Posted on 08/25/2003 5:59:59 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
Nobody wants to lose U.S. jobs to cheaper overseas workers, but we're sure getting used to it.
We did not make much of a stink in the 1990s when textile and low-wage apparel jobs in plants located on the Florida Panhandle moved to Mexico. We winced but half-understood when companies in super-competitive industries like St. Petersburg's Jabil Circuit cut staff in domestic electronics facilities and expanded lower-cost factories in Malaysia and other countries.
Lately, we've been biting the bullet as Tampa's help-desk operator Sykes Enterprises shuts down call centers across rural America. That work is heading to new call centers, some expanding by thousands of jobs, in Costa Rica, the Philippines and today's hottest job magnet: Bangalore, the "Silicon Valley" of India. Sykes' stock price, by the way, has doubled since February.
It turns out all these relocations are just warm-up acts for the bigger job exodus ahead.
This time, the jobs likely to be lost are higher-end, white-collar work in information technology, accounting, engineering and human resources: exactly the types of employment the Tampa Bay area is trying so hard to attract. Best known these days as "offshore outsourcing," the overseas movement of such jobs is not, of course, just a Tampa Bay phenomenon but a trend striking the state and entire nation.
This summer, a flood of high-profile reports were issued by consulting companies such as Gartner, Forrester Research, A.T. Kearney and Deloitte Consulting, all warning about the accelerated pace of high-quality jobs heading overseas.
Gartner researchers say it costs half as much to operate a call center in India as in this country. By 2018, Forrester predicts, U.S. employers will move about 3.3-million white-collar jobs and $136-billion in wages abroad. Notes Deloitte: No corporation is immune from the pressure to place jobs overseas for less money.
Tampa Bay area business leaders are not sure how to counter this job threat. How do you defend a local $75,000 MBA job when someone in India who has equal training and is fluent in English will make about $12,000 a year? How do you pay a programmer $50,000 here when the same work can be done by an India programmer who is enthusiastic to be making $5,000?
Here in Florida one thing is perfectly clear. "We cannot compete on a cost or price basis," says longtime Tampa economic development leader Robin Ronne of the Greater Tampa Chamber of Commerce's Committee of One Hundred.
But the Tampa Bay area and Florida may be able to compete on a higher level with cutting-edge job expertise in certain key industries, in job innovation supported by focused training from the educational community and in the sheer ease with which companies can relocate or expand here with a minimum of red tape.
Instead of helplessly watching the "offshoring" of so many white-collar jobs from Wall Street, for example, Ronne wants to redirect some of those better jobs right here. He calls the task "nearshoring."
Easy to say. Tougher to do. White-collar jobs are flying out of the United States faster than Arnold Schwarzenegger is running for governor in California. Here's just a small sampler:
"Using offshore tech workers certainly has been an issue locally," says Fritz Eichelberger of the Casey Group, a Tampa tech consulting and support company. "These are some of the largest procurers of IT (information technology) resources."
Cost is key. But it's not the only reason for offshore work. U.S. companies like distributing technology work around the globe so that tasks can be handled on a 24-hour basis, not solely during the local eight-hour workday.
Critics of the flight-to-cheap-labor movement say U.S. workers who lose their jobs are not the only victims. As more jobs are handled overseas for less, U.S. companies may feel more justified in cutting benefits and pay here. And if higher-degree MBAs, engineers and software developers find their services aggressively undercut by more competitors around the globe, what will motivate young Americans to pursue such careers in the future?
Tampa Bay area business leaders are trying to respond to at least one slice of the offshore job movement. They recently created a "financial services cluster initiative" aimed at preserving the region's growing concentration of financial and related technology jobs provided here by JP Morgan Chase, Citigroup, Franklin Templeton, MetLife, Raymond James & Associates, Capital One and other corporations.
The concept already has spread. Last Thursday, Enterprise Florida, the state's principal economic development organization, embraced Tampa Bay's idea and announced a statewide version of the financial services cluster initiative.
The effort is chaired by Irv Cohen, president of J.P. Morgan Treasury Technologies Corp. in Tampa, a growing unit of New York City's huge JP Morgan Chase banking corporation. Cohen, who relocated to Tampa from the New York area, oversees a sprawling high-tech operation in a campus-like setting off I-75 in east Tampa.
Last week, I sat down with Cohen in his office and discussed the new cluster initiative. Here are excerpts:
Q. So what's the point of this financial services cluster idea?
As financial service companies, we compete with Citigroup and others. But in the Tampa Bay area it is also to all of our cooperative advantage to create a place where people want to come. We already have no problem getting people to come here. But now more of the issue is keeping these jobs here.
