Posted on 08/10/2003 8:46:07 AM PDT by Brian S
| Increasing export of white-collar jobs is cause for concern
By Michelle Kessler and Stephanie Armour Not anymore. It's not just clothing and electronics being made by workers in India and China and similar places. Now, it's office and professional jobs that are being shipped out -- raising the specter that skilled white-collar workers could face the same devastating job losses that decimated the manufacturing industry. Already call-center jobs have been affected, including jobs in Utah. Convergys Corp. a week ago confirmed plans to move at least 100 technical support jobs at its Taylorsville call center to an overseas center. Almost any professional job that can be done long-distance is suddenly up for grabs. Jobs done by financial analysts, architectural drafters, telemarketers, accountants, claims adjusters, home loan processors and others at higher levels of the labor food chain are being farmed out to workers in other countries. "We're not just talking about call-center jobs, but all kinds of jobs," says Deloitte Consulting analyst Christopher Gentle. "It doesn't leave any part of the corporation untouched." These include high-paying, highly sought-after jobs that often require advanced degrees and years of study to attain. But instead of paying six-figure salaries to trained workers in America, more companies are shelling out $10,000 to $20,000 to get cheaper employees an ocean away. Major U.S. companies, including such giants as IBM, Microsoft and Procter & Gamble, are leading the pack. Tens of thousands of jobs already have been shipped out, and analysts project that millions more will go -- just as the fragile economy attempts a rebound. Employers say outsourcing jobs to foreign countries makes them more competitive because they can reap enormous savings in labor costs. They argue that most of the jobs now going overseas are positions many Americans snub, such as telemarketing. Farming out that work leaves better, higher-paying jobs for American employees to do. The trend represents a potential seismic shift: In the next 15 years, American employers will move about 3.3 million white-collar jobs and $136 billion in wages overseas, according to Forrester Research. That's up from $4 billion in wages in 2000. Financial services companies alone plan to move more than 500,000 jobs offshore in the next five years, says consulting firm A.T. Kearney. Deloitte Consulting expects 2 million jobs worldwide to eventually move to countries such as India. To labor unions, the farming out of white-collars jobs is more than just another way for businesses to cut costs. They say the trend has the potential to plunder American jobs, prolong the weak labor conditions that have characterized this jobless economic recovery and pose a long-term danger to the employment security long enjoyed by white-collar workers. It's the first threat of its kind, and critics now are trying to mount an offensive. "We see it as a threat to America's middle-class work force, in terms of wages and benefits," says Marcus Courtney, president of Washington Alliance of Technology Workers in Seattle. "The service sector is not immune to the forces of globalization. We're talking about highly skilled, best-paying jobs. It's raising the concern of workers." The Communications Workers of America this spring began pressing Congress to authorize an investigation into the growing number of jobs being shifted overseas. High-tech workers have handed out leaflets and held demonstrations protesting the trend in states such as Texas, Washington, Massachusetts and New York. Critics are pushing for legislation that would halt projects from being sent overseas if they're funded by tax dollars. Others want tax incentives to help keep business on U.S. soil. The worry: Increasing profit pressures and the ease of information exchange provided by the Internet will turn the wave of companies shipping out work into a tsunami -- potentially having an impact on every sector of the white-collar labor force. Among concerns: * Benefits and pay: Secure in the knowledge that they can get cheaper workers overseas, American companies might begin slashing benefits here, critics say. Even U.S. workers who get jobs could see wages slashed because of the competition posed by their counterparts overseas, they say. Companies have already been curbing benefits as labor costs -- driven largely by health care costs -- escalate. Pay has also suffered as companies cut back on raises in a sluggish economy. As more companies start tapping overseas workers, critics say American workers will lose the last vestiges of their bargaining power. At 123jump.com, a Miami Beach-provider of investment advice, the company's 32 financial analysts live in India, Bulgaria and Argentina, earning $15,000 to $20,000 a year. CEO Manish Shah says he could shell out $150,000 or more to hire analysts here. But why? His analysts usually have MBAs and speak fluent English. "Can we stop [globalization]? No," Shah says. "We go to the cheapest possible cost with the best possible product." * Loss of American jobs: Labor unions and consultants fear a repeat of what happened to the manufacturing sector, which has lost more than 2.6 million jobs in the past three years. The scope and type of jobs being farmed out show how vulnerable many professional positions are. J.P. Morgan Chase expects to have 40 research analysts