The Hopeless Futility of the Displaced American Worker

[Phaedrus]

Outsourcing seems to be an hot topic here lately. Some commentary of mine from another forum:

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Many bemoan the fact that recently, large numbers of IT jobs previously enjoyed by American workers have been exported to India, where the same or comparable quality work can be delivered for a small fraction of the price. There is a minor groundswell brewing now about protecting "American jobs" (as if there is any such thing, and as if Americans have a right to a job as some sort of national policy or natural state of affairs.) A recent, very long article appeared in Wired about this phenomenon ("The New Face of the Silicon Age" if you've got half an hour to read it) some of the salient points of which are below (with my own comments added.)

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
In 1992, Jairam graduated from India's University of Pune with a degree in engineering. She has since worked in a variety of jobs in the software industry and is now a project manager at Hexaware Technologies in Mumbai, the city formerly known as Bombay. Jairam specializes in embedded systems software for handheld devices. She leaves her two children with a babysitter each morning, commutes an hour to the office, and spends her days attending meetings, perfecting her team's code, and emailing her main client, a utility company in the western US. Jairam's annual salary is about $11,000 - more than 22 times the per capita annual income in India.
<HR></BLOCKQUOTE>

First off, that any IT person could not see this coming is at once hilarious and sad. Irresponsible policies by the federal government in the 1990's led to a glut on the market of short-term opportunities in the IT sector, many of which ended up dead ends, but nonetheless caused a massive segment of the American workforce to migrate into IT. However, because they are Americans they are unable to grasp the concept of competitive wages, and because IT programming (contrary to what IT programmers tell you) is a relatively simple field which anyone can master with time and discipline it was only a matter of time before the glut became a choking obstacle in the field.

And so now, with computer- and English-literate workforce in a country where the per capita GDP is $ 480.00 (versus America's $ 35,000.00 and change) it is supposed to be considered a suprise and a shock that American companies would prefer to use their capital for more pressing purposes than making the Porsche payment of some former hotshot C++ jockey.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Hexaware's headquarters, the workplace of some 500 programmers (another 800 work at a development center in the southern city of Chennai, and 200 more are in Bangalore), is a silvery four-story glass building chock-full of blond-wood cubicles and black Dell computers. In one area, 30 new recruits sit through programming boot camp; down the hall, 25 even newer hires are filling out HR forms. Meanwhile, other young people - the average age here is 27 - tap keyboards and skitter in and out of conference rooms outfitted with whiteboards and enclosed in frosted glass. If you pulled the shades and ignored the accents, you could be in Santa Clara. But it's the talent - coupled with the ridiculously low salaries, of course - that's luring big clients from Europe and North America. The coders here work for the likes of Citibank, Deutsche Leasing, Alliance Capital, Air Canada, HSBC, BP, Princeton University, and several other institutions that won't permit Hexaware to reveal their names.
<HR></BLOCKQUOTE>

(emphasis added)

Time to quit whining and learn a new skill guys. India is now manufacturing IT professionals.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
After lunch one Tuesday, I meet in a conference room with Jairam and five colleagues to hear their reactions to the complaints of the Pissed-Off Programmer. I cite the usual statistics: 1 in 10 US technology jobs will go overseas by the end of 2004, according to the research firm Gartner. In the next 15 years, more than 3 million US white-collar jobs, representing $136 billion in wages, will depart to places like India, with the IT industry leading the migration, according to Forrester Research. I relate stories of American programmers collecting unemployment, declaring bankruptcy, even contemplating suicide - because they can't compete with people willing to work for one-sixth of their wages.
<HR></BLOCKQUOTE>

Again, why not just learn new skills?

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
One such group has adopted a friendlier title, the Information Technology Professional Association of America. But its founder, 37-year-old Scott Kirwin, voices the same indignation. "I'm very pissed off," he tells me over lunch in Wilmington, Delaware, where he lives. "I want to make people aware of what's going on with outsourcing."

