Slashdot Mirror
Labor Department Downplays Offshoring
twitter writes "The New York Times is reporting the US Labor Department's first assessment of International Offshoring. The report claims that less than 3% of Q1 2004 jobs were lost to offshoring. Companies were asked if workers had been replaced and taken at their word. A Federal Reserve governor is also quoted as dissmissive. Estimates by Goldman Sachs are 20 times higher. Despite Washington's IP fetish, no one quoted is worried about the export of US research and knowhow. Your job and 830,000 others are gone."
Kerry will stop this offshoring nonsense!
oh wait, his wife's companies are offshoring as much as anyone else.
ummm...
NADER '04 !!!1!
Dey took arr jabs!
Here is some advice that I took after I graduated college. During my last few years of college there was a lot of talk that companies may start outsourcing their work to places such as India. Living in an area where there is a large air force base I was given the advice to get a job there working with either with a contractiong company or the civil service (government). They are so strung for computer-minded people that they can offer up to a $60,000 hiring bonus on top of about $60-70,000 per year just to get you to work for them. And the best part? The US government isn't going to outsource your job anywhere. The only thing to worry about, however, is that your job can be eliminated. But the benefit of working for the civil service? They also have to find you a new job of similar pay.
Hmmm.
I think they have to downplay it because its election season and Bush doesn't want to lose an election.
The report claims that less than 3% of Q1 2004 jobs were lost to offshoring.... Estimates by Goldman Sachs are 20 times higher.
So 60%? I don't think so...
I feel for people who've lost jobs -- my wife lost hers, twice, and several of my friends did as well. But you know what? It keeps the labor market dynamic. "Well, if this is dynamic, I want none of it!" Sorry, but that's a kneejerk reaction: if people overseas can do it cheaper, and maybe even better, WE HAVE TO LET THEM. If we don't, then some day they'll come along and simply overpower us, because they -aren't- stagnant. Look at what happened (say) to American automakers when they were dismissive of Japan! How about textile workers? It's part of being in a global economy. Unless we wish to become entirely self-sufficient and isolationist, we HAVE to learn to do well what we do well: innovate, create jobs, create wealth and opportunity. But don't try to bail out a tepid economy with finger pointing and a leaky pot.
was answered by Sanjay Patel, who couldnt comment as his superiour had popped down the shops in Delhi for a curry
Yes, when you take a survey, you expect people to be honest, the very few that aren't honest won't make much of a dent in distorting the picture.
Anyway, I don't know why slahsdot is playing protectionist when it comes to tech jobs in the US. You people enjoy the fruits of offshoring in cheap computers, gadgets, and other electronics. Tech jobs aren't any more sacred than manufacturing jobs. Adapt or die.
Slashdot Moderation: From positive to terrible in 2 "insightful" posts.
I have to reply as an Anonymous Coward b/c my indian replacement took my slashdot account!
It is not downplayed in India. BPO jobs: Devil in sheep's clothing? Call centres put Indian mores on the hook
There is a big attitude that ofshoring is taking away people's jobs.
What bull! Of course, These jobs don't belong to you in the first place, but that's missing an important point. There are always more jobs. Many of them will NOT be offshored. People need employees. People will create jobs when there are some free workers. If you can't get a job writing tedious code that a trained monkey can do, learn to do something that requires real skill and talent.
But you also need to take into account that these foreign workers :
So how can you compete when they can feed a family of 10 on 10K a year and have housing while you would be in poverty here if you made that much ?
UPS Sucks
Yes! Let's do exactly that!
While we're at it, let's ensure that no policy that would cost American jobs is ever passed. We should tax the hell out of any company that attempts to hurt American workers by doing things that increase efficiency, automate labor, or make products and services cheaper. Sure, we'll all have to pay $50000 for a computer assembled by hand, but at least we'll have all those good-paying jobs right here in America.
All this regressive protectionism is a throwback to the nativist movement and the failed policies of the Smoot-Hawley Tariff. You can't take the benefits of global trade and then complain about how terrible it is that people are getting their jobs replaced by cheaper workers. We all benefit from products and services that would be prohibitively expensive if it weren't made in a distributed fashion.
The best way of saving American jobs isn't by shutting our borders and going back to the 1920's, it's by reducing the cost of health care and enacting tort reform to prevent frivolous lawsuits, both of which would decrease the regulator burdens that make it very hard to add new employees and be able to pay them well.
Of course, why bother with a nuanced solution when we can react in a kneejerk fashion and makde a cheap ad hominem against the President?
I don't know about you, but I'll probably be dead in 80 years... I'm betting Bush and Cheney will be, too!
..within my department at work. The company recently exported some data entry positions to India. Our IT manager claims this is just a natural progression to the "next thing", just as we made the move to a service-based economy. But what is the next thing? A progression to service seems natural in hindsight; can anyone point to what is after that? Of course, I hear people say that wages overseas will eventually climb, making companies here rethink this outsourcing strategy. But when? 50 years from now? I am no alarmist, but this is beginning to really, really worry me.
Don't be a looter...and yes, I know that it's spelled with an "A" instead of an "E".
depending on how much they need the computer-minded people. However, they're very flexible in hiring young people and are willing to give them a chance to establish a work history that they can use in the future.
-Cyc
/.'s 10 Millionth
You know why? Because companies that do this should be taxed to hell and back for doing it.
Fine, but be prepared to pay at least twice what you now pay for a lot of your consumer goods, including your PC, TV, clothes and most of what you can buy so cheaply at the mall or Wallmart. Why is it OK to outsource the manufacturing jobs so you can have cheap electronics, but when the job being outsourced is something you're trained / interested in, it's wrong?
... is to be the best ! No matter the cost, if no one is able to do your job, you are safe. With the development of automatic code generation, middleware and so on, the number of coder will fall in a near future. Trying to reduce offshoring is just a way to gain time. Remember the beginning of the modern era, when labor worker where replaced by machines... but there are still manual worker, they are doing "haute couture" and earn a lot of money. Now, it is the same thing with software. But, maybe we are all wrong, maybe there ain't enough job for us all, not enough place, not enough ressources... Want to drive a SUV ? Eat super maxi menu ? We can't go on like this, it is time to slow down, relax and live a better life. The more is not always the best.
No. That's not how it works. It -is- a level playing field, almost by default: their cost of living is lower than ours, regardless of the reason. That means that there are certain things that they can do cheaper. WE HAVE TO LET THEM. Eventually, their economy will get better, raising their cost of living... or it won't, and they'll no longer be a concern. But if you try to "level" the playing field, you're just kidding yourself. If someone else can do it cheaper, and you don't let them, YOU WILL LOSE: that's the only sure bet. Check history if you don't believe me; gov't instituted remedies in situations like this just don't work, as most socialist countries were fine examples of. Free market may not be fun, but it's the only game that consistently wins, because there's nothing artificial, and greed -- the great human motivator -- is allowed to run rampant.
My job has not been shipped offshore. There is no risk of my job being shipped offshore.
Of course, I've escaped the rut of the corporate/educational/medical IT structure and gone into business for myself. There's no more worries about losing my job because some corporate bigwig doesn't know how to use a computer correctly. I don't worry about the High Point Furniture Market doing badly, causing a warehouse glut and staff cutback. I can no longer use victim-mentality to explain what goes wrong with my career.
These days, if I don't make much money, it's because of the ups and downs of the retail cycle. It's because I need to get off my butt a bit more and do some work. It's because of a lot of things, but it isn't because of offshoring of my job.
Want to be insulated against offshoring of jobs? Learn carpentry, or HVAC maintenance, or any number of trades. Then, buy yourself a van, hit the road and work for yourself. The rewards are greater, the hassles are more easily managed, and you get paid extra for working with bigger problems or worse customers.
Oh yeah, and you'll get a thank you occasionally, from those you do the jobs for.
Visit Lockjaw's Lair. He won't bite.
Excuse me but zero jobs should be lost to overseas workers.
Ah yes, the boundless economic ignorance that leads to +5 insightful on Slashdot.
An economy where no jobs are going overseas or coming back is a lifeless, growthless economy. Acting as if even one job moved overseas is somehow a problem does nothing but illustrate your own particular ideological blinkers, which prevent from thinking in any halfway rational way about complex topics like economics and globalization.
