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Study Claims Offshoring Doesn't Cost US Jobs
SwashbucklingCowboy writes "Infoworld has an article up about a survey by the Software & Information Industry Association claiming that offshoring doesn't cost American jobs. The article quotes the executive director of the SIIA as saying, '[Offshoring] was used almost entirely as a form of expansion, not as a replacement.' Well, if a job is created elsewhere that could have been created in the US, isn't that a job lost?"
Well, if a job is created elsewhere that could have been created in the US, isn't that a job lost?
Who's saying the job could have been created in the U.S.?
The theory of relativity doesn't work right in Arkansas.
Well - that may be what the study says, but that simply doesn't jive with Silicon Valley's experience. The valley (read US Semiconductor Industry) has never really recovered from the Dot-Bomb downturn. We lost around 200K jobs here in Silicon Valley after the downturn, and they have never really come back. What happened was Bangalore.
Just to highlight this - there was an entire division of Intel that was closed down and re-opened in India a few years ago. You could relocate to India or loose your job. Real simple choice. Speak Hindi??
Have you compiled your kernel today??
I worked for a major retailer for 17 years, then Feb 18 2005 wammo! My job was replaced by offshoring. The person now at my desk is a figurehead (or project manager) for a programming group in Bangalore.
Thanks,
Jim
Comment removed based on user account deletion
Sure, we lose a 40 hour/week programmer position to [india|china|vietnam|swaziland], but we generate 40 hours/week worth of bugfixing and project management work, so it's really a wash.
there is no need to sign your posts. this isn't usenet. your username is right there above your post. stop it.
Yeah but when the economy turns down, who are they gonna lay off, the guy in California making $50/hour or the guy in Mumbai making $9/hour? Sure, everyone's happy when things are humming along, but the cracks will show later.
The equation isn't 2+0=2 to the middle class. The equation is 2-1=1 to the Middle Class. You can lie with artithmetic as easily as any other language.
SJW: a person who perceives an injustice, and while correcting it, commits a greater injustice.
The job market is a lot like demographics. When you cut the young out of the picture, you end up with a collapse over the horizon. Just as societies that have sub-replacement level birthrates get pummeled by other nations and immigrant groups that do in the long run, countries that cut off the supply of apprentice-level work to their young find that surprise, surprise, their young people never become older replacements for their field.
The problem is very complex. It's a cross between expensive regulation that makes Americans expensive, lack of foresight being called an asset by many business people and just general lack of concern about the future.
One day America will look around and say, there's so much opportunity for those that know where to go, but why aren't Americans filling these jobs? Then the displaced CS, EE, hard sciences, etc. students can say "you fuckers brought it on yourselves."
There is also a realpolitik aspect of it that should scare the hell out of our leadership. Capitalists of all stripes love to harp on human rationality, but humans are **rationalizing** not **rational** beings. Nations go to war at times for completely idiotic, abundantly obviously suicidal reasons. Witness Gulf War I and Iraq. Who actually thought that Iraq wasn't going to get pummeled into oblivion militarily? Yet they did it anyway!
See, the thing is, we might not always be allies with India, Pakistan, Taiwan, etc. We might actually end up at war with them in the future. It's slim, but who knows. The people who poo poo these concerns need to face up to the facts of history which is that nations have no permanent allies, only interests. One day, we may find that all of this regulation cost-imposed outsourcing has put America in dire threat of having not enough engineers to actually keep its economy strong, its military well-equipped, etc. We might find that some of these nations are also feeling stronger, and want to start doing things their way.
1. You do not own 'your' job.
/flame on
2. You are not entitled to a job.
3. If someone else is willing to do the same work for less money than you do, too damn bad for you.
4. Yes, it is a race to the bottom. No, that isn't necessarily a bad thing in the long run. When you want to fill a container you have to fill the bottom first.
5. If you think you're better than the people 'your' job was outsourced to, prove it.
"Prefiero morir de pie que vivir siempre arrodillado!"