in Mumbai (formerly called Bombay) by year's end. Deloitte Consulting has about 1,000 employees in Hyderabad and Mumbai, many handling research work. A.T. Kearney uses workers in New Delhi to for research and office support. IBM has expanded offices in Bangalore, India, to handle engineering work, and is reportedly considering a big off shoring push. Hewlett-Packard has 5,000 employees in India, doing research, developing software and staffing call centers. * An unstoppable force: While the overall percentage of jobs being farmed out to overseas workers is still small, the advantages to U.S. companies are so attractive that labor unions fear any congressional efforts to curtail the practice will be doomed. Already, major companies are able to work around the clock because of their overseas presence. Oracle has two big development centers in India, and 4,000 employees will be stationed there by the end of the year. Programmers there pick up projects when their American counterparts leave for the day, and vice versa. That way, Oracle is working 24 hours a day. The numbers are continuing to swell. Consulting firm Brulant recently surveyed 38 large companies about their outsourcing plans. While only 18 percent were seriously considering outsourcing, "100 percent of them were evaluating it," says CEO Len Pagon Jr. If outsourcing takes off, it's unlikely to stop, experts say. "The jobs aren't coming back, that's for sure," says Forrester Research analyst John McCarthy. While the trend has been under way for years, only now -- as the pace of outsourcing picks up and new projections show its use continuing to grow -- is debate about the practice increasing. One reason for the attention is the recent economic doldrums. With unemployment at 6.2 percent in July, more white-collar professionals are becoming anxious about job security. While many have been shaken by layoffs, workers' new concern that jobs could be lost permanently to other countries is sounding an alarm. Says Josh Bivens, an economist at the Economic Policy Institute in Washington: "This will cause more churning and concern higher up the professional food chain. Blue-collar workers have been used to this for years." Since the first migration of white-collar work involved technology jobs, other employees in professional jobs thought they were immune. Now, office jobs many thought could never be done overseas are being farmed out. Workers in India hired to handle telemarketing, for example, assume an American name and take cultural training in U.S. customs. "In India, it's a very respectable job," says Chaitra Aiyar, 23, who works at Cellbion, a call center near Mumbai. She goes by the American name Cindy Newman when making calls. Workers who have never set foot in an American office are handling such sensitive areas as payroll and benefits. Procter & Gamble handles payroll, travel, benefits, accounts payable, invoice processing and other work at offices in San Jose, Costa Rica; Manila; and Newcastle, United Kingdom. About 7,000 people work in these offices, which opened in 1999. "There are real security risks," says John Guinasso at Data Systems Security in San Jose, Calif. "Corporations here don't have control over who has access to information once it gets out of their hands. There are real concerns." Are the fears real? Is all the hand wringing overblown? Labor groups say no, but companies and some analysts argue that shipping white-collar jobs overseas is hardly a menace to American jobs. "The recession is making all sorts of people insecure. I don't see this as a huge threat to the U.S. economy," Bivens says. Since labor and land in countries such as India can be cheap, the cost savings can be "extraordinary," says A.T. Kearney Vice President Andrea Bierce. An MBA with three years experience in India will make about $12,000 a year, compared with $100,000 in the USA, she says. A programmer will make $5,000, compared with $60,000 in the USA, she says. "There are an awful lot of companies thinking about this," Bierce says. But it's the fact that overseas workers are so cheap that has detractors crying foul. It even gnaws at some employers. David Stixrood, president of Dallas-based Corp-Wireless, which provides broadband wireless connectively to the Internet in truck stops, opted not to use an overseas help desk -- even though it was cheaper -- partly because he's concerned about what outsourcing will do to American jobs. "We're going to lose all those jobs," Stixrood says. "Unfortunately, we live in a very competitive world and sometimes competition is very cruel." |
Lessee... that's about $100 a week - or $2.50 per hour (assuming a 40hr week).
I guess my student loans will have to stay defaulted.
If a company is going to reap the bennies of operating in the "generally lawful" confines of the US, they damn sure owe something to the taxpayers who protect their wealth.
Hell, maybe we should build nuclear carriers in India as well. We can buy three for the price of one.
I would be extremely interested in such a list.
Hmmmm...I have an interview for a claims adjusting job tomorrow. I don't see how a job like that can be outsourced, since there has to be some up-close investigation performed. Unless they are referring to medical claims, which would not be the case.
more socialist rhetoric on "Free" Republic. Nobody owes anyone anything, protection of property is a right not a privilege that you pay for.
