3.13.2004

"No Outsourcing" Becoming the New "Made in the U.S.A." Slogan American International Automobile Dealers (3/12)
"No outsourcing" could become the latest twist on the "made in the USA" slogan. Now, consumers are compiling Web sites that track which employers outsource overseas, which means they hire workers in other countries to do jobs typically held by U.S. employees. And some businesses are letting clients request that work not be farmed out to overseas workers.

Anti-outsourcing cry unnerves corporate giants Asia Times (3/13)
"Early this week, both GE and Gillette cited the outsourcing backlash as a risk factor for their growth and said the competitiveness of a number of US companies would be severely affected by legislation barring outsourcing and the emergence of a protectionist climate in the US. While GE warned of its impact in the initial public offering (IPO) filing for Genworth Financial, a GE subsidiary, as well as in its annual report, Gillette so far has kept its concerns limited to the pages of its annual report."

Fair is fair: Offshoring unnerves us!

At This Startup, "Outsource" Is a Dirty Word BusinessWeek.com (3/15)
Kevin Wallace of Atomz won't even consider offshore programmers. It's essential, he says, to have "all the people we want in the one room"

St. Petersberg Times (Letters to the Editor, 3/13)
"I suppose that paying someone overseas one-sixth the amount paid to Friedman to come up with his columns could save a bundle.

At 400 times the salaries of their average employee, CEOs are expensive. Can't someone overseas do their jobs for less?"

Hmmm, now those are interesting ideas...

In This Recovery, a College Education Backfires The New York Times (3/14)

Online lender lets borrower opt to avoid offshoring CBS MarketWatch (via Ohio.com) (3/13)
"In the ongoing debate over the shifting of U.S. jobs to locales abroad, one company is taking a unique position: Let the buyer decide.

E-Loan, an online auto, mortgage and home-equity lender, is letting its customers decide between having their loans processed abroad or in the United States."

3.11.2004

Fiore Presents: Today's Growth Industries WorkingForChange.com (3/11)

We love Mark Fiore's work, go check it out now!

U.S. not protecting against outsourcing LDNews.com (3/11)
"The economic "law of comparative advantage" does indeed prove that trade benefits both parties to an exchange. But the economists don't tell you about the "law of factor-price equalization" which says, just as definitively, that foreign trade and investment will force American wages down and raise Mexican, Indian and Chinese wages up until they are all equal. And profits will go up as wages and jobs go down."

Bush Choice for Manufacturing Post in Question The Washington Post (3/11)
"Six months after promising to create an office to help the nation's struggling manufacturers, President Bush settled on someone to head it, but the nomination was being reconsidered last night after Democrats revealed that his candidate had opened a factory in China."

Hilarious

A Must Read
Worse off than sheep? CNNMoney (3/11)
" ...because agriculture and agricultural products are protected from the vagaries of the market -- not just in the United Kingdom and the United States but throughout the developed world.

Protectionist measures in agribusiness are, in fact, the reason that recent efforts to reduce trade barriers and tariffs and increase global trade have foundered. Poor agricultural countries resent the fact that rich, developed countries protect their farmers and farm products.

In other words, we take it as gospel that knowledge workers must compete in the global economy, but sheep farmers and sheep?"

Bahhhh bahhhh

Unions, manufacturers call outsourcing a threat PittsburghLive.com/Tribune-Review (3/11)

Bakk bill would keep state agency work in the U.S.
The Daily Tribune (3/11)

Economic growth, but no jobs DelawareOnline.com (3/11)

Bush defends outsourcing of jobs The Times of India (3/11)
(Submitted by an OA reader who believes that since the Indians love "Mahatma DubyaBush" that we should offshore him. To that we say: Amen)

3.10.2004

Offshoring may cripple U.S. office markets Inman Real Estate News (3/10)
"The steady movement of knowledge-based jobs overseas has dire implications for America's office markets, virtually ensuring high vacancy rates and minimal rent increases for several years and affecting several types of office space..."

3.08.2004

Tax relief for offshoring? The Mercury News (3/06)
Infosys Technologies, an India-based software development company with its U.S. headquarters in Fremont, asked the state for more than a million dollars in tax relief, saying the standard tax formula fails to reflect that two-thirds of its U.S. work is done offshore.

---SNIP---

"Infosys represents the extreme of the outsourcing problem,'' said Sen. Joseph Dunn, D-Garden Grove, who is one of several lawmakers who have submitted legislation to regulate outsourcing. "They not only want to steal California jobs, they'd also steal the taxpayers' dollars. That's unfair not only to California workers, but to businesses as well."

What complete bastards.

