Posted on 08/03/2003 1:11:56 AM PDT by sarcasm
Sunday, August 03, 2003 - Denver-based Quark Inc., one of the nation's best-known software companies, has just built a brand-new facility that will employ 1,000 software and technology workers.
The growth might appear encouraging to the state's ailing tech economy, but there's a key caveat: the center, and the jobs, are in Chandigarh, India.
Quark is among a long line of tech companies now moving jobs or creating new ones in India, China, Vietnam and Singapore in search of cheaper and faster software development, manufacturing or tech support.
The trend appears to be an unstoppable force that infuriates many of Colorado's jobless and worries some economists who say it ultimately may hinder the state's economic recovery.
"This is part of why the economy is still sluggish," said Mac Clouse, director of the Reiman School of Finance at the University of Denver.
"It's not the traditional economic model anymore," he said. "Businesses may be spending, but they're not spending their dollars here - it's not going to result in new jobs and increased economic activity."
Momentum by U.S.-based companies to create new jobs in foreign countries is building throughout the tech industry. Late last month, news leaked that IBM Corp. would move 1,000 jobs overseas.
A couple of weeks earlier, Microsoft Corp. said it would hire 5,000 more people, up to 2,000 of them outside the United States. At about the same time, Oracle Corp. said it will almost double workers in its Indian unit to 6,000.
Tech-heavy Colorado is being hit especially hard.
Two-thirds of the layoffs in Colorado over the past few years came from telecommunications and technology firms. In June, 142,000 people were looking for work in the state, according to the Colorado Department of Labor and Employment.
Dozens of Colorado companies have already moved or created technology manufacturing jobs outside the country. More recently, they're taking technical support, software jobs and even network operations overseas.
One Denver firm called Technology Crafters is helping 18 Colorado businesses do software development in India.
"There's a lot of interest," said Robert Welch, the company's president. "American software teams are awesome for innovation, but in terms of being able to crank things out in a productive manner, they're not the best on the planet."
Three years ago, Louisville-based Storage Technology Corp. moved its manufacturing operations to Puerto Rico. Agilent Technologies shipped hundreds of its Colorado Springs jobs to India and China. Also in the Springs, broadband device maker Actiontec sent several hundred jobs to India, and computer storage firm Quantum sent 865 jobs to Malaysia.
Now PeopleSoft, the company that last month acquired Denver software maker J.D. Edwards, plans to double its Indian operation to as many as 700 jobs. And Denver tech consulting firm Ciber Inc. revealed a few weeks ago it will create new software and information technology-related jobs in India.
"All this is a huge challenge that the new mayor and Gov. Owens have to bring back a job base to Colorado and to Denver," Clouse said.
On Tuesday, Denver Mayor John Hickenlooper and Gov. Bill Owens will fly to California to meet with tech firms that have Colorado operations. The duo will encourage those businesses to expand in the state and in Denver.
"There are still jobs to be created domestically," said Hickenlooper's press secretary Lindy Eichenbaum Lent. "We just need to make our case."
But it won't be easy.
The pressure on corporate executives to look overseas is huge, primarily fueled by the weak economy.
Within the next 18 months, one in 10 U.S. technology jobs will be moved offshore, according to Gartner Inc., a research firm that follows technology trends.
Special /Todd Spangler |
Indian workers, above, staff a U.S. companys call center in Bangalore, India. Technical jobs are increasingly being offshored to companies such as Wipro Technologies in Bangalore, top. |
Business executives say they can't compete, let alone keep their companies alive, if they hire U.S. IT workers for $40,000 to $80,000 a year while their competitors hire the same talent in India for $8,500 to $9,800.
Mac Slingerlend, chief executive of Ciber, argues that by using Indian workers, his firm ultimately saves U.S. jobs. The company employs 6,000 worldwide.
For instance, Ciber lost work from a major client, American Express, when the financial firm sent half of its software development work to India.
Because Ciber didn't do work in India at the time, the company lost the business and was forced to cut 100 jobs in its Phoenix office, Slingerlend said.
"I've cost American jobs by not doing work on India," he said.
