and that's fine. But you're only gaining the benefits from the taxes paid on their incomes not on the corporation. The profits of the company in the long run are going to back to the homeland.

So do you support your American workers or your American companies?

Hypocricy

[clenhart]

Our government positions outsourced to other countries, yet the CDC has a policy of buying airline tickets from US companies over foreign airlines.

Our foreign aid also favors purchasing from US companies abroad over local companies. (Who are we really aiding?)

How does your documentary view the hypocricy of outsourcing when it appears to favor US companies, not US employees?

Effect on the economy?

[neurojab]

What effect do you feel the outsourcing of professional jobs has on the economy? When manufacturing moves offshore, it's easy to say we'll all be employed with "knowledge jobs", but what happens when the knowledge jobs move offshore? Doesn't this equate to leaving our own highly skilled individuals unemployed/underemployed while we're pumping money into a foriegn economy via payroll? If we oursource our professional jobs, where will stateside consumers get the money to purchase the (now cheaper?) products? Is a "service only" economic model sustainable for the United States?

Re:Effect on the economy?

[benwaggoner]

No. What will happen is that both prices and wages will drop. Over time, expect Indian IT salaries to be something like US salaries * productivity difference - productivity loss from cross-Pacific management. So US salaries will drop and Indian ones will go up until they are in reasonable equilibrium.

A big part of what's happening in outsourcing is that India and China have finally rejoined the global economy after decades of misguided economic nationalism for India and Communism on the other. Those societies are finally starting to catch up with their potential. Which is disruptive in the short term, but good in the long term. Had both countries stayed on a more conventional development path after WWII, they'd be much bigger economies now.

This might sound depressing, but bear in mind that as the cost of good and services drop, so does cost of living. I'd be happy to take a 50% pay cut if everything I bought cost 66% less.

question about staying ahead

[millahtime]

My question would be... If the US is outsourcing many areas and this in tern is bringing the other countries up in the economic levels, then what can US workers and companies do to stay ahead of the curve and continue to be a worlk leader?

At the rate we are going with outsourcing jobs and having decreasing technical educational levels (studies have shown drops in math in science all the way through college) by the time i am old we will not be tha major world power anymore. Other countries will have taken that from us.

Local effects

[Elwood P Dowd]

What are the positive and negative effects on the offshore locations?

Are these positive and negative effects distributing themselves evenly through these societies, or is it effecting and effected by existing class and social structures?

Information security

[kanwisch]

As an informed, identity-paranoid IT person:

How will my SSN and other personal information be secured from workers who have zero responsibility to secure it, from a legal perspective?

Where does the money go?

[blair1q]

Offshoring jobs increases the management/labor revenue split.

Isn't offshoring just a way to make the rich richer without regard for the American working class?

Isn't it evidence that the wealthy have no regard for those who must do work to stay alive?

Isn't it an utter repudiation of the widely held belief that concentration of capital is good for all of us?

Isn't it a strong reminder that the only thing that keeps capitalism alive is tolerance of the working man for the profligacy of the non-working class?

I'm no socialist, but I know a revolt when I see one coming. The rich in this country will be lucky if they aren't killed, cooked, and eaten before it's done.

Re:Where does the money go?

[Killswitch1968]

If there's on class of people that is still heavily discriminated against, it's the rich. Let's look at your points:

1. America invests more in European nations and Canada than third world nations. So they aren't discriminately trying to destroy the 'working class', but trying to see who is willing to do the best job at the lowest price.
Finally aren't all those Indians 'working class' as well? What about their life? Or is geocentrism clouding that obvious reality?
2. Don't the poor have this same ideal, they just suck it? This is simply idiotic bigotry against rich people. Some people are rich because they earned it, and some people aren't. Similarly, some poor people are poor because they deserve it, and some aren't. Get over it.
3. Capitalism is good for all of us in the sense that every other economic system has been terrible. Capitalism is not perfect, it's simply better than the alternatives.
4. WRONG. If you were to exile all 'rich' people in American to other countries we'd all be much worse off. People aren't poor because rich people are 'exploiting' them.
Stop foisting blame upon others and take responsibility, and maybe a few economics classes while you're at it.

Re:Where does the money go?

[blair1q]

1. Euros and Canucks get paid less than Americans do. And once the Rich get the clue, they'll move that capital to India and China, too.

2. Most of the poor don't suck at anything. But concentration of property rights and social contacts creates a higher hurdle for attaining wealth than many of the current wealthy families had.

3. Capitalism is good when it is regulated. Unfettered capitalism is like a car with a turbocharger, no brakes, and an eternal downhill slope. It tears itself to pieces every so often.

4. If we exile all the rich people but impound their wealth first and give it to a new class of people who HAVE A CLUE about the real value of capitalism, then our problem is solved. People absolutely are poor because rich people are exploiting them. Ask any corporate executive if he likes unions, and why. And don't take any emotional nonsense about "socialism"; ask about what would happen to his share of the revenue stream if the unions were busted.

Customer Service

[mrdjames]

I'd like to know how the executives of these outsourcing companies feel about the level of customer service, and how the quality of these services is going down due to language barriers, and lack of knowledge. David James

I have two actually...

[Maestro4k]

The first one I hope they're planning on asking the appropriate person(s) already.

1. What effect has losing a job to out-sourcing had on you personally, including all aspects -- mental, physical, financially, etc. (This one obviously needs to be asked to someone (or many someones) who have lost a job because it got outsourced.
2. Who is supposed to pay for tech workers retraining themselves in new fields? I see so many companies/organizations saying that US tech workers even enjoy retraining for new fields, but they never mention how a newly unemployed (thanks to outsourcing) person is supposed to PAY for that retraining.

Personally I would LOVE to see the people who go on about US tech workers just need to retrain for a new field asked #2. I doubt you'll find many (if any) that will answer on the record though.

Is the fiscal argument real?

[delcielo]

To the CEOs of the outsourcing companies:

Is the outsourcing really cheaper when the total costs are figured, or is this move a way to show shareholders that you're doing some cutting in the down economy?

Re:Is the fiscal argument real?

[hng_rval]

I would like to expand on this question somewhat:

Does outsourcing have a positive NPV for the company?

For non-finance types, NPV = net present value. It is based on the idea that $1 today is worth more than $1 tomorrow. An example:

Let's say you can trade $100 today to get a $20 a year forever. For the purpose of this example, assume your discount rate (discount rate is like the interest rate with some risk added in) is 10%. The NPV of this investment is:

NPV = -100 + 20 / 1.1^2 + 20 / 1.1^3 + 20 / 1.1^4....

If you sum the series you get:
NPV = -100 + 20 / .10 = +100.

There are clearly up front costs to outsourcing. Paying the severance packages to all your workers, buying offices offshore, buying equipment, all costs money. We'll say they invest $I initially to outsource.

There are annual savings in the form of reduced salaries. There are also annual costs as alluded to in the parent post in the form of communication issues as well as management issues. There are some other costs such as bad press that are harder to determine. Lets say that the net every year is a savings of $S.

NPV of outsourcing = -$I + $S / discount rate

Good managers only take positive NPV projects. If the project has a negative NPV there must be some non-financial reason to take the project (ie, show boardmembers that you are trying to cut costs). In a perfectly transparent economy, stock prices would go up if and only if managers took positive NPV projects.

I'm very curious what the NPV of these outsourcing investments are. How much money do the companies save compared to how much they had to spend initially. What is the value in today's dollars? Did they factor bad morale into their equation?

Two Questions - one from each "side"?

[prestidigital]

1. What are the hidden costs associated with offshore outsourcing? We hear a lot about drastically lower labor costs. But there are also costs associated with cultural and geographic distance, lack of interpersonal interaction, and trust issues, and more. These should be balanced against labor cost savings. So what are these costs and how much impact do they have?
2. Is it really "offshore outsourcing" when the company that gets the job is a global company with offices and personnel located in the U.S.? Even jobs that are awarded to U.S. companies often involve the use of offsite workers located in or shipped in from other states. How much difference does it really make to an in-state worker who loses his job to an out-of-state worker compared to an out-of-country worker?