Kirwin was a latecomer to the IT world. After college, he lived in Japan for five years, then returned to the States hoping to join the US Foreign Service. He didn't get in. In 1997, he and his wife moved to Wilmington, her hometown, and he took a job at a tech support company outside Philadelphia, where he learned Visual Basic. Kirwin discovered that he loved programming and did it well. By 2000, he was working at J.P. Morgan in Newark, Delaware, providing back-office database services for the firm's bankers around the world. But after Morgan merged with Chase, and the bloom left the boom, the combined firm decided to outsource the responsibilities of Kirwin's department to an Indian company. For nine months, he worked alongside three Indian programmers, all on temporary visas, teaching them his job but expecting to stick around as a manager when the work moved to India. Last March, Kirwin got his pink slip.

The experience did more than capsize his work life. It battered his belief system. He's long espoused the virtues of free trade. He says that he supported Nafta and that for 12 years he's subscribed to The Economist, a hymnal in the free trade church. But now he's questioning core beliefs. "These are theories that have really not been tested and proven," he says. "We're using people's lives to do this experiment - to find out what happens."

"I'm not religious," he tells me. "But I believe that everyone has to have faith in one thing. And my faith has been in the American system." That conviction is weakening. "Politicians are not aware of the problem that information workers are facing here. And it's not just the IT people. It's going to be anybody. That really worries me. Where does it stop?"
<HR></BLOCKQUOTE>

What a sick joke of a guy, and although it pains and shames me to say it, what a typical American -- a good system has ill effects. One day, one of those ill effects is felt by you -- so now you've lost faith in that system. This jackass, this weak-minded immoral communist piece of shit, is basically saying that free trade is a bad thing, because something bad happened to him on the way to the market. Rather than just adapt and change, or perhaps out-compete his competition, he forms a political action group to try and have the state change the rules so that people who try to give or take away "American jobs" can be fined, imprisoned or killed. So scared is this person of basic facts of real life that it is apalling.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Seventy miles up the Northeast Corridor is a politician who is asking that very question - and who, in the process, has become something of a folk hero to programmers like Kirwin. Shirley Turner represents the 15th District in the New Jersey State Senate. In 2002, Turner learned that eFunds, the company that administers electronic benefits cards for the state's welfare recipients, had moved its customer service jobs from the US to a call center in Mumbai. She was stunned that the jobs were going overseas - and that taxpayer dollars were funding the migration. So Turner introduced legislation to ban the outsourcing of any state contracts to foreign countries

Word of Turner's actions rippled ac**** the Internet. Over the last year, she says, she's received more than 2,000 letters and emails from around the country - mostly from programmers. "I had no idea what these people were going through with outsourcing in the private sector," Turner told me at her district office in Ewing, New Jersey, just outside Trenton.

Turner's bill passed the state senate by a 40-to-0 vote. But it got bottled up in the assembly, thanks to the efforts of Indian IT firms and their powerhouse Washington, DC, lobbying firm, Hill & Knowlton. However, eFunds, chastened by the bad publicity and eager for more state contracts, moved its call center from Mumbai to Camden, New Jersey. And this former small-time civil servant found herself articulating what might be the political philosophy of the Pissed-Off Programmer.

Turner's office is decorated in early politico. Framed pieces of legislation hang on the wall. Large New Jersey and US flags stand behind her imposing desk. Her credenzas are crammed with photos of herself rubbing shoulders with various dignitaries, including three shots of her clasping hands with Bill Clinton. She's good at what she does - so smart and likable that she can make what many would consider retrograde views sound eminently reasonable. After talking to her for 10 minutes, I think, if **** Perot had picked her as his running mate, he might have had a shot.

"We can't stop globalization," Turner says. But outsourcing, especially now, amounts to "contributing to our own demise." When jobs go overseas, governments lose income tax revenue - and that makes it even harder to assist those who need a hand. Losing IT jobs has particularly frightful consequences. In a jittery world, "it's really foolish for us to become so dependent on any foreign country for those kinds of jobs," she says. What's more, she continues, it imperils the US middle class. "If we keep going in this direction, we'll have just two classes in our society - the very, very rich and the very, very poor. We're going to look like some of the countries we're outsourcing to."

Her solution is simple: America first. Support American firms. Put Americans back to work. And only then, after we reach full employment, will outsourcing be an acceptable option. "If we can't take care of our own first, we shouldn't be looking to take care of other people around the world," she says. "If you're a parent, you don't take care of everybody on the block before you make sure your own children have their basic needs met."
<HR></BLOCKQUOTE>

Now this is a quaint and classic political solution to a problem: force the taxpayers to pay the highest price possible for government services, in order to "protect America." NEWS FLASH TO POLITICIANS: Taxpayers are Americans too, you retards. The only part of America which is protected by such actions is the American political class, who can buy votes with such patriotic bromides as "putting American jobs first."