Slingerlend acknowledges that if the U.S. economy remains lackluster, India will chip away at American jobs and economic growth here. But he said the United States is simply too expensive.
"If things can be done well and more inexpensively, the work will find its way to these places," he said. "The question is, do we want to participate or put our heads in the sand? I'm not trying to sound cruel or crude, but we as a country need to adapt."
That doesn't provide much consolation to the thousands of Coloradans looking for work, some of whom say they were replaced by foreign workers.
"Corporate America is loyal to their stockholders, not loyal to America," said Richard Armstrong, an unemployed Denver computer programmer who was laid off three times and each time replaced by foreign workers.
"We really can't compete because they're earning $6,000 a year overseas," he said.
Armstrong started a website, HireAmericanCitizens.org, to organize rallies and urge people to write Congress to stop offshore job development. He also is pushing for reform of the temporary worker visa program that he says is abused by companies and ultimately used to send more jobs overseas.
"They bring in these people to work and train on their software," Armstrong said. "Once they've trained them, they can do everything offshore."
Protesters picket last month outside Microsoft Corp. offices in Irving, Texas. Workers are upset because the software giant announced it would close the facility and move 800 jobs to India. The trend among tech companies to offshore jobs worries both workers and economists. |
Yet jobs have been leaving the United States for years in a number of other industries. The automotive industry began hiring offshore in the 1960s as did clothing, shoe and widget manufacturers a decade later. In 1970, manufacturing jobs made up 15 percent of the Colorado workforce. By 2000, they made up just 9.3 percent.
And more recently, customer call centers started moving overseas.
"It's the worry du jour. But it's been going on for hundreds of years," said Tucker Hart Adams, a regional economist for U.S. Bank.
"These people have to retrain," she said. "It's particularly hard for the older worker, but these jobs won't be here to put people back to work when we move out of this recession."
Critics of "offshoring" argue that technology isn't the same as making tennis shoes or cars. They worry that eventually, all the high-tech brain power will be in the hands of another country - which potentially could be dangerous to U.S. national security and to future high-tech innovation.
"Right now we're the technology leader of the world," said Jim Hertzel, chairman of Alumni Consulting Group International, a Greenwood Village technology consulting firm. "If we take the technology and let someone else do it for us, what's left for us?"
Armstrong, the laid-off programmer, fears that future college graduates, who will soon include his own son, won't find jobs or that others will be discouraged from even learning software skills.
He says that ultimately will lead to a technology brain drain for future American generations.
"It's dumbing down of American software," Armstrong said. "We're going to be so dependent upon that labor and they'll have an opportunity to have their way with us. It puts our assets and capital at risk."
And while manufacturing jobs in the 1970s were replaced with new and higher-paying jobs in technology, the future for today's jobless tech workers is not clear, said Clouse, the DU economist.
"No one knows what will replace these jobs," Clouse said.
Meanwhile, the noise made by people such as Armstrong over offshoring has piqued the interest of Congress.
Two congressional representatives from Washington state, Democrats Jay Inslee and Adam Smith, asked the U.S. General Accounting Office to study why companies are going offshore, which policies could encourage them to stay here and what domestic jobs will look like in the future. Washington has had one of the top state unemployment rates in the past couple of years, reaching 7.7 percent in June.
"We want to steer people toward jobs that will be there," said Smith's press secretary, Katharine Lister. "We're concerned we may be giving tax breaks to companies and then encouraging them to send jobs overseas."
Armstrong and Hertzel want to see Congress impose tariffs penalizing companies that do offshore work and create rewards for those that do not.
But John Hansen, Colorado's secretary of technology, said the solution is not regulation. That, he said, will strangle businesses' global competitiveness.
Hansen said U.S. companies and citizens must innovate and come up with technologies that create new companies and ultimately new jobs. Most of that innovation, he said, will come from university laboratories.
"We need to create an environment for innovation, access to capital and favorable tax climate," Hansen said. "(Regulation) will not work in the long run."
Technology workers must make themselves more valuable to employers as well, said John Raeder, CEO of IQNavigator, a Denver software firm that develops its code in India.