It depends upon what they are measuring.
From TFA:
Notice the usage of "H-1B visas" in that statement? That tells you what they're actually looking for. Cheap labour. The cheaper, the better.
The question isn't whether there are enough H-1B visas available.
The question is how many programmers are there in the US vs how many programming jobs there are in the US.
I'm not seeing that question being asked. All I'm seeing is stuff on savings and such. If they're measuring cost savings, then they're not going to find any lost jobs, are they?
Temporarily it may be a job lost, but cutting costs allows for further expansion of a business.
Expansion to where? Third world countries may benefit from having a pool of low-cost labor with little regulation, but that doesn't help the labor at home. Even if they are lower level IT/support jobs that are typically affected by outsourcing. How can you expect to train the next generation of workers if theres no bottom rung for them to start from? Take a look at Monster.com postings and see the experience demanded for jobs. A system where the entry level really doesn't exist cannot sustain itself for the long term.
If you don't want the risks of losing your job due to IT off-shoring, go move to France. I'm sure you'll find the rewards there are in much less frequent supply than here in the U.S.
I know France is used as an insult, but if they protect their middle class rather than let the greedheads in corporate management gut their job base for their short term gain before ejecting with their golden parachutes onto their next abomination, maybe its not so bad.
Where does the school board find them and why do they keep sending them to ME?
The idea that the economy is a zero-sum affair is so abundantly contradicted by readily available evidence that I find it almost amusing that it holds such sway over people.
No, a job created elsewhere instead of here does not automatically mean that it "costs" us a job here. Jobs aren't a resource that is mined from the Earth, jobs are created by the economy. If that overseas person does well enough, it may "create" two jobs here.
It's not even right to speak of jobs being "created"; a more appropriate verb might be funded. There's a "job" that involves you being my personal punchmonkey, but there's no way we're going to come to mutually beneficial agreement about that "job", so it isn't funded.
But the flip side holds; the net impact could be more than one job "destroyed". It's not zero-sum.
The whole thing is very complicated, because even if off-shoring a developer creates/funds five jobs over here, it may be the case that none of them are development work. Or one off-shored developer may well create three more development jobs, but not in Silicon Valley. (No, you don't get to say all three of those jobs are cleaning up after the off-shore guy; if off-shoring is a net negative value, the economy will eventually cut off the off-shoring, even if that means driving a particularly stubborn company that refuses to see it as a negative value bankrupt.)
But one thing it's not is "zero-sum".
(Even if you don't "like" capitalism, it's vital to come to understand what capital is and why capital produces more capital. Communism, and to a lesser extent socialism, can be seen as starting with the assumption the economy is a zero-sum game, and they end up creating a self-fulfilling prophecy on that front as in their zeal to make sure capital/wealth is evenly distributed, they destroy the mechanisms of capital/wealth creation. Actually, they end up with a negative-sum game. I'm not defending any particular instantiation of capitalism at this time, I'm just saying you damn well need to understand why it does what it does if you want to understand how economies work.)
So, IOW, while we aren't actively replacing American workers, there are jobs that would otherwise have gone to American workers had they not offshored.
In economics, this is called opportunity cost.
The bottom line is the same, though: Instead of hiring American workers, they are paying foreign contractors
Now on to my experience. I was part of a team doing embedded development for a consumer electronics platform. We were under tremendous time pressure to get the product to market, so management decided to offshore the development of drivers which I had been working on. When I handed over my drivers to the offshore team:
- The driver was responding to interrupts, and used an interrupt driven model.
- The framework for using DMA was setup.
- The framework to work with the kernel's block specific device driver interface was setup.
- I estimated that it would have taken me another 4 to 6 weeks to complete the driver. The only things I had left to do were to write the routines which actually transferred the data to and from the device.
Now, 6 months and several deadlines go by, and we haven't heard anything regarding the drivers. Finally, we get our code back:- The interrupt code has been removed. The driver now works on a polling basis. Keep in mind how acceptable this would be in a real time system.