If it ain't broke, you need more software.
Don't open that! You don't know if there's air out there! /obligatory GalaxyQuestReference
schild
editor, f13.net
"Comapnies that do this should be taxed to hell and back for doing it?"
This post betrays an utter lack of economic sense, and a complete disregard for individual rights. So you think companies should be taxed to hell for hiring employees outside of the U.S., and then Slashdotters think this idea is insightfull? What the hell happened to keeping the federal government out of private buisness? I see now that most of you slashdotters are all about personal rights, so long as those rights are yours and rights aren't given to other people who might use them in ways that you don't like
Your idea that "zero jobs" should be lost to workers overseas is completely, utterly, assinine. Anyone who thinks this sort of thinking is "insightful" needs to learn some basic economics. Everyone benefits when companies become more productive because their products are made cheaper. We have seen a net increase in the number of americans employed as a result of international trade, because those people in foreign countries who get jobs will now be able to purchase more expensive American jobs.
You really piss me off. Saying that we should tax the hell out of companies so that they keep all their workers here is mindlessly stupid from an economic viewpoint, and utterly unamerican. Is there any consitutional basis for controlling whom private companies wish to have for employees? No! Mind your own god-damned buisness. If you think too many companies are outsourcing, then start your own company with only american workers and american inputs, and see how long you last in a free market. The truth of the matter is that it's the American People who are pushing for outsourcing becuase they demand cheaper products. And why shouldn't they?My blog
As a U.S. IT worker, I helped do my part for GE outsourcing. I traveled to New Delhi and GE's new facility in Haryana State where I helped to set up the infrastructure for helping to offload work from the GE financial units.
I can tell you that I did not feel the least bit sorry for the American call center employees whose jobs were sent to India. The Americans in the call center were men and women right out of high school and college with crappy attitudes and a streak of laziness a mile wide.
The Indian workers had master's degrees and had drive and ambition. The Americans did not even care about the job competition and thought they were owed work. Sorry, I cannot agree with protecting an entitlement!
That being said, there is still a barrier. Despite English being the common language between India and the U.S., Most Americans cannot understand the Indian accent and get rather frustrated. (I am sure it works both ways. ) Also, some of the Indians take a "Brahman" or intellectualy superior view and treat their American customers like crap, especially women.
The offshoring will level off in my opinion. Some companies will still try to gain competetive service level where empathy and understanding are part of the customer experience.
Where I work, it's not even so much about your skills as it is that you're a warm body filling a seat at a lower rate.
It's beginning to look like "Little New Delhi" around my office and I'm becoming concerned that the fact that they don't understand me when I speak is going to become my problem instead of theirs since Americans are becoming the minority at my office, even though I work for an english speaking US based comany.
Don't get me wrong, this isn't some racist rant. I'm just showing a little concern for the direction things are headed.
You're idea of taxing companies for shipping jobs overseas has merit. Despite this, however, I am reluctant to go along with it. My concern is that the current state of the IT industry depends to a certain degree on the cheaper labor of programmers, etc. in countries that do not have the labor laws we enjoy here in the US. If the government begins taxing this practice will the impact force companies to hire American workers? Or, perhaps companies will fire more American workers to make up for the taxes. Or the company might just fold and leave all their employees without jobs.
I don't know enough about economics and business to make a conjecture about which of the above would happen, but they all seem like reasonable possibilities. Is there anyone with a MBA out there who can elaborate :D
As a side note I am an EE and, while I'm not one of the jobs most likely to be affected by the shift, it still makes me quite uncomfortable.
100% Crunchier
Hear, Hear! I'm sick of hearing protectionist garbage, particularly on slashdot. I like to think of this as a place where intelligent people can debate ideas. It discourages me enough when some guy says that we should tax the hell out of companies who think about outsourcing, but then when people go and say this sort of thinking is Insightful? Give me a break! It makes me think of a bunch of Neanderthals with clubs sitting around in a cave. One of them stands up and says "GROG SMASH," and the others point and grunt approvingly - "Grog Insightfull!" they chant, and Mod him a notch.
My blog
I think one of our fellow Slashdoters has a sig line that says the following:
"If They have access to our jobs, I want access to thier cost of living"
This my friends is the crux of the matter. One thing we must understand is that the cost of living in the United States is so high that we literaly CAN'T AFFORD (monitarily speaking) to compete with off-shore jobs. One of the main reasons an Indian tech support company can pay thier workers the equivalent of $2 an hour is that the cost of living in India is so low that $2 an hour is actualy a COMPETEIVE WAGE! Maybe if healthcare, housing (especialy housing), education, and food were cheaper in the US we could compete, but the fact is you're lucky if you can even find a nearly condemned hole in the wall to live in for $320 a month, let alone pay for food, transportation and medical costs.
Unfortunately we really have no one to blame but our selves, the American economy has driven these costs up. Perhaps when half the US is unemployed due to out-sourcing prices will drop and then we'll be competetive again. Until then it's gonna be rough, and I don't fault anyone for complaining.
A Call For A New Slashdot Moderation Level!
Well, i might sound like a troll but...
Americans say they love capitalism (im not suggesting all say that), and America is a capitalistk country (at least compared to many european countries). Everything has its good sides and bad sides.. You can not simply take the good sides of capitalism and think that you won't see any of the bad sides.. Americans need to understand that outsourcing jobs to cheaper labour is a perfect exampel of capitalism.. thats life..
For a good part of the latter half of the last century, MNCs (which are incidentally mostly US owned corporations) have been trying to *market* their goods to third world countries with an aim to get their earnings up (expanding markets = more money). This has often resulted in loss of local jobs and industry and made the countries more dependent on foreign corporations, and local unions/organization have often opposed opening up local economies for this reason - but mostly to no avail.
Lately, we've seen that corporations have figured out that the skill/education levels in these so called developing countries have been increasing, and it's more cost effective to shift their manufacturing/services divisions abroad. This has caused widespread annoyance due to loss of jobs in the developed countries.
But really, is it the people's fault anywhere? Is it fair for people living in developing nations which have been invaded be these megacorps to just serve as profitable markets for the MNCs while being denied economic benefit from them? A bit of pondering may reveal that it's profit minded corporations which have been sucking peoples from both sides for their benefit (and for their parent countries' since the profit trickles down in the form of jobs/cashflow).
I think it's just the completion of a circle. Not flamebait - sincere concerns.
Some quotes:
Multinational corporations (MNCs) engage in very useful and morally defensible activities in Third World countries for which they frequently have received little credit. Significant among these activities are their extension of opportunities for earning higher incomes as well as the consumption of improved quality goods and services to people in poorer regions of the world. Instead, these firms have been misrepresented by ugly or fearful images by Marxists and "dependency theory" advocates. Because many of these firms originate in the industrialized countries, including the U.S., the U.K., Canada, Germany, France, and Italy, they have been viewed as instruments for the imposition of Western cultural values on Third World countries, rather than allies in their economic development. Thus, some proponents of these views urge the expulsion of these firms, while others less hostile have argued for their close supervision or regulation by Third World governments.
Incidents such as the improper use in the Third World of baby milk formula manufactured by Nestle, the gas leak from a Union Carbide plant in Bhopal, India, and the alleged involvement of foreign firms in the overthrow of President Allende of Chile have been used to perpetuate the ugly image of MNCs. The fact that some MNCs command assets worth more than the national income of their host countries also reinforces their fearful image. And indeed, there is evidence that some MNCs have paid bribes to government officials in order to get around obstacles erected against profitable operations of their enterprises.
An Indian-American Hindu committed to non-violent thought/speech/action alarmed by the global explosion of radical Islam
Has no-one thought of the possibility that Goldman Sachs might be wrong ? I don't know how trusted they are (I'd assume at least a bit, as they're used as a reference,) but even the most trusted firms/whatever can be wrong.
/prefers to be an optimistic pessimist: Plan for the worst, try/hope for the best.
I'm not saying the Labor Department is right, but there's a chance that Goldman Sachs is wrong. I mean, they are estimates. I could do some quick researching, round to the nearest hundereds places, and report that as an estimate.
You're all pessimists.
Not only do they incorrectly calculate the numbers, but they also don't use the correct numbers in the rest of the article.
It says we lost 3 million jobs since 2001.