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
A century ago, 40 percent of Americans worked on farms. Today, the farm sector employs about 3 percent of our workforce. But our agriculture economy still outproduces all but two countries. Fifty years ago, most of the US labor force worked in factories. Today, only about 14 percent is in manufacturing. But we've still got the largest manufacturing economy in the world - worth about $1.9 trillion in 2002. We've seen this movie before - and it's always had a happy ending. The only difference this time is that the protagonists are forging pixels instead of steel. And accountants, financial analysts, and other number crunchers, prepare for your close-up. Your jobs are next. After all, to export sneakers or sweatshirts, companies need an intercontinental supply chain. To export software or spreadsheets, somebody just needs to hit Return.

What makes this latest upheaval so disorienting for Americans is its speed. Agriculture jobs provided decent livelihoods for at least 80 years before the rules changed and working in the factory became the norm. Those industrial jobs endured for some 40 years before the twin pressures of cheap competition overseas and labor-saving automation at home rewrote the rules again. IT jobs - the kind of high-skill knowledge work that was supposed to be our future - are facing the same sort of realignment after only 20 years or so. The upheaval is occurring not ac**** generations, but within individual careers. The rules are being rewritten while people are still playing the game. And that seems unjust.
<HR></BLOCKQUOTE>

Again, a massive migration into the IT sector which turned out to be superfluous is the cause of this problem. IT jobs are very scarce in America overall, even without the factor of some jobs being exported overseas. Or are they? Most scarcities in a given market are the result of one or more efficiencies being revealed and slowly corrected. In fact, there is no scarcity of IT work in America -- there is a massive overpopulation of IT workers. And those workers would do well to get cracking on a new career, because those jobs are not going to just materialise because you were sold on the false promises of a future where everybody would work in IT (it might still get here eventually, but not anytime soon.)

The only way that such a thing as seems to be desired by the IT sector in America will come around is by massive federal interference -- and this will harm the very companies from which you demand employment. Perhaps the companies will go bankrupt. Perhaps they will pull up more than just their IT dvision and relocate entirely, so that they won't have to deal with the bullshit anymore. Either way, the only thing that federal interference in the IT labour market will yield is damage to the American economy, as all federal interference in markets does.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Patni's head of human resources, Miland Jadhav, compares the Pissed-Off Programmers' efforts to the protests that greeted Pizza Hut's arrival in India. When the chain opened, some people "went around smashing windows and doing all kinds of things," but their cause ultimately did not prevail. Why? Demand. "You cannot tell Indian people to stop eating at Pizza Hut," he says. "It won't happen." Likewise, if some kinds of work can be done just as well for a lot cheaper somewhere other than the US, that's where US companies will send the work. The reason: demand. And if we don't like it, then it's time to return our iPods (assembled in Taiwan), our cell phones (manufactured in Korea), and our J. Crew shirts (sewn in Indonesia). We can't have it both ways.
<HR></BLOCKQUOTE>

Right on target.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
And therein lies the opportunity for Americans. It's inevitable that certain things - fabrication, maintenance, testing, upgrades, and other routine knowledge work - will be done overseas. But that leaves plenty for us to do. After all, before these Indian programmers have something to fabricate, maintain, test, or upgrade, that something first must be imagined and invented. And these creations must be explained to customers and marketed to suppliers and entered into the swirl of commerce in a fashion that people notice, all of which require aptitudes that are more difficult to outsource - imagination, empathy, and the ability to forge relationships. After a week in India, it seems clear that the white-collar jobs with any lasting potential in the US won't be classically high tech. Instead, they'll be high concept and high touch.
<HR></BLOCKQUOTE>

Again, right on target, America is the centre of the universe as far as the ability to improvise new solutions and ventures go. But try explaining this to the American IT sector, the new Teamsters.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Will Work for Rupees

US jobs are fleeing overseas...

United States

GDP per capita $35,060
Unemployment rate 5.8%
Labor force 141.8 million
Population below the poverty line 13%
Typical salary for a programmer $70,000

... and heading to the subcontinent ...