- The DMA code has likewise been removed.
- The driver doesn't interface at all with the kernel's specific device driver interface - instead, it uses a hack by which it talks to the block layer, bypassing the development track of every other said kind of device.
- Oh, did I mention that the driver didn't work?
So, not only are we now behind schedule, we ended up shipping a broken driver to the customer. Several of our customers missed the Christmas selling season because our code wasn't delivered in a timely manner; worse, it's now 6 months late and doesn't work.We had to spend several months of engineering time to debug/redo the driver to get it to a working state. Here's what offshoring cost my company:
In the end, offshoring was a net loss for everyone involved:
The only people who are getting rich from offshoring are the offshoring companies. The only reason why this fraud is allowed to continue is because it's hard to prosecute across national boundaries.
And, if anyone is wondering, we later learned that the engineers who wrote the broken code were formerly Java developers who had no experience writing embedded code. My company would not ever have hired these guys had they interviewed with us, yet we saw no problem in contracting a critical part of product to them.
The society for a thought-free internet welcomes you.
"Well, if a job is created elsewhere that could have been created in the US, isn't that a job lost?"
No... No: This one goes up to eleven.
a Wal Mart job, for the most part.
Offshoring IT means new people will never get into the industry at all.
IT now demands high level network administrators and accomplished programmers. Americans cannot reach that level of expertise without starting out as a lower level programmer, software tester, sysadmin, tech support person, etc. - and those jobs have gone overseas.
The higher level jobs can't be filled because no new qualified workers are coming into the US workforce, and the qualified people are entrenched in jobs they won't leave, or are afraid to leave. And yes, before you say otherwise, I know this. I am a data center manager and I see our ads go unfilled constantly. Which is why since before this data center came up, I kept our jobs from going overseas and made sure we grow our talent right here, in house. My lead network administratress started out as our receptionist and then a tech support rep, then a tester, then a sysadmin, then a network admin. At other companies, that ain't gonna happen. Ever.
So no, another job was not created here - except low paying service jobs like Wal Mart cashiers, and super high end jobs that newcomer Americans can never qualify for.
--- Grow a pair, liberals... stop letting the Republicans bully you!
I for one welcome our new Indian Tech Support Overlords.
Did someone say cake?
UbuntuDupe says that because some high paying IT jobs were lost overseas and were replaced by minimum wage or barely above minimum wage service jobs, we've scored a victory in the jobs arena?
That's BS.
That's called underemployment - the total reduction of an educated, skilled workforce to menial labor which itself can be automated.
That means a loss of buying power which means that in the end, those SAME Northwest LA drycleaners will be hurting for customers.
--- Grow a pair, liberals... stop letting the Republicans bully you!
No, but U.S. workers, and more importantly voters, don't really care. The purpose of the U.S. government is to do what's best for its citizens; if that also helps other people abroad, then that's great -- bonus! If not, they can complain to their own government. Countries exist for the mutual benefit of the governed; if a government is doing something that's fundamentally disadvantageous for its own people, something is wrong.
Sacrificing jobs in the United States in order to employ the rest of the world isn't something most people here are prepared to do, nor should they.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Ok, let me get this straight. You did not cooperate with the new developers, or "teach them your code". You not only actively encouraged others to do the same, but also look for new jobs. You then in fact left the company - without, it seems, adequate documentation - and somehow you think they sold you out?
Wow.
Sounds like you really got screwed.
Take a DVD player. You can purchase a cheap DVD player for about $40. Now, the plastic and metal in the DVD is not very valuable, pretty much you are paying for the labor and logistics in manufacturing the DVD player.
Now, the DVD player is made in China, and lets say the labor to make the DVD player cost about 1/20th of what it costs in the U.S. (it is probably actually cheaper than that). That means, that the same DVD player would cost at least $800 if made in the U.S. (in reality, it would cost much more... I am not including the differences in enviornmental regulation, defending frivolous lawsuits, medical insurance, taxes, etc. all of which would be much higher in the U.S.).
