3.14.2004
Interesting Articles on Outsourcing These Days...
'A New Kind of Workforce' Emerges: Surge in Number of Contractors Helps Explain Why Recovery Adds Few Jobs '"The Washington Post January 27, 2004 By Nell Henderson and Kirstin Downey Ken Gaebler can help explain how the U.S. economy can be growing so briskly without adding significant numbers of new jobs. When Gaebler's three-year-old marketing firm needs a computer programmer, a speechwriter, a Web designer or just about any other work done, Gaebler doesn't take out a help-wanted ad. He puts the project out to bid on the Internet. He recently hired a man in Ukraine to design a computer system to monitor sales results. Gaebler paid him $118, much less than the $1,000 he figures he would have paid a freelance American programmer. Gaebler paid by credit card and earned frequent flier miles on the transaction. Gaebler's Chicago firm has grown to nearly $1 million in sales with only three full-time, traditional employees. "So many talented people that I worked with in the past are available for freelance work," Gaebler said. "These are people who used to make $150,000 per year and now they are freelancing and pulling in $60,000 to $70,000 while they wait for the economy to turn around." It may be that the economy has already turned around and that Gaebler's personnel policies are among those that will help define this expansion: an era when the creation of permanent, full-time jobs will be tamped down by the global availability of work-for-hire independent contractors. More than two years into the recovery from the last recession, coming off a quarter with sizzling 8.2 percent growth in the gross domestic product, the U.S. economy has created only 278,000 new jobs in the past five months -- leaving the nation's total number of payroll jobs 776,000 lower than when the recovery began. "It's a new kind of workforce," said Paul Villella, chief executive of HireStrategy, a Reston-based recruiting firm. About 64 percent of the people his firm found work for last year accepted jobs as independent contractors, up from 28 percent in 2000. He described the job seekers as mostly accountants and software engineers. While economists agree there is more self-employment, they disagree about whether this is a temporary adjustment that will soon give way to more robust growth in traditional jobs, or a lasting change in the nature of work and the relationship between employer and worker. The answer to that question matters greatly to presidential candidates vying for office during a "jobless recovery," as well as to Federal Reserve officials who must decide how long to leave interest rates at a 45-year low. Fed policymakers have made clear in recent public comments that they will leave their target for a key short-term rate at 1 percent when they meet today and Wednesday, and probably for some time after that, in large part because of the continuing softness of the labor market. If and when the job market strengthens, Fed officials will have to decide how to start raising rates to prevent inflation from rising to undesirable levels. Making these decisions is tricky, particularly in a changing economy. "Assessing the amount of slack in the labor market is very difficult and ultimately a matter of judgment," Fed Governor Ben S. Bernanke, one of the 19 members of the central bank's policymaking committee, said in a recent speech. Many economists believe the government's official job statistics are having difficulty measuring changes in the employment picture with precision. For example, jobs being created by small businesses can take longer to be recognized in the official tallies compiled from the Labor Department's survey of about 400,000 employers. That survey also does not capture the increase since the recession in self-employment, contract labor arrangements and off-the-books labor, including work by illegal immigrants, according to a recent study of federal and local employment data by the Center for Labor and Market Studies at Northeastern University. The number of people who identify themselves to census takers as non-farm, self-employed workers rose to 9.5 million in December, seasonally adjusted, up from 9.2 million a year earlier and up from 8.9 million when the recession ended, according to the Labor Department. The category includes all sorts of workers -- real estate agents, consultants, programmers or graphic artists -- as long as they are not also employed by a business, government or nonprofit organization. SurePayroll, a Chicago firm that provides payroll services to small businesses, says more workers are reporting their earnings by tax form 1099, which is submitted for freelance work, rather than by W-2 form, which is submitted for traditional employees. Michael Alter, SurePayroll's president, said the number of 1099 employees the company paid for its clients rose to 4.7 percent last year, from 4.2 percent the year before. He described his client base as about 10,000 small businesses. "We definitely see aspects of a recovery," Alter said. "The number of people we're paying is growing, but more of them are