India

GDP per capita $480
Unemployment rate 8.8%
Labor force 406 million
Population below the poverty line 25%
Typical salary for a programmer $8,000

Top 5 US Employers in India

General Electric 17,800 employees
Hewlett-Packard 11,000 employees
IBM 6,000 employees
American Express 4,000 employees
Dell 3,800 employees
<HR></BLOCKQUOTE>

Do you hear that sound, Mr. Anderson? That is the sound of inevitability. It is the sound of your death. Good-bye, Mr. Anderson ...


Phaedrus
<HR></BLOCKQUOTE>

You guys bitching and moaning about outsourcing need to borrow a clue and go find something else to do for a living. Legislation against outsourcing will only further harm the companies doing it, and by extension the economy.


Phaedrus

 

[codeworks]

Well if you want America to become 2nd or 3rd tier country in technology, research and development and have confidential information spread through out the middle East than continue to vote for those who support this.

I for one do not want my bank information and SSN spread through out the world (middle east).

By the way legislation is already taking place example Gov't contracts need to stay in the USA and I applaud that

 

[Phaedrus]

posted by codeworks:
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
By the way legislation is already taking place example Gov't contracts need to stay in the USA and I applaud that
<HR></BLOCKQUOTE>

Right, so you applaud taxpayers being forced to pay higher prices for services for which they might well have never asked in the first place. Lovely way to preserve the "American dream" you have there.

Also, absent the need to compete on price, there is no need for providers of said service to compete on quality -- thus potentially turning every American government "service" [sic] into another Amtrak.

Great deal -- way to "support America."


Idiot.


Phaedrus

 

[Oceans11]

I thought the UK had the data protection act to stop companies spreading personal info. stored on computer media around.
Its a criminal offence over here to share/duplicate it for whatever commercial purposes.

Somehow those sneaky Corporate fukkers have circumvented this without telling anyone or getting their permission in writing, and now we get phonecalls from these overseas callcentres.

 

[codeworks]

Phaedrus

I re-bolded the part you forgot to comment about, you must have a case of selective hearing

Well if you want America to become 2nd or 3rd tier country in technology, research and development and have confidential information spread through out the middle East than continue to vote for those who support this. I for one do not want my bank information and SSN spread through out the world (middle east).

If it was so stupid then why did the politicians bring the work back to the good old USA.

[This message was edited by codeworks on February 24, 2004 at 12:00 AM.]

[This message was edited by codeworks on February 24, 2004 at 12:05 AM.]

 

[Phaedrus]

Hehehehehehe. Here's a cute one. Hilarious that here we find a case of a government actually justifying this action because of outsourcing.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Outsourcing? Try "Insourcing"

ONTARIO, Oregon -- Chris Harry is a model employee for the U.S. call-center industry.

The 25 year-old arrives promptly at his cubicle, speaks courteously on the phone and is never late or absent. He plans to stick with his job for three years, a boon in an industry plagued by high turnover. And he gladly works for money many Americans would scoff at -- $130 or so a month.

After all, he could be back swabbing cell-block floors for a third of that.

"I can't complain about fair," said Harry, who was sentenced to 10 years and eight months for robbery. "I did a crime and I'm in prison. At least I'm not wearing a ball and chain."

Prison inmates like Harry are the reason Perry Johnson Inc., a Southfield, Michigan consulting company, chose to remain in the United States rather than join a host of telemarketing companies moving offshore.

Perry Johnson had intended to move to India. But the company chose instead to open inside the Snake River Correctional Institution, a sprawling razor wire and cinder block state penitentiary a few miles west of the Idaho line.

The center's opening followed a year-long effort by the Oregon Department of Corrections to recruit businesses that would otherwise move offshore, and echoes a national trend among state and federal prisons to recruit such companies.

"This is a niche where the prison industry could really help the U.S. economy," said Robert Killgore, director of Inside Oregon Enterprises, the quasi-state agency that recruits for-profit business to prisons.

"I'm really excited about this," he said. "We keep the benefits here in the United States with companies where it's fruitless to compete on the outside."

Prison officials have long praised work programs for lowering recidivism and teaching inmates skills and self-respect, yet have been criticized by unions for taking jobs from the private sector.

Those concerns are moot if a company planned to leave the country anyway, Killgore said. National prison labor trade groups support the idea.

