Slashdot Mirror
India Outsourcers Find Back Door in Canada
securitas writes "Metro International newspapers Toronto edition reports that more Indian companies are opening back doors into the United States by setting up shop in Canada. The issue of outsourcing, offshoring and nearshoring has become a hot issue, with the 2004 presidential election less than a week away. Candidate John Kerry has said he will close the tax loophole that makes it advantageous to outsource call centers."
I guess that makes me an evildoer, eh? Ah well, at least Guantanamo Bay will be warmer than Winnipeg this winter.
Trolling is a art,
Blame Canada?
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
I think near-shore or off-shore makes no difference as they're still outsourcing, ie taking away jobs which could have been given to locals.
Bush said druing a debate that he will let Mexicans to come to US to work legally, and gradually obtain residency. If this happens, the Canadian-Indian issue is small in comparison.
Maybe the ideal "screening" is based on the percentage of employees' residency status, so if over 50% of a Canadian company is from developing countries, it's no deal.
Rock that crushes, Paper & Scissors that don't matter.
He could of introduced plenty of bills supporting his current election platform as a senator, why didn't he? What makes you think he'll do it now if elected president? Just asking.
As anyone knows who has hit someone in India the accents can be very hard to understand, Canadian accents (if any) are very close to americain ones so you might be able to get the help you need!
Everyone that disagrees with me is a paid shill
I think it's because there was a fad for awhile for directors of TV and movies to film in Canada, because it was cheaper, and for a little while a lot of places in Southern California were feeling it. But then prices started going up in the areas in Canada where filming was being done because there was awareness that there were lots of rich people there all of a sudden, and the locals acted accordingly. It'll balance itself out. At least, in my youthful optimism, I'm going to hope it will.
Did they follow proper disclosure procedures and report the backdoor to the Canadian government before submitting it to Slashdot?
Why doesn't anyone ever talk about all the jobs being insourced? The real "Benedict Arnold" companies are those that move their headquarters overseas -- in the form of a rented office in Bermuda -- to avoid paying US taxes, not US-based companies with manufacturing centers in other countries. Those are the real tax cheats.
Bungo!
What tax loophole is this exactly? I know that the companies avoid certain expenses just due to lower wages offshore, but taxes too?
If there is a loophole, closing it would mean more revenues for the government (plus for them) and/or less outsources (plus for us)
I knew from the post that someone would immediately whine that it mentioned Kerry's stance.. and immediately wanted to post something about it...
Slashdot is not a TV or radio network. There is no reason for it to give "equal time" or avoid showing bias. It's "news for nerds" - it doesn't claim to be nonpartisan (or partisan).
The internet is not the same as other "media outlets", and Slashdot has no "responsibility" to be any certain way.
http://www.babysmasher.com
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Also please remember that the US has spent the last twenty five years literally ramming free trade down the world's collective throat (admittedly, an effort made on behalf of the financial elite, not workers).
Be sure you show George where we are on the map. It could be embarassing seeing him saying how great Canada's burritos and Corona are after he conquers Mexico.
Trolling is a art,
not necessarily...
...
User: it's a Latitude CPi-A.
Tech: Got it, a CPi.
User: no, it's a CPi-A.
Tech: I heard you the first time, eh? A CPi.
User: No, a CPi with the letter A.
Tech: With what letter, eh?
...
User: I think it's a boot virus.
Tech: What's about virus?
User: No, it's a boot virus.
Tech: What does "it's about virus" mean? What virus, eh?
First off I'm voting for Kerry, but the idea that new legislation is going curb the tax advantages of outsourcing is ludicrous. So lets say Kerry does pass such a bill, what will happen? Large companies will simple open up offshore subsiaries to skirt the law, similiar to what Haliburton did under the leadership of Dick Cheney, by having a Caymen islands phantom corporation in order to business with nations like Iran.
from an old episode of This Hour Has 22 Minutes
An Apology to Americans
By Reporter 'Anthony St. George' (Performed by Colin Mochrie)
Hello. I'm Anthony St. George on location here in Washington.