When are they going to be sending the CEO and the rest of the leadership "team" over to India? Certianly if they go from 60K to 12K for a programmer, wouldn't the savings from 10 mil to 2 mil help the bottom line?
As for the bit about speaking english, I have yet to find one that speaks comprehendable english. I often end up conversing via email since I cannot understand them on the phone.
As for the programming skills, they can program like a robot. The problem is we need to keep a pile of folks here stateside to correct their programming. They do not seem to understand creativity yet.
One more thing. The reason they are so cheap is because companies do not have to pay for all the stupid liberal policies over there. No diversity. No OSHA. No ADA. No social security. No workman's comp. No environmentalism. No unions. If they had to pay for all those things, then that programmer would cost 60K over there, too.
We must get rid of the rats if we want to stay competitive.
Really? I would suggest that in a democracy where every adult can vote, it might be wise to do everything possible to make sure that there are plenty of jobs to go around. Because if there aren't, the unemployed will simply vote to tax your earnings away from you.
The flow goes both ways, with the US draining the world's brightest to work here, we export more, stay competitive and provide jobs.
Americans are fatter and more care free than any people of any time. Our "unemployed poor" are richer than 90% of the world today, But there will be some here who claim to align with conservatives, but want to micro manage our ability to trade with someone overseas, calling for another inevitably corrupt bureaucracy to protect us.
The economy is still based on a "free enterprise system". Perhaps, this is a tool that the corporations are utilizing to help stifle any chance of the loss of this rebound. After all business IS in business to make money NOT to guarantee empolyment. That is a politicians job and look where the politicians philosophy has gotten us.
Well said! : )
And why are we fatter and more care free? Who knows however, since we are the last vestige of of a "free enterprise system" left in this world of ours, I would have to speculate that perhaps that is the reason why! If one takes an objective point of view, then one really can't desupte the fact that we still are the only super power left in the world and that it is because of our free system which also gives business the freedom to promote their ideals of making money.
Give the Free Traders time and Zimbabwe will seem like paradise compared to what is in the USA.
Americans are fatter and more care free than any people of any time. Our "unemployed poor" are richer than 90% of the world today, But there will be some here who claim to align with conservatives, but want to micro manage our ability to trade with someone overseas, calling for another inevitably corrupt bureaucracy to protect us.
Can you provide any evidence of your assertions or are you just another hit and run poster who makes statements they can not back up.
Translation: I still have a job...
Perhaps but is there any evidence to support what he is stating in the current trade envirornment or are you just stating what you would like things to be
And why are we fatter and more care free? Who knows however, since we are the last vestige of of a "free enterprise system" left in this world of ours, I would have to speculate that perhaps that is the reason why! If one takes an objective point of view, then one really can't desupte the fact that we still are the only super power left in the world and that it is because of our free system which also gives business the freedom to promote their ideals of making money.
I have no argument withh the Free enterprise system and free markets within the USA but have you looked at the international trade system and the current economic numbers?
With pratice, it gets easier to understand.
Then Zimbabwe will be the land of opportunity! Then there will be a mass exodus to Zimbabwe however I don't see that taking place in the near future because for some strange reason the mass exodus is to the USofA! Why? One has to wonder.
In order to "sell" aircraft to China Boeing had to build a factory there. Of course that was only becuase of the "competition" from Airbus, a state subsidized entity.
I doubt this. Free entetprise is alive and well in much of the world. Thailand has a much higher percentage of the population that owns their own business than the USA.
Since you seem to be such a fan of outsourcing how about jsutifying the trade envirornment that supports outsourcing including: Currency controls in the Rupee and the Yuan,. OPIC a subsidy from the US government to overseas investment, Chinses tariffs on American consumer products that are in the 50% range, Demands for investment for access to markets, Government subsidized builduing of factories, Government policies specifically designed to raid the american markets and garner the business while government actions atrificially provide slave labor.
Now the remedies are simple really and totyally free market capitalist.
1. Get rid of government subsidies for offshore investment of US companies. Opic is the first such program which should go but support of World Bank programs that subsidize the outflow of Capital would be another.
2. Use tariffs on those nations which are engaged in unfair trade practices such as currency manipulation (China and India for example), those nations which refuse to open their markets to US products (China for example with uts 50% tariffs on US consumer goods and non tariff barriers), those nations that subsidize competition to American Industry(airbus for example) and thos enations which have slave conditions for their workers.