Ten states, including Oregon, employ inmates in for-profit call centers. Oregon and many others also make garments and furniture -- industries that have largely moved offshore, other than in prisons. Inmates are paid between 12 cents and $5.69 an hour, according to Bureau of Prisons statistics.

Perry Johnson Inc. opened its call center in an Oregon prison for half the price of relocating to India, and achieved many of the same benefits, according to Mike Reagan, director of Inside Oregon Enterprises at Snake River.

Inmates at Snake River must have three to five years remaining on their sentences to qualify for the call-center job. Outside, the typical turnover is nine months.

Also, inmates make good telemarketers, prison officials said.

"They see an opportunity to talk to people and learn how to communicate," said Nick Armenakis, a manager for Inside Oregon Enterprises. "They are told that to keep these jobs, they have to be very patient and very contrite, and follow protocol."

The convicts pitch Perry Johnson's quality control consulting service to executives at American businesses, sometimes even company presidents.

Prison officials randomly monitor inmates' phone conversations and all calls are digitally recorded to discourage personal calls or illegal activity.

The prisoners work 40-hour weeks in rows of nondescript cubicles.

Critics assail the idea of retaining American jobs in prisons as a flagrant violation of minimum wage laws and an affront to free workers.

"Obviously, it doesn't do anything for the labor market here," said University of Oregon political science professor Gordon Lafer, author of a study on prison labor.

"It's like bringing little islands of the Third World right here to the heartland of America," he said. "You get the same total control of the work force, the same low wages, and it does nothing for the inmates."

Also, convicts don't benefit much from training for jobs that no longer exist in America because they have all gone overseas or into prisons, he said.

Harry said he is thankful for the skills he has learned in prison, and intends to attend college when he is released. He kicked back in his cubicle and bantered about the weather with a customer in Houston.

"I've been here three months," he said. "Nobody's ever suspected they're talking to a convict."
<HR></BLOCKQUOTE>

So there you go, you guys that are so up in arms about outsourcing -- all you have to do is commit a serious crime and an American company which might have otherwise moved to India will hire you in prison for even less money than the Hindis would work.

Maybe that'll help.


Phaedrus

 

[Phaedrus]

An interesting and detailed analysis of both isdes of the issue from the Wharton School at UPenn ...

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
It's Time to Talk Sense about Outsourcing

Gregory Mankiw, who heads the White House Council of Economic Advisors, ignited a firestorm of debate this month when he said outsourcing of U.S. jobs is probably a good thing in the long run. As tends to happen with hot-button issues in presidential election years, sensible discussion of this question soon was drowned in an uproar of political posturing. John Kerry and John Edwards -- who are seeking the Democratic nomination to take on George W. Bush in November -- denounced the government's so-called conspiracy to ship jobs overseas.

Even Dennis Hastert, the Republican speaker of the House, criticized Mankiw. In the past few days, other respected economists -- such as Columbia University's Jagdish Bhagwati -- have come under fire when they tried to explain the economic rationale behind outsourcing.

Politics apart, the reality is that outsourcing is as old as the corporation. One business arranges with another to make a widget or provide a certain service that it cannot do itself, or does not wish to do, so that it can focus on the parts of the business it does best. The sourcing arrangement is normally seamless, and it matters little to end-use customers who have been paid to perform the outsourced work.

Flash-forward to today, though, and it becomes clear that the phenomenon of outsourcing has taken on a whole new dimension that companies even a decade or two ago would find astonishing. Experts at Wharton and the Boston Consulting Group say sourcing is no longer a tactical option that can help a firm save a few dollars here and there. Rather, it has emerged as a strategic necessity in an era when opportunities offered by “low-cost countries,” such as China, India or Mexico, abound. Indeed, these experts say that the sourcing juggernaut will continue to move forward, despite occasional missteps and retrenchment, and transform national economies in both the developed and developing worlds in the process.

“It’s the classic ‘makes vs. buy’ question,” says Morris Cohen, professor of manufacturing and logistics at Wharton. “Do I make something internally or buy it in the marketplace, and how do I add value most effectively? This is a problem that’s been studied in economics and management for decades. This is not a new issue, and it’s not one that will ever go away.” What has changed, Cohen says, is that more companies are engaged in more outsourcing than before -- and they are doing it in novel ways. “The idea of moving things offshore and outside the boundary of the firm -- more of that has been happening around processes you would never have thought possible. Having somebody in India answer calls -- who would have ever thought of that?”