contractors." Alter said his company is relying more on contractors as well. The four-year-old firm has 70 employees, but no one handling marketing, public relations, sales, legal issues or business development. Alter contracts out all that work, he said, so he can "pay as I go." Although this trend may be happening at the fringe of the economy, it explains at least a slice of how the jobless recovery is continuing. And some economists believe it will continue to grow. "It's gone on way too long to be temporary," said John E. Silvia, chief economist of the fixed-income division of Wachovia Securities. "We have to treat it as a realistic transformation of the economy." While self-employment is great for workers who enjoy the freedom and flexibility, others would prefer the security and employer-provided benefits of a traditional job. The data provide no information on how much self-employment is voluntary. Electrical engineer Dale DiBernardo, 43, of Oviedo, Fla., said he was happy to double his pay by joining Gibson Audio as an independent contractor. He said the idea of permanence in the workplace was an illusion, and he hopes to prosper by maintaining greater control of his career prospects. "I've lost total trust in the management of companies in controlling my future," said DiBernardo, who worked in the past as an employee of Boeing Co. and Jensen Audio. "The last thing I want to do is move to D.C. or Washington state or whatever and be laid off if the product doesn't take off. A lot of people are like me." Others are more anxious. Eric Madden, 34, a Web page designer who lives in Alexandria, worked as an independent contractor for four months last year and said the "loss of security" was difficult to endure. He took a permanent job as soon as he could. "There's a craziness all the time where you're wondering, 'Where will I be two months from now?,'" Madden said. "That instability wears down on people. I've noticed some people get ill from worrying all the time." And not everyone can make the transition. John Mahoney, 55, of Battle Creek, Mich., lost his job making car stereo equipment in December 2002 and has been unemployed for 13 months, but doesn't think he would make a good businessman. "I've always worked for someone else," he said. "I've never had the gumption to start a business. I don't even know where I'd start, to be honest with you." Self-employment in the current economy favors some classes of workers over others, said Wachovia's Silvia. Those who have an information product to sell -- such as a writer, consultant, graphic artist, software designer or real estate agent -- would have an easier time setting up shop independently than a former textile factory worker. Self-employment "works well for some people, but a production worker doesn't have that option," Silvia said. Economists generally believe that sometime soon demand will rise strongly enough, for long enough, that employers will find they have to hire significant numbers of workers in traditional payroll jobs. They will have enough business to justify the overhead and benefits costs, and will have to compete for good employees in a tighter job market. And over time, more new jobs will come from innovative new technologies and industries we can't even imagine now. Federal Reserve Chairman Alan Greenspan said in a speech yesterday that we can "be confident that new jobs will replace old ones as they always have, but not without a high degree of pain for those caught in the job-losing segment of America's massive job-turnover process." But independent contractors and other nontraditional employment arrangements will continue to grow as well, Gaebler said. "It's just the tip of the iceberg now, but this is definitely going to be permanent.""
<Note from JobFairy.com: I can see we're all on two different pages here. To those of us here at Fairy Central, anything that brings in income is a job. Since we don't believe there's any such thing as a permanent job, contract work is just fine with us. The only thing that really tends to suck is the lousy or non-existent benefits that come with contracting. But I like the flexibility of it and the lack of boredom. Plus, I often get considered for the kind of work I'd never be hired for permanently. Then voila - I have the skills! And hello, better job! For which I can now be hired because I have the experience. I never worry about where I'm going to be two months from now. Because I have no idea whatsoever. I never do. Hey, once a friend of mine worked for Merrill Lynch here in Colorado, and they promised him a three year contract. That was a month and a half before ML pulled out of Colorado completely. He had a hell of a time finding something else. Being a contractor, he got no severance or anything...>