Study: IBM's 'new' U.S. jobs not so new The Washington Times (3/08)
"... For one thing, many of those 5,000 new jobs are part of IBM's ongoing contract business, whereby it takes over client's accounting and payroll work.

Typically, IBM hires the employees whom the client already had doing such work. Eventually, though, many of them are fired, the Journal reported.

Not only that but some of that work ends up offshore."

See also New IBM Jobs Can Mean Fewer Elsewhere on CNNMoney

Democrats propose penalties for outsourcing The Macomb Daily Online Edition (3/08)
"Democrats in the state House want Michigan to reward companies that create good-paying jobs and punish those that move jobs out of the state by requiring them to pay to retrain the work force they left behind.

A package of legislation set to be announced today would give companies that have added to their Michigan work force priority for state contracts and prohibit the state from investing in or doing business with companies that relocate to other countries to avoid federal taxes."

Union push against offshoring Australian IT (3/09)
"UNIONS have threatened network operator Equant with a global stopwork following a decision to offshore jobs from its Sydney customer service centre to Egypt."

Maybe We Could All Deliver Pizza... The Washington Post (3/07)
"In the long run, though, the thing even execs should fear is this: What would happen if America's once-prosperous middle class, the sine qua non of a vibrant democracy, grew too strapped to purchase the goods and services that businesses produce? True, as workers in China, India and elsewhere move up the value-added chain, they should prop up global demand. But here at home, increasing income inequality could lead, as Sen. John Edwards (D-N.C.) warns, to a two-tier economy, with a small but ever wealthier coterie of capital holders and a sprawling proletariat."

This article is highly recommended, and you can read a post about the author's talk at the GAO a few weeks ago in our archives.

You also check out her WP sponsored online chat today.

3.07.2004

Outsourcing: Globalization 3.0 Star-Telegram.com (3/07)
"These work-flow platforms can chop up any service job -- accounting, radiology, consulting, software engineering -- into different functions and then, thanks to scanning and digitization, outsource each function to teams of skilled knowledge workers around the globe, based on which team can do each function with the highest skill at the lowest price. Then the project is reassembled back at headquarters into a finished product."

---SNIP---

"We created a worldwide network which connected all the resource pools on the planet, and suddenly we changed the rules of the game," said Nandan Nilekani, CEO of the Indian software giant Infosys -- which last year received nearly 1 million applications from Indian techies for 9,000 software jobs.

You cannot wish away this new era of globalization, he added. "It will not go away."
We could really learn to loathe Thomas Friedman.

Stephen King: US recovery is creating jobs, just not in the US The Independent (3/08)
The markets hoped they'd get an elephant but, in fact, they got a mouse. A mouse that sent the dollar lower against sterling and the euro. A mouse that led to a rally in US bonds. And a mouse that stood up to the world and roared out its message loud and clear: "The US is still facing a jobless recovery."

---SNIP---

Companies may be hiring more workers but there is no reason why companies should specifically be hiring US workers.

---SNIP---

If companies are doing well precisely because of their ability to outsource and offshore, it makes no sense whatsoever to expect a recovery in corporate profits to feed through to a recovery in workers' incomes. In this Brave New World, profit strength - and labour market strength in China and India - may be driven by exactly the same processes that are giving rise to labour market weakness in the US.

Looking Offshore: Impact On Jobs SFGate.com (3/07)

HOW MANY JOBS COULD WE LOSE?
3.3 million - The number of U.S. jobs expected to be outsourced by 2015 (Forrester)

14 million - The number of U.S. jobs vulnerable to outsourcing (UC Berkeley)

11 percent - The percentage of U.S. jobs vulnerable to offshoring (UC Berkeley)

17 percent - The percentage of Silicon Valley jobs vulnerable to offshoring (UCBerkeley)

WHY IS THIS HAPPENING?
$70,000 - What the average American computer programmer is paid (UC Berkeley)

$8,250 - What the average computer programmer in India makes (CIO Magazine)

$9,000 - What the average computer programmer in China makes (CIO Magazine)

And the numbers say it all. But has anything really gotten any cheaper?

Offshoring's giant target: the Bay Area
Silicon Valley could face export of 1 in 6 jobs -- worst in nation
SFGate.com (3/07)
"Jobs are more likely to be shipped overseas from Silicon Valley than any other region in the nation, placing the Bay Area's economic engine directly in the path of the global freight train known as offshoring.

Specifically, 1 in 6 jobs in Silicon Valley are at risk of being sent abroad, compared with only 1 in 10 positions nationwide, according to researchers at UC Berkeley. The economists estimate that 1 in 7 San Francisco jobs could be exported."