Hal Sirkin, senior vice president and director in BCG’s Chicago office and head of the firm’s global operations practice, emphasizes that “leveraging low-cost countries” is not only about reducing costs. “It cuts across a number of dimensions. It doesn’t mean your total cost will be cheaper if you can find someone who can make something cheaper. Having a long supply chain is not as cheap [as a short one]. You can’t look at leveraging low-cost countries as just finding the purest, lowest cost widget. It affects so much of your business and your customers. You have to take a holistic view.”

Ravi Aron, a professor of operations and information management at Wharton, emphasizes the same point. In a new paper, “Rightsourcing Services: Make, Migrate or Outsource?” Aron describes how his field research has determined that for a company to reap dividends beyond operational efficiencies, it is imperative that senior management view sourcing strategically, and not as an operational decision.

“Rightsourcing initiatives that have cost savings as their principal intent do not yield strategic gains easily. Considerable re-architecting of the relationship is needed before strategic gains can be captured,” according to the paper. Senior executives who treat sourcing primarily as a cost-cutting maneuver will usually not commit to the major organizational change that is often required to make sourcing produce important strategic benefits. Typical benefits include superior service customization, premium prices for superior service, buyer lock-in, getting to market faster, compression of the product-development cycle and increased market share through competitive pricing.

Jim Hemerling, vice president and director in the Shanghai office of BCG, says the shift of manufacturing and service operations to other nations “is more about leveraging low-cost countries than outsourcing, per se. Increasingly, it’s appropriate to define it more broadly than sourcing a physical material component or product. There’s a need to think about it so that it includes product development, research and development -- a set of knowledge-related and people-related services and activities in addition to the sourcing of things. Just as there’s cost saving in sourcing things, there are savings in sourcing knowledge and talent.”

Cohen agrees that, by sourcing, firms can achieve much more than cost savings. “One of the strategic advantages of sourcing is knowledge of technology, access to better processes or efficiencies, or learning about more efficient management procedures. Another company might be a specialist in making types of precision components. By outsourcing, you gain access to that superior knowledge and capability. There are also companies that outsource for capacity. They know how to make a product but don’t have capacity, or they don’t want to invest in how to make it.”

Saving money may not be the only reason for a corporation to cast a strategic eye on low-cost countries, but it is a major impetus. Hemerling notes that the savings can be as high as 50%. Much of the savings is driven by lower wage rates. But other factors also come into play: lower costs for equipment, tooling, raw materials, and real estate, as well as government incentives.

Companies in some sectors – apparel, footwear and consumer electronics – were among the earliest firms to shift many of their operations to low-cost countries, according to BCG research. Nike, for instance, decided a long time ago that its core competency was marketing high-end sneakers, not making them. Other sectors – such as electrical equipment, household appliances and computer equipment – are among the fast-growing segments that are penetrating low-cost countries today. But migration to low-cost countries has only just begun for firms in many other industries, including measuring and controlling devices, heating and ventilation equipment, fabricated metal products and motor-vehicle parts.
<HR></BLOCKQUOTE>

Article continued here.

Wharton also produced an in-depth study of the specific case of foreign outsourcing from the U.S., here.


Phaedrus

 

[barman]

Thanks for the reference to legal 'slave labor' being done in our nation's prison system.

It's the primary obstacle to our ending current drug Prohibition laws. Prohibition assures a steady flow of otherwise law-abiding citizens being imprisoned for drug offenses. The vast majority are non-violent. They are given the chance to work for $1.20 or so per hour doing jobs that would cost ten times that amount in the private sector.

 

[Phaedrus]

Thomas Friedman of the New York Times expounds on one of my earlier points ...

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Outsourcing is no threat to US' unrivalled 'I' engine

BANGALORE (India) - Ms Yamini Narayanan is an Indian-born 35-year-old with a PhD in economics from the University of Oklahoma. After graduation, she worked for an American computer company in Virginia and recently moved back to Bangalore with her husband to be closer to family. When I asked her how she felt about the outsourcing of jobs from her adopted country, the United States, to her native country, India, she responded with a revealing story:

'I just read about a guy in America who lost his job to India and he made a T-shirt that said, 'I lost my job to India and all I got was this (lousy) T-shirt.' And he made all kinds of money.' Only in America, she said, shaking her head, would someone figure out how to profit from his own unemployment.