Future of Indian outsourcing

[gorbachev]

My question is:

How do you think the rising salaries in India are going to affect the current outsourcing trend?

How is it different than Robotics?

[PseudononymousCoward]

Ok, so lets say I have a piece of software on the computer sitting under my desk that automagically writes programs. I write detailed design specs, then run a shell script, say ./program.sh . A week or two later, I have a written program. Would anybody object to the creation of such a program? No, of course not.

But if, instead of DELL writing programs, it's 5 guys in Bangalore, and my computer simply acts as a communications point, then suddenly we're getting out the pitchforks and torches? Why the difference? I ask my Economics classes this every course, and I've yet to hear a reasonable answer...it all comes back to "but those are PEOPLE", as if them being Intels, or AMDs, or chickens would make it more acceptable.

Remember the scare about robots in the 1980's? Remember the chicken littles running around warning of the disappearance of jobs in America, as we were all replaced by robots? It's happening again.

PC.

Re:How is it different than Robotics?

[Carbonite]

The difference is that outsourcing is a reality while the software that writes programs (at least as you described it) is fantasy. Such software would have as large an impact on the tech industry as the invention of the microprocessor. It would be similar to software that wrote an entire novel based only on a plot outline.

And what about NEXT quarter?

[BadDoggie]

Most outsourcing is done through intermediaries and the outsourced workers themselevs are classified as "contractors". These people realise the disposable nature of their positions and are themselves worried about their jobs disappearing to even cheaper countries such as the Philippines. There is no job security and no loyalty to the company. There is no incentive to work harder or find ways to help the company. There is only the desire to get as much out of the employer as possible, in the shortest time possible, and to find a new employer while still being paid by the old one.

Considering this, can the short-term financial gains really offset the long-term benefits a loyal and motivated workforce provide?

Impact on outsourcing destination

[obi1one]

What impact does outsourcing higher paying jobs to a poor country have on that country's economy? For instance when Dell sent support jobs to india, they were paying those support people many many times what most indians make, paying them with money from selling a product most indians could never afford. I would imagine that those with the outsourced jobs would be consuming a lot more than normal, which would drive up prices for things like housing, transportation, and cloths. These higher prices would negatively impact the average person trying to purchase those things, meaning that the average indian is worse off for having these higher paying jobs in their country.

Impact on housing and automobile markets

[StandardCell]

The promise of outshoring has always been cheaper goods, but housing in the Western world and particularly the large tech centers in the US have largely been supported by the higher salaries of white collar workers. Because white collar workers in virtually every profession are now subject to offshoring, what is the projected impact on the housing markets, as well as the financial health of mortgage granters such as Fannie Mae and Freddie Mac? My concern is that the housing market will crash, causing defaults and undermining the overall economy. I would also ask the same question regarding automobile manufacturers' sales, and if outsourcing will do the same for their markets, as well as auto loan granters.

White man should see this coming.

[CrystalFalcon]

Ugh. White man comes to America, takes away all precious, precious land from Indians.

Now, Indians take away precious, precious income from white man in return.

What goes around comes around, as white man says.

What KIND of jobs?

[rburgess3]

The question I would like most answered is this:

Yes, IT jobs seem to be outsourced to foriegn countries, but specifically what sectors of IT, and for what purpose? Not for what gain, as that is fairly obvious - saving money - but what is the function that these outsourced jobs fill? For call centers, this is fairly obvious, but what about for programming? What kind of programming is being done off-shore? What kind of programming cannot for saftey reasons, intellectual property reasons and other reasons be moved out of the US?

Similarly for other sectors of the IT field - what are the limits, and why?

Racism and more

[Anonymous Coward]

I am concerned about the off handed, racist remarks I have seen and heard. I would like to see that touched upon. Also, the connection between insurance companies and other investors with grotesquely large amounts of money, investing their funds in businesses thus forcing them to work towards the bottom line and going with the cheapest solution.

Real Reasons?

[ChuckDivine]

I'm on record for saying that working 100, 80, even 60 hours per week regularly is dysfunctional and counterproductive. There are other management fads that are likewise dysfunctional and counterproductive.

To what extent is outsourcing being driven by staff resistance to management demands? What kinds of demands are being resisted?

This question can be put to both the pro and anti sides.

Re:Real Reasons?

[gratefully dead]

This simplification of reality fails to take into account the human aspect of work. Productivity is a nonlinear function with respect to how many hours someone works. Work is more than just pumping out widgets. For example, the well rested and happy programmer is able to come up with a better solution to a problem than the one who is tired, agitated, and obsessed. I noticed that the times that I have breakthroughs are not when I'm furiously concentrating on my work, but instead when I am coming back to it with a clean slate (like in the shower in the morning).

Likewise, the happy and cordial retailer earns more customer loyalty through his courteous attitude than the retailer who is stressed and exhausted. This same line of reason was used to justify limiting the hours of medical residents to 80 hours a week. Would you want someone who hasn't slept in two days working on you? --I don't think so.

Paying the price for getting rich.

[DrSkwid]

We all live on the same planet so there can't be any such thing as outsourcing in a world with trade.

The people of the rich countries hve been happy to eat cheap (though artificially expensive!) food for years.

The short term costs to the newly jobless are high but in a world ecnomony eventually the disparity between one country and another should shrink, unless the disparity is kept open artificially.

Seems not many are complaining that their cheap laptops are built from cheap labour, or cheap shoes. Take a look at the balance of trade for the countries of the world. The US and UK are net importers. China and Taiwan are net exporters. One should consider the long term consequences of this pattern.

We have exploited the disparity for a long long time.

When the pony comes home, pay up, pay up, pay up.

Is it worth customer irritation?

[somethinghollow]

I recently had the task of setting up a printer to work with Quark Xpress. They offer no free support. My employer paid the support cost, and I was put on the phone with a man with a thick Indian accent. It was so bad that I had to ask him to repeat himself at least once every time he spoke. I guess my argument is that people hired to interface with other people should be able to communicate well. It was such a pain in the ass to translate his accent that I decided I would avoid purchasing Quark or recomending Quark (ignoring that some alternatives may be better products). I've heard that Dell computers heard similar complaints to the ones I am making, and brought their tech support back.

I guess my question is: Is it worth the savings to piss your customers off, esp. when they are paying top dollar for good tech support on a per-call basis? On another front, Have these companies had good results overcoming the language barriar (that, according to a programmer friend of mine, ends up causing more problems for a project, resulting in more time cleaning up the mess that misunderstanding brings than executing the project)?

Supply and Demand, indigenous development

[danharan]

Apparently rates in India are going up with demand, which is entirely logical from a market perspective.

If instead of reducing outsourcing we tried to send more work to India, is it conceivable that we could bring up their salaries to a point where they would no longer compete on price?

Also, can we expect some of those Indian programmers and companies to do more work on fulfilling their own software needs, and stop chasing outsourcing work?

I applaud your objectivity and your humility

[unassimilatible]

Unlike Lou Dobbs, who has made outsourcing his nightly crusade, and who shouts down anyone who disagress, you seem to want to approach this with some intellectual honesty, rather than an agenda.

I also like the fact that you don't claim to have all the answers in advance. So many reporters and filmakers are too arrogant to ask for assistance. A truly awesome idea to ask everyone you can about this before filming. Nothing pisses me off more than some 60 Minutes piece that (invariably) fails to interview the other side.

Agenda-based "reporters" rarely find the truth. You might find that outsourcing is terrible, but you appear to be objective and thorough, i.e., the opposite of Michael Moore.

My golden question: Ask the labor unions to explain how they can reconcile their push for high wages and benefits which are completely non-competitive with foreign workers, and then have the audacity to complain about outsourcing, rather than take some of the blame (how's that for a leading question?).

I'd also ask the managers of large pension and mutual funds how outsourcing affects their stockholders, and ask them to describe who, exactly, those stockholders are. The answer might surprise most people.

Good luck!

Spread of US Culture?

[Mongoose Disciple]

Something I've been curious about...