On behalf of Canadians everywhere I'd like to offer an apology to the United States of America. We haven't been getting along very well recently and for that, I am truly sorry. I'm sorry we called George Bush a moron. He is a moron, but it wasn't nice of us to point it out. If it's any consolation, the fact that he's a moron shouldn't reflect poorly on the people of America. After all, it's not like you actually elected him.
I'm sorry about our softwood lumber. Just because we have more trees than you, doesn't give us the right to sell you lumber that's cheaper and better than your own. It would be like if, well, say you had ten times the television audeince we did and you flood our market with great shows, cheaper than we could produce. I know you'd never do that.
I'm sorry we beat you in Olympic hockey. In our defence I guess our excuse would be that our team was much, much, much, much better than yours. As word of apology, please accept all of our NHL teams which, one by one, are going out of business and moving to your fine country.
I'm sorry about our waffling on Iraq. I mean, when you're going up against a crazed dictator, you want to have your friends by your side. I realize it took more than two years before you guys pitched in against Hitler, but that was different. Everyone knew he had weapons.
I'm sorry we burnt down your White House during the War of 1812. I see you've rebuilt it! It's very nice.
I'm sorry for Alan Thicke, Shania Twain, Celine Dion, Loverboy, that song from Seriff that ends with a really high-pitched long note. Your beer. I know we had nothing to do with your beer, but we feel your pain.
And finally on behalf of all Canadians, I'm sorry that we're constantly apologizing for things in a passive-aggressive way which is really a thinly veiled criticism. I sincerely hope that you're not upset over this. Because we've seen what you do to countries you get upset with.
For 22 minutes, I'm Anthony St. George, and I'm sorry.
You're allowed to smack Texans upside the head. They usually deserve it.
If I hadn't been through all of this election I probably wouldn't have believed my eyes. This report from last February from people in Wisconson finding Caller ID signatures from Canada for the Kerry Election Call Center? Makes you wonder if there will be political loopholes in any laws similar to those for the National No Call list.
Today is a gift. Save the receipt.
Remarks like this cause me to think perhaps people who make 6 or 7 figures per year forget that going to school isn't particularly cheap, and that doesn't even consider the dynamics and costs of supporting yourself while taking classes full time just so that one can complete their education in a timely manner. Student loans help matters somewhat, but one has to remember that they are, in the end, just loans... and one has to pay it all back.
File under 'M' for 'Manic ranting'
Slashdot is not a TV or radio network. There is no reason for it to give "equal time" or avoid showing bias. It's "news for nerds" - it doesn't claim to be nonpartisan (or partisan).
Except that it used to be a place to read about really cool stuff, really neat stuff, things on topic for the online community, not stuffed with politicking. And maybe you don't mind Taco's obvious bias, but it gives me agita, and I don't need it. I want my old Slashdot back! Maybe things will be back (or closer) to normal after the election.
the supposedly liberal crowd, that would often complain about the rich countries not giving enough aid to the poor ones, quickly rushes to highly illiberal views depriving the poor of ways to build honest wealth through honest work.
In Soviet Washington the swamp drains you.
If?
I guess thats one reason, but let me maybe present another one. The company I work for recently did some outsourcing to India, even though we mostly went through Chicago when the RFP negotiations were going on when it came to the nitty gritty (i.e. the "real" work) communication was a huuuuge problem. Even after we worked that out the quality of the code we got back was, let us say lacking (this might have just been this one company, but I'm just saying...). Anyway, by the time the project was done it cost us more and took us longer than if we had just hired local contractors to do it. Edmonton is kind of a weird place, there are at least four post-secondary institutions pumping out IT grads three times a year, putting it bluntly we have a lot of skilled IT people flipping burgers around town. Getting those people who are still keen on the IT industry (but don't want to move away) into low paying but IT-related jobs isn't exactly hard to do.