Where did all the jobs go? "NewsMax.com February 17, 2004 Paul Craig Roberts URL:http://www.newsmax.com/archives/articles/2004/2/17/112324.shtml Since January 2001, a three year period during which the economy has experienced one year of recession and two years of recovery, the US economy has lost 2.6 percent of its private sector jobs. These losses are not evenly distributed. Construction employment has declined by only 0.1 percent and employment in oil and gas extraction by 0.7 percent. Employment declines in manufacturing and knowledge jobs, however, have been dramatic. Tables prepared by Charles McMillion of MBG Information Services from government data show employment in primary metals down 24 percent, machinery 21.6 percent, computer and peripheral equipment 28 percent, communications equipment 38.8 percent, semiconductors and electronic components 37 percent, electrical equipment and appliances 22.8 percent, textile mills 34.1 percent, apparel 37.3 percent, chemicals 8.3 percent, plastics and rubber products, 13.8 percent, Internet publishing and broadcast 40 percent, telecommunications 19.4 percent, ISPs, search portals, data processing 22.6 percent, securities, commodity, investments 6.8 percent, computer systems design and related 17 percent. Where has employment grown? Private service sector jobs have declined by 0.1 percent. Growth in state education jobs and local government jobs has boosted overall service employment by 0.6 percent. During the past 12 months, the second year of economic recovery, the US economy eked out 57,000 net new jobs in nontradable low-pay services, leaving the economy millions of jobs short of normal performance. This is not a picture of an economy that is doing well. Low income jobs in nontradable services are the only sources of employment, while high value-added jobs that pay good incomes continue to disappear. This job record is not one of a powerful US economy dominating world markets and building consumer incomes for sustained recovery. It is not a record that promises jobs for university graduates. It is not a record that promises a future. Economists have apologies, but no real explanations, for the loss of jobs in tradable goods and services. They are careful not to blame outsourcing of manufacturing and service jobs, which they claim creates as many new jobs as it loses. Outsourcing platforms, especially the knowledge jobs platforms in India, are commissioning US think tanks and consultants to do ?independent? studies that prove "outsourcing is good for the US." Certainly, the people who are benefiting from outsourcing want us to think it is good for us. For years as US multinationals moved manufacturing offshore, Americans were told that their future was in "knowledge jobs." Today knowledge jobs are being moved offshore more rapidly than manufacturing jobs were. What are the unemployed computer engineers and information technology workers supposed to retrain for? What high value-added job can't be outsourced? Only those in the nontradable sector, such as dentists and surgeons. If everyone becomes a dentist or a surgeon, those incomes will be driven down. Many young engineering graduates have discovered that they invested in acquiring skills for which there are no jobs and are headed to law schools in an effort to retrieve their future. I know young software engineers who are substitute teachers in middle schools, and others who are trying to organize rock bands to play the club and bar circuits. They have no idea what to retrain for, and neither do the economists who tell them retraining is the answer. What is happening is easy to discern from the daily announcements of the multinationals themselves. Cheap foreign labor is being substituted for US labor over a wide range of goods and services produced for US markets. Americans are losing the incomes associated with the production of the goods and services that they consume. Because of extraordinary differences in domestic prices and living standards, foreign labor can offer its services to US capital and technology for far lower wages than can Americans. Capitalists maximize profits, not employment in their home countries. This is a new development. Until the collapse of world socialism and the rise of the Internet, first world capital stayed in the first world, and offshore production was not the motive of foreign investment. As offshore production takes hold and spreads, the US will lose more high value-added jobs. A rise in Asian currency values could dampen and eventually end the exodus of jobs from America. The question is: how long does the exodus last before there is a new equilibrium? In an important new work in trade theory (Global Trade and Conflicting National Interests, MIT Press, 2000), Ralph E. Gomory and William J. Baumol, show that it very much matters which industries and occupations countries retain. They explode the free trade assumption that free trade always produces mutual gains. Gomory and Baumol show that in many cases, perhaps a majority, gains for countries come at the expense of other countries. The authors explain why the "man in the street," so derided by economists, is right in his understanding that free trade produces winners and losers. University of Maryland economist Herman Daly has been making this point for 15 years and myself and Senator Charles Schumer more recently. Now Gomory and Baumol have provided powerful demonstration that trade has winners and losers. Right now the US is losing."