I've read in stories about call centers / tech support outsourced to other countries that the employees are often coached on how to pass as Americans.

They work on their accents to appear more American, learn about American sports teams and pop culture in order to be able to make smalltalk about it and appear authentically American, etc.

I'm curious to know the effects this has locally and what the opinions of it are. Do any of the employees have problems with this deceptive practice? Do they feel that it's making some kind of statement about the (theoretical) superiority of American culture that they're forced to learn about it and utilize their knowledge of it instead of that of the culture they grew up with? Are there ever, for example, new baseball fans created by an offshore call center worker's exposure to the sport for his/her job, or is this almost always purely business for them? Does this happen in other industries? Do more traditional members of the local societies object to the poisoning of their children with this American culture?

I think there are a lot of interesting questions to be asked there. It's not involved in any way with the causes or primary effects of outsourcing, but from the perspective of social psychology alone the answers should be fascinating.

Try the Bureau of Labor Statistics

[dmeranda]

The best factual source for these numbers is directly from the Bureau of Labor Statistics of the US Department of Labor.

Their March 2004 Report is online, as well as archives of past reports.

Do NOT rely on any "statistics" from politically motivated people or organizations such as Robert Reich, or even any Republicans. Anybody can manipulate and cherry pick numbers to make them fit their political agenda. Use the BLS numbers only!

Unfortunately since almost all documentaries seem to be created for political/social agendas or with biases, I highly doubt that my suggestion will be used. That's why I as a potential film viewer will almost never watch a documentary on current events, regardless of the position or whether I agree with it. If it doesn't have footnotes and references I can check, I don't want to be fooled into thinking something is fact when it is not.

competitive pressure

[lone_marauder]

Question for outsourcing CEO: (predicted answers in parentheses)

1. What is the exact nature of the competitive pressure compelling CEOs to outsource labor?
2. (Everyone else is doing it.)
3. So these other companies that "did it first" and thereby decreased their costs, passed this on to the consumer in the form of reduced prices?
4. (That's how the market works.)
5. Uh, huh. Ok, given that the inflation rate has remained pretty much constant, if not growing slightly, during this period of outsourcing, is it fair to say that the trend of outsourcing is, in fact, not driven by market forces?
6. (Well, uh, the market is very complex...)
7. If a group of companies collectively decide to engage in behavior to the detriment of their consumers (prices haven't dropped) and employees (who are out of work), and this behavior is not market driven, can you explain it in the context of antitrust law?

No further questions, your honor.

Why?

[DAldredge]

Ask them this, "Why aren't high level executive jobs outsourced?"

Re:Why?

[Rupert]

In many countries, CEOs work for a fraction of the cost of an American CEO. Despite this disparity in cost, foreign CEOs produce work of comparable quality, as measured by the performance of the companies they head. So:

where are the H1-B CEOs?

which US companies have relocated their CEOs to foreign countries, rather than just their head office?

When we know the answers to these questions, we will... ...well, we'll sit down and cry into our beer. That's what we'll do.

What is the government's obligation to citizens

[pileated]

There are a number of perspectives anyone can take on all of this, some purely economic, more purely political and all sorts of odd mixtures.

The one I'm most interested in is this: what obligation does the government have to its citizens? Should it do whatever it can to facilitate profits for businesses? Should it do whatever it can to maintain/attain a high standard of living for all its citizens. Most communities form out of self-interest. They gain more by being together than apart, and often hard compromises are necessary where individuals must give up something for the common good that they've agreed to support. My feeling is that citizens, government and business have all lost any sense of this commonality of interest. So the first question I would ask is: who gains by offshoring and is that gain for the common good or for a specialized good. My feeling is that it's really for a specialized good, large corporations, but I may be wrong. But I do think this is the most important question to ask.

Debt to Employees

[Perl-Pusher]

I would like to know why when employees put 10+ years into a company, and through those employees efforts and creativity the company has prospered, that the company feels no debt to them? And does a company feel like it can despose of them like yesterdays garbage so that the CEO can get a big fat salary?

Where does it stop?

[damu]

Where does outsourcing stop? You can basiclly outsource pretty much every aspect of any company to a comparable cheaper solution overseas. However, where are the lines drawn? What is the criteria? Does cheaper automatically call for outsourcing. Is there a formula to this?

PS: I know this is not one question, but they all closely related.

Some suggested locations to film

[Animats]

A few good Silicon Valley locations:

• Pacific Shores Center This huge, strikingly beautiful bayfront office park, built at the end of the dot-com boom, stands complete but empty. Great place to film an interview.
• The trailer park next to Moffett Field Facing the intake of the huge wind tunnel at NASA Ames is a trailer park. Take 101 to Shoreline in Mountain View, turn east, go about three blocks, turn right opposite the movie theaters, and drive to the end of the street. The trailer park is right in front of the 100-foot high air intake.
• The abandoned FMC manufacturing complex in San Jose. The Bradley Fighting Vehicle was built there. There's a test track for the things.
• Downtown San Jose at rush hour Little traffic, plenty of free parking, half the stores are closed. It's like Sunday, every day.

Re:Customers

[LaCosaNostradamus]

There's a simpler question: Once you outsource and offshore the bejeezus out of your company, who do you expect your customers to be?

What about failures?

[hirschma]

How about a look at how and why offshoring fails. There was an article about it just today at MSNBC.

American companies outsourcing to be competitive

[xyote]

Can they still be considered an American company? If MIT outsourced its football team (they do need to), would that team still be considered an MIT football team?

Call Maryland's Governor...

[gatkinso]

... and ask why it is a priority of the Ehrlich Administration to outsource as much Maryland state government work as possible overseas.

Yup, it's true, and I have the letter from one Boyd K. Rutherford (Secretary of General Services) to prove it.

He will regret ever sending that letter!

Having inherited outsourced code........

[big-giant-head]

On a couple of occasions, my experience, bear in mind we are a talking a VERY limited set of the total here. Two projects out of millions.....

The first 3 or 4 months we got thier A-Team, the code was good quaility, and we had make a few revisions based on them not completely understanding our business requirements. After the A-team left, we got code that was so bad I was working 60+ hr weeks to rewrite/fix the stuff from india. We actually hired more American Programmers to fix the indian stuff. This happened on the next project as well (Different Indian Co.). After that our management went to small XP groups that actully sit right next to the users and everyone has been very happy with the results. For some things like reports, we still outsource those, but for anything very complex our we do our own......

What are the limits of offshoring?

[KinChip]

While the cause and effect are being hotly debated, my question is: "What are the limits of offshoring?"

Is it acceptable to allow external development of national defense software? What about storing and evaluating patient medical information (CT and MRI scans)? What if all networking software, virus detection and operating systems came from overseas. Would/could you trust it?

Foreign governments do not (in fact, should not be expected to) necessarily share US political, societal or economic interests. Too much offshoring can weaken the US software development market measurably. How long would it take to recreate that market in the setting of global conflict? Is the maintainance of a strong software community a matter of national security?

War?

[DAldredge]

Ask this? What are you contigency plans if war breaks out between India and Pak or India and China?

How can a nation exist with only management?

[gr8_phk]

I've heard MBA students spouting something about how all the "work" will be outsourced and people in the US will just "manage" everything. I fail to see how this is a viable model for a country. The foreigners will learn management too, and then those US managers that don't know anything about day to day operations in Singapore will be next to go. How can anyone claim a nation of upper managers is viable with a straight face?

Re:How can a nation exist with only management?

[theCat]

That's true. And when the middle managers are outsourced to Singapore then it will be just the upper managers in the US. But what do they really know? All their middle managers are now in Singapore. So the Board will fire the US upper managers and hire replacements in Singapore. But the CEO won't have day-to-day interactions with most of the company at that point. So the CEO will be placed on the Board and all the managment will be from Singapore. Only the Board and most of the stockholders will be in the US.

20 years later: All the major US IT companies are entirely managed from outsource companies, with only Board and stockholders in the US.