Edmonton has always been an IT hub because of the Provincial Government (and the IT jobs it attracts), but in the last decade big IT firms have moved in and paled that aspect of Edmonton's IT community, firms like IBM, Microsoft, Fujitsu, BioWare, Intuit (etc, etc...).
P.S. It's good to see NAFTA finally doing what it was designed to do, form an even stronger economic partnership between the Americas.
P.P.S. If these Indian companies have indeed found a back door to profit in the good ole USA, you can be sure that the Canadian Revenue Agency will be sucking the life-blood from them if they are profitable. If there's one thing our Government knows how to do, it's tax the bejesus out of any pocketbook...
crazy dynamite monkey
maybe we are just expecting to be over paid. Why would Indians in canada get paid less than Canadians? They both have to pay the same for their stuff. Just because you arn't willing to work that cheap doesn't mean someone else shouldn't be able to.
Personaly, I like having cheap tech support workers because even if they don't know much more, they are still better than talking to a computer. And, they can pass me up to somone who doesn't need a script if the script won't solve my problem.
Not to mention the the fact that the money these companies are saving will be invested on other things which creates more jobs.
It was me, I did it, I moved your cheese
Everything you've said so far is good except for the
Maybe in 3rd world nations were slave labour is fine
comment. Software Developers in India (including me) are paid 350 times the prevailing minimum wage in India. They aren't slaving away at all. That's the REAL reason outsourcing is working. Because the people in the 3rd-world companies are NOT being exploited. They're paid astronomical sums by their country's standard, but dirt cheap by American standards, so it works out just fine. This article may help. Eventually our salaries will rise (they've been rising about 6% every year for the past 5 years) and eventually the work will move elsewhere - or it might even move back to USA after y'all make a painful adjustment and decide to work for $30,000 instead of $40,000 At some point, it will no longer be worth the communication, distance and time lag problems to hire 50 Indian workers to do the work of 12 American developers. Yes the work might then be outsourced to the Philipines or China or some place but this is unlikely and I'll tell you why: The reason India is a chosen destination is population. There is just such a LARGE pool of english-speaking univeristy graduates relative to other developing nations. So philipines might take some of the work, but never as much as was shipped to India. China is unlikely, because its standard of living is already higher than India's. This means that Chinese workers are already more expensive than Indian ones (plus in terms of english-speaking people and IT China has some ways to go - by the time China catches up with India in this particular demographic its standard of living also be higher thus meaning that the price differentials between Chinese and American workers ain't too big so no outsourcing). In order for this to truly be a race to the bottom as all of you Slashdot panickers assume you would need another country of India/China's size in terms of population, with a standard of living lower than them and with a large percentage of young, university graduates that can speak the language of the western world. There is no other country. So this is what the future holds - American wages fall a little, Indian wages rise a LOT. It becomes financially unviable to outsource to India so some work comes BACK to the US, some work gets shipped to Sudan or the Philipines or Croatia or whatever and some other work stays in India. And now that India has higher wages, they start buying more developed world products, trade increases, your economy picks up again blah blah. But yes, if you're a software engineer, it'll be hard to find a job for the next 5 years or so - this all hinges on how fast Indian wages rise, and how fast American wages fall. If Americans are willing to work for less, then less jobs will be outsourced. I'm not saying you SHOULD be willing to work for less, I'm just stating the facts.
My Favourite Meme
I'd like to point out that the story as posted edited out the attribution.
Editors: Please don't remove quotation marks where they are necessary because that effectively results in plagiarism. The words in quotes are not mine. They belong to the reporter.
Also, the reference to the interview with the Chairman of Satyam - an Indian outsourcer that has set up shop in Toronto - was removed. Knowing that Slashdotters often don't read the source articles, I included that detail as an incentive for people to read what the leader of a large outsourcing company has to say about this politicized business practice.