Right now, when a DVD player cost $40, it means that DVD players are cheap and ubiquitous. The store is making money selling the DVD player and the DVDs you will buy to put into the player (all that is money made in the local economy). Movie companies are spending hundreds of millions on movies, expecting to recover that money in part on DVD sales - and most U.S. movies (and virtually all DVD manufacturing) happen IN the United States, creating tens of thousands of jobs.
Now, lets say we ban foreign manufactured media playing devices from being sold in the U.S., and now *CHEAP* DVD players are $800 (of course, assuming the same escilation of pricing, you would expect a good quality one to be around $8000). You have made DVD players into a luxury good, outside the realm of afordability to a good chunck of Americans. Not only are stores selling less DVD players and DVDs, but Hollywood cuts back on movie production because they can no longer recoup so much back from DVD sales (people without DVD players, don't buy or rent DVDs).
Now, if you look at the jobs that would be added to the U.S. by manufacturing DVD players locally, and how many jobs would be lost because fewer people could afford DVD players, it is easy to see you aren't creating any jobs locally by requiring that DVD players be made in the U.S. In fact, most likely you would end up losing a whole lot of jobs in the U.S..
If a company outsources IT, that can give free up money that it might use to make more TV commercials (which create jobs in the U.S.). Or it could free money to allow it to expand its retail outlets (creating jobs in construction and for the people working at the outlets in the U.S.). It could also allow the company to lower the price of its goods, meaning more people in the U.S. could afford the products being sold.
People are also ignoring the fact that as people overseas get more jobs and more money, they now have more money to purchase OUR goods and services. China, India, and elsewhere are now customers for many American products, unlike say Cuba, or Iran, or some other country that is economicly isolated from the United States because of artificial trade barriers.
Personally I'm not sure what my opinion is on the free-trade vs. job-protection continuum, but since you seem to have an opinion, perhaps you can give you thoughts on a question that's been bugging me for a while.
What, exactly, is the long-term, steady-state outcome of globalization going to look like for the U.S.? I mean, it doesn't seem like what we're doing right now is really sustainable. Massive current-account deficit (trade deficit), loss of manufacturing capacity and jobs in exchange for service-sector jobs, etc. I keep hearing people say that "the future is the service sector," but forgive me if I'm econometrically challenged, but I'm not quite sure how that's supposed to work, long term.
If all we have left is service sector jobs, and we're basically paying each other to do stuff, while at the same time importing all our manufactured goods from abroad and exporting little to nothing (or at least less than we're importing), how do we keep going? It seems like that's a ticket to economic collapse. There's no way that people here can compete on wages with folks in Asia and other parts of the Third World, just because of the cost of living, so eventually all the jobs that can be exported and offshored, will be. The only jobs left are ones that have to be done in person: doctors, lawyers, truck drivers, waiters, etc. But they're all selling their services to other people in this country, so in the long run, you're still hemorrhaging cash.
The line I keep hearing from politicans is that, somehow, "American innovation" is going to keep us so far ahead of the rest of the world technologically (apparently forever) that we'll be able to sustain this lifestyle. But I don't see that happening. And frankly, the basis for it seems suspiciously ethnocentric/racist. Now, I don't particularly care about ethnocentrism or racism per se, but in this case I think it's leading to a fallacious assumption, namely that Americans are somehow naturally superior to the rest of the world, and that we'll naturally figure out a way to stay on top, even when we're driving cars made in Japan using gasoline from Saudi Arabia and watching DVDs made in Malaysia on players produced in the PRC. I just don't buy it. Our educational system isn't that good, and a country filled with unemployed people isn't exactly going to roll out the welcome mat to immigrants, no matter how skilled they are (particularly if they're skilled, in fact). That we've managed to maintain the lead in technological development over the past 100 years is remarkable, but there were also two World Wars in there to spur development (not to mention razing much of Europe), plus waves of economic expansion and immigration, and a whole lot of luck. It's enough to make a nation dangerously cocky, and as an American, that worries the hell out of me.