But then it says we've gained back 1.4 million of those jobs recently.
But our population has been growing since 2001. What about the jobs that are needed to employ the new workers entering the workforce in 2001, 2002, 2003 and early 2004?
And what is the total pay for those segments of the population?
If I get outsourced as a sysadmin, and I take a job flipping burgers, then that's still ONE job. But the pay rate is very different.
It isn't just a matter of adding X jobs. They have to be in similar or better fields at similar or better pay.
The report is hogwash. Hear me out.
Look, the Bush Administration has done something that has never been done by any previous administration: they're actively distorting truth in the reports that low-level non-appointed staffers put out. Sure, in the past political appointees could always be counted on to put spin on things (and even bury information, like Reagan did with AIDS and the CDC), but actively creating misleading information was not done by the career service government workers.
Until Bush, that is. For example, recently the State Department put out a study claiming that world terrorism incidence were down in 2003 (even if you include Iraq). This bolstered Bush's claim that he's winning the War on Terrorism. But thanks to Rep. Henry Waxman, this report was shown to be false and misleading. The State Department then issued a statement admitting the mistake. (Read here).
As another example, recently a government study pointed out that children who had breast milk has 30% fewer incidents of ear infections, allergies and Downs syndrome, compared to infants who used formula. So, the FDA decided to launch a commercial campaign to promote the use of breast milk. Well, the infant formula companies saw the commercials (which included the statistic), and were allowed to intervene, and this vital data was cut out. So, the campaign promoted breast milk, but did not say that compared to formula use, babies suffer fewer maladies. This outrageous intervention by industry had never been done on a matter of public health before. But Bush's FDA let it take place. The same thing has happened with other government studies on the safety of abortion, women's health issues, etc.
So, now we have another report in an election year that outsourcing is not costing the US jobs (at the same time education cuts are not replacing them with better-skilled positions...) Do we believe this? No. The Goldman Sachs report states that there were 20x as many jobs moved over seas.
Now, I'm what you'd call a Reagan Democrat. I even voted for Bush (but probably won't a second time--still need to see about Kerry.) But what Bush has done is simply this: he's squandered the public trust we used to have in government research and studies. Whether there was a Democrat or Republican in charge, we used to trust the staff would do the best job they could to study a problem. (Sure, sure, in the end it was a government study, and perhaps not the best, but it was at least an honest effort). Now, that trust is gone.
So, the Government claims outsourcing is not costing jobs? And this comes right after a huge wave of press articles about outsourcing... I don't believe the study for a second. I'll stick with the Goldman Sachs study. They have a financial incentive to get things right, not a political incentive.
I know that's where a big percentage of our company's labor-related jobs have been shipped to within the last two years.
When discussing off-shoring, whether it's tech jobs or manufacturing, keep in mind World War II. A lot of industry in the United States at that time retooled their manufacturing facilities to produce goods for the war effort. Now that most manufacturing happens outside the U.S., what will happen in the event of another world war? The U.S. won't be able to produce the goods it needs at scale. Furthermore, think about a "technological war" fought over the internet. If all of the techs are siding with or in another country, we're hosed.
SiO2
What the report says is that 3% of the jobs lost (not total jobs) were lost to overseas outsourcing.
From the article: "Nine percent of non-seasonal U.S. layoffs in the first quarter were due to outsourcing, but less than a third of the work was sent overseas, the U.S. Labor Department said in releasing new figures on mass layoffs and outsourcing."
So less than a tenth of all jobs lost were lost to outsourcing, and only a third of those were lost to overseas markets.
Did you ever think that perhaps those jobs are being outsourced because it can be done better *and* cheaper? That means that even if it weren't cheaper, it could still be done better.
Don't like the job market is going? Get better or change skillsets. When I vote with my dollars, I want value, not the warm fuzzy feeling that comes behind paying more money for something just because it was "Made in the USA".
A slightly related (and interesting) article on the social ramifications of the BPO (Biz jargon for Business process outsourcing) can be read here.
Ship 100,000 jobs overseas - It's a free market and a free country
Drive to Canada to buy medicine for your grandma - you're un-patriotic
*DrugCheese rants*
The report claims that less than 3% of Q1 2004 jobs were lost to offshoring.
/.ers - If you really believe in personal freedoms - you gotta side with Bush on this one. Companies ought to be able to do what they please within the law. All the local (MN, but it's everywhere) no smoking legislation lately is driving me nuts. Lets get the government out of business - yes that means that some companies will outsource some of their labor. Nothing new here!
It's not 3% of all jobs - it's 3% of the jobs that have been lost. Quit with the mindless troll attitude. Don't blow the outsourcing thing out of proportion.
Oh, and by the way - all you ACLU loving
The number I'm seeing is 4,633 jobs lost to offshoring in the first quarter. Okay. So assuming a 6:1 US to offshore salary ration, then we should have seen only a 27,798 increase in offshore positions. If the increase was more then the US has had a net loss of jobs. And we definitely have not see enough of an increase in the US job level to maintain current emmployment levels in light of new workers entering the workforce. I'm talking about tech jobs mainly. So this may be good for the US economy but the economy and the workforce are not the same thing. It's sort of like saying that putting your children up for adoption is good. It may be good for your family's budget but it's definitely not good for your family.
If an overseas worker is considerably cheaper than an American one, if we eliminate the savings through taxation, overseas companies will simply form that capture the difference. Then the US company will evenutally go bankrupt (and wipe out even more jobs). Imagine how expensive a cheap Ford would be if all car parts were required to be made in America.
Realize that many technology jobs have been replaced by automation that lets a few people do work that many would have been required to do years ago. That's a much bigger factor than offshoring. If you want to protect yourself learn as much as you can about what others use your products to accomplish, even if you are no more efficent than an indian programmer in lines per hour, you have a tremendous advantage over him in making software that will do more for your company (because you can see how it is used).
A fable that I am stealing from an Econ prof goes as follows. Imagine a bright engineer announces a development that allows him to covert grain into cars. He buys tons and tons of grain, which goes into one end of his factory, and out the other end roll cars (at considerably less cost than Detroit can produce them). The machine is rather automatic, so while he doesn't hire too many people, there are a few jobs created in his machine. Everyone is amazed at his prowess, even Detroit who has to adjust to compete with this new competitor, they vow to become more efficent producers.
A few years after he begins operation a bright, hungry investigative reporter gets the scoop of his (or her) lifetime, the factory does not convert grain into cars, it's a cover on a large boat dock (grain is exported and cars are imported). After he blows the lid of the story his cars are taxed, protested, and disliked. Why would it be alright to convert grain into cars through an industrial process, but not alright to trade for it? That's why I'm a free trader.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
"And we'd like to welcome the technology workers of America to the global economy. Please, have a seat and make yourself comfortable. If you fight it you'll only waste time you should be spending upgrading your skills."
There are two scenarios here, let's play with them a little bit:
1:
We tax local companies who offshore to make offshoring less palatable. We tariff products coming into the US from companies who are offshoring but use certian tax shelters and place their corporation offices outside the US so the taxes don't affect them.
Outcome:
Other countries raise tariffs in response. Companies here in America lose customers because their products are so expensive compared to solutions and products purchased elsewhere by independant companies outside the US. American companies close shop unless they are 'saved' by tax breaks/loans/subsidies - the same companies that were taxed into not outsourcing.
2
We recognize the fallacy of America as an independant microeconomy. We allow companies to outsource labor which can be performed more cheaply elswhere. Displaced workers are forced to upgrade skills or accept a lower sallary.
Outcome:
Those who upgrade their skills earn more money, increasing the economic power of the US Labor force. National GDP increases, companies become more profitable, etc.
There is no realistic way to stop outsourcing the tech worker. All one can do is try to stay ahead of the curve. Get your MBA and manage outsourced projects. Move to a smaller company where outsourcing IT doesn't make sense. Start your own company.
Eventually the global economy will level out, and half of the tech work done here will be done there. This will happen regardless of the measures we are taking to slow it down. In the end our products are still competitive on the global market, and we still carry 1/3 of the international GDP. Fighting it is only going to slow down our economy and speed up the rest of the world's economy.
If you really want to keep your current life style, you'll learn to roll with the punches, pick yourself up and get back in the game.