<Note from JobFairy.com: Yes, it's true. If we outsource too much, we'll lose our brain capital. Who is going to train the next generation if we send all our critical thinking jobs overseas? Who will mentor the junior people coming into the field? People that work on the other side of the globe? What are people going to retrain for? I have been involved with computers since I was 12 years old. If they think I'm going to give it up without a fight, they have another think coming. Technology is my life. They're NOT taking it away.>
Less Savings from Outsourcing than Expected: Study "Global News Wire March 3, 2004 (New Delhi) At a time when a controversy is raging on whether clamping curbs on outsourcing business is against the tenets of globalization, Hewitt Associates has come out with a US study highlighting global sourcing trends and outcomes. In particular, the study notes that companies reap less savings from offshoring than expected due to hidden costs. The Hewitt study points out that while leaders in many companies are satisfied with their global sourcing efforts and will continue to invest aggressively in offshoring, "they must do a better job of addressing human capital costs and issues to maximize value." Hewitt defines "global sourcing" as the component of a company's overall sourcing strategy, through which it makes business decisions about where, within its global reach, it performs work. Of the more than 500 senior finance and HR leaders that Hewitt surveyed, 45 per cent indicated that their firms are currently using a global sourcing model or are considering implementing one within the next three years. Although cost reduction is the primary driver (92 per cent) and top means of gauging success (95 per cent), the study notes that leaders are often overlooking many people-related costs. For example, less than half of companies analyze the tax environments of considered countries, only three-fourths measure the impact on supply chain costs and only 34 per cent assess the cost of plant or office shutdown. "It's economics 101," said Mr Mark Arian, 'Corporate Restructuring and Change' practice leader for Hewitt Associates. "In the early rush to migrate to lower cost centres, companies have been grabbing people to fill seats where the supply of workers greatly exceeds demand, but, demand will quickly catch up. "As their operations mature, companies that have invested heavily in offshore markets will see projected profits disappear if they have not fully examined issues around scaling, as well as future opportunities for labor arbitrage, developing leaders and retaining workers." Discussing the challenges in the outsourcing business, the Hewitt study says that people-related expenses, including training needs and cultural issues, are typically not sufficiently examined when companies decide whether and where to source their work. Not surprisingly, most companies (88 per cent) evaluate labor costs and analyze potential return on investment (79 per cent). However, fewer than four out of 10 analyze the local economic and political climate, and only one-third routinely examine the impact of global sourcing initiatives on the community or other stakeholders (34 per cent). Fewer still (32 per cent), look at the impact of employee/union representation considerations at home or in the location to which they will be moving operations. "Global sourcing decisions are made primarily by finance and the c-suite, with HR usually being brought in after the fact," noted Mr Arian. "However, companies can minimize hidden costs and maximize returns by enabling HR to have a seat at the table early, so they can carefully address issues, such as skill and language requirements, labor costs by market, alternative talent pools, workforce training, retention and change management at both ends of the global sourcing spectrum, that is, those being displaced and those receiving the work." Hewitt's study shows that the percentage of jobs being 'offshored' will roughly double in the next three years, with an average of 13 per cent of jobs at each company currently relocated and an additional 12 per cent being considered for relocation within the next three years. Of those who are currently sourcing talent globally, 29 per cent began doing so in 1995-1999, and 43 per cent began in 2000-2003. Of those who do not currently use an offshoring model, 71 per cent intend to start by 2005. After cost reduction, productivity improvement (54 per cent), focus on core competencies (49 per cent), increased flexibility (45 per cent) and 24/7 staffing (38 per cent) are the most popular drivers of global sourcing. However, the survey notes that while costs will remain the number one driver, other areas such as reduced cycle times and speed to market will gain importance in the next three years. The two most popular factors companies use to determine which jobs to relocate are routine transactions (64 per cent) and efficiencies in scale of work (61 per cent). "Those who succeed at global sourcing develop an overall sourcing strategy first and make key decisions on what's core and non-core, and what will be sourced internally or outsourced to experts," said Mr Arian. "Global sourcing does not mean sending work to an offshore vendor, but making a choice to create or expand internal operations offshore," he maintains. Mr Arian feels that in the long run, HR leaders will be held accountable for hidden human capital costs and constraints that limit profitability and growth. So it is important that they be more aggressive in pushing for greater influence in the decision-making process. The survey also reveals that the top locations used for global sourcing from the finance group include India (60 per cent), China (36 per cent), Mexico (32 per cent), Canada (15 per cent) and Ireland (14 per cent). Interestingly, the areas of greatest global sourcing expansion over the next three years will be Eastern Europe and South-East Asia, says the survey."
