Outsourcing hits US techies hard

Times of India ^ | MAY 26, 2003 | CHIDANAND RAJGHATTA

[Lessismore]

WASHINGTON: On a recent April afternoon in Silicon Valley, moments after he was told he had been laid off from his computer programming job at a Bank of America training centre, Kevin Flanagan stepped into the parking lot and shot himself dead.

Some of America's technology workers, who like Flanagan have also had to collect pink slips over the last several months, think they know why Flanagan took his life: Bank of America not only outsourced his job to India, but forced him to train Indian workers to do the job he had to give up.

In the weeks since his death, the techies have used the incident as fuel to fire a campaign against outsourcing to India, an issue that now seems poised to become a major sticking point between the two countries. Several US states are already considering legislation to ban or limit outsourcing.

Bank of America is one of several major US corporations – General Electric, Microsoft, Intel are among others - under scrutiny for outsourcing jobs to India. The Bank created what is called a "Global Delivery centre" in 2000 to identify projects that could be sent offshore.

Since then it has signed agreements with Infosys and Tata Consulting Services (TCS) to provide solutions and services.

In an e-mail exchange with this correspondent, Kevin's father Tom Flanagan said "a significant reason for which my son took his life was indeed as a result of his job being outsourced."

"Did he blame India for his job loss? No. He blamed the "system." He couldn't understand why Americans are losing jobs. Rather I should say he understood it economically, but not emotionally," Flanagan said.

Bank officials, who did not return calls relating to Flanagan's death, have said in the past that the deal with Indian companies would effect no more than 5 per cent of the bank's 21,000 employees, or about 1,100 jobs, in its technology and operations division.

According to some surveys, the US has lost at least 800,000 jobs in the past year and some 3.3 million jobs will move overseas over the next few years because of outsourcing, mostly to India.

The Bank has also acknowledged that it had asked local workers to train foreigners because such knowledge transfer was essential. According to Tom Flanagan, his son was "totally disgusted" with the fact that he and his fellow-workers had to train foreigners to do his job so they could take over. "That sir is a travesty," he said in one e-mail.

US tech workers are challenging the corporate world's claim that it is outsourcing work to improve bottomlines and efficiency. Some analysts have also pointed out that US corporations were being forced to tighten up by the same people who are moaning about outsourcing, and who, heavily invested in the stock market, demand better performance.

But on one website that discussed the Flanagan case, a tech worker pointed out that data processing consumed only a small per cent of revenues and was hardly a drain on the Bank's profit.

"(It is) a prosperous bank which has let greed trump any sense of patriotism or social responsibility," he fumed.

[oceanview]

the managers running these operations could care less about that, they are only looking to cash in over the short term with a few big bonuses and stock options in the money, what they leave behind is of no concern to them.

[Pukin Dog]

Mister, you need a stage act. LOL!!

The fact is we have gotten soft. Soft and pudgy.

We have no idea what our grandparents lived through, back when folks paid cash for everything, and credit was thought of like gambling. I have refained from challenging people, but I would be curious to know how many of those hurting right now are paying for more than one car, and watching DirecTV?

[Pukin Dog]

Thank you for the correction. I have often said that if it took good grammar to fly jets, I would have died long ago.

[LibertarianInExile]

Ever Onward wrote:

Re your post 114:

You have stated the truth clearly. Thank you.

What he said.

[TaxRelief]

Sorry, the comment started out being to you, then went kind of general. It is excellent to see how your family values education and how you all have continued to invest your time advancing yourselves. You are right, the secret is to be well educated and flexible.

[RedBloodedAmerican]

I think that is a little dramatic, don't you? I bet I could find a programmer in Hartford in the insurance industry.

[SoCal_Republican]

The quote "There but for the grace of God go I" is meant to imply that none of us is secure no matter how much we think we are. No matter how hard you have worked, no matter how much you say "Suck it up! Get hot!" you are only one stroke/tornado/market crash/you-name-it away from relying on others to put chow on your table. Much of what you are saying is right-on, but I wonder if you would take such joy in the WAY you have been laying it on here if you were suddenly being fed through a tube. God humbles us all at some point in our lives. Yes we all need to take responsibility for supporting ourselves and being flexible. But maybe there is something to the other side of the arguement presented by the others here. By the way, one of the guys in my wardroom (XO) who was a hard-ass,suck-it-up ,your-problem-not-mine kind of guy was not so 'smug' when he was passed over and got zero retirement for his 14 years of service. He was humbled and was a different person after that. Maybe your turn is coming up ...

[crazykatz]

And I know SEVERAL HUNDRED programmers, engineers and call center workers who have been replaced by H1B workers or had their jobs outsourced.

My straight flush beats your pair of deuces.

[Snerfling]

The average understanding of economics is on about a 4th grade level.

It is astounding that normally bright people are so out of touch with basic economic knowledge. Whether or not one deserves a job, apartment, standard of living, etc are all questions for philosphers. The one universal truth that has held up throughout the ages is that capitalism encourages innovation (ie 'trying to get rich') and innovation attracts capital.