Then all the rich IT workers in Singapore will buy up the companies in hostile takeovers as aging American stockholders liquidate at a bargain, kick out the Board, install their fellows in leadership...and we will have finally exported wholesale a trillion+ dollar industry in record time. The Roman Empire took several hundred years to pull that off.

And this is...a good thing? Looks like giving away the farm. Well at least the Singaporians won't contribute to the Republican Party so then maybe we'll elect...oh wait, I suppose they will contribute illegally, or by proxy. Never mind. We really have given away the farm.

Re:How can a nation exist with only management?

[FallLine]

I've heard MBA students spouting something about how all the "work" will be outsourced and people in the US will just "manage" everything. I fail to see how this is a viable model for a country. The foreigners will learn management too, and then those US managers that don't know anything about day to day operations in Singapore will be next to go. How can anyone claim a nation of upper managers is viable with a straight face?

First, it's truly not "millions" of jobs that we are talking about here. It's a couple hundred thousand at most. Do not make the mistake that all, most, or even a large percentage of displaced IT workers has anything to do with outsourcing (there there are not nearly enough dollars in offshoring industry to explain this "loss"). Most (but not all) of the lost jobs are better explained by cyclical factors in the industry that have nothing to do with offshoring (e.g., DotCom bombs, slumping IT spending, etc)

Second, I don't believe the argument is that they will be "managers" per se (at least not in the sense that you're thinking). The argument is that most of those displaced workers will ultimately find jobs that are less rote (less cookie cutter) and more creative oriented. The vast majority of outsourcing work (at least those where it's been proven to succeed) is rote work that has been done a zillion times before and can essentially staffed by a trained monkeys and can generally be put into very precise sets of requirements with few changes necessary.

In other words, the belief is that US programmers will become, say, domain experts in their fields and bridge the large gap in technical understanding between the needs of the business and needs of the programmers for proper instruction. Instead of spending hours with the mundane aspects of coding, the time is spent at a higher level. [This is NOT something foreigners can do well, because it requires very specific knowledge of the industry, excellent communication skills, and close proximity to the end users/managers.] The analogy that I might draw would be the difference in going from, say, assembler to a high level development environent (e.g., C#, Delphi, etc) with graphical IDE. These tools allowed a developer to produce orders of magnitude more for the end user, but they didn't result in job less because they made lots of development activities economically viable that were before cost prohibitive.

Third, there are a limited number of qualified individuals in the foreign workforces and these numbers in the larger markets will be over run with demand (pushing up wages and increasing the problems as they have to dip deeper into the barrel). Despite the fact that there are billions of people in places like China and India, only a tiny fraction of these are truly educated enough to perform the work they already have AND have good english skills. Fewer still have any sort related work experience. In other words, prices in foreign labor markets will rise and prices here will decline--which will help moderate the financial incentive to put work overseas.

Fourth, where do you think all of this imagined off-shore produced IT goes? It goes back into US corporations, by and large, in the form of CHEAPER IT products and services (remember most of the country doesn't work in IT). This means more and better IT, which generally means higher productivity, which gives the US a competitive advantage on international markets. [Conversely, if we prevent our corps from offshoring, while most of the developed world does not, they WILL have a comparative advantage]

Current US Administration

[DumbWhiteGuy777]

What has the current US administration done to effect outsourcing, and what viable options could they do in the future to fix it?

The key question

[__aanebg9627]

Supporters of offshoring like to say that "everyone benefits" from the increase in economic efficienty. But the economic theory of trade doesn't say that, it says that overall the world benefits. There are important caveats:

1. The benefit does not have to be shared between the two (or more) countries involved, depending on circumstances.

So, who *is* benefiting from offshoring to India and China?

2. Within a country, the 'plentiful' factors of production usually benefit, but the 'scarce' ones see their share of the pie shrink. If the pie grows enough, the 'scarce' factors see a gain, but it is certainly not a given. [Scarce and plentiful are relative terms. A country can have a high proportion of educated workers, like the U.S., and still have a shortage compared to say, India or China.]

In the U.S., who is going to benefit (what factors are 'plentiful')? Who is going to -- relatively -- lose out? How badly are the 'losers' going to suffer? How large is this group going to be? Should we do anything to help them out?

Is the current situation different from what happened with manufacturing jobs going to Mexico under NAFTA? How, aside from it being white-collar work rather than manual labor?

Is the current situation -- free trade with India and China -- any different from the migration of jobs to 'low-cost' Ireland a few years ago? How?

How does Exchange Rate Stability effect Off Shore?

[KJSwartz]

I've looked at the exchange rate for the Chinese Yuan over the last 6 years and found it to be FLAT (not a single dollar/dime difference) with exception of a handfull of spikes, only to return to the Flatline exchange rate again. There are several sides to this one question:

1) If the exchange rate is FLAT, would you consider offshoring?

2) If the exchange rate was volatile such that your contract price were unreliable by 10%, would you still offshore? - or was this even discussed?

3) Does political instability have an affect on the exchange rate, and does this factor in your decision?

Real Question

[Anonymous Coward]

They should comment on the so called "cost of living advantage:"

Q1: If the severe oppression underlying working conditions for the vast majority of Indians was removed, would outsourcing of "high-end" jobs to India cease to be profitable?

Q2: How does the current practice of outsourcing of "high-end" jobs to India help Indians in the ongoing struggle to remove the severe oppression there?

Examples of oppression and their supporting infrastructure:

1) Forced and *uncompensated* displacement of people from rural areas into the cities because of emminent domain siezure by authorities. (Official Indian government figures put the number of people affected by this at around 40Million since 1947. Activists estimate the number is much much higher.)

2) Ubiquitious child labor in the houshold cleaning, and other related service sectors. No real enforcement against it.

3) Child slavery and bonded labor (think "indentured servitude" from your history classes, but much worse.) affecting millions in rural areas. Sporadic enforcement against it.

4) Open physical and verbal brutality of authorities (police, guards, and even employers) towards the poor to keep them obedient and compliant. Personal Note: once on a trip to India, I saw a policeman beat a little beggar kid about 3 hours after my plane touched down. I see examples of stuff like this on every trip to India. I have even heard many well-to-do folks talk openly about how "this is all those kind of people can understand."

5) Right to education for everyone exists on paper only. Many areas have no functioning public school or that school has been "captured" by a subsection of the community with others excluded by overt and implicit discrimination.

6) No democracy within political parties. The voter has no say as to whom will run for a seat on behalf of any given party. (e.g. No caucuses or primaries of any kind.) Rules *preventing* elected members of parliament from voting their conscience on issues affecting their locality.

7) No freedom of information act or sunshine laws. (Even Ashcroft has to obey at least some FOI requests.) Example of a resulting state secret: How much money was spent on the goverment support of parochial (Christian and Muslim) schools as compared to the money spent on public schools open to all?

8) No right to a speedy trial by a jury of peers. Say what you will about the OJ case, etc., participation in jury trials is a powerful way in which the public gets some control over their own destiny by being a part of the justice system. It is a lot harder to corrupt 12 randomly chosen jurors with other jobs than it is to get at one judge who you can count on for repeat business.

Top 5 short term beneficiaries of outsourcing

[aeoo]

The following question is directed to all the various parties, such as economists, CEOs, CIO/CTOs, workers both USA and foreign, President G. W. Bush, and whoever else you can reach.

Please name, from your point of view, who are the top five short term beneficiaries of outsourcing practice?

Please, in your answer do not speak of long term, because I think we have all heard the rosy long term outlook already (and I think it is safe to say that few of us are buying it). Yes, I am biased, but so are we all.

Outsourcing alternatives?

[CatGrep]

1. CEO's tend to make the argument that they need to outsource in order to compete with their competitors who are outsourcing. (sounds an awful lot like an argument between kids on the playground - "he's doing it too!" - where nobody wants to take responsibility). Given that CEO salaries run into the $millions (typically 20 to 40X the pay of their average employees) why don't CEOs consider cutting their own salaries in an effort to remain competitive?