Q. Why focus on financial services and not other parts of our regional economy?
The cluster idea came about from the Tampa Chamber and Committee of One Hundred after they looked carefully at what types of businesses the Tampa Bay area had attracted and what had prospered. After the 9/11 attacks, and now after the recent Northeast blackouts, Wall Street is much more sensitive about having proper backup, but not too close. We decided this area had attracted thousands of financial services and technology jobs. It was something we think we can grow and nurture. And we wanted to figure out some ways to prevent those jobs from just slipping away overseas.
Q. It's early, but what can you do if your boss in New York tells you to cut that job paying $46,000 here for a new job in India paying $6,000?
I stay up at night thinking about that. We're not going to stop all jobs from leaving overseas. But as a cluster of firms here, we can deepen the bench and add things to strengthen the industry here.
Q. Such as?
Such as getting the University of South Florida and University of Tampa involved in creating training programs that help supply us with top-trained people in financial services technology. The deans of USF and UT business schools are on our cluster team already. How about creating a financial services research facility to generate innovative ways to do new things? There's no reason that could not occur, given our concentration of jobs here.
How about looking with fresh eyes at the tax incentives, the infrastructure needs, the educational options, the available real estate and zoning that, combined, could help keep this area a top relocation attraction for financial companies looking to spread out their operations? One goal of the financial services cluster is to achieve the ability to conduct our business as efficiently as possible. Why not a Wall Street South right here?
Q. Is there a lesson behind JP Morgan Chase's substantial relocation here?
We would never be here today if we had not opened a basic call center here years ago. That success gave us the comfort level to pursue other things. It's the basic value chain. We have Morgan Chase operations in town (near Tampa International Airport) and we have this Highland Oaks business complex that handles our global wire transactions amounting to hundreds of billions of dollars each day.
Q. Let's cut to the chase. How much better is your work commute now?
In New York, I commuted to the city from New Jersey, which usually took an hour and a half. On a bad day it became two hours. On a good day here, it's 25 minutes. On a bad day, 27 minutes.
There's another selfish motive behind all this regional struggle to build better jobs here. Cohen says - and I hear this more and more often from a broad range of parents - he wants to make the Tampa Bay job market stronger so that his children will be motivated and able to find good local jobs.
That way, parents and their kids can live closer to one another. To Floridians, that's no small obstacle. In the past, many ambitious kids growing up in Florida have left the state and often not returned.
In the short term, the alarms over white-collar U.S. job losses will only get louder. Some states have proposed legislation to stop or limit jobs heading overseas, but few protectionist measures have gained much support. Not yet.
Until (or is it if) efforts like Tampa Bay's financial services cluster initiative gain some traction, that giant sucking sound you hear may be area jobs being uprooted and deposited overseas.
The examples are numerous and growing. (Check out reporter Kris Hundley's story on the outsourcing strategy of Tampa's Acclaris LLC.) Consider the Miami Beach investment advice service called 123jump.com. The company's 32 financial analysts earn $15,000 to $20,000 a year because they live in India, Bulgaria and Argentina.
In Tampa, Santu Rohatgi, founder and CEO of Rising Solutions, leverages his outsourcing staff in India by undercutting the prices of U.S. competitors. The numbers can be startling. Rohatgi says his technology support business can offer outsourcing services to clients for as little as $8.25 an hour.
Talk about global competition. Isn't that the going price around here for an experienced babysitter?
- Robert Trigaux can be reached at trigaux@sptimes.com or 727 893-8405.
And what 'reality' do you get 90% marginal rates from?
Historical income tax rates went up to 90%. Who is to say they won't go back there to pay for everyone's Welfare benefits once they go to the polls to loot the wallets of those who "have" once their jobs are offshored with no prospects of other employment?
Just pull a number out of thin air? Why not 87% marginal rates? Why 90?
See above.
Honestly, without anywhere else for people to go, they *will* go to the polls and *will* vote for as much in terms of entitlements as they can squeeze out of the productive few who are left.
That is the reality of the situation. Like I said, put ideology aside and look at what your fellow citizens are likely to do. Are they likely to just accept a reduced standard of living? Why, when they can extract the balance from someone else's wallet -- legally?
Watch it come....because it will if the massive offshoring trend isn't slowed or stopped. Slowing will give people time to develop something new here at home in America. Stampeding the jobs offshore will likely cause Great Depression style unemployment and we *all* know what *that* led us to....correct?
It will also usher in President Hillary and her ilk. Ugh.
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