<Note from JobFairy.com: Outsourcing can be very short-sighted. Executives only think about short term results because that's what Wall Street likes. Well, let's make it harder for them to send jobs overseas. Quit documenting. Don't improve process; if there's a better way to do it, don't open your mouth. Don't let anyone at your company know about improvements in technology and make sure your colleagues don't mention them. Reduce productivity wherever possible. Remember, Red Green said, "We're all in this together. I'm pulling for you!">
U.S. jobs take overseas trips; Send the word that the Yanks' (jobs) are coming "Rocky Mountain News March 1, 2004 By Roger Fillion The jobs have been lost by the thousands, moving overseas where the labor is cheaper. Thousands of U.S. white-collar workers - especially high-tech workers - have joined the ranks of the unemployed. Software developers, data-entry agents, customer service reps, airline reservationists and others, replaced by workers in far-flung lands. The issue strikes a chord in Colorado because the state boasts the highest concentration of tech workers in the nation. U.S. corporations and some economists say it's good for business. Outsourcing, or offshoring - the practice of companies in one country having workers and offices in other lands - saves on labor costs, allowing companies to be more competitive and create more jobs. That argument doesn't wash with some. "It's a load of crap. This is exactly what we were told about manufacturing jobs 15 years ago," Mike Gildea, executive director of the Department for Professional Employees of the AFL-CIO, which represents 4 million white-collar workers, told The Boston Globe. And on the other side? Try this from Carly Fiorina, CEO of Hewlett- Packard: "There is no job that is America's God-given right anymore." Outsourcing is fueling a political firestorm sweeping through Colorado and the nation. The practice has an effect on both the Colorado and U.S. economies, as well as trade and political relations around the world. No firm data exist on how many jobs have been sent overseas, though research suggests at least 102,000 service jobs left the United States in 2000 and the number has climbed steadily since. There are various projections about the number of jobs likely to depart in the years ahead. Forrester Research, in a widely cited report in late 2002, predicted 3.3 million U.S. service industry jobs would move overseas over 15 years. Gartner, another research firm, has said one of every 10 jobs at information technology companies and at companies that provide IT services will move overseas by the end of this year. "The projections are all over the map," said Manuel Serapio, associate professor at the Business School at the University of Colorado at Denver. "We have some sense of what's going on," said Serapio, who is researching the impact of outsourcing on Colorado. "But we don't know what the future will hold because so many different things can happen." A case in point: In the late 1990's and early 2000, at the height of the high-tech bubble, industry executives warned of coming worker shortages. Today, many tech workers are struggling to land a job. Two sides of the story Meet Stephen Gartside, CEO of a Denver-area software company, and Alice, an unemployed Colorado high-tech worker who prefers to stay anonymous. They're on opposite sides of the debate over U.S. companies sending white-collar jobs to low-wage nations such as India, China, Romania or the Philippines. Looking ahead, more jobs seem likely to exit tech-heavy Colorado. The state was home to 178,000 tech workers in 2002, according to the American Electronics Association. "(Outsourcing) may be helping the big corporations. But it's not helping our economy," said Alice, not her real name. Alice - a single mother whose children are grown - became unemployed last September after her job as a software analyst at an EDS office in Colorado was sent to Brazil. Alice has put her house up for sale and frets about her future. "It's leaving more money for management at the top of the corporate totem pole, so they can receive bigger salaries," she said. But for Gartside, CEO of Douglas County-based telecom software company Evolving Systems, outsourcing has been a godsend. He said the practice helped slash annual expenses by more than half and saved his company after the tech bubble burst in 2000. "It was instrumental to our turnaround and our survival," Gartside said. A variety of Colorado companies use overseas workers, including Qwest, StorageTek, CIBER, First Data and TeleTech. And Colorado is home to plenty of workers who've lost jobs because of outsourcing. Economic development officials in Colorado Springs estimate the area has lost more than 2,000 mostly high-tech jobs in the past three years because of work sent offshore. The debate over outsourcing has landed like a bombshell in this year's presidential campaign, fueled in part by tepid job growth in the U.S. White House chief economist Gregory Mankiw made national headlines last month - and drew political flak - after saying outsourcing "is probably a plus for the economy in the long run." U.S. Sen. John Kerry of Massachusetts, the leading Democratic candidate for president, has criticized "Benedict Arnold" CEOs for moving jobs overseas. The issue is being hotly debated in the halls of Congress and in statehouses across the country, including Colorado, as lawmakers mull whether to curb outsourcing. In Indiana, state officials scrapped a $15 million contract with