2. Many unemployed and about-to-be-unemployed US engineers would be happy to work for less money (within reason)in order to keep their jobs, however when this is suggested to companies the companies usually choose to go with outsourcing. If an engineer is willing to take a 30 - 40% pay cut to save his/her job, why isn't this offer taken seriously by most companies?

3. (related to 2) It's quite clear that if we want to continue working in the engineering fields in America that we'll either have to become much more productive (2 - 3X) or we'll have to accept much lower wages (or a combination of the two). By some measurements we're already much more productive than our overseas counterparts by virtue of the fact that we have more experience with real projects, so it all comes down to money. What can American engineers do to lower their cost of living in order to try to compete with 3rd world salaries?

4. Most offshoring advocates say that we need to just be patient as we await the 'Next big thing (TM)' that will be invented in America (they have a lot of faith). Any idea what the 'Next bit thing' will be and what do we do in the meantime?

5. (related to 4) In the software arena, most of the offshoring advocates say that US developers need to 'move up the foodchain' into project management. Given that you never need anywhere near as many managers as you do managees, what how will most US developers 'move up the food chain'? (perhaps they'll become hunters)

6. (related to 5) What if you'd much rather develop code than manage projects?

7. For outsourcing advocates: Why not make the argument that we should outsource every possible US job to cheaper, lower labor-cost countries and then bring in 'guest-workers' to fill the positions that can't practically be outsourced? It seems that the outsourcing advocates would find this a favorable plan since there would be so much potential money savings. If money savings is the primary economic motivator then this seems like a logical plan, however, what do we do with the millions of US workers that would be put out of work in this scenario?

Commentary: The outsourcing advocates take a very narrow view of economics. To them cost-cutting is the primary motivation for doing anything - "if it'll save a buck, then do it" is their motto. However, it isn't clear that the money savings from outsourcing white collar jobs are actually going to be able to counter-ballance the economic devestation brought on by widespread offshoring. So what if US corporations suddenly become wildly profitable (for a quarter or two) while millions of workers are put out of work. Eventually those millions of unemployed workers won't have the money to buy the products of the wildly profitable corporations and profits will go down. I'd rather see corporations break even while providing good jobs to millions, than see them be wildly profitable but providing no jobs to US workers. Oh, and if millions are unemployed, who is going to pay the taxes to support the schools that we supposedly need to train workers for the 'jobs of the future'?

Interview Hollywood Filmmakers

[C-Diddy]

Hollywood has been outsourcing for years. Examples include The Lord of the Rings triology (almost entirely outsourced to New Zealand), and dozens of films where the city of Vancouver, British Columbia is passed off as various cities in the United States, all to avoid labor costs and union scale issues. For whatever reason, the entertainment industry seems immune from the big media "outsourcing" scrutiny placed on so many other industries. C-Diddy

Lemme guess...

[Duhavid]

You are a CEO.

I would *love* to be discriminated against as most CEO's are.

Re:who has more knowledge

[zerochance]

As someone within a company that is slowly shifting to offshore IT workers (to complement the offshore manufacturing workers who make almost all of the products sold in our stores) I can tell you this is 100% crap. Offshoring is not about moving jobs to more knowledgable workers, it is about moving jobs to cheaper workers. When you need a horde for a particular project or task, you always go with the lower cost solution. Remember, quantity of graduates says absolutely nothing about the quality of such graduates.

Oddly enough, we've had to pull back in a few cases where the offshore workers knowledge and experience weren't up to the tasks (fairly simple DBA maintenance support). It seems that the sharp DBA we were shown and worked with at the start of the engagement, was replaced with a week of the start by a trainee of limited language skills. It kind of makes you think that maybe the whole offshoring thing is just some scam to rake in the bucks from gullible idiots.

Lower prices!

[benwaggoner]

Er, no, that's no the way it works.

Yes, moving a car factory to El Salvador will cost some US jobs in the short term. But no, there will be a price drop (or a price/performance improvement) in cars available in the USA. There is the idea floating around that outsourcing means that companies just keep the profits, and that money just vanishes from the economies somehow. However, in a competitive market like cars, some company is always willing to trade lower profits for increased market share. This can take the form of selling the same car for less, or more car for the same price. But this puts pressure on everyone else to lower prices.

For example, compare how much car you can get for 1/4th of the median family income today compared to a few decades ago. A 2004 Civic is a vastly better car than anything one could buy in 1972.

And look at how much better US made cars got in the decade after the Japanese import boom started. While it might have been painful for the workers in Detroit, for the vastly greater number of US car drivers, imports and outsourcing have been a HUGE gain.

The thing about free trade is that the pain is concentrated, but the benefits are diffuse. But the aggregate benefits always (and yes, I mean ALWAYS - I don't know of a single counterexample in the last few thousand years) outweigh the aggregate losses.

The wage differential between the USA and India is a reflection of our greater wealth and productivity, not a threat to our wealth and productivity.

Re:Lower prices!

[laigle]

No, there won't be a price drop. Prices are established by the market, not arbitrarily set by the manufacturer. A Ford Focus will cost as much as people are willing to pay for it, given demand and supply. Moving the plant to El Salvador changes neither supply nor demand. You aren't opening a new consumer base, and you aren't getting yourself a way to fulfill previously unfilled demand. It only lowers the price of making the good, thus increasing the profit margin.

Political Economy

[4of12]

I'd ask political economists whether the improved overall market efficiencies associated with free and unrestrained trade will automatically

• cause high-pollution industries to migrate to where pollution regulations are most lax, and
• cause high-labor cost industries to migrate to where labor is not only cheap, but where authoritarian regimes help keep labor costs contained by suppressing organized labor movements.

Whether there are indications of what degree of wealth segregation might be associated with violent upheaval in regimes (China) that do not allow for easy change.

Whether democracies or republics can be counted on to provide peaceful transitions when such imbalances become too extreme.

Whether democracies can be counted upon to elect efficient economic models, or whether democracies will tend to choose inefficient economic models that are "popular".

[Empirical evidence of failed regimes would illuminating.]

Productivity

[benwaggoner]

Well, unskilled labor manufacturing is leaving in droves, and has been for decades. This is probably a good thing in the long term - you want pollution producing industries here?

The way American companies compete against foreign companies is the same way we have for centuries - innovation and productivity. Even though Ford could build a car plant in Mongolia and pay 1% of UAW wages, they'd lose their shirt. Shipping costs to consumers and from suppliers, lack of a trained labor force, etcetera would cost them much more than they'd save.

Now, making plastic toys? Yeah, that's in China now, for the reasons you cite. But how is that a bad thing? Have you SEEN the toys you can buy for $20 now? Unbelievable! What do you think it'd cost to build, say, a Hoberman Sphere with US labor? How many fewer would get sold at that price. Not a lot of US jobs saved, but Hoberman is a lot poorer. And he lives in the USA.

As for environmental protections, we certainly need better global environmental controls. But trade isn't the problem or the solution there. Even if we had complete trade barriers, greenhouse gasses don't know borders.

Isn't the power of corporations the cause of this?

[freecell_wizard]

I'd like to see some honest discussion of the deeper problem, which is that corporations are artificial constructs that operate outside the control of individual nations or investors/board members, and do not have as their goal the betterment of society or the individual. Rather they exist specifically to concentrate as much wealth as possible in the hands of as few people as possible. It's therefore not surprising that these creations move labor to where the cost is lower.

Also, it's inarguable, if not well-known, that neoclassical economics is fatally flawed and does not apply to the current world economy. So most of the pundits and economists arguing about how great NAFTA etc. are for everyone have no idea what they are talking about, despite their training. Neoclassical economics is based on many false assumptions, and "proofs" of the benefits of unbridled international capitalism are therefore wrong. Letting corporations do whatever they want is just as bad as letting the pre-breakup Soviet government do whatever it wanted.

For that matter, I'm curious: Why are people so deeply distrustful of "big government", but willing to accept an unlimited amount of abuse from private industry? It's just the same problem with a different name.

Cheers,

freecell_wizard

What jobs are there beyond "knowledge"?

[Money for Nothin']

Question 1: Retrain in what? Will the new jobs created by trading our jobs with India be created here?