We never know where/when the next "big" thing is coming, but rest assured, it always does. The importance of having open/fluid markets is not just products/labor, it's capital. And it's capital that develops industries which in turn hire workers. Perhaps people should be reading more Hayek than moping at FR.

[RedBloodedAmerican]

I know several gazillion programmers who have jobs in the USA. My stretch beats yours any day.

[MarkL]

I do not understand what the big deal about IT workers is anyway. Things change. Why didn't the man training his replacement just resign? Did he have no savings and living paycheck to paycheck? If so, who's fault is that?

We are currently supporting 39 weeks of unemployment insurance for those who cannot find work. I think the coward would have just found another reason to give up if not for this one.

I know of some people who were in the same position (however, not the same company). First off, the company was offering a small severence package. Secondly, the employees were told, flat out, that if they didn't train their replacements, then they would immediately be fired, that there would be no severence, and that the company would fight to deny them unemployment. 4 weeks of salary, plus 3 months staying on the company health plan (with the ex-employee paying 100%) wasn't much, but was better then nothing. They felt they didn't have a choice.

Mark

[RaceBannon]

Not too dramatic, I will confess there are still some, but there have been major layoffs at CIGNA, AETNA and THE HARTFORD in IT in the last year, not related to 9/11 or the Telecom collapse, but instead are all due to new jobs created for India.

As for NEW jobs...fat chance for anyone without years of experience

here is a link, search for yourself, see what is offere here for todays graduates, then, add up the number of grads. 1000 people for 10 jobs?

http://www.jobsearch.org/CT

[dr_lew]

The sky never does seem to fall. I remember reading about how Japan was going to own America. Japan is now into its second decade of recession because it is unwilling to allow businesses to fail and to restructure its economy.

Hello? The sky fell, but it's OK 'cuz it fell on Japan? And anyway, it's their own fault because they're so STOOPID ???

[oceanview]

China is not a free market economy. US companies can't sell into China, Cisco tried it, only to be met by a Chinese company that was knocking off their products.

You are basically arguing for equalization of wages throughout workers of the world. And if you get your way, that level of equalization will occur at a rate equal to that of workers who are willing to sleep on dirt floors with very low living standards.

Your plan isn't going to work, because long before we get to that point, the political system in the US is going to "intervene". We aren't going to push American standards of living down that much. The Dems are going to pick up this issue, and drive it as part of the "class warfare" issue, and these millions of displaced workers are going to vote for them. It will be utopia for the Dems, as these displaced workers will demand new goverment programs replace the things they have "lost" from the decimation of the private sectors ability to provide middle class jobs. And there is no end to the taxes on the "haves" that can be passed to cover it.

[maui_hawaii]

I wouldn't doubt that pretty soon people won't be shooting themselves, but rahter their (former) bosses. People are going to go postal if the trend keeps up.

[MarkL]

I wonder if he might have ever considered using his experience to train others?

It's a good job, when you can get them. The biggest problem is that it's feast or famine, and more importantly, the federal government is SUCH A HASSLE regarding certification of yourself as an employee or an independant contractor. Because you're working at a training center, and they're (usually) providing you with the location and training materials, the feds want to classify you as am employee! I know that when I went to teach a class for Novell, their certification group kept classifying me as an employee, even though Novell was contracting with MY EMPLOYER to have me come and teach the class! Damn IRS!

It's also very difficult and expensive to keep your certification current. At one time, I was authorized to teach 23 different Novell courses, but now, even though I still have my MCNI certs, I'm only certified to teach one class, and it's been 3 years since I taught an organized class (I still teach in-house to co-workers).

Mark

[Pukin Dog]

We are all humbled at some point by something. Does that mean we should hide under the covers and fear our own shadow?

I don't know what your XO friend is telling you, but to get passed up at that stage can only mean one thing; a serious screw up. If he flew, ask him about his qualls. You ask him and see if you get a straight answer.

Should my 'turn' come up, I can only pray for the strength to handle it with integrity. If I whine or gripe about it, I want that D'Anconia person to shoot me in the head.

[mylife]

Imn no fan of Isolationism, but this globalization thing suks...How can a US worker compete with someone in india with similar skills??
Seems to me that you cant unless we lower our standard of living.

[MarkL]

I know great kids who have graduated from college over a year ago with engineering degrees (Virginia Tech) and have yet to find a job. Talked to a friend of mine whose daughter just graduated with a teaching degree -- hasn't found work. The smaller communities where her daughter would like to teach, cannot afford more teachers. One person out of that graduating class has found a job so far. Many of these kids are continuing their education simply because there are no jobs.

There's a guy I know who graduated with a BSEE from Iowa State, and couldn't find a job. Through a family friend, he got into an electrician program (very important... He never let on that he was a college grad, let alone and engineer!). He went through the program and his apprenticeship, and now he's a journeyman electrician. And an EE! He's got a job working for a major engineering firm, designing power systems. He's the only EE that I've ever met that I trust with a screwdriver (I've almost been electricuted by a bunch of EEs, who wired a hot ground while installing some cubicles with power!)

Mark