Toward a Progressive View on Outsourcing The Nation (3/04)
Democrats have rightly seized on the issue. They are touting an array of anti-outsourcing proposals, mostly focusing on national measures, such as elimination of taxpayer subsidies. For example, John Kerry advocates banning foreign outsourcing of state and federal government contract work and would also eliminate tax breaks for firms that outsource, while giving tax credits to those that do not. Other US policies that encourage overseas investment could also be targeted. For example:

§ The relatively weak requirements for US firms, compared with European counterparts, to pay severance or negotiate with unions over plans to move jobs overseas.
§ Overseas Private Investment Corporation insurance for corporations investing abroad.
§ Treaties that protect US investors against host-government actions--including public interest laws--that diminish profits.

Changes in these and other areas could help chip away at the incentive to outsource. However, such domestic remedies do not address the main driving force: the extreme gap in wage levels.

Bush's Economic Indicator: 2 New Jobs The Washington Post (3/05; Registration required)

President Bush rhapsodized Thursday about the possibility that a stock-car firm in this hot, dry community will add two jobs this year, as he refined his campaign message of economic optimism.

Bush, seated on a highchair along with five small-business workers and owners, was speaking at a "conversation on the economy," a talk-show-type event the White House stages regularly in front of television-friendly signs that say, "Strengthening the Economy."

Prompted by the president, chassis-maker Les DenHerder said the tax cuts Bush backed might allow him to hire two or three more people.

"When he says he's going to hire two more, that's really good news," Bush said. "A lot of people are feeling confident and optimistic about our future so they can say, 'I'm going to hire two more.' They can sit here and tell the president in front of all the cameras, 'I'm going to hire two more people.' That's confidence!"

So Bush's tax cuts might allow this guy to hire 2 more people (maybe 3)... Do you need another reason to vote Bush out of office in November?

Outsourcing Is Becoming a Harder Sell in the U.S. The New York Times (3/06)

Now, even some practitioners are speaking out against globalization.

"I really hate it," said Al Lubrano, president of Technical Materials Inc., a Lincoln, R.I., manufacturer of specialty metal parts for computers, telecommunications equipment and other applications. "I think we're really selling out our manufacturing community down the river."

---SNIP---

"Outsourcing has so far been modest compared to what's to come," said Lael Brainard of the Brookings Institution in Washington. Brian Keane, chief executive of Keane Inc., a Boston-based company that handles back-office operations for companies, said executives increasingly were concluding that they had no alternative to sending jobs overseas, despite the growing political heat.

"You almost can't afford not to,'' Mr. Keane said. "That's the bottom line." Otherwise, he added, competitors will end up "eating your lunch."

US business fearful as Senate votes for outsourcing curbs The Business Times Online (3/06)
"Legislation still faces hurdles, but companies are raising profit alarm"

"The London paper said GE, like many multinationals, rejects the crude analysis that a job outsourced is a job lost, and points to the fact that its employment levels in the US have remained steady for 10 years. However, it has judged the backlash serious enough to warrant an extended warning to the SEC. 'The political climate in the US could change so that it would not be practical for us to use international operations centres, such as call centres,' GE said an updated prospectus.

In contrast to earlier filings, it also warns specifically of bills recently introduced in Congress that would require employees of call centres to disclose their physical location at the beginning of each phone call.

'If enacted, this legislation could result in consumer pressure to curtail our use of low-cost operations outside the US, which could reduce the cost benefits we currently realise from using them,' added GE's Genworth division in the filing."

Uh, hello you ding-dongs: that's the point of the legislation. See, it's all about profit and there is no guarantee of "new jobs" because the traditional economnic rules have all changed now and no one knows what the new ones exactly are, but in a rigged, uneven game you know the advantage won't go to the "little guy."

US business fearful as Senate votes for outsourcing curbs The Business Times Online (3/06)
"Legislation still faces hurdles, but companies are raising profit alarm"

"The London paper said GE, like many multinationals, rejects the crude analysis that a job outsourced is a job lost, and points to the fact that its employment levels in the US have remained steady for 10 years. However, it has judged the backlash serious enough to warrant an extended warning to the SEC. 'The political climate in the US could change so that it would not be practical for us to use international operations centres, such as call centres,' GE said an updated prospectus.

In contrast to earlier filings, it also warns specifically of bills recently introduced in Congress that would require employees of call centres to disclose their physical location at the beginning of each phone call.

'If enacted, this legislation could result in consumer pressure to curtail our use of low-cost operations outside the US, which could reduce the cost benefits we currently realise from using them,' added GE's Genworth division in the filing."

"If you're after getting the honey, hey
Then you don't go killing all the bees
  - Joe Strummer & The Mescaleros, "Johnny Appleseed"