an Indian consulting firm last November. The brouhaha is even changing the face of politics. After his software development job was axed in 2002, Mike Emmons of Florida decided to run for Congress on an anti-outsourcing platform. The supporters In 2003, IBM inadvertently shined a spotlight on the issue: The Wall Street Journal reported that Big Blue planned to move several thousand skilled software jobs from the United States - including, possibly, Boulder - to India, China and elsewhere. Corporate CEOs and economists from both major political parties say outsourcing is inevitable and ultimately good for the American economy and its workers. The savings can be plowed back into the companies and the domestic economy, benefiting workers and companies alike. General Electric, IBM and Oracle are among the notable practitioners. Richard Noe, senior vice president at MBS Outsourcing in Fort Collins, reckons that companies realistically can save 20 percent to 30 percent through outsourcing. "There's not a lot of other options that will generate those kinds of savings," said Noe, whose company helps businesses with outsourcing. He said earnings generated from outsourced work return to U.S. shores and are funneled back into jobs, stock dividends or profit sharing. "It's not always, 'Well, it's gone, and we'll never get it back,' " he said. A McKinsey Global Institute study contends that for every $1 sent overseas, outsourcing creates up to $1.14 in value for the U.S. economy via cost savings, trade and other factors, or a net gain of 14 cents on the dollar. But many politicians and jobless tech workers decry the practice as bad for America, or downright unpatriotic. Not all economists are sold on the idea, either. Economists at the Haas School of Business at the University of California-Berkeley warned in a recent study that the jobs that stay in the United States could be subject to downward wage pressures. They also said the jobs that leave may slow U.S. job growth or generate losses in related activities. "Outsourcing will not empty out office buildings in the United States," said one of the study's authors, Cynthia Kroll. "But it will certainly slow the rate at which current vacancies are absorbed." Both "back office" markets and high-tech centers are likely to feel the effects, she added. Debt collectors to journalists A variety of occupations have been shipped overseas in recent years: data-entry agents, debt collectors, software developers and back-office workers who process payrolls. What's more, overseas call-center operators now handle airline reservations for Delta Airlines. And customer-support reps can help fix a computer glitch for Dell Computer customers. The trend has spread to other types of work, too. Indian workers in Bombay and Bangalore, for example, process U.S. tax returns. Indians also read U.S. patients' X-rays. Even reporters aren't immune. The news agency Reuters reportedly plans to hire a half-dozen journalists in Bangalore to do basic financial reporting on a large group of U.S. companies. To be sure, outsourcing doesn't always work. After fielding customer gripes, Dell stopped sending U.S. technical support calls for some corporate computer customers to a call center in India. Dell customers reportedly complained of language barriers and delays. It's also worth noting that the United States isn't the only nation where outsourcing is happening, although it accounts for an estimated 70 percent of the market. British and Australian companies are sending jobs to India. European businesses are exporting work to the Czech Republic and other former Soviet Bloc countries. While India is a leading destination for outsourced jobs, China, East Asia, Russia, Israel, Ireland and Canada are attracting offshore work, too. The flight of jobs from U.S. shores is expected to continue. Forrester's November 2002 report said those 3.3 million service jobs moving overseas represent $136 billion in wages. It also said the information technology industry would lead the initial exodus. Documents around the globe Of course, technology is what allows outsourcing to occur. Computers and high-speed communications permit companies to zap documents effortlessly around the globe so workers can process them or perform other chores. Similarly, e-mail and videoconferencing allow companies to stay in touch with overseas workers. And what is the main driver behind all this? Cost. According to the McKinsey Global Institute, the equivalent of a software developer who costs an employer $60 an hour in the United States costs only $6 an hour in India. The McKinsey & Co. think tank also estimates that a data-entry agent who costs $20 an hour in the U.S. costs only $2 an hour in India. Mac Slingerlend, CEO of information technology consulting company CIBER in Greenwood Village, sees historic parallels. "Offshoring is doing to the computer-service industry what Japan and others have done to the auto industry for a long time," said Slingerlend, whose own company has a partnership in India that allows it to tap into Indian tech workers. "The high cost structure of our society as a whole makes it difficult to compete in some areas," Slingerlend added. "It happened in manufacturing. It's now happening in professional and technical services. It's inevitable that all industries will be subject to this reality." Outsourcing overseas has roots in the 1970s and 1980s. Then, U.S. blue-collar factory jobs in consumer electronics - think TV sets - and the auto industry moved to Asia and Mexico. It spread in