During the 1980s, blue-collar manufacturing workers whose jobs were offshored were told to retrain in some other area, particularly knowledge jobs. Some did, most others moved into other blue-collar jobs such as construction, automobile repair, and other such jobs which aren't so easily offshorable.

Today, the message from economists and CEOs is the same: retrain in some other field. We know that jobs in programming, software-engineering, and most other fields of engineering (electrical, mechanical, chemical, etc.) are being offshored.

So what exactly does one retrain in? Let's look at the options:

* Biotech -- is there any reason that new biotech jobs can't be created overseas instead?
* Nanotech -- is there any reason that new nanotech jobs can't be created overseas instead?
* Medicine -- oooh, wait, radiology is already being offshored, and so are surgical jobs

Note that those are all technology-oriented jobs which do not require one's presence. What technology-oriented jobs require one's presence then?

* Auto mechanic -- for the few geeks who can tolerate working outdoors, with their hands, getting dirty, etc.
* IT technician -- the basically blue-collar guys who schlep computers around, run cables, and replace bad hardware
* Nuclear engineer -- because It Is Stupid to not have people on-site to prevent a nuclear plant from going boom in the event of an emergency

So, can the hundreds of thousands of software geeks who have had their jobs offshored retrain to be auto mechanics? Even if they wanted to, I doubt they could, and as cars become increasingly-reliable, demand for those jobs will decrease. IT technicians? We have a glut of them as it is. Nuclear engineers? This nation is too scared of nuclear power (thanks to Chernobyl and Three-Mile Island) for there to be much of a market for nuclear power.

So, what do we do? Just what jobs are there beyond "knowledge" jobs? If you assume that international trade (and preferably free trade) is a good thing -- as I do, due to comparative advantage -- then you must admit that many of these jobs can go overseas now thanks to the Internet's ability to send data worldwide at dirt-cheap prices.

Now, the standard economist's response to that is that "new jobs will be created as a result of trade." On the face of things, this is true.

But return to the fact that the Internet makes all jobs which deal primarily with information (instead of people) offshorable. Given that fact, what reason is there that the new jobs -- which WILL be created, just as economists tell you -- won't be created overseas, but will be created here in America? Again, is there any reason the new jobs -- which we can reasonably expect to see in biotech and nanotech -- won't simply skip the step of being created in America and instead get created in India first?

I wrote an email to one of my economics professors asking that question (and many others) recently. His response? "Gee, you know that's what interests me about economics so much - why do these things happen?" But he never really answered the question.

If a college professor in Econ. doesn't know the answer, who does?

Question 2: Education.

Often the advice to unemployed IT geeks is to retrain. Retraining requires education. Education requires years of time and money.

Simple question: Where does an unemployed IT geek *get* that money to retrain with, given the rapidly-rising costs of a college education?

Moreover, how can America -- which largely does not subsidize post-secondary education -- compete with foreign nations which do subsidize post-secondary education?

So long as this educational barrier-

Analyst on CNBC

[jcdick1]

I can remember a few weeks ago - and this is purely anecdotal on my part - watching CNBC on the TV in the Cafeteria at work, and they were interviewing a couple of stock analysts about the "recovery" and offshoring labor, and one of the guys made a comment that made everyone in the room sort of gasp.

He said, paraphrasing, "America, which for the last fifty years or so has been consuming vastly greater amounts of resources than they produce, has had an artificially high standard of living. Its going to be painful until the American lifestyle comes more in line with the rest of the world."

Just thought I would relate that observation. It seemed appropriate when the topic of outsourcing and offshoring comes up. You can take it as either playing devil's advocate, or something to get you motivated to ensure that it doesn't happen.

What happens when outsourcer changes countries

[steelerguy]

I am curious if, for instance, Indian people who work for an American (or other country) corporation are concerned that as their wages increase their jobs will be moved to another country with even cheaper wages.

It seems that a vast majority of American corporations that outsource their IT work send it to India. Lately there appears to be a shift to the Philippines, especially for help desk related positions. Do Indian employees share the same fears some Americans do that there jobs too will be sent overseas to another country?

Wither the working class

[benwaggoner]

Well, in many senses, especially the Marxist, the working class is largely vanishing as a class in the USA. The grandchildren of post-WWII auto workers go to college now, and work in service industries. Really, if you did a poll, how many people in the US call themselves "Working Class?" And how many of those are really college graduates slumming for a couple of years? Social mobility really keeps traditional class boundaries from being one of the major divides in US politics today. In US history racial and cultural issues have been much more divisive and persistent.

Unionized workers think of themselves as working people, but middle class. Poverty is a different issue. But the poor mainly hope to not be poor, and don't have a lot of personal allegiance to the class of the poverty-stricken.

Also, I don't think it is a widely held view that the concentration of capital is good for all of us. This is why most honest economists like high inheritance taxes, to prevent multiple generation accumulation of wealth.

In fact, capital is pretty widely distributed these days, with 401(k)'s, pension plans, and home equity.

Explain me clearly

[melted]

Just how outsourcing one of the highest-margin industries to another country and depleting hi-tech talent pool that takes decades (and shitloads of money) to rebuild helps the US economy.

It'd be also cool to hear someone from Federal Reserve System explain how long does this country expect to live in prosperity by simply exporting national debt while not manufacturing the actual _stuff_ (be it IP, goods, natural resources, etc.). There's gotta be a breaking point to this trend.

Insourcing

[jgarzik]

In order to provide a balanced documentary, please examine the foreign companies that are "in-sourcing" labor -- shifting labor from overseas into the United States.

I just heard on the radio (no source mentioned) that last quarter the number of in-sourced jobs was larger than the number of out-sourced jobs.

Further, please examine the ramifications of protectionist policies, and ask economists about their long term ramifications. There is way too much "outsourcing is evil" or "outsourcing is great" without balance or attribution.

Several questions here...

[mckwant]

1. Are companies getting more bang for the buck?

2. Since NAFTA's initial rush, there are reports of manufacturing jobs coming BACK from Mexico. That "giant sucking sound" that Perot used to describe maquilladora companies running for the Mexican border never really materialized in the volume he thought it would. Also, several of those factories are coming back, as they get better productivity from USians.

   One function of outsourcing is that the labor is cheaper, which shows up quickly on the company balance sheet. If revenue is stable, and costs go down, profit goes up. What doesn't show up quickly is ineffeciency. e.g. Time lost due to cultural differences, time spent rewriting poor code, the cost of having to negotiate every change request, and so on. While these costs exist for locally sourced companies, I'd argue they're probably lower.

   It's not strictly the price of the labor that's at issue, it's performance per dollar spent. Given the economic mess, it's all about the price of the labor right now, but the efficiency argument will start creeping back in over time.

3. Is your penny saved actually spent locally? Or, restated, how often is that same cash going to be spent by subsequent purchases?

4. The multiplier is the key here. Does the money just go back into company coffers, or is it actually distributed?

   If it's held as cash by the company, then its effect is negligible, except for the value of the company's equity. It's not used to buy things in the local market, which contributes to the bottom line (and profits, and eventually more purchases) of the various merchants, and so on.

   If it's distributed as dividends, is that money used to buy goods in the local market, or reinvested? I would suggest that the supplyside economic model can be criticized here, as dividends paid to stockholders at large might tend to be reinvested (sometimes automatically, sometimes not), and the economic multiplier for that cash is very, very small.

   If it had actually been used to pay a local programmer, who was using it to live, then the majority of the money is probably circulating freely, having been spent with merchants.

   We can get into issues with the WalMartization of the planet here, but let's not.

5. Are we helping other countries' economies?

6. Again, this is arguable. Sure, we're helping them in the short term, but we've all heard stories of how the Indian outsources are getting undercut by the Czechs, or the Philipinos, or the Malaysians, or whomever.

   I'm not sure, but I think this is the core of the globalist "race to the bottom" argument. If you assume that the company only cares about workers/$, then it would be logical for the jobs to drift towards the cheapest labor. Problem is, the cheapest country for labor changes periodically, and suddenly you have several countries vying for the lowest price. Does this unstable economic injection actually help their economy in the long run? Tough call.