And that, she insisted, was the reason America need not fear outsourcing to India: America is so much more innovative a place than any other country.

There is a reason the 'next big thing' almost always comes out of America, said Ms Narayanan. When she and her husband came back to live in Bangalore and enrolled their son in a good private school, he found himself totally stifled because of the emphasis on rote learning - rather than the independent thinking he was exposed to in his US school. They had to take him out and look for another, more avant-garde private school.

'America allows you to explore your mind,' she said. The whole concept of outsourcing was actually invented in America, added her husband, Sean, because no one else figured it out.

The Narayanans are worth listening to at this time of rising insecurity over white-collar job losses to India. America is the greatest engine of innovation that has ever existed, and it can't be duplicated any time soon, because it is the product of a multitude of factors: extreme freedom of thought, an emphasis on independent thinking, a steady immigration of new minds, a risk-taking culture with no stigma attached to trying and failing, a non-corrupt bureaucracy, and financial markets and a venture capital system that are unrivalled at taking new ideas and turning them into global products.

'You have this whole ecosystem that constitutes a unique crucible for innovation,' said Mr Nandan Nilekani, CEO of Infosys, India's IBM. 'I was in Europe the other day and they were commiserating about the 400,000 (European) knowledge workers who have gone to live in the US because of the innovative environment there.

'The whole process where people get an idea and put together a team, raise the capital, create a product and mainstream it - that can only be done in the US. It can't be done sitting in India.

'The Indian part of the equation is to help these innovative US companies bring their products to the market quicker, cheaper and better, which increases the innovative cycle there. It is a complementarity we need to enhance.'

That is so right. As Mr Robert Hof, a tech writer for Business Week, noted, US tech workers 'must keep creating leading-edge technologies that make their companies more productive - especially innovations that spark entirely new markets'. The same tech innovations that produced outsourcing, he noted, also produced eBay, Amazon.com, Google and thousands of new jobs along with them.

This is America's real edge.

Sure, Bangalore has a lot of engineering schools, but the local government is rife with corruption; half the city has no sidewalks; there are constant electricity blackouts; the rivers are choked with pollution; the public school system is dysfunctional; beggars dart in and out of the traffic, which is in constant gridlock; and the whole infrastructure is falling apart.

The big high-tech firms here reside on beautiful, walled campuses, because they maintain their own water, electricity and communications systems. They thrive by defying their political-economic environment, not by emerging from it.

What would Indian techies give for just one day of America's rule of law; its dependable, regulated financial markets; its efficient, non-corrupt bureaucracy; and its best public schools and universities? They'd give a lot. These institutions, which nurture innovation, are our real crown jewels that must be protected - not the 1 per cent of jobs that might be outsourced.

But it is precisely these crown jewels that can be squandered if we become lazy, or engage in mindless protectionism, or persist in radical tax cutting that can only erode the strength and quality of our government and educational institutions.

Our competitors know the secret of our sauce. But do we?
<HR></BLOCKQUOTE>


Phaedrus

 

[bulldog77]

For a realistic portrayal of prison industries and not this bull fed out to the masses visa press releases see Warden Norton's program in 'The Shawshank Redemption'.

 

[Sodium Pentethol V]

Avg Us programmer=$80,000/yr
Avg for saem overseas $40,000/yr

Guess what some US programmers are taking the $40,000/yr.

Unreal yes, they are actually taking what their service is worth.

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Outsourcing Alternatives
Willing to Accept the Going Rate in India?

By Bob Jamieson



March 9— Inside a nondescript Cambridge, Mass., office building, the president of a new company that conducts Internet auctions thinks he has a better idea about outsourcing.



"I have a number of people I know who are unemployed in the tech community and to the degree of keeping jobs here, that's just better for everybody," said Jon Carson, CEO of CMarket.

When Carson started CMarket several months ago, a consultant urged him to send his computer programming jobs overseas to lower his costs.

That's because a programmer in the United States makes about $80,000 a year, but the same job overseas would cost only $40,000.