So what exactly does a first-world country that's gotten accustomed to a very high standard of living do, in the brave new world of free trade? I'm just not sure I see a way out through that, which doesn't involve either a sinking average quality of life, or hyperinflation followed by economic collapse.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Except how many of those pickers are U.S. Citizens, and how many are actually Mexicans, living in the U.S. illegally?
Maybe there's a reason why they only get paid $0.70 per box: that's all they need to pay to get the workers. If you eliminated the vast supply of cheap, illegal labor, you might create a labor shortage and drive wages up. But when you've got people willing to work for peanuts, that's what the jobs are going to pay.
This cost isn't included in most (at least not that I've seen, anyway) analyses of illegal labor, because it's hard to quantify. The presence of a vast cheap-labor pool prevents wages from increasing, and also prevents mechanized technology from being brought to bear on problems. There's a reason that a mechanical cotton-picker wasn't invented until long after the South's Great Migration: when you had slaves, and later sharecroppers, there was no impetus to spend the capital necessary to mechanize.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Hell with that. I'm against offshoring for two reasons:
1. In my own extensive experience with work coming back from offshore, it's crap. Period. Anything that we save in up-front cost, we have to pay down the line when the the bugs are getting fixed.
2. I am of the unpopular belief that there's nothing wrong with looking out for the self interest of my family, my friends, and myself. Our lives and livelihoods are more important to me than some stranger I've never met and never will meet. And yes, if it came to a choice between me starving, and that stranger starving, I'd pick the stranger every time. I place value on my own life above others -- it's called survival, though these days we're supposed to call it selfish.
/rant.
What you are describing, in economic terms, is leakage.
In Keynesian economics, there is a model called the Injection-Leakage Model that describes the circular flow of production, income, and resources between producers and consumers within a national economy.
In short, you work for a business, which pays you for making goods or services. You then use your money to then buy from other businesses. There is a circular flow of money.
Investment, government purchases, and exports inject money into the system, making more money available for everyone in the economy. Savings, taxes, and money spent overseas come out in the form of leakage, reducing the amount of money in the system for everyone.
Offshoring is just another form of leakage. And no, it is not good.
Actually, I heard they switched the fast food folks to the Manufacturing sector (assemby workers, doncha know) a while back. It looked better in the stats to lose Service sector jobs - which most people assume are close to minimum wage - and to gain thousands of Manufacturing jobs - which people assume pay a good deal more. So, hocus pocus, switcherino, walla, PING. The economy must be inproving since so many people moved from low paying service sector jobs to high paying manufacuring jobs. It's clear our manufacturing secor is NOT being denuded by the Chinese, as we once thought ;-)
Jeff
Sorry, that's hooie. Joe worker is in no position to compete when his costs remain the same and are relatively high compared to the nation that the capitalists can ship their capital to. If it's only a few percent, sure, possible, but to say someone in the US can live on a buck an hour or 5 bucks a day (whatever, some absurdly small number) is just retarded, because they are saying you should be able to compete at that price. And it *is* black and white that way. The big company says they'll ship the job to where they can save on the labor, to increase their bottom line and some CEO salary by a few million, because it's insanely cheaper there, yet they want the same loot for the product.
Yet, I am not seeing any big push by the capitalists or their stooges in government to drop rentals or mortgages or real estate property prices, or even freeze rates by law,nor utility bills, nor cost of transportation, nor local property taxes to pay for the illegals invasion, etc, none of that. You can go to the poorest cheapest cost of living place in the US and you still couldn't live on a buck an hour, even if your house was completely paid off and your car was completely paid off and you never needed new clothes. You still couldn't do it. Our society was set up over a long period of time the way it was, certain costs and obligations, and wealth gradually built up over a lot of manufacturing and then a ton of internal trade. You lose it as a worker in the middle of paying off a house and car and etc you can go down the tubes fairly readily now, and you do it in some area where the bulk of the adults are all in the same industry and all of a sudden everyone is laid off you can't even hardly sell your house. It's happened to any number of millions of people and this year with the ARM rates going up it is going to get worse.