What jobs are created in the US by offshoring?

[Loraque]

A common retort by "them" when faced with the reality that offshoring causes the US to lose jobs overseas, is that jobs are created in the US to support and/or augment those jobs that went overseas.

I call BS on that, and here is the question to ask if someone trys to use that line on you:

"What jobs, specifically, are created by sending other jobs overseas? Wouldn't those jobs have to exist anyway, if the parent job in question were not sent overseas?"

And finally, lets get some specifics here. Those that try to rebut the facts of offshoring never speak in specifics. Here is a specific for you:

At my company, about 50 helpdesk style jobs, level 1 class, were sent to Hydrabad India. How do those jobs leaving create jobs here? Level 2 does exist here, but if the level 1 jobs were here, you know what? The level 2 would still have to be here.

Here is another question:

"Why isn't it illegal to import people from India on 12 month visa to fill positions that get 400-500 resumes from local people, when they are posted according to US law? You cannot tell me that there isn't qualified NT admins in ANY local area, and yet these positions have imported labor."

And here is another specific:
My company has over 150 imported Indians that fill all sorts of mundane IT jobs. After 12 months, they go away and are replaced by another cog in the offshoring machine. How is this creating jobs here? The managers/architects that supervise these people? Guess what, the supervisors/architects would have to exist anyway if Americans had these jobs.

And that is the part that seems totally illegal... importing people on visa to fill positions so the company doesn't have to pay local pay. Offshoring is one thing, but seemingly breaking the spirit of the visa rules for techincal people to fill positions that local people would LOVE to have. I know so many out of work, or working other random jobs they COULD get, that are more than qualified.

And this is the largest company in the world I am talking about here, not some fly-by-night gig.

That IS a GREAT article--everyone should read it

[Cryofan]

But Americans (and now even Brits) have been so propagandized, it seems most of them can even think straight when it comes to this kind of subject.

Loss of the Middle class and Outsourcing

[Anonymous Coward]

I have been reading for several years now that the middle class has been flat in pay and job growth since the 70's. Not only that but the low-end middle has even seen negative numbers. If my history is correct this coincides with the beginning of significant outsourcing by industry. Does this correlate? And if it does does that mean that the middle class and lower economic folk in America can look forward to another 30 years of the rich getting richer and the poor getting poorer?

It is never a good thing for any country to lose its middle class.

But there will

[Gorimek]

You are essentially saying that manufacturing costs have no impact on consumer prices. To be consistent you would have to claim that consumer prices would not rise if manufacturing costs increased. You could disprove that just looking at manufacturing costs and consumer prices for pretty much any good, and observe at the canny resemblance. But I'll try with a concrete math example.

Let's say Volvo sells 100.000 cars a year for $30k that they spend $25k to manufacture. That brings in $500M. They could lower the price to 29k and sell 120.000 cars and make $480M, or they could raise the price to $31k, sell 80.000 cars and make $480M. Clearly they picked the selling price $30k to maximize their profit.

Now let's say they figure out a way to make the cars for $23k. Selling 100.000 cars will now bring in $700M. But selling 120.000 cars for $29k will make $720M. So they lower the price. It's really quite simple if you look at it the right way.

The common misunderstanding here is that people think Volvo won't pass on their savings since they're greedy bastards. In actual fact, they will pass on their savings because they are greedy bastards, and will make more profit doing so!

No, there won't be a price drop. Prices are established by the market, not arbitrarily set by the manufacturer. A Ford Focus will cost as much as people are willing to pay for it, given demand and supply. Moving the plant to El Salvador changes neither supply nor demand. You aren't opening a new consumer base, and you aren't getting yourself a way to fulfill previously unfilled demand. It only lowers the price of making the good, thus increasing the profit margin.

Put in those terms, prices for a single manufacturers goods are arbitrarily set by it. How much it will sell at that price is determined by the market. That is how lowering costs does increase supply at a certain price.

Re:Productivity

[autumnpeople]

Your argument has only one flaw, if we outsource all the unskilled labor (and don't forget, call centers count in that bracket), where do the unskilled in the US go? Sure we can say we'll train them up, but there is a certain percentage of the population that does not have the capacity to do highly skilled jobs.

So what then? Do we create a welfare state where those who no longer can work are supported by those of us who do (at least until our jobs get shipped as well)? It's a nice idea to think you can do away with the unskilled working class, or somehow transform them in to a highly skilled work force. The fact of the matter is that while most of the /. crowd tends to be on the upper end of the bell curve of intelligence, it is a curve and there is a low end, which most people here seem to forget...

Questions for outsourcing opponents

[Kohath]

1. If outsourcing from California to India is "greedy" or otherwise morally wrong in some way, then what about outsourcing from California to, say, Alabama?

2. Do people in India or China have less right to make a living and feed their families than Americans do?

3. In a business, does management have a duty to artificially maintain relatively high wages in the US for equivalent work? Is that a higher duty than their duty to the shareholders?

4. What duty do the workers owe management in return?

5. Would you support relaxed regulations and tax cuts to help bring the cost of US labor down closer to that of foreign labor?

6. Which world leader is more just: George Bush or Fidel Castro. (This is just to determine who you're talking to.)

Morality

[gminks]

If outsourcing is something that will make the entire world better, why is it done is secrecy?

Why are call center workers who handle the private information of US citizens (banks, credit cards, etc) in foreign countries trained to sound like Americans? If outsourcing is so great, why are foreign workers forced to pretend that they are American?

Why are US workers forced to train their replacements, all the while being told that their job is being eliminated because it's the only way for the company to remain profitable?

Is it moral to outsource government services such as upgrading the system that provides aid to unemployed workers or customer service to food stamp receipients to workers who make one fourth of what an American worker would make?

Why are groups that are obviously lobbying groups for corporate interests being allowed to dictate our nation's policy on everything IT?

What effect does outsourcing have on innovation? The skilled workers in the US are not allowed to compete for jobs because American workers are too costly. The marginally skilled workers in countries where costs are lower are making the same types of technical mistakes that US workers made years ago. If outsourcing had been done for reasons other than pure price, would technology be on a different level now?

Why isn't the connection between the misuse of H1B and L1 visas and business access to cheap labor in other countries ever discussed?

How Has Offshoring BENEFITTED America

[thelizman]

With all the talk about how jobs go overseas, most Americans equate offshoring to job losses. No such documentary could be complete without mentioning that on balance, foreign companies created 6.4 million jobs in the US. Exports of US goods to foreign countries made by foreign owned businesses comprise 22% of all us exports. Foreign Direct Investment (FDI) has increased by $82 Bn USD in FY2003, creating 400,000 new jobs. The weak US Dollar combined with our lower taxes is encouraging economic growth so much that companies like Honda and Toyota now make cars for the US market in California and Tennessee - NOT Japan. The EU's OECD is threatening trade sanctions, claiming our lower costs of doing business are a "tax subsidy" (i.e., not overtaxing business is the same as paying their taxes for them...wonderful circular logic).

Source: http://www.ofii.org/insourcing/

Re:Productivity

[benwaggoner]

Has no one at Slashdot read David Ricardo?

Well, probably not.

People who can't do highly skilled jobs will do unskilled jobs. Pump gas, work on a farm, sort recycling. Or train them. Life as an unskilled laborer in a 21st century first world nation isn't great, but it's a lot better than as an unskilled laborer in the 3rd world.

Now, as a society, we need to be working hard at reducing the number of people we have who can't do skilled jobs. And that's working to some degree - how many US Citizens are doing migrant farm labor these days? Probably our biggest failure as a nation is not fully funding schools and enrichment programs in poor areas. Even if conservatives want to blame the poor for being poor, it certainly isn't their kids fault.

But anyway, unskilled labor has been around forever, and most of the jobs they did a long time ago have gone away, and new jobs always show up. Most unskilled workers were farm labor a century ago.

Re:Productivity

[benwaggoner]

Productivity measured in value added per hour is going up as well. It isn't all about overtime (and hours worked are actually going down a bit in the long term).