-Adam
It also turns out that offshoring is a complicated business. I have participated as tech lead in three offshored projects. Only one of these ended up "profitable", costing us less than domestic talent would. Even though offshore workers earn a much lower salary than their US counterparts, the markup on their services is not small. We were paying $35/hour for talent that we could get for about $55/hour domestically. I think a lot of companies will experiment with offshoring and quickly discover that there are many sharp rocks under those inviting waters. The companies that are seeing biggest gains are those that set up offices in the offshore countries and hire the locals as employees, rather than consultants.
From a larger view, the baby boomers are starting to retire. If you check your census statistics, that is a huge skill deficit that we just don't have the population to replace in a growing ecomony. Therefore, if we wish to continue similar growth rates to what has happened over the past 50 years, we will need to:
- Immigrate
- Automate
- Offshore
Remember 1999? Companies were recruiting waiters and putting them through IT training, just to make up the shortfall. If you knew where the power switch on your computer was, you could get an IT job. Well, back then, we had a shortfall of 4.7 million skilled workers. If similar growth is projected forward and the baby boomers are subtracted from the labor pool, we're looking at a shortage of over 20 million skilled workers by 2010. This will make the shortage of 1999 look like a picnic. Some predictions even show us using up all the available offshore talent by 2012 or so.So whine all you like about offshoring. Soon, it'll be the only thing that keeps our economy growing.
The problem is that there is no way to make sure that companies that oursource actually pass those savings on to customers in the form of cheaper goods, or instead just give their ceos larger bonuses.
There must be something done to level the playing field, otherwise American labor will never be able to compete with countries that have much lower standards of living and little or no workers rights.
It -is- a level playing field
Not quite. Because of market collusion its possible to lower the quality of goods across the board and pay no price for it in the marketplace. THAT's why outsourcing to India works. If you are one of five widget makers, and you all subtly agree not to compete on quality, then it's easy to fire 90% of your customer service center, hire shoddy brute-force armies of programmers and end up paying far less than you would need to if your customers actually got a real choice of widget to buy. If one of your competitors hired real programmers who were worth thier salt (and paid them for it) they would eat you alive as droves of customers left you for them. But as long as you all agree to keep the status quo or less, then caring about your customers doesn't really matter.
Don't believe me, go do some comparison shopping on cell phone in the US and Japan. When the market colludes, and competition is scarce, the playing field is not level.
I live in rural North Carolina and I have seen this long before the outsourcing of IT jobs with the textile mills and the farmers who are going bankrupt. I agree that this sucks for the people who lose their jobs.
The big picture is that because of this overall outsourcing of jobs, each and everyone of us can go to Walmart and buy whatever we want for a cheap price.
Due to the constant pressure on companies to not only make it better, but make it cheaper, companies are always looking for a cheaper labor source. As my boss says all the time, my company made over 30 Billion last year and my department made exactly 0 dollars of that. So as long as we are an expense, we as an IT industry have to learn to adapt to the ever changing environment. I know it sucks, but it's a fact of life....I see it all the time with the textile ghost towns in my backyard.
http://jayceecorder.blogspot.com
I pretty much agree.
The job loss numbers also don't seem to tell the whole story, I think for those quarters quoted there was a net job gain overall.
Despite the harping, the last Labor department figure I've seen, I think for Q1 2004, was that unemployment was about 5.9% with other figures being favorable as well. I thought that figure is very nice, especially considering we were comming out of an overheated economy in the 90's where those considered completely unemployable were given a second look. I think unemployment was only slightly under 5% at some points in the 90s.
I remember a time when 7% was considered an acceptable compromise between inflation and unemployment, so the hand-wringing may be overblown. Sadly, the alarmists like to take the figures that fit their case best and play chicken little. Let's try a balanced approach, shall we?
A family member is currently a project manager for a new software product being created in India. As such, I have some insights into the situation -- and I don't think the current offshoring craze will last too long.
The basic problem is because there is approximately a 12 hour time difference between the US and India. This makes business communications quite slow. For example, at 6 AM in the US, it's 6 PM in India.
What happens is that the normal project related problems pop up during the day -- and if you need input from "the other side" then you have to wait up to 8 hours. Or make your best guess and verify it with "the other side" at a later time.
As developers, we all know this happens a lot during product development. What used to take a few minutes with a call or a quick meeting can take a day or more. This dramatically slows down the development cycle.
Of course, management is excited about the fact that the labor cost is about a third as expensive. They are now starting to realize that this benefit is offset by the cost of lost revenue (products that are late can't be sold!)
So long term, I don't see offshore development being used for new product development. It's likely that it will continue to be useful for product maintenance and support since they have a lesser need for constant communication.
-ch
I agree with what you are saying (especially the bit about a knee-jerk reaction). We cannot isolate ourselves and create an environment that stifles competition. And certainly attacking the high health costs and the sue-happy will help.
However, the problem I have with outsourcing and international competition is that it is not a level playing field. We have many requirements on companies that run in the US -- environmental standards, insurance requirements, minimum wage, etc. (I am sure that others can come up with even better examples) -- that many of the countries we are dealing with do not have. I agree with the parent poster in that I think there should be a tax to compensate for the differences in requirements for employees. How can we expect an American firm who has to spend millions to be environmentally friendly to be able to compete with an Indonesian firm with absolutely no attempts to be good stewards with the land?
This is not an easy problem, but I think attention needs to be given to the requirements on our companies. I do not propose that we lower our standards. Rather, perhaps we should require companies working in foreign countries to either meet our standards or apply a financial penalty for failing to do so.
Our countries companies cannot hope to compete with other countries given the current environment in America. Maybe this means that America itself needs to change to keep up.
I believe in de-evolution. God made the world perfect, man fell, and its been going downhill ever since!
"Companies were asked if workers had been replaced and taken at their word."
Because a statistically significant number of companies are scared to reveal the truth they will lie to the gov't about how many people they are offshoring?
The bureau has always taken companies at their word. Are you going to pay for them to audit american companies for labor statistics? It's stupid to assume that you'll get better numbers by holding a gun to someone's head. They'll lie if they want to lie just to see what you'll do. You'll be forced to implement laws and consequences for lies, and if you discover a company was lying then you get to prove it in court.
It isn't worth it.
The BLS has always surveyed a number of companies and a number of households for their information. These surveys produce unemployment numbers and a ton of other interesting statistics about the job economy.
If this bothers you then you'll really go wild when you learn that they only survey a small number of companies instead of all the companies in the US.
I love a good cynic in the morning. No wonder some people are so unhappy about outsourcing - they're never happy about anything.
-Adam
As another example, recently a government study pointed out that children who had breast milk has 30% fewer incidents of ear infections, allergies and Downs syndrome, compared to infants who used formula.
Wait a second there. Downs Syndrome is a chromosomal disease--the battle is lost the moment the ovum starts developing. How on earth can breast feeding help?
One thing I have to point out, however. It has been my experience that most companies to not outsource their leading edge, business advantage software. They outsource the routine maintenance and standard operations software. For these systems, "creativity" is not as important as process, so the outsourcing process works well.
The thing western software developers need to recognize is this: there will always be jobs for great programmers. What you have to ask yourself is "am I a great programmer?". If the answer is yes, you having nothing to fear from outsourcing. If the answer is no, you need to develop other skills (system design, customer liaison, etc) or maybe change careers.
The writing is on the wall. If you are a mediocre programmer and have no ambition to move up the technical ladder, you job will disappear.
Strong IP protection is for the incumbents, not future generations. :-\
If you don't already have a patent, you don't get to vote.
Free Markets are like black holes, no one has ever seen one, but theoretical academics will argue to the death about what they are like. Economics is a soft science based on assumptions about human behavior.
If US companies want to ousource, fine, just quit giving them taxpayer dollars (corporate welfare) and access to government R&D.
The problem is that there is no way to make sure that companies that oursource actually pass those savings on to customers in the form of cheaper goods, or instead just give their ceos larger bonuses.
Sure there is. Its called competition. When a company finds a way to reduce costs, their first urge probably isn't to lower prices. But when a competitor who wants some of their market share sees that they can make money while selling the same thing cheaper, that's what they will do. The first company will then lower prices or watch the new competitor eat their lunch. That's the beauty of capitalism.
