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Globalization Decimating US I.T. Jobs
mrraven writes, "According to Ronald Reagan's former deputy secretary of the treasury in this
article in Counterpunch, globalization is destroying US I.T. jobs. From the article: 'During the past five years (January 01 – January 06), the information sector of the US economy lost 644,000 jobs, or 17.4 per cent of its work force. Computer systems design and related work lost 105,000 jobs, or 8.5 per cent of its work force. Clearly, jobs offshoring is not creating jobs in computers and information technology.'" Paul Craig Roberts quotes a number of formerly pro-globalization economists who are now seeing the light of the harrowing of the US middle class. It's not limited to I.T. Roberts quotes one recanting economist, Alan Blinder, as saying that 42–56 million American service-sector jobs are susceptible to offshoring.
Speaking of R&D... ...one of the comments made by Lucent CEO Patricia Russo about the pending merger with Alcatel said (and I'm paraphrasing because I don't have the quote in front of me):
"Alcatel does not do the kind of research that Lucent has historically done at Bell Labs. Future projects at Bell Labs will need to focus on productization in a 5-year timeframe. This transition has already started."
Science and research for the sake of science and research is now officially dead at Bell Labs. If they can't turn it into something that can be sold within 5 years, shitcan it.
Learning HOW to think is more important than learning WHAT to think.
Yea, I am experiencing this too... This guy from Singapore installed a router here and he was in India at the time. It was really amazing how foreigners can defy physics now. Geez the internet is changing everything.
From the perspective of someone who is not American, this is a good thing. It means that unions in rich countries are no longer able to keep the rest of the world poor. Poor people in Romania who have excellent IT skills have the freedom and opportunity to enter the capitalist system and compete on the global market.
The Americans spent 50 years trying to win the cold war so the guy in Romania would have this opportunity. Would you now turn around and say "Sorry, we're going to be implementing some socialist protectionist measures.... we didn't expect American workers to have to compete with you".
Looking at the IT landscape, it seems clear to me that the American IT industry is the most vibrant and resilient in the world. Microsoft, Google, Yahoo, HP, Wikipedia, Myspace, Youtube, etc. are organisations which saw the light of day in America. Please don't react in a spastic way when the rest of the world looks at what you're doing and tries to do something similar.
The American president keeps talking about "freedom". For me, freedom includes the freedom to compete with American workers.
Walk the walk....
Disclaimer: I am an IT manager who sets up and runs IT groups in India. So I'm the "bad guy" I guess.
1. Outsourcing is not new. And the reaction by the IT industry is not new. The garment industry was outsourced, the steel industry, to a degree the automotive industry. It happens. The people directly impacted don't like it but as long as it make economic sense, outsourcing will happen. Adapt to survive and thrive.
2. Isolated protective measures to limit outsourcing will ultimately fail. If you put restrictions on US companies that increase their costs while overseas competitors have no such restrictions, US companies will be at a competitive disadvantage ultimately hurting their growth and their employees.
3. Outsourcing is not easy in the IT industry. I can point to as many failures as successes. Not every company in the US that needs IT resources will be candidates for outsourcing. Not every job will end up overseas. In fact even though my entire IT organization is in India I'll soon be looking for a Systems Engineer in the US because I'm not happy with what I find in India.
4. Salaries for IT candidates in India are increasing very rapidly (think Silicon Valley, 1999). Given the inherent inefficiency of dealing with people great distances away, the economics of outsourcing are getting worse.
5. Decimation means to kill off 10%, not 90% as some posts have said. From Wikipedia: The word decimation is derived from Latin meaning "removal of a tenth." So the article is correct, this is decimation.
6. I could be wrong on any or all of the above.
"Written on the pages is the answer to the never ending story..."
What I *AM* seeing is a hell of a lot of chinese mainlanders being hired as engineers *IN THE US* depressing wages. Companies are starting to demand a LOT more for less money.
Outsourcing is based on a falicy which is that workers are fungible resources. Engineers are not fungible resources and any management that thinks they are has their heads way up their asses. The US *DOES* have a seriously bad management culture which is a far bigger threat than outsourcing IMHO.
Again, this is just one opinion from in the trenches here in southern california.
Religion is a gateway psychosis. -- Dave Foley
Why should small/medium sized companies develop software in the US? It's too damn risky. If they compete with or are considered a threat to any of the larger companies, they will just get sued out of existence for "patent infringement". It doesn't even matter whether they have infringed patents, because suing someone for patent infringement is am easy way to cost them a lot of money and not have it immediately obvious about whether you're bluffing. Patents are usually very difficult to read and understand.
"The US *DOES* have a seriously bad management culture which is a far bigger threat than outsourcing IMHO."