So Carson placed a help-wanted ad in The Boston Globe offering overseas wages for computer programmers. Within 48 hours, he had more than 100 résumés.

‘Took a Pay Cut, Needed a Job’

"I took a pay cut, but I needed a job," said Cari Collins, an experienced programmer, who couldn't find work until she responded to the ad and was hired by Carson.

"Some people go and do blue collar jobs, making $20,000 a year. Give them the opportunity. Put [the job] out there before you go and jump the gun and go outsource to India, to Russia, to China," Collins said.

The number of computer jobs moving overseas is expected to triple in the next six years. Six years from now there could be 300,000 American computer jobs in other countries.

Carson's idea could keep some of those jobs here.

Hal Reed, unemployed before he took Carson's offer, says it's simple economics.

"I think it's very smart what Jon did. He took a look at what the financial realities were and sort of turned it on its ear."

Carson said he considers his alternative to outsourcing to be a win-win situation. "We found great people who allowed us to get off the ground at lower wages," he said.

CMarket is off the ground and is now a profitable company.

Reed and Collins have even gotten raises. <HR></BLOCKQUOTE>

 

[Phaedrus]

An interesting analysis that touches on another aspect of the programming meme ...

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
Offshoring Obsessions Miss the Point

by Marc Herbert
CNET News

"No, you can't outsource your homework to India!" the gruff father in the cartoon pinned to our lunchroom board tells his son. Jeez, now that even the cartoonists have picked up on offshoring, it must be a hot trend. With all due respect to the people whose livelihood is being affected by software offshoring, I frankly think all this obsessive focus on the subject misses the real point.

The software industry clearly is in dramatic upheaval. Some 90 percent of software start-ups have gone out of business, and many of the rest are likely doomed. Yes, newly funded software start-ups are required by venture capitalists to do their product development offshore, and chief information officers are aggressively using offshoring to reduce their operational IT costs.

Meanwhile, the domestic IT services industry is being ravaged by deflation. Independent consultants today command half or less of their pre-2000 billing rates, as the labor arbitrage between the United States and India quickly erodes.

All these realities are well-documented in the press. To me, however, they are symptoms of a different and much more interesting trend.

It is easy to miss the fact that we work in the most violently catalytic industry at the fastest-paced moment in human economic history. We overlook the fact that we are largely responsible for the return of amazingly high productivity rate gains in the U.S. economy (and soon, the world economy). The price we pay for this success is volatility: the sacrifice of the individual for the good of the whole.

The point is that we have only just begun. We're only a short way up the beginning slant of history's biggest rollercoaster ride. Offshoring seems like such an irresistible force, but in the not-too-distant future, much of the work that is pushing offshore will be eliminated altogether by continual improvements in software technology.

Legacy code is replaced by modern, off-the-shelf software packages. Custom-coded enhancements to software packages are replaced by highly configurable upgrades to those same packages. User help desks are bypassed by people who learn to solve problems themselves with knowledge management programs and databases. Tough business integration problems ultimately get solved by true software standards, accepted business object definitions and Web services.

Ultimately, the holy grail of codeless development using great software design tools will be discovered. By then, the loss of jobs to offshoring won't seem so important after all.

That's scary. What jobs will be left, then? The new jobs that haven't even been thought of yet, the kind that always arise out of creative destruction, the ones that will surely emanate from the United States because that's where the creative forces thrive.

So what do we do until they arrive? Thankfully, we are the smartest, most adaptive workers in the history of the world. We look for the light and go for it, like the laid off tech worker who started a new business selling T-shirts reading, "I lost my job to offshoring, and all I got was this lousy T-shirt!" We hunker down and use our survival instincts.

For our reward, just look at what is a short way ahead of us in IT: virtually free hardware and network bandwidth (Gilder's telecosm is really arriving); unimaginable computing power (growing indefinitely at Moore's law); limitless, virtually free data storage; increasingly intelligent, self-learning applications; evolving, highly integrated business transaction networks; highly personalized, instantaneous self-service systems.

All of these tools will liberate us to the point where we are constrained mainly by our imaginations.
<HR></BLOCKQUOTE>

(emphasis added)

What would the public outcry be if the phenonemon of well-designed "wizard" applications were draining jobs out of the IT sector? It has already happened once, with Web design, and there was hardly a whisper.


Phaedrus