Free market may not be fun, but it's the only game that consistently wins,
Yes, but over what term? How long have we REALLY been a globalized economy? The truth is not even the Keynsian fanboys know what the future holds.
Assuming of course we actually have a free market. We don't. A free market assumes many buyers and sellers of the same product and perfect information; when you have just a few sellers of a product and disinformation in the form of advertising, you have something that does not at all resemble a free market.
The first company will then lower prices or watch the new competitor eat their lunch. That's the beauty of capitalism.
Your argument is nice in theory, but with all the outsourcing that has happened lately, shouldn't we be seeing a lot of decreases in prices? I haven't.
Offshoring creates a much larger problem that none of these articles have touched on. I call it the "Bob Factor." Here's how it works-
Bob worked for CitiGroup in Chicago. Bob was earning $80,000/yr for his database programming position in a light supervisory position with a few other coders under him. Bob had fifteen years experience and has worked on numerous mission-critical multimillion dollar projects.
Bob lost his job a year ago to offshoring.
Bob is now in his late 30's or 40's. Bob has a mortgage, car payment, spouse and kids to support. Bob cannot afford to quickly change careers. Starting over gets a lot harder with age for financial reasons.
Bob is now willing to relocate to smaller midwestern markets like.. South Bend, Akron, Indianapolis, etc. etc. Bob will now be competing with you for the $48,000/yr job that you had your eye on.
These displaced IT workers with gobs of experience and resumes 3x thicker than yours are out there competing for the same jobs that new graduates and guys with a few years and a couple certifications were hoping to get. They are the ones making new positions in IT harder and harder to find.
Ph33r the Bobs, people. They are making it harder to GET jobs or CHANGE jobs. And worse yet, they are destroying the IT salary horizon by bringing superior job skills to the table for entry and mid-level positions out of need, creating an environment where the average REAL-LIFE starting salary for IT is DECLINING.
In the area I live in, people with Masters' degrees and a handful of certifications are showing up for entry-level programming positions advertised at ~ $25,000/yr in the paper.
Offshoring is doing precisely the same thing to the IT market that the Japanese did to big steel in the U.S. in the 70's and 80's. The U.S. government did absolutely nothing to level the playing field then - What makes you think they will now? Who has more lobbyists buttonholing congressmen in the hallway on their into work? You, Joe Schmoe Slashdot reader, or Tata?
Signed,
Frustrated former IT shmuck changing careers
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Your argument makes it sound like "As long as we all band together and make cheap, crappy products, nobody can complain because they won't have any alternatives". Very few industries actually have NO alternatives, and quality products are always in demand.
It's like saying Ikea, Target and Walmart and going to run the woodmakers of America out of business because you can buy such cheap, albeity low quality, furniture from them. Quality furniture will always be in demand, but low quality furniture may in be in higher demand because people will accept lower quality for the price differential.
--trb
2) Companies would just find loopholes to exploit, and continue to seek ways to lower their costs. But then we would be stuck with a massive regulatory structure which would be a drain on the economy. All companies will do is just create affiliations and shadow companies incorporated in the bahamas to handle the work.
Only problem - this isn't a free market. I've got restrictions on what kinds of services I can offer that Joe Brain-Damaged in India doesn't have. I have no choice about whether to comply with these restrictions or not.
Ergo it is not, by default, a free market. Not until India enacts labour laws offering the same degree of protection to its workers as the US does.
You know what's really interesting? India's new government is already doing that. And despite the fact that it has only raised the cost of workers there a little, companies are already abandoning India for China. Why? Because now, when they abuse their "employees" (read: slaves, and if you've spent any time at all talking to upper management, you know that's how they think of them), they can be held responsible.
Asian Loghorn beatles are eating many trees in many American states. Should we let the beatles eat all the trees because they can compete better? How about dandylions, do you let them take over your yard because that are more hardy than grass? I bet your paying a low payed illegal to do it for you. Try highing your neighbors kid next time.
I enjoy the lifestyle of what non-third world contries give. I don't want 1st world contries to salary norm to 3rd world contries. Then I'll have to move to India and make $8,000 a year but avoid sharp things given the lower benifits provided.
Point is that not all change is good for us. We should protect our way of life as long as we can.
I bet you would not be on this soap box if you were training your replacement.
- Just because you can't, doesn't mean you shouldn't
I live in Brazil, where workers have many more "rights", or rather, entitlements, than in the USA. For instance, women have four months childbirth leave with full pay. Every worker has 30 days vacations each year, with full pay. Depending on the activity, some can retire with full pay after working for 20 years, it was only recently that a minimum age for retirement has been legislated. I know several engineers who retired in their early 40's. This list could go on and on, there are thousands of laws regulating labor in Brazil, starting from the Federal Constitution downward.
But this does not translate into a high standard of living. For one thing, it encourages illegality, if the alternatives are working outside the law or being unemployed, what would you do? Also, so many benefits do have a high cost. Taxes are sky-high in Brazil, and still rising. The minimum wage is equivalent to about US$80 / month, raising it would cost too much for the government to pay all the benefits to retired workers.
OTOH, even if there was a way to legislate against importing from countries with low standards of living, it wouldn't resolve the problem of outsourcing. Exchange rates still make a difference. If countries like China, India, or Brazil seem to have such low wages, part of it comes from depressed exchange rates. In Brazil a typical restaurant meal, for instance, will cost about US$4. You can buy a new car for less than US$5000, or a man's shirt for US$5.
At least at the state level. Wasn't it Indiana that had offshored a computer system/call center associated with the unemployed?
Also, state governments often LIKE to outsource stuff to the private sector. The bureaucracy associated with a state run project is huge -- everything from labor rules to material acquisition, and with more states needing to do more work with less tax revenue, these projects often get pushed into the private sector.
Once in the hands of the private sector, there's often multiple layers of subcontracting that can involve offshoring. Somtimes it just seems like a giant shell game -- local business (with figurehead female minority ownership for easy contract grabs), pitches for state contract and then just subcontracts all the work out, skimming profits off the top and not really doing any work.
In fact, it wouldn't surprise me if some consultancies have won business by equating offshoring with minority hiring, which should REALLY piss off the people the minority hiring laws were supposed to help.
What are you talking about? American companies are around for one reason, and one reason only: to make money. They hire GOOD programmers in India CHEAPLY. They save money. Simple as that. There is no 'conspiracy' for a group of companies to not compete over quality: as soon as this happens, a new player will come in not following these rules and take over the market. It's how free trade works.
How very true. Not everyone needs to know about or understand economics. But people who spew venom about the government or corporations who engage in intelligent business practices should at least understand the fundamentals of the topic before ranting about it.
That's not what the Indian gov. thinks. Ever hearl of the Bhopal chemical disaster? It happened because the Indian Gov. forced Union Carbide to use insufficiently trained Indian workers rather than Carbide's own, better trained employees. http://www.bhopal.com/facts.htm
The purpose of this globalization of labor resources is to pit one labor market against another, forcing wages down. NAFTA actually decreased Mexican wages. It increased profits for American companies using Mexican rather than American labor. The justification polititians use for this is 'we need to keep down inflation' which is just another way of saying 'we need to keep down worker's wages.
Nothing is inevitable. It is in the best interests of 70% of the population to not trade with countries with inadequate labor standards. If you compete with slaves, you become one.
The American middle class, vital for democracy, is disappearing. We're becoming like other third world nations with a lot of poor, a few rich, and nothing in between. This isn't isolationist. It's recognizing the consequences of our actions rather than simply bowing to 'inevitability.'
Heck, countries like China don't even recognize American intellectual property. If they won't pay us for our work, why should we pay them for theirs? Shouldn't the American Government represent more than just American corporations?
___
It's the end of my comment as I know it and I feel fine.
My boss used that word in a meeting just the other day. After she paused, I asked her, "Did you say 'rightsource?". And she said, yes, that means outsourcing, when it is the right thing to do.
I can't stand it. I feel like I'm living in a fucking Dilbert cartoon. It drives me up a wall, how people try to change words to make things 'feel better'. That is one of the many reasons I'll never be in corporate management, because I don't deal in bullshit, and could never say 'rightsource' with a straight face.
Mod me down, please. I have too much karma, and I just needed to ventilate. I just found that funny, and disgusting, at the same time.