3. Use tariffs and other means to prevent the relocation of jobs offshore that are essential to the national defense. If necessary take control of the company seeking to export vital technology or industry by means of eminent domain (No I do not like this last option and I will only defend its use as an absolute last resort like say in teh case of rare earth magnets essential to smart bomb technology).
4. An immediate end to guest worker programs. If people wish to come to teh USA to work and make a life let them immigrate according to the rules.
5 Provide economic development zones where the corporate income tax is zero for operations within these zones. In order to operate in this zone a company must agree to only purchase American components if available and employ only American citizens or legal immigrants in these operations.
6. Scale back unecesary regulation.
7. Increase the domestic content in purchases by the Department of defense and give absolute preference in non-domestic content to proven allies of the USA over say the French or Germans.
8. Do not allow expense involved in moving operations overseas to be included in business expenses under the IRS code.
9. Prosecute for perjury anyone who has made a false staement in order to employ an H1B or L1 visa worker. I will be lienient on the actual perjurer if he/she was ordered to make this false statement and he/she provides testimony to aid in the conviction of the person ordering the perjury. Just because a person is a CEO does not give them a pss on criminal behavior.
10. Prosecute anyone who orders the transfer of vital defense technology overseas except to stroing allies of the USA. The UK, and Australia come to mind as meeting these criteria first.
Absolutely nothing there is socialist. It is entirely centered on the free market.
Because at present the USA has the highest standard of living in the world but those who encourage what they call Free trade but is only Free access to American markets are trying to destroy that standard of living. Somehow some peopel have gotten the idea that there is a right to imoport people, goods or services.
By the way there will not be a mass exodus to Zimbabwe Mugabe will not let people in.
Well some evidence of support may be that "world currency" is based on the dollar. In the current trade environment, I know how I would like things to be, however I realize that MY perception as to how things should be are very minimal in the whole scheme of everything so I promote my betterment (who else will?) on the basis of what I have to work with and that places "free enterprise" on the top of my list. This way I can better myself, maintain my percieved "comfortable lifestyle" and not have to take rights away from anybody else to do so.
I, as of yet, haven't seen a better system to promote individual rights, than a free enterprise system.
It obiously works, otherwise we wouldn't be at the status we are with reference to the rest of the world financially.
Maybe in Canadastan, here they take taxes from us. What's more, Americans paid for the research to develop so much of what the world enjoys. (Drugs, computer, etc) Ingrate!
So, why oh why, isn't there a massive migration to Thailand??
I guess THAT caps any thought of going to Zimbabwe to enjoy a life of freedom and contentment doesn't it.
No. I never even mentioned illegal aliens for illegal aliens are NOT part of a free enterprise system. You, by happenstance, brought Illegal aliens up not I.
Personally I am commited to staying in the USA and that means a USA where liberty is still arround and a USA that has not been destroyed by those seeking to do so by destroying its economy. In short I do not want what the Clintonista and internationalists have foisted on the USA as Free Trade which is destroying the USA if you bother to look at the numbers.
Now would you care to discuss issues or continue to make irrelevant comments.
No, to both. : )
I happen to agree that the Fre Enterprise sustem is what works the best. Expect no argument from me on that now I see some definite threats to the Free Enterprise system in teh USA at present. Some are immediate others are mid and long term. most of them are the result of the opening of access to American markets from other nations. since i am an American I propose the Constitutional means to deal with such threats Tariifs on imports reduction of coporate income taxes to balance out the potentialy counter productive impacts of these tariffs. etc.
Now the short term threat of continuing in teh jobless recovery through 2004 is teh increased chance of Democart coming to power aqnd further destroying the American Free enterprise system Longer term threats are from teh economic havoc that the current trade is inflicting and even longer term is the degradation of the American military which will result form the destruction of our economy.
< SNIP >
And now, apart from offshoring, he's also betting big on the US government contracts. "Indian firms in the Washington DC area, where I have been living for the last year and a half, now clearly have an agenda to create awareness and organise themselves to lobby with the US government. That's because IT and defence are the big things in Washington DC these days, even as the private sector cuts costs,'' he says.
Well, what goes around comes around! AOL is in a big hurt financially and apparently going by your post they chose wrongly as to how to turn their financial situation around! There are plenty of IP services available and this being the case, you have ample opportunity to find one that suites your needs to the point of actually making you feel like you are getting your monies worth! As the IP's go down in a ball of flame, there will be someone to take their place! Maybe this is an opportunity for some of the layed off IT workers to put themselves back on track.
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