Posted on 07/30/2003 3:16:14 PM PDT by demlosers
NEW YORK (Reuters) - One out of 10 jobs in the U.S. computer services and software industry could shift to lower-cost emerging markets such as India or Russia by the end of 2004, a top computer consultancy said on Tuesday.
Gartner Inc., the world's biggest high-tech forecasting firm, said in a report entitled "U.S. Offshore Outsourcing: Structural Changes, Big Impact" that 500,000 of the 10.3 million U.S. technology jobs could move just in 2003 and 2004.
While professionals in the computer industry itself are likely to bear the brunt, the report predicts that one in 20 tech jobs in industry-at-large also could be moved overseas.
This is especially true in industries with high concentrations of knowledge workers such as banking, health care and insurance, the author of the survey said.
"Suddenly we have a profession -- computer programming -- that has to wake up and consider what value it really has to offer," Diane Morello, a Gartner vice president and research director who studies work force issues said in an interview.
"Offshore outsourcing" is the euphemism the computer industry uses to describe the transformation of software development, computer services and customer call-center work.
As a global economic recession has hit hard over the past two years, U.S. companies have embraced as never before a decades-old trend to hire educated workers overseas who can be employed for a fraction of the cost of U.S.-based programmers.
Just last week, software maker Siebel Systems Inc. SEBL.O of San Mateo, California said it would cut 9 percent of its work force, or 490 jobs, and planned to move some operations overseas.
Executives of the world's largest computer and services company, International Business Machines Corp. were quoted recently as saying they had no competitive choice other than to expand software and semiconductor development overseas. The comments came to light in a recording supplied by a union seeking to organize IBM workers and supplied to Reuters. IBM now employs 5,400 workers in India out of a total work force of 316,000.
A JOBLESS TECH RECOVERY?
The debate by economists over whether the United States may now be experiencing a jobless economic recovery echoes disputes over high-tech job losses that heated up during the last technology recession a decade ago. These petered out quickly in the Internet boom of the late 1990s.
The recent acceleration of job losses actually began during the late 1990s when shortages of qualified U.S.-based workers led companies to turn overseas to countries such as India, Ireland and elsewhere for computer and Internet project work.
The mounting job losses are heating up as a political issue, with bills put forward by legislators in five U.S. states that would require workers hired under state contracts be American citizens or fill a special niche citizens cannot fill.
Morello said her study did not speculate on where such jobs were moving. But she indicated that India, Russia and other countries in Southeast Asia were the most likely locations.
She also pointed to how Canada has moved recently to position itself as a "nearshore" alternative to companies who have trouble shifting jobs to more distant "offshore" locales.
Electronic Data Systems Corp. EDS.N of Plano, Texas, the world's second largest computer services provider, has already reached into Canada and many points beyond. EDS has begun promoting its "Best Shore" strategy of positioning software and customer service work in what it says are the most cost-effective locations around the globe.
EDS has 16 centers that range from New Zealand to India to Egypt, Poland, Brazil, and Canada.
The Gartner analyst said that based on her preliminary calculations that one in 10 software services jobs are at stake at computer vendors and 5 percent of technology jobs in the wider corporate world, at least 500,000 jobs will be moved. (Additional reporting by Caroline Humer)
Welcome to FR!! Your initiation will be the same as all newbies: If you dare to express an opinion contrary to the majority on the topic at hand, your sign-up date will be looked up and if it is recent, or heaven forbid today's date, you will immediately be branded with that stigma, or worse as the dreaded troll. Don't let them get to you -- real trolls are dealt with by the admin moderators by means of the well-known ZOT. Happy Freeping!!
the products will not get any cheaper then they already are. do you honestly think you would pay less then $30 for a video game? less then $80 for desktop publishing? sheesh... even some of it is free. don't you realize the savings go directly to the shareholders and the execs in the form of bonuses.
if your frontal lobes did more then support your enlarged brow, you would realize that the software industry pays less in production to revenue costs then almost any other industry. the vast majority of the costs associated with producing a winning product is the marketing costs. development is often times less then 25% of the startup costs, and the support costs are normally minimal. meanwhile, marketing can sometimes exceed 50% of the overall cost of the product for the first year.
i dont hear anyone saying that the marketing companies are overpaid. nope. that's because most people have absolutely no idea wtf they are talking about. here's a little insight. there are roughly 230 nielsen markets in the US. Advertising on a normal channel during a normal time on a semi popular show could easily run your company $5,000 for 30 seconds. To advertise in the top 20 markets, which is not even 10% of the overall market, would exceed $100,000 for that single 30 second spot. And what do these people do for this money that deserves to be paid over $600,000/hr? They broadcast a signal, support a few towers, and support some video equipment. is it worth that? hardly.