Original post follows:
..what you say is correct, but there are other aspects to consider. A US company competes in a global marketplace, they're competing against products made all over the world. If for example an Indian company makes a piece of software similar to your entirely "made in the USA" product, their costs will have been much lower, they'll be able to sell it for less and nobody will buy your software - you're completely screwed. Outsourcing allows you to lower your costs, which isn't just trying managements evil attempt to fire you. Outsourcing also allows other advantages, you can exist as a small startup company in the US with a core R&D team and a great idea. When you've designed the product you can suddenly have a team of 100 in Bangalore coding like banshees for 6 months to make it a reality - and when you've got your product you can wave them goodbye. Without outsourcing you'd either be trapped as a small company, have taken years to code the same yourself - and miss your window of opportunity, have been bankrupted taking on US contractors or have taken on employees and either kept them on afterwards (bankruptcy) or laid them off. Because of outsourcing you're now a small company, with a great product you're selling around the world, making a tonne of money and paying a lot of tax into the US system. Point I was trying to make is that outsourcing isn't right or wrong, good or bad, it's another tool and if you refuse to accept it exists or use it if available you'll be screwed.
Ok, first of all, it is not this phantom tax loophole that makes offshoring attractive - and it's not as if this tax "loophole" even exists. It is not a loophole at all. What makes it advantageous for taxes is that the US cannot collect income tax from people who don't live and work in the US. Duh! That's not a loophole, it's just the law. We will never be able to close this loophole because we cannot collect income tax from foreign citizens working in a foreign country.
Moving on. The factor that really makes offshoring attractive is that, for a call center as an example, the labor and utility costs are so much less. An American might demand $12/hr to work at a call center, which is expensive for someone who just reads a script over the phone all day. On top of that, the company has to pay for real-estate (which is ridiculous in this country right now), insurance (which is also ridiculous thanks to frivolous lawsuits), payroll taxes (FICA, Medicare) which are high because of government fat, high utilities due to high cost of energy in general, and a host of other factors that makes low-income jobs difficult to maintain in the US.
What makes these things cheaper in a place like India? Well, first of all, a dollar in America goes a long way in India because of the exchange rate and the differentiated standard of living. Something that costs $10 to buy here costs $1 in India, including labor. Second, India itself has a hugely growing economy and infrastructure, and for American businesses to participate in building that growing nation, they have to have a presence there anyway. India has a very nationalist government and they won't allow foreign companies to simply walk in and take money out of the country. India needs call centers for India, too, and those call centers by Indian law must be located in India. Also, Indian law also requires things that are sold in India to have some % of Indian-manufactured content. So, for infrastructure companies to sell their goods, they have to have a presence there as well.
India's nationalist policies are working well for them because they are a growing nation. There is so much stuff to be done and sold there that it is worthwhile for companies to locate jobs there. Nationalist policies often work for rapidly growing countries because it keeps money in the country. However, once that nation is mature, those companies and the jobs they brought will leave just as quickly as they came. This is why nationalism does not work in a world where it is easy to move resources around, or in a matured nation that is in a state of continuation rather than development.
This is also why nationalist policies will not solve our outsourcing "problem." There really is no solution because we cannot control what is going on in other nations. The best we can do is do what we've always done - persevere. I've been fortunate enough to keep my job even though I can definitely see my job going to India in the next 24-36 months. I will have to get another one, which is why I am training for it now and not later.
This really is a sink or swim situation, and the choice lies with each individual. One cannot be dead-set on a specific job at a minimum rate of compensation. If you are flexible, willing to learn a new profession, and willing to relocate, you will be able to find employment. The jobs are out there. The unemployment rate has been falling steadily since the post-9/11 peak, and is lower now than it was for the first 4 years of Clinton's presidency. Historically, the unemployment rate has fallen in between 5 and 7%, which occasional excursions outside that range both above and below. Right now it is 5.4%.
What we're seeing is a shift away from technology jobs because that period of growth is over. The explosion of the Internet is what gave us the first period of prosperity, and now we're in a period of continuation. Time to find something else to do.