Mod down people who tell people how to mod in their sigs
You got it nearly right, only the conspiracy theory is a little off. Why invent a conspiracy, when a few simple observations explain it also:
If the customers don't care about quality, saving there is a sensible measure. The goal isn't to produce the best, it's to produce just good enough. Anything above that is wasted. If customers wan't better quality, there's a business oppurtunity by making them pay for it.
The other assumption was, that the service from american is better than what poor starved indians provide. More often than not, the so called better service from americans was limited to read the brain-dead script with an american dialect instead of an indian one.
Here's more fuel to your argument:
http://www.nypost.com/business/23936.htm
WHAT ARE THEY SMOKING AT THE LABOR DEPT.? By JOHN CRUDELE
May 11, 2004 -- DON'T get too excited about all those new jobs that were supposed to have been created in April.
I'm not going to waste a lot of my precious space on this, but the bottom line is that most of the 288,000 jobs that the Labor Department says were created last month may not really exist.
They could be figments of statisticians' optimism.
Anyone who plodded through my column last Thursday knows I predicted that job growth in April would be better than the 160,000 to 170,000 jobs that the "pros" were anticipating.
But I also said, quite emphatically I hope, that the stronger growth would be an illusion - the result of the Labor Department's computers making happy predictions about seasonal job creation that could neither be verified nor justified.
I'll explain one aspect.
Back in the March employment report, the government added 153,000 positions to its revised total of 337,000 new jobs because it thought (but couldn't prove) loads of new companies were being created in this economy.
That estimate comes from the Labor Department's "birth/death model." You can look up these numbers on the Department's Web site.
As staggering as the assumption about new companies was in March, the Labor Department got even more brazen in April.
Last Friday, it was disclosed that these imaginary jobs had been increased by 117,000 to 270,000 for the latest month - because, I guess, the stat jockeys got a vision from the gods of spring.
Without those extra 117,000 make-believe jobs, the total growth for April would have been just 171,000 - sub-par for an economy that's supposed to be growing at more than 4 percent a year, but right on the pros' targets.
Take away all 270,000 make-believe jobs and, well, you have the sort of pessimism that the political pollsters are seeing.
If I was the suspicious type (and if I thought Washington was smart enough), I'd suspect a nasty motive behind the sudden surge in these mystery jobs. But for now, let's just acknowledge their existence.
Also keep in mind that the government doesn't distinguish between good companies being created and, say, a guy doing consulting work out of his basement because he can't find real work.
What does this new job announcement mean in the real world?
It means there will be more pressure on the financial markets, as we've seen for a while but especially since last Thursday.
It also means that the Federal Reserve now has the excuse it needs to raise interest rates in June (as I've said before would happen) and will probably start regretting that move by the end of the summer.
And President Bush will probably give in to temptation and start crowing about the economy, going against the mood, as captured by pollsters.
This will make him look as out of touch with reality as his father did.
I read the same article and I have to wonder if the author and the government are talking about the United States. I am so sick and tired of the lies! My company constantly offers sound bites to the media that " we only offshore 40 jobs ". Everyone who works with me knows this is a complete lie, it's more like 4000+ jobs if not more. Our IT area went from 1000 people to 640 within the last two years and the makeup of that 640 is 450 Indian (Cognizant and Tata) offshore consultants and 190 employees, seems like more than 3%. My own development area went from 17 developers and 1 manager to 3 developers and 1 manager. Is the company getting its money's worth? Does it get good service? Depends on who you talk to because almost everyone lies since no one wants to tell upper management, for fear of losing their jobs, that it isn't working because upper management have so deluded themselves that it is. What are the benefits of using Indian offshore consultants? It currently keeps me employed because the other remaining developers and I are constantly rewriting their code. I have to create specs for them to work from that have to be so detailed that I could create the program faster myself. Also no matter what you define for them to do they are always adding " coding enhancements " for our " best interests ", sort of like saying " look how smart I am courtesy of IIT ", of course this goes back into doing the rewrites. It's pathetic because they are learning at our expense, of all the offshore developers I have dealt with they are really no better than junior programmers, you get what you pay for. Do you really want to have fun?, try a Knowledge Transfer Session. This is where you have to take everything you know and have done for the duration of your employment and condense it down into documentation in order to give a presentation to your Indian replacements, then have a Q&A with them about it until your last day of employment. Of course it's also perfectly okay that what you did before you could do alone but now they need four people to do the same job since you've been terminated. I've had to painfully watch many of my colleagues go through this experience; these were good, intelligent people whose lives were ruined by greed. That's the bottom line of offshoring, greed. I would like to know who is going to purchase the goods and services when the U.S. starts looking like India and we're all making 25 cents a day? If offshoring is such a great thing then why do companies lie and try to hide it like my employer does and most others do? These surveys and reports simply play with the numbers, if it wasn't so sad it would be a joke!
Your job and 830,000 others are gone.
This is very dodgy stiatistics. The fact that 830,000 jobs havce been sourced overseas doies not mean that 830,000 jobs have disappeared: that would be to assume no growth at all.
I don't have figures for softw3are developers, but The Economist reckons that the number employed in the US in call centers (one of the other major outsourcing scapegoats) has been essentially constant for about 5 years. Which suggests that one of the major drivers for outsorurcing is not so much cheapness as availability: the US has used up all the people able and willing to do that sort of work. Outsourcers have already found the hard way that the savings are way smaller than expected - even negative. But if you cannot get the people at home, overseas looks good.
Which is not to say that nobody has ever lost their job to overseas outsourcing - of course they have. But it is to suggest that there are still jobs somewhere in the onshore US for all those displaced - though maybe not where they currently live. But this is the US way - make firing easy so peopel will hire easy. The alternative is the European way: make it so difficult to fire someone that you don't dare set up a risky venture because the downsizing costs will double your losses.
Historically, the upside of the US attitude to jobs has worked very well. Why is Silicon valley in Californai, not England? Because the US has a risk-friendly, failure tolerant attitude. Losing out to outsources is the downside of the same coin.
Consciousness is an illusion caused by an excess of self consciousness.
As a few readers have pointed out so far - The Bobs are earning less money, so consequently they are injecting much less back into the tax base and are not purchasing the same amount of goods and services.
How much less?
If 830,000 people are forced to take jobs elsewhere for 50% less pay, that's 33.2 billion dollars/yr in lost income. That's assuming they are able to find jobs AT ALL.
This is using the "$80,000/yr" figure from my first post. Obviously not everyone that has lost their job to offshoring earns $80k. Some earned less, some earned more. One interesting factor is that most of the lost jobs are from fortune 1000 companies, which tends to suggest that the average salary of the affected positions IS much higher than the average salary at a 50-1500 employee company in the Midwest.
Needless to say, regardless of the actual figures, the amount of lost income is in the tens of billions of dollars. If those people have not been able to find replacement IT jobs at all, it's
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The problem with this attitude is that there are ways that first world nations should not have to compete. While cheaper cost of living is a sensible reason to outsource, loose labour laws are other reasons they outsource.
I mean, its one thing to outsource coders to India where its just like a programmer here - its another to outsource labour jobs to countries like Indonesia where they can treat child workers as abusable slave labour.
I figure there should be tariffs on outsourcing and importing - free trade is good economic sense, but not necessarily good social sense. However, it shouldn't be applied based on "they're stealing our jobs" so much as "we should not allow American companies and American products to be made by oppressed labour". Tax oppression. Simple. If they don't oppress their labour pool and they still steal our jobs, then you're right - they actually are more competative. But if the US has to start abusing its own workers in order to compete, then something's wrong.
Or would you rather go back to the days of Edison, locking the scientists in the lab until they invent something new.
Perhaps we should renegotiate our trade agreements to include these things. Maybe withdraw from the WTO and NAFTA until these are worked out. (For example, require that Mexican trucks meet US emissions standards in order to operate within the border. Sounds reasonable to me!)
As for financial penalties, they should be greater than the profit achieved by doing things against the morals or ethics of the United States. If a company saves $50 million by using near-slave-labor and they get fined $25 million, they're still making $25 million of profit, and therefore have little incentive to stop.
I'm in the hole of the broadband donut.
If making goods abroad cuts costs, why does a pair of sneakers that cost 50c to make still cost me about $50?
Why is it that the most expensive people in my organisation and the easiest to offshore (middle-management) get paid more than me?