the person that says that a developer with over 15 years experience isn't worth the $50,000 ($50/hr in 6 months) to develop the software that will produce over 50,000 sales in 2 years @ $100 a copy, obviosuly has no idea what the hell they are talking about. (that's $2.5 million per year for the mathematically challenged)
ok, 2 things... first, in 2000 the number of IT jobs in the US was 6 million. The 10 million number is designed to lessen the overall stat.
secondly, as reported by lou dobbs of cnn, 2.5 million jobs have already been outsource since 2000. currently, 350,000 L-1 visas holders and just under 1 million H-1B visas are in the US taking American jobs. That's just under 4 million jobs given to foreigners instead of Americans.
then there is that fact that there are 100 million taxpayers in the US. Keep in mind, not all these taxpayers are working, some pay taxes off investments. Assumming 10% of the taxpayers are non-working, that leaves 90 million workers. Even if there are 10 million IT jobs, that would still be over 11% of the workforce being undermined. that is a considerable chunk of the working populace.
next time your local retail store goes out of business, thank NAFTA, GATT, WTO, L-1 visas and H-1B visas for reducing the descresinary spending they were living off.
also, please note your new house (that you stretched to get since rates were so cheap) will crush you, even if you are not in the tech sector (assuming you live in a tech heavy area). in those areas, the housing market has had a major surge in the last 3 years, as investors moved their money from the markets into realestate. with the dropping salaries or discontinued jobs, mortgage foreclosures are at an all time high. once the tipping point is reached, do you want to be in your $600k mortgage as the houses around you drop back to pre-2000 prices (sub $250k)? Wouldn't that be lovely. Even if you sold your house for $300k, 20% over market, you'd still have to pay of another $200-300k on the mortgage... friendly.
at that point, expect to see record numbers of bankruptcies and foreclosures as well as many foreign owned banks buying up those mortgages at cheap numbers.
The only way that our "overfed programmers" can become attractive to our top corporations is to move to a third-world country whose cost of living is a fraction of ours. Could you compete against a half-way qualified worker whose cost of living was one quarter of yours? Of course, if the current trend continues, the prices of everything in this country, including housing, will decrease until we eventually reach par with the rest of the world. Then we will have reached the great "free trade nirvanna".
This shows that you have no experience in the IT sector. I have watched as project managers have deliberately hired unqualified people with the thinking that they can be trained. The main requirements being cost and willingness to pound on the keyboard to get the job done. Of course, this takes for granted that all people are equal with the only difference being experience and training. In IT, I have found that not to be the case. The result of this hiring practice is normally very long production times and sub par projects. In the case of foreign laborer produced code, it is normally very shabby with all the corners cut wherever possible. In software, to cut a corner leads to software that doesn't work for all situations.
Many IT managers have no idea what it takes to make a project work. The vast majority of them have never done the job themselves. This leads directly to the stat you see waved around that 90% of all software projects fail. On my projects, the ones that have failed have not been due to technical reasons, but rather for business or political ones.
Of course, this whole argument presupposes the existence of open borders for labor. The idea is insane and the direct result of short sighted thinking. (Also the mantra of libertarians). With over 6 billion people on the planet, and the age of never ending mega corporation mergers, how many companies do you think there are in this world? How many positions? There are simply not enough positions for everyone on the planet. If you open up the borders for all people to compete for the jobs, then you end up with the jobs going to the most "qualified"... which has cost being the major factor in qualifying someone.
In the end, are you willing to do your job for a bowl of rice and $2/hr? That is the going rate for Chinese programmers. Your education costs alone would never allow that, yet the person you are competing with does not have to pay back their educational costs, has extremely cheap housing prices, and the goods/services in their country are very inexpensive (10:1 difference between the US and China).
A typical undergraduate education in the US can run an easy $100k for 4 years, if you include housing and not for a state school. That bill normally must be paid back within 5 years. Prior to the low interest rates, the normal rates were 8%. That will run you at least $2027/month. Put on top of that the rent/mortgage in the area you will work at around $1200/month (tech work is usually not in rural areas). Add an additional $250/wk for food and incidentals. Car payments of at least $200/month. Toss in your car insurance, being sub 30 male no tickets, roughly $1200/6-months. Now add your cable modem and broadband (you are a techie, so you need it for work), $90/month. Phone costs are at a minimum $40/month, and electricity will run at least $100/month.
cost:
Of course, this is after taxes and assuming you did not go to graduate school and have not decided to get married and have kids. Now factor in taxes:
Factors out to be around $83,532/year. And this is without any savings, just paying bills and taxes.
Actually, I am forgetting the fish. Companies will pay their (slave) laborers to insure they stay on site.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.