Well, it wouldn't be the first invasion that had "gone south" on him.
One line blog. I hear that they're called Twitters now.
> It could be embarassing seeing him saying how great Canada's
> burritos and Corona are after he conquers Mexico.
Would that be more or less embarrassing than when Dan Quayle was heading for Latin America and mentioned that he needed to brush up on his Latin?
Do daemons dream of electric sleep()?
It is a sink or swim situation. However, when the ship suddenly plunges, it's difficult to avoid being sucked in. Your wages, your job, are dependant not just on your abilities and efforts, bu the state of the entire (in this case) American economy. Being a good mechanical engineer on the Titanic probably didn't help so much when the ship hit the iceberg.
As many people have said on Slashdot, and on more academic boards, the entire point of outsourcing is to lower labor costs. That's it. Nothing else. Nothing more. A capitalist system exists primarily to generate a return to those who own the capital. Cutting labor costs increases the capitalists returns. No, I'm not speaking from any Marxist point of view here. Read Adam Smith.
India's policies work do to the low pay of their workers. Nothing more. Not a policy choice, but a cheap labor force due to a massive and desparate population. So, do you really think American workers can compete against about two billion Indian and Chinese workers? The only way we can do that is to have our own wages plunge to a level that would be difficult for most American's to imagine.
As wages fall for workers facing international competition, wages fall in other fields. Think of this: if the automobile factory closes the next town over, business probably won't be that good. When we combine outsourcing with a taxation system that encourages the concentration of wealth, we can foresee serious structural problems in the American economy. I've tried to think of a simple way to explain this - maybe the greatest evidence is the fact that American real wages have been flat for thirty years, despite incredible increases in productivity.
Jobs are out there - but job quality, measured in wages and in hours, is falling. If your job is outsourced, its unlikely - and against economic theory - that you'll be able to find an equivalent job in the same field and roughly the same locale for the same wage. And as the Democrat's have been happily pointing out, the new jobs being created pay far lower than the ones lost.
Other employers understand outsourcing, and they'll be happy to give you a lower offer. Of course, your bank doesn't care about outsourcing and your mortgage stays the same. So does your health insurance, children's tuition, etc. So your in serious trouble.
I have a question for all of our fun Libertarian economists on /. If immigration to the US averages about 200,000 per month, and the Administration claims that 1.7 million jobs were created in the last four years, how many new jobs were available for the native population? Guys, unemployment statistics are easily manipulated. I'd recommend you visit the Bureau of Labor Statistics site and, well, read between the lines. Alos, please consider that unemployment statistics only count those who are receiving unemployment benefits. Once you've exhausted your six months, you're no longer unemployed, you become a "discouraged worker." Off the roles, out of thought. Same thing occurs if you take a low wage job - say go from being a chip designer to a chif fryer. Still counts as a job.
I have to say this: The government of the United States exists to protect the welfare of the American people, not to protect the welfare of the wealthiest American's bank accounts. And the two are not one and the same.
/* Dang, I can't type that well. */
Nor any finincial responsibilities other than yourself. I spent two years between "real jobs" and had to work two or three minumum wage jobs just to make ends meet and help keep my child and my wife fed and in shelter. It's not laziness- it's a staggering economy. Right now I'm back to work in IT, doing what I love (software design). But it was much harder to find work now than it was the last time I was out of work (right out of college, 5 years ago). The main problem I had looking for IT work is that I was over-qualified (I'm working aan entry level job right now. I had to convince my current employers that yes, I wanted to do this even though it was lower than my level of experience because finding a job as a lead programmer was taking way too long.) Bigger and better things my ass. It's only bigger and better if it's still ours to achieve. If the jobs are over seas than there is nothing bigger or better.
click me
Also French (as verified by a girl who transferred to my high school which had French classes from a school which had Latin classes), Portuguese, and Romanian. Learning Latin makes it very easy to learn the other five Romance (Latin-based) languages.
It can also improve one's English, since English has many words that derive from Latin.