A few years ago, I worked as a developer in a fairly large well-known tech company. The progression: Starting there, things were pretty good--well staffed, good morale, nice people to work with. The push for the "bottom line" started creeping in after a year or two on the job--secretaries got laid off, senior engineers got laid off, a website was set up for us to do our own expensing, travel, etc. It was hell. I, a well-trained software developer, getting paid pretty good money, was expected to deal with making travel arrangements, fighting with HR, etc. while my time was being billed to an engineering project. It isn't worth working for a company where my time and talent is simply not valued.
The MBA is the new Visual Basic certification.
-matthew
"THERE IS NO JUSTICE, THERE IS ONLY ME." -Death
2. Isolated protective measures to limit outsourcing will ultimately fail. If you put restrictions on US companies that increase their costs while overseas competitors have no such restrictions, US companies will be at a competitive disadvantage ultimately hurting their growth and their employees.
And this is the problem, countries like India and China can get away with horrible working conditions, lapses in saftey standards and employee rights that we take for granted in the U.S. I see examples of this all the time with illegal construction workers here in California. Since they are already in the country illegally, they have no insentive (or knowledge?) to follow OSHA saftey standards that a legitimate construction company would have to follow. If you can get away with the same thing with exported labor, exchanging a few lives for $$$ many companies are willing to do this.
So essentially, U.S. companies are deffering those costs by working overseas. I for one think companies should be punished financially in someway or guarantee the same worker rights in those foreign countries.
Another problem, and I think this is the biggest one, is the lack of national pride in the U.S. If the country you live in is say no more important to you then $200 off a plasma TV at Wal-Mart, what are you to care if jobs go overseas? I'm just saying that economically speaking, there is no added value in the tag "made in U.S.A." anymore since it is no longer associated with quality or pride with the average consumer. I suppose an employer sees their employees the same way now, looking at the individual and their qualities instead of "made in U.S.A.". However, if the U.S. does want to stay competitive it still must maintain self interest.
5. decimation can also mean: to cause great destruction or harm to
Disclaimer: I am an IT manager
Dude, you didn't need that disclaimer, your post looks like a powerpoint sheet: a nice bulleted list, it has manager all over it.
Hey, you're the first to mention the concept for which I was looking, so you get the reply:
This is correct, in my opinion. The big myth - which was not cited in the article - is that you can actually maintain an economy with high standard of living based on "high value" services alone. The key to an economy is really its ability to produce wealth - hard, physical, tangible goods that, as you said, actually raise the standard of living of that society's citizens. All the dentists and doctors in the world cannot help you if you don't have good tools, good infrastructure, or even good food.
I remember from one of my early economics classes that the only wealth-producing endeavours known are agriculture and manufacturing - the rest of economic activity just shuffles that wealth around.
If the economy of a country switches to being service-based, it is then a slave to the actual wealth-producing nations, because if the nations that have the wealth no longer need or want the services, with what is the service-based economy left? The reason the US economy used to be so robust is it had a good balance between service and wealth production. The shift away from producing wealth locally (I don't mean by ownership, I mean physically) is probably a greater risk than most are able to recognize.
"There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
While IT workers aren't 'abused' in the sweatshop sense, don't trivialize the challenges American IT workers face. We're not complaining about jobs without free soft drinks, but about jobs where we're doing the work of two or three people for 60% of the salary we could command five years ago. American wages are being eroded much faster than Indian wages are going up, with the difference being pocketed by employers, and any attempt by American workers to ask for more jobs, better wages, or better working conditions are discouraged by the threat of jobs moving to India.
What I fear is something called 'wage arbitrage.' Transnational corporations can go anywhere to take advantage of low cost labor, and skilled workers trapped behind national borders cannot follow. So wherever corporations have jobs, they can keep costs down by threatening to move workers overseas. Governments are desperate to keep these jobs, so they're happy to pass laws at the behest of the corporations, giving them tax breaks or making it illegal for workers to unionize.
So I really don't see it as "America is hurting, but India is turning into a technological superpower." If it were that simple, I'd probably just start looking into migrating. India's day in the sun will only last as long as they don't do anything stupid, like try and tax the corporations to pay for the education system that benefits them or improve the lot of the rural poor. The moment that happens, you'll see a massive shift away from India towards some more compliant country.
Of course, that will raise wages in Sierra Leone, or wherever the jobs move to. But not nearly as much as wages will fall in India, and again, corporations will pocket the difference. It's all a huge shell game designed to transfer as much of the wealth created by labor into the coffers of owners, while giving as little back as possible. Wage arbitrage gives capital a huge advantage in any negotiations with labor. But in the long run, this destroys the middle class, and erodes nations' abilities to invest in the health and education of their citizens, which are necessary for businesses to run successfully. So big business is reaping short term profits while undercutting both demand for their products and the ability of labor to create those products.
IOW, I'm happy to see India doing well, but I think it's part of a long-term trend that is going to hurt everyone.
You want the truthiness? You can't handle the truthiness!