If you work in IT, you KNOW you get a lot more done than 10 years ago. Sure, you might not feel relatively more productive since everyone around you is also having the same gains. But think of your current big project. How would you have done it a decade ago?

filling mundane jobs with visa holders

[gminks]

They are most likely abusing the H1B and/or the L1 category of temporary visas.

There are NO RESTRICTIONS on the L1 visas as far as making sure that there is not a qualified American to do the job. There is NO WAGE REQUIREMENT, so it may be these people are working in the US and making Indian wages.

These visas are snapped up by the big Indian consulting companies as a way to market their cheap labor in the US.

For fun, notice the age and sexes of these imported workers. The big Indian consulting firms that import labor are NOT bound to US hiring laws, and frequently advertise age limits in the job postings in India for these positions.

Investigations, not Just Questions

[StormyMonday]

Some things I'd like to see investigated (I wouldn't expect straight answers to these questions):

1. The usual reason given for outsourcing is that it's cheaper. What about other reasons? Freedom from Government regulation? Freedom from stockholder/top management oversight? Financial shennagians?

2. In the manufacturing world, we've seen outsourcing start with assembly-line work and end up with essentially the entire operation overseas. (Think of home entertainment.) How high up the corporate ladder will the current outsourcing trend go? Could you, for example, run an entire bank branch (not just tellers) from India? Newspaper back office? Stock brokerage? Law office?

3. What is happening to the Indian outsourcing firms as even cheaper countries (Russia, Ukraine) get into the act?

4. Freedom from Government interference is one advantage given for outsourcing. What about the downside? Organized crime? Political corruption/extortion? (How do you *know* that your shiny new system doesn't have a backdoor, now that you've fired all the engineers?)

My Question

[pturley]

Manufacturing jobs have been "outsourced" overseas for a very long time. One could say that outsourcing has simply been moving steadily along a continuum from less-skilled to more-skilled jobs (i.e., less-well-paid to more-well-paid). Perhaps this latest wave of concern is not the result of a fundamental change in outsourcing, but is instead just a symptom of its arrival at a particular skill/pay/pain threshold.

If we're simply experiencing a natural extrapolation of the outsourcing trend, should we react to it any differently than we reacted to the loss of our manufacturing jobs (as painful as that was)? Is there truly a need for any more action/legislation here than we thought we needed when we were losing our steel industry?

Questions I'd like to have answers to...

[moorley]

Ok... So we are in a transition period. NAFTA / Outsourcing is the wave of the future. But is any CEO or Economist looking at the long term?

Outsourcing makes sense in the short-term 3-5 years. But what about the long term? After the transition?

If you outsource manufacturing and assembly don't you cut out a potential resource? New talent? If someone doesn't have the hard knocks of manufacturing or assembling without an International Airline ticket and a stipend what will happen to *OUR* innovation?

I never hear an innovator say "Thanks to my Harvard Degree I was able to design the new next clothing fad." I tend to hear of someone who worked hands on then found a niche that wasn't being covered and they went for it. If you outsource the lower industries you outsource our innovation. Does this concern anyone else but me? And if so, what is the answer? Strictly for American Defense do you want all of our clothes manufacturing being handled outside of the United States? Would that be our new ration item if we were forced to go to war?

I'm for the long term. But I'd like to know what strategically American Business Leaders want that to be. Right now all I see is a bleeding out of our dollars to other countries with economists worried about deflation. And personally I don't think Business Leaders are knowledgeable or equipped, this is where government should step in and slow the transition for our own stability.

I've asked alot of questions for thought fodder but this is my A#1.

What would 5 conceptual business be in 20 years, and what are supposed to do to get there?

Myself, I think technical communes or cooperatives are the answer but... Right now I only see my class being asked to do the cooperating while the upper 10% are whooping it up overseas. I spent 15 years of my professional life climbing the ladder while working under executives that never understood how to turn on their computer. Now that I have the skills they've outsourced overseas.

I never got my invite to the Hilton B-Day party, did you? Perhaps a cookout hosted by HP and Carly? Naw, she was so vindictive about HP Site Boise not being a cheerleader squad in her battle with HP's Heirs that she's cutting Boise (and other domestic sites I'm sure) whenever she can.

I don't like revolution, but I get the impression the upper CEO's are dolling out the economic equivalent of let them eat cake... More accurately, buy my stuff at inflated stupid rates... Please tell me what I'm not seeing!!!!

Re:Productivity

[benwaggoner]

There has never been long-term unemployment of skilled workers in this country since the Depression, even though past rounds of outsourcing involved more jobs than are going away today. A dynamic economy makes jobs for everyone who can do good work, even if it isn't in the field they imagined. I don't think outsourcing is the major factor in any decline in IT employment - the total number of foreign workers doing outsourced IT work isn't high enough. Bear in mind there are far more many trained ID professionals in the USA than in India, even though their population is much higher.

I don't see anything about our current economy that suggests that something has fundamentally changed to cause this to be different.

I know lots of engineers, and while not all of them are working their dream jobs, all of them are working in positions where they're applying their technical skills.

Re:Customers

[benwaggoner]

Well, obviously most professional jobs WON'T go overseas. And those that do will get replaced by other jobs in new sectors. Really, what's happening today isn't any more disruptive than say, the transition from a farming to industrial economy, or from industrial to services.

The classic example is buggy-whip makers. Big industry before cars. Went away fast and hard. Sucked for most whip-making companies, but the workers found new jobs.

What's happening right now is companies are taking advantage of a wage differential caused by some formerly closed economies that are opening up, which is suppressing wages relative to education/talent in those countries.

But wages are going up in India faster than they're going down in the USA. Since people don't actually refuse to work for decades instead of taking jobs at a lower rate of pay, we'll see some downward pressure on IT salaries in some sectors. This is appropriate - salaries were getting way too high relative to education required in some sectors. There isn't any good reason why average programmers a few years out of school should make more than doctors a few years out of medical school, which had been happening.

So, every year, Indian programmers will make more and US programmers less, in relative terms, until some kind of equilibrium is hit where productivity per dollar is the same. I expect that US programmers will still get paid more, due to greater productivity. And while wages in some sectors might go down, this will be more than balanced out by a lower cost of goods and services across the economy.

So we won't be poorer in any meaningful sense. Sure, the USA won't be making 20x per capita as India and China do anymore, but that's fine. We'll still be richer than we are today, even if others are even richer than they used to be on a percentage basis.

I suppose the USA will feel less relatively rich compared to the rest of the world, but that's a good thing, right?

Not Fair, Not Balanced, Just Cheaper?

[quarkscat]

You have hit the nail on the head.
The "Walmart" economy is not a self-sustaining
economy, because of the shrinking middle class.
This model only works for 60 - 70 percent of
the inverted bell curve of declining purchasing
power, after which it will collapse.
Only so many people can work in the trades
and professions that don't get out-sourced.
The "cream" of these don't shop at Walmart,
anyway.
As more illegal aliens enter this country
(which has increased by 40% since 9/11/01),
even many of the professional trades jobs
will be lost to those willing to work even
more cheaply here.
The three tiered social strata that was
America will melt away into a two tiered
strata that will more closely resemble
Europe in the Middle Ages: the very small
and powerful privledged class, and the
peons.
The disparity of income between the rich
and the middle class in America has widened
significantly since the 1970's. If you
compare the CEO salary and perks in today's
economy between the EU, Japan, and America,
the American CEO's compensation is obscenely
greater.
Only when shareholders insist on out-sourcing
the American corporate elite will the trend
moderate.
IP protection, job conservation, and the preservation of societal values must be
enforced through legal governmental means,
since the corporate fatcats refuse to consider
these factors. NAFTA is flawed (as well as
structural problems in the WTO), because the
regional/national societal values are not
part of the equation of trade equality.
If working conditions, hours of labor, pay
scale, ability to organize, health care,
and environmental issues were factored into
all trade negotiations, the "playing field"
would be much more level.

(Just my depreciated $00.02 worth ...)