I think yours is a very simplistic view of the World.
Charlie Munger (Warren Buffet's second in command) argues against over-simplifying economics (follow the links to his transcript at the Motley Fool) and the dangers that it brings.
Sure, the first order effects of offshoring look good, but second, third and fourth order effects could be devastating (including your friendly offshore nation builds a better atomic bomb than you because you have been paying him to increase his intellectual capital).
--- "We've always been at war with Eastasia."
What do you think the alternative is to off-shoring? If US companies don't off-shore to India, do you think Indians will just sit around, twiddle their thumbs, and keep buying expensive US-made products? Not on your life: they'll build highly competitive domestic industries, with their entire staff based in India, using cheap labor, completely beyond US regulations, taxation, or control. They'll import less from the US and export more to the US and offer cut-throat competition to US companies in other markets. The consequence will be many US companies going out of business entirely. Numerous examples show that countries can go from wastelands to economic powerhouses in a few decades, and India is ahead of the pack already.
Besides, I also don't see any justification for calling these jobs "American jobs" in the first place. Just because the US happens to have been able to build a large industrial base when other nations were in shambles doesn't mean that that kind of extraordinary situation is a God-given right. Postwar US economic success was a lucky, but temporary, windfall. Americans, like the rest of the world, have to learn to live with real, tough competition from other nations and the real possibility of economic disaster--the US has no more found a "magic formula" for wealth than any other nation, even though many US politicians arrogantly proclaim otherwise.
Furthermore, it was primarily the US that dragged other nations kicking and screaming into the current system of globalization and the US has benefitted, and continues to benefit, handsomely from that system. Outsourcing is, in effect, at the very core of why the US wanted globalization in the first place: you get economic efficiencies from comparative advantage. It makes no sense to come back and complain about that the system is doing what it was designed to do now that it is actually starting to work as desired and as expected.
Well, duh! If you ask the company, nobody is "replaced"-- departments just get downsized, and new divisions open up overseas doing the exact same job, but there is absolutely no corelation between the two... no sir!
About a year ago I was working as a contractor for a certain very large hardware/chip company. My immediate manager (an engineer) and über good guy wasn't "replaced" -- he was just sent to India to train somebody how to do his job, and then was send to the "redeployment pool" (laid off) a few weeks later as part of a massive downsizing of the department... nope, no replacement going on here!
I empathize with technology workers in the US who are afraid of losing or have already lost their job to a third-world country. But it's important to realize that this process of outsourcing is a natural consequence of the enormous gap between the wealth of Americans versus those overseas.
Offshoring creates opportunities for millions of otherwise disadvantaged individuals in countries where incomes are lower than they are in the US. Offshoring boosts their incomes and helps these poor countries become rich countries by funding improvements in their infrastructure and allowing them to access external resources through increased foreign currency reserves.
Also, it is not the case that a job outsourced is a job lost to an American. Oursourcing creates capacity which allows more production of goods and services and therefore supports a larger workforce -- in the US and abroad. Certainly there will be a period of adjustment where some US jobs are lost and seemingly not recreated, but look at what happened throughout the 1990s when manufacturing jobs were lost to cheaper countries. Jobs were created in other areas of the economy and Americans ended up far wealthier than before.
There are six billion people on earth and the vast majority of them are clamoring in the depths of poverty for any kind of upgrade. It's only fair that we share the wealth with them -- or suffer the consequences of a downtrodden, well armed opponent...
As anyone who has looked into this issue can tell you, there is not in most cases a one-to-one correlation between an American losing their job, and the job going offshore.
For instance, Microsoft is shutting down a major facility in the US. They are also hiring in India. Will the Microsoft jobs lost in the US be counted as jobs lost to outsourcing? Probably not. That is why the new buzz words are "global sourcing" and "insourcing".
Also, how many jobs are being lost to "American" companys like Cognizant, who do not hire permanant US residents or citizens to work for them, only people on H-1B visas? 30% of Cognizant's 9K headcount work in the US (per the June 7th issue of Newsweek), and according to the Dept of Labor's LCA database the company has 2719 immigrants here on H1-B visas (you do the math).
This issue is not simply them bad us good. American IT workers are getting shut out of the IT labor market, even in our own country. This is not good for anyone. We are wasting our own intellectual capital, which we should be sharing with other countries so IT can be used to bridge cultural and economic divides. People should not have to pretend to be from another country as part of their job requirement. People should not be brought here on temporary visas and be paid less and worked harder than the Americans that work in the next cubicle.
This black and white thinking about this issue is pitting the workers on both sides against each other. The only people who win in that situation are the big guys making millions and millions of dollars to come up with these schemes. We (all IT workers worldwide) created these technologies, and historically we have openly shared and taught everyone so that the technology would thrive. That cooperative spirit needs to come through when thinking about this issue.
www.displacedtechies.com
I am a recent graduate who found himself in a toilet when it came to getting a job. I have been working in the industry since my freshman year in college. By the time I graduated I had experiences with almost everything: from kernel development, to Java to PHP and system administration. Yet it took me forever to find a job. Now that I am gainfully employed I constantly wach out and see how I remain employed in the coastal United States. Here are my survival tips.
Look for a job where you can get into business-to-business relationships. When you deal with large companies, your job has a higher chance of staying in the States because companies like quality service. Dell was forced to bring its business customer support because managers did not enjoy talking to people who could not assit them in a reasonable manner. Moreover, once you get into B2B, you get to meet a lot of people; if you leave a good impression, some of them could help you out in the future.
If you are stuck with a job that involves receiving specifications over e-mail and then sending the code somewhere else, RUN. Unless you code something that is used for military of the government (meaning you have at least one level of clearance), you job is done. You must get out and do more things. I do not know what things you should do, but you must do something besides being a code monkey.
Learn how to do business; learn how to benefit your current employer or start your own shop. People do not create companies in order to employ more people. Businesses are here to make money. If you show your employers that you can benefit the company, they are likely to keep you closer.
Learn languages, cultures, and traditions. Improve your communication skills and presentability. Being flexible in the global economy is very important. I got my first job only becuase I was the only applicant who spoke fluent foreign language. I could talk and relate to our development team, something that other candidates could not offer. Based on my previous experience, I am going for one more foreign language, my fourth. Staying neatly groomed and socializing with your co-workers helps as well. I would not want to employ a person who is not welcome by the rest of my crew.
I followed these rules and, fortunately, I was able to find different jobs even during the recession. Also, remember whatever does not kill you, makes you stronger. Learn from other peoples' mistakes and do not forget to do so from yours.
... of the R party is what we used to call the eastern establishment rockefeller liberal wing of the party, back in the 60's and 70's. There was a huge power struggle then, and the traditionalists, who included a lot of the classical non interventionists and business ethics-matter types, lost, bigtime. That eastern establishment wing (your basic military - industrial complex-banking establishment sorts, now roughly classed as the globalists) took over in the 64 election, then re-concentrated their power when they forced bush 1 onto the ticket with reagan. The current occupiers in DC have little, I mean VERY little, in common with the traditionalists, although I will admit they have a lot of misguided fundies sucked into supporting them, based on "endtimes" prophecy and being israel-firsters, but that's actually a low number and they don't have as much influence as they think they do, but the R party will keep their votes anyway, just "because" they can.
At the top, the strings are pulled (speaking of both the D and R party now) by a few large banks and conglomerates, same as it always has been, and the various subgroupings/constituenceies are still being preached to in the exact words they want to hear, to keep up this generational-long congame.
Same old- same old stuff, just this eras version of "ohhh-new shiny so it MUST be improved.." tacked on top.
I'm personally so disgusted with the R party I don't even call myself conservative any more, they even ruined that word, turned it into something bad and noxious, when it used to just stand for honest, decency, small and efficient government, and more basic freedoms. Now I don't know what the heck it stands for other than it's "patriotic" to become a looter nation, and that lying is a commendable lifestyle choice.
As to the word "liberal", that was abused even further, what passes for a defintion now as liberal has nothing to do with a classical liberal from the olden daza. It certainly never meant just wholesale wealth transference to pick up votes, like it means now.
I consider myself now just a traditional Constitutionalist,an independent, with a strict interpretation based on the english words and defintions that were used at the time of the writing of the Constitution. For a very common example, the state of Vermont has the only true implementation of the second amendment, IMO. The federal government sure doesn't, that's for sure.
