Posted on 12/06/2005 10:10:44 PM PST by CarrotAndStick
Intel, the world's largest chipmaker, and JP Morgan Chase, the global investment banker, said on Monday that they would outsource significant operations to India, an indication that more complex, high-value work is moving here. Intel, based in Santa Clara, California, will invest more than US$1 billion in India over the next five years, of which US$800 million will go to expanding its research and development center in Bangalore, the company's chairman, Craig Barrett, said in a statement during a visit to New Delhi.
Intel's news followed the announcement in October that Cisco Systems would invest US$1.1 billion and triple its staff in India, from 1,400 to more than 4,000, in three years.
Intel's Bangalore center employs around 3,000 engineers who design and develop products. Barrett said on Monday that its latest investment "demonstrates Intel's long-term commitment."
Intel will invest the remaining approximately US$250 million as venture capital in technology companies.
JP Morgan Chase said it would add 4,500 employees in India by 2007, mainly by setting up operations in Bangalore to support its growing structured finance and derivatives businesses globally. The company will hire a mix of recent graduates and experienced workers and will double the size of its India operations. All 4,500 of JP Morgan Chase's current employees in India are based in Mumbai.
The bank made news two years ago when it became the first global investment bank to hire 35 equity researchers in India to support its operations on Wall Street.
"In our experience, we have found high-quality, low-cost staff in India and we want to continue investing in the country," said Michael Golden, a spokesman for the bank who is based in London."The investment is about meeting the growing needs of our business and not about shipping jobs from another location."
Wall Street firms and large global banks have been particularly aggressive in outsourcing work to India in recent months. UBS said it would open its first center in Hyderabad with 500 jobs early next year. Goldman Sachs has 750 people in its center in Bangalore but has a capacity for 1,500 employees.
"This is way beyond mere cost savings," Madhavi Mantha, a senior banking analyst at the financial consultancy Celent, said from Montreal. "Unless global banks are comfortable with the quality of work, they would not risk taking the work offshore."
JP Morgan Chase said the new employees will process complex derivatives settlements and structured finance transactions. The company will hire about 400 people a month. By 2007, it will have almost a third of its back-office and support jobs, about 3,000, in India.
Offshoring of work to India has steadily risen in the last few years, despite political discomfort in the US over the trend. Recently, high-end jobs in areas like chip design and complex product design have been added to the relatively low-end call center and paid-by-the-hour software coding work.
Though salaries in India are climbing rapidly for entry-level workers and top managers, Indian employees still earn less than a fifth of what their peers in the US do. This story has been viewed 45 times. Advertising
Copyright © 1999-2005 The Taipei Times. All rights reserved.
We should consider this type of outsourcing in context.
These investments are such peanuts compared to how much these giants invest in their R&D and their overall business.
The issue of transferring jobs overseas is a red herring because these type of R&D jobs are anyway held by immigrants to the US.
When you consider how much capital investment is made by foreign countries in the US (Honda, Toyota, etc....), these investments outside US are further dwarfed.
Indian kids can beat up our kids. They're playing by the rules and winning. Props to them.
If it builds them up as an ally... good.
Do you also contemplate the issues of supply/demand of technically-competent and cost-effective workforce?
I'm not going to subsidize a substandard American worker by paying him more or accepting inferior service, just because he happens to be the same nationality as me. And I'm certainly not going to blame corporations for not dumping money on universities that churn out useless liberal arts degrees. This is capitalism, and this is how it's supposed to work. May the best man win.
Eh, pouring money into schools hasn't solved anything. It depends on what you mean by "investment."
I agree with you 100%, but I will still make a note not to do business with Chase. I'd be worried about privacy.
Adopting the FairTax would be a good first step in the right direction. Then much investment now being sent abroad would stay home as well as attracting foreign corporate headquarters to our country. After that it will be easier to address the other stuff.
If you can do your job from home, it can be done halfway around the globe.
1. The laws of the United States are not immutable. They can be changed. They ought to be changed to make the United States more business-friendly. That will help put the brakes on outsourcing.
2. I wouldn't call myself a "globalist." I'm a Reaganite, Thatcherite, neo-liberal. That's "liberal" in the Adam Smith sense, not the Jimmy Carter sense.
So in order to assure domestic tranquility we need to support policy which puts American citizens first so that they can provide for themselves and their families and contribute to the tax base.
I agree wholeheartedly. We ought to cut taxes and deregulate employment practices to make American employees more attractive to businesses.
If it costs more for Americans to do a job( because of a lot of regulation) so be it. Pure capitalism is not necessarily in the best interest of our country. You cannot put Americans out of work just so some products or services might be cheaper.
Translation: wealth should be redistributed from me to some other person just because he lives under the same flag as I do. Think winners and losers here: if substandard and/or higher-cost American workers are propped up, they win, and the people who are forced to pay for their services instead of a better alternative lose. It should be fairly obvious that losers vastly outnumber winners in this scenario.
And pure capitalism is always in America's best interests.
There is a trade-off, maybe national security is an issue, maybe a high rate of unemployment is an issue, maybe the reduction of the middle class is an issue as a few examples. It's just dopey to think that if a few investors or corporations benefit the the U.S. as a whole benefits. Generally, America benefits when it's people are employed and are able to participate fully in the economy especially the local economy.
Protectionist polices benefit local producers to the detriment of local consumers. In this case, the producers are American workers whose jobs may have been outsourced. The consumers are the companies that have to pay extra to employ American workers, and the consumers of that company's products, to whom that cost is passed.
The free market tends to move resources into the most efficient position possible. Fight the ocean and you will drown.
What kind of business do you run?
*Waits for "Well, then how could you know..."-type argument*
But I do pay for services with my money. And I really like having lots of choices so that I can get the best value for my hard-earned dollar. Cutting out competition among suppliers no different a wealth-redistribution Great Society scheme than welfare.
International trade is a good thing in general, but with limits and restrictions. I don't understand the modern fascination with it all; it's taken on a life of its own with no apparent benefit anymore except to the corporate owners, CEOs, and shareholders. It's become like an addiction, where eveyone thinks things are going great, but in due time a high price will be exacted.
Our trade with China has produced a massive trade deficit and a huge supply of cheesy, garbage-quality goods flooding our retail stores. This lack of home-manufactured goods saves us a few dollars in the short term, but with these junk goods we end up replacing them more often and losing money in the long run.
More than just hurting American manufacturing and good quality, this global trade fetish creates the perfect scenario for retail giants like WalMart to corner the market on this crap and put smaller retailers out of business. It also allows for low paying jobs for WalMart clerks and makes us reliant on foreign nations for parts, especially regarding electronics. Take a look inside your cell phone and see where all the parts are manufactured, same thing with your computers and most other electronics. Of course this in turn creates a market for mediocrity, where short life, disposable products become the new order of the day so we can "save on repairs".
Now that even our services are being outsourced to foreign countries, I can see the likelyhood of our children graduating from Law School with huge debts, only to discover the job market has been reduced by outsourcing to India. None of this globalism/free trade rot will ultimately benefit America, it has taken us from being number one in nearly every category in the 1960's; (education, standard of living, manufacturing, medicine, etc), to number 2, 3, 16 or lower. This is because we have globalized our country and have spread our wealth and knowledge to every corner of the earth, rather like ..... Communism. The world is one big happy family now, and taking care of the family here at home has been 'outsourced' by greed.
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