the 1990s to workers in call centers, data centers and back-office operations such as accounting and human resources. Since 2000, the wave has spread further to include chip design, information technology consulting, software development and other white-collar work. "What you're seeing today - and what is raising more of a political storm - is mostly over the white-collar jobs," said lawyer Celia Rankin, a partner with Faegre & Benson's Boulder office. A chance to survive For Stephen Gartside and Evolving Systems, the decision to seek help from workers in India began in 1999, at the height of the tech bubble. Gartside said the company was having trouble finding telecom software programmers. At the time, one of the company's top programmers was moving his family back to Bangalore and offered to set up a partnership with an Indian company, Infosys Technologies. A deal was born. And Evolving Systems relied on 40 to 45 Indian programmers in Bangalore. Then the tech bubble burst - and suddenly Evolving Systems was among the many companies struggling for its life. "It was a very difficult time for our company, and we were bleeding a lot of red ink," Gartside said. In mid-2002, the company changed its business model: The lion's share of software development work would shift to India. The number of Indian workers grew to about 50. The company slashed its annual expenses to roughly $20 million in 2002 from $52 million in 2001. Its Denver-area work force shrank to 100 today from more than 300 in 2001. The company is profitable. Gartside said he doubts Evolving Systems "could have survived through the telecom downturn" were it not for having sent the software work offshore. The company has gone a step further. In January, it said it would form Evolving Systems India, a wholly owned subsidiary in Bangalore. The initial work force is expected to total about 40. While Evolving Systems survived and at least some workers' jobs were saved, such news is unlikely to provide much comfort for people such as Alice and others who lost their jobs. Last October, Pueblo resident Marty McClelland lost his job as a software engineer at Hewlett-Packard in Colorado Springs after the development work he and five other colleagues were doing was sent to India. Over the years, McClelland had gotten a firsthand look at outsourcing. McClelland and colleagues were asked to help train Indian software engineers, who visited the Springs and then returned to India to perform software maintenance work for the company, he said. While it wasn't always easy because of language barriers and other issues, McClelland said he and his colleagues did the training. They showed the Indians, for example, how the software operations worked and how they should be maintained. McClelland realized his job might be eliminated some day, but he hoped there would be alternative work for him at Hewlett-Packard. No such luck. McClelland said Hewlett- Packard gave him a "fair" severance package. But the 56-year-old is worried about his future, given the shortage of tech jobs in the Colorado Springs area. "To be laid off in this economy at this age, it's scary," he said. McClelland is studying the possibility of moving into a career outside the tech industry, such as teaching. Politicians jump in The issue also has surfaced in state capitols. According to the National Conference of State Legislatures, at least 26 legislatures have taken up bills in 2004 to restrict states from contracting with a company that would use foreign workers to do the job. None of the measures has passed so far, according to the NCSL. Some have been quashed. That was the case in Colorado. Republicans killed two outsourcing bills backed by Democrats. "An economist sometimes just looks at the numbers and doesn't realize these numbers are people," said state Sen. Terry Phillips, the sponsor of one bill. The Louisville Democrat worries about the ripple effects on a local economy when employees there lose their jobs after the work has been sent overseas. But Senate President John Andrews, who opposed the bills, argued: "I don't believe that protectionism makes anybody richer." Whatever the case, the dispute over outsourcing is unlikely to be resolved anytime soon. What is clear is that both sides are likely to argue passionately. At EDS, where Alice lost her job, spokesman Travis Jacobsen noted the company has been outsourcing services for customers for more than 40 years. "That's our business," he said. "We do it in a way that is most beneficial for our clients." He said customers of Texas-based EDS often want "low-cost" outsourcing services. "And so we have to meet that demand. Or they'll go to a competitor." Then there's Alice. "I have not only lost my job but am also losing my home," she said. In the meantime, she's looking into areas of work other than high-tech. "My theory now is to acquire knowledge in jobs where there will always be a need locally," Alice said. "Surely, I won't have to go to a foreign country for legal advice, immediate medical care, banking, etc. Then again, who knows?""
<Note from JobFairy.com: Some of these companies are total crooks; if there hadn't been outsourcing, they would have had to figure out some other underhanded means of surviving. Don't work for them, don't permit their reps to call on your companies, don't pass along their messages to your executives, and if you're a server admin, block their email from reaching recipients in your domain. People, this is war.>
Articles about the recent developments in the SCO Linux lawsuit
|