Raeder said tech workers should develop expertise in finance, marketing or perhaps business strategy as well as software.
"Don't pigeonhole yourself into just learning computer science," he said. "A lot of creativity for software cannot be done offshore."
Young college graduates already are starting to adapt, said Terry Wanger, director of DU's Suitts Center for Career Placement. She said 73 percent of DU's new graduates are getting jobs because they bring with them additional expertise and they expect jobs with lower salaries and less responsibility.
She said it's critical that older workers see the shift in the industry as well.
Welch, who sees the global economy firsthand as president of Technology Crafters, agrees.
"Colorado will evolve. We have to," said Welch. "We're in direct competition with people from all over the world."
I closed my account with American Express after 20 years.
And I let them know exactly why I was doing it.
I'd had quite enough of Bollywood accents when I called customer service beginning earlier this year.
Funny, that final discussion with Amex was quickly shuttled back to American customer service workers.
Basing short-term, low-cost facilities offshore isn't likely to cause a company a problem providing they have alternate sources for the same product.
Basing long-term or high-cost facilities offshore in a location like India, Russia or China will probably bankrupt most companies that go that route.
It doesn't matter how much lower the costs are if you can't operate the facility long enough to recover your costs and provide a constant stream.
Anyone remember Union Carbide Corp (UCC)?
They built a large chemical factory in Bhopal, India, which the Indian government was a 51% owner and also controlled. The factory made chemicals such as MIC (methylisocynate -- spelling may be off, it's been awhile I spent much time in chemistry).
Because of the way the factory was run and the people doing the work, the factory had a very large spill and killed thousands of people in nearby villages.
It was the Indian government making the decisions.
It was UCC who paid for it. They used to be a major US corporation and now they're defunct. The court settlements regarding the spill put them out of business.
Indian/Pakistan/Kashmir has never been stable and probably never will be. Throw in an existing big ramp up in AIDs and the very high probabiliby of something like SARS and that trend ends.
China is an accident waiting to happen, I can't picture them making it to 2010 with a catastrophe or six.
Yeah, that doesn't do squat for Americans who are out of jobs now due to stupid management.
If you want to make a difference, buy some stock and complain as a stockholder.... or, better yet, buy the company.
They aren't. I was replaced by THREE H1-B's on my last job, and by one on the job prior to that.
Final unemployment check covers this week...
Emotion will drop it 50%.
Enjoyed your analysis but lets not forget the other part of the equation that is providing massive incentives for management to get rid of workers. Namely, Workers Comp abuse, OSHA, EPA, FMLA (Family Leave act), ADA (Disabilities), Section 8 set asides, and I could go on. Now you have alcoholics who get caught drunk on the job and ADA provides them protection because boozing is now a DISEASE. Liberals with their Teddy Kennedy laws and REpubs like Specter and Hatch and Lott who have gone along with this BS to be nice are ruining the greatest free enterprise experiment ever conceived. So, yes, a lot of the dot commers and Y2K geeks were selfish and greedy, but with manufacturing heading offshore, and now knowledge work headed away, think about it. What is really left?
American companies aren't making jack off of China comparitavely speaking. That is one of the lies of our times. If you think China trade is going to employ any Americans on a large scale you need your brain examined.
We can shape the global economy any way we want. We better start shaping though...Differently than we are now.
You cite China, and I challenge you on your assumptions. Most American business are too ignorant to recognize the whole picture of China. I am talking about the big boys. They hire a bunch of yes men who will always tell them China is great, but since when did that work? If someone tried to tell them that China wasn't great they would toss him out after the first sentence. Valid points or not, he has the wrong conclusions.
I'm under no illusions whatsoever, pardner.
What you described is illegal. Period.
To hire H1-B labor, your employer must have attested in the Foreign Labor Certification Pre H-1B that it would pay them the same rate, not adversely affect the working conditions of existing employees, and not displace U.S. workers.
You want to argue and whine, go read the form right here first. Don't argue with me.
Stop throwing bricks at those who support you, and get a lawyer. Your employers have been filing ficitious documents with the DoL and INS.
AMEN!!!!
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.