I would say there's handful left of high ranking pols in both parties who are actual patriots and constitutionalists, but they are a severe minority. Most of the rest are all various flavors of garden variety crooks, IMO.
The good news is, we have developed a huge number of people who have gotten over voting for criminal gang A or B,or have stopped voting entirely, which means there exists a base of *potential* voters and activists who could conceivably take back government from the gangs who run it-some time anyway. It would take quite the grassroots effort to be sure. And there's also a growing number of what are called disaffected voters who used to classify themselves as R or D but are now neutral and looking harder at reality. This is good, and the net sure helps to break the programming and brainwashing that has gone on for years.
It's June, 2004, and I can't believe we're STILL arguing the BASICS of this complicated issue on Slashdot. Go to the archives and re-read all the previous threads on outsourcing. We've discussed these issues to death. It's offtopic.
The TOPIC here, is that the Bush Administration produced a report, which includes demonstrably false, and intentionally misleading information, which distorts the magnatude of the problem that this poses for America and our economy. Gee, Bush has never done anything like that before, has he?
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
You can buy and sell IT JOB futures here:
http://www.ideosphere.com/fx-bin/Claim?claim=IT
Includes a lot of links to BLS statistics and gives you some idea of whether you will have a job in a few years. If this claim trades above $0.50 then market participants expect the job market to expand; below $0.50 and it is expected to shrink.
Put your (play) money where your mouth is: You can get a high score in this game by predicting the future. If you really think all the jobs are going overseas sell sell sell.
It's kind of an experiment, and a non-profit/academicy/free thing so give it a whirl.
Companies lobby the government for favorable treatment. Hell, Microsoft pays no federal taxes and it's the most profitable company and yet your mom and pop don't get tax breaks or incentives or abatements. Our conservatives believe in taxing workers, not businesses. In fact, handing them money through sweetheart deals. You're kidding yourself if you don't think businesses don't create "protectionist" policies to help themselves (but not workers, oh, no...)
If corporations have lobbyists, why shouldn't the average joe?
People that believe that protectionist is garbage should revoke all local tax abatements and government research money to corporations. It's a hypocrite that believes in "helping corporations" is okay, but helping people is "protectionist."
If I buy components from China or India instead of your company, and your company loses business and you get layed off, I have outsourced your job as part of the global economy. However since I am getting lower cost components and become more profitable, I can hire more people to assemble my product. Then as I realize that other local companies are eating into my business by selling at a very slightly lower price, I now start looking for offshore manufacturing and shift my workers to other jobs required by the additional volume. I become more competitive and profitable, but my local competition loses business and has a layoff. So far I have outsourced your job and the jobs of another local company. Both of these companies had layoffs that were not due to outsourcing.
So far I have outsourced your job and the your company's manufacturing by putting you out of business.
When the Bureau of Labor Statistics asks mine and the two other companies about outsourcing, two of them have lost jobs but not due to outsourcing. I have done outsourcing but have hired some people to help with the additional volume.
Net result of the survey? Few or no jobs have been outsourced, and the jobs that were outsourced did not result in a layoff. So much for government statistics!
In Germany: "GERMANY has been the sick man of Europe for some time, with high unemployment and a stagnating economy. The diagnosis of German economists is unanimous: the labour market is unable to balance supply and demand because of high social welfare benefits and excessive trade union power." Link
Well, the article tries to dispell that "myth", but regardless of the reasons, unemployment in Germany is nearly twice that of the USA (10.3% vs. 5.6%).
Denmark does pretty well (2002) at 5.1%, which is generally considered optimal. Link.
And Canada?, 7.2%
So let's rank:
Stupid sexy Flanders.
How do you explain 5.6% unemployment? The same number that Clinton had that everyone called "great."
As a statistically trained person I'd like to point out that thats a agrigate number that is a generalization of the workforce. As such it doesn't mean dick. If 30% of all jobs switched from white collar to service, the unemployment woudl still be 5.6 but now the average income has drastically fallen.
"There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
If you really believe in personal freedoms - you gotta side with Bush on this one. Companies ought to be able to do what they please within the law. [my emphasis] Personal freedoms for companies? Sorry, you mean free trade. (Yes, I'm aware that corporations are "legal persons" in the USA. But that's a contingent legal fact.)
Are you adequate?
If you don't like globalization, quit complaining and do something about it.
1. Support PACs that support your views. I hate this idea, however, it is how the system works. It is easier to change a system from within than it is to go against it.
2. Vote with your wallet. In the end, companies have to support shareholders and consumers. If consumers stop buying cheap imported goods, companies will stop producing them. Shareholders do not like supporting companies that do not sell goods that they produce, no matter how efficiently they produce them. There was a great article in Business 2.0 about Wallmart and Masterlock. Masterlock employees were buying goods at the local Wallmart. Wallmart sold more expensive Masterlocks, and cheaper locks made in China. In order for Mastlock to remain a vendor at Wallmart, they had to bring their prices down. Masterlock moved their manufacturing operations off shore to cut costs, and laid off their employees. It is a cycle. Stop it.
3. You are a shareholder, VOTE! I am tired of hearing the "lets unionize garbage". Most companies that I know of state that they are doing things for "shareholder value". Heck, your retirement fund (if you have one), is probably a major stakeholder in the company. Get organized, exercise your shareholder rights; they have more power than any union ever did.
4. Vote in your government elections. In the end, officials get into office due to how many votes they get.
Personally, I think that globalization is a good thing, and I am using my shareholder rights to promote it.
Outsourcing is merely a product of freedom. If you want to stop outsourcing, make employees in the United States more competitive on the world market. We can do this by:
(1) Lowering or eliminating employer taxes. That's right, companies have the pay the government for the right to hire someont to work for them.
(2) Lowering or eliminating employee taxes. With lower taxes, employees will be willing to work for less.
(3) Reducing regulations surrounding employment. While employers are spending money scrambling to find ways to immunize themselves from RSI injury lawsuits, they are spending untold billions to consultants and for expensive products. This is one example of many thousands.
(4) Reducing the cost of living by reducing the cost of goods. The only way government can do this is by lowering taxes and by reducing regulations.
(5) Increase the value of our employees. Make reading a requirement for elementary school graduation. Make generally useful skills in the workplace (ethics, responsibility, hard-work, good attitude) requirements for high school graduation. Encourage studies in colleges, trade schools, and universities in math, science, engineering, and other profitable areas. Discourage the politicization of our college campuses and keep the focus on teaching and training. Make the cost of obtaining an education cheaper with less regulation and lower taxes.
When hiring someone in the United States is cheaper and more profitable than hiring someone in India, then we will stop outsourcing. President Bush is no more responsible for this phenomena than the Tooth Fairy is responsible for the bombs being dropped in Hiroshima.
In short, instead of complaining, compete!
The radical sect of Islam would either see you dead or "reverted" to Islam.
The current outsorcing situation is about US companies taking US money from profits of US sales to US customers for labor from US workers over seas...taking engineers, research, AND incidentally JOBS to save a few bucks. It's about YOUR bosses wanting to save a buck, it's never been about US workers not being competitive...Realize that most large US manufacturing companies have had record productivity gains over the last decade! It's not high wages or insurance premiums! it's pure simple greed.
Henry Ford hit on this early on when he started his company. He paid above average wages which shocked the industry at the time. But he did it so HIS workers could afford to buy HIS cars...he realized that he had to grow his own market or he would always be a niche product. The current recession is directly in line with that assumption! It's never been a recession, it just a market correction...sometimes called DEFLATION! Simply put, my employer pays me less in real dollars each year [as is the case for most americans right now!] My standard bills for power and taxes still go up by the average rate of inflation meaning I have less and less money each year to spend on fun stuff. Notice how Walmart and such are always having sales...they can't make money to save their lives! Pertually having stuff "on sale" is deflation.
Actually deflation is fine for you and me...just not for people with lots of money. Depression is runaway INFLATION where the haves charge more and more trying to keep what they got... Deflation is the "graceful" approach but the rich people loose because no matter how good a deal they get they can't ever actually make money...there are other desperate rich people also trying to make money!!! In the meantime it's fun for us because stuff is really cheap!!