And you want even more proof that this isn't working? Easy! They have to cook the books on the economy to make it look good, use every possible word parsing tactic to call credit "wealth" and get people to believe that fairy tale, they dropped some of the FED reporting on cash in circulation to coverup the on purpose credit expansion by running the presses and just adding zeroes to the data entries, they adjusted cost of living and took out critical necessities to make it look good, they reclassified jobs, and we are now without any shadow of a doubt and this is not debateable, just accept it the most in the red any nation has ever been, all within the last 20 years of this big globalism push. If globalism worked, we'd see some results other than cheap crap at walmart. You wouldn't see so many people against it. We'd still be a creditor nation, not a debtor nation. And if you think debt is wealth, go ahead and try it on a small scale at your bank, try to get a big fat loan approved by using your other debt load as collateral. Go ahead, try it see what happens. But nationally that is what has happened in the US and you and they call it good? If we had a true, not fairy tale but true good economy, 30-50 year mortgages would be unheard of, and those interest-only mortgages they push now? Wouldn't exist. Back before the big globalism "offshore all the jobs you can jobs inshore what can't be offshored" push (the war on the middle class in other words) it was 10 and 20 year house notes max and 18 month car loans and total debt (government/corporate/personal) was extremely low and savings rate was high.
You may call trillions and trillions in debt a good economy, IOUs funding more IOUs trying to fund yet more IOUs, while the CE whatever class keeps getting chunks of billions per year because they "work so hard", but I call it one international dump the dollar panic run away from great depression version 2. And it's going to be much suckier than the first one when it happens. And it is going to happen, inevitable, it's too far gone now.
Many regimes and empires and nations have tried the fiat-fairy tale styled economy dodge in the past, to just paper shuffle busy wo
Ahh, complaints about software outsourcing...
I studied through high school in India and came to the U.S. for college. I remember my CS classes. Our teacher was a dinosaur. He knew about pascal and some basic but he was taught by idiots and consequently his code never got beyond the Hello World level. We were supposed to be learning C++. He did mean well though and freely admitted being ignorant which helped immensely because we were forced to learn by ourselves. I count myself as being very lucky. Several teachers would have shoved what they learned by rote knew down our throats. The quality of software you get back reflects this education, and the price you pay for it. You want good software from India go hire a bunch of IIT and BITS grads and have them do it. You will pay though. Or alternatively, wait a decade or so. Software outsourcing is (paid for!) real world practical training for the next generation of teachers and thats something thats been sorely lacking.
As for the call center jobs... well you could complain about Indians who can't speak English (or American as the case is) but frankly the communication barrier has very little to do with accents or language. I know guys from here that can understand Indian accents easier than they can understand people from central Illinois and Texas. You guys try to imitate Apu frequently enough. Rather, the headache with support people is because they have crappy scripts to read from. Support would suck even if it wasn't outsourced unless you have someone on the other end of the line who actually knows the product he is trying to support. That costs companies money and companies that value their profits more than their customers know they can get away with crap service. Ideally they'd love to not bother with support at all.
Reality must take precedence over public relations, for nature cannot be fooled.
Who was so despondent after being laid off, she blew her brains out in the parking lot of the Bank of America IT facility in Concord California.
I think well remember that. The programers were offered severence packages ONLY if they would sit and teach their new Indian replacements their jobs. Who were flown here, from India, to learn their new jobs, and then flown back.
Lets see who desperately needs to reduce IT costs...
2006 - 3rd Quarter After Tax Income - Source Google Financials
Ohhh yeah, damn they are gonna go broke! Quick ship those IT jobs off to someplace where we can get shit code for pennies on the dollar that is nothing but slopped together cookie cutter trash based on Microsoft crap frameworks.
Hey KID! Yeah you, get the fuck off my lawn!