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Labor Department Downplays Offshoring 849

Posted by michael
from the if-we-don't-see-it-it-isn't-happening dept.
twitter writes "The New York Times is reporting the US Labor Department's first assessment of International Offshoring. The report claims that less than 3% of Q1 2004 jobs were lost to offshoring. Companies were asked if workers had been replaced and taken at their word. A Federal Reserve governor is also quoted as dissmissive. Estimates by Goldman Sachs are 20 times higher. Despite Washington's IP fetish, no one quoted is worried about the export of US research and knowhow. Your job and 830,000 others are gone."
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Labor Department Downplays Offshoring

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  • by Anonymous Coward on Friday June 11, 2004 @09:37AM (#9396955)
    Kerry will stop this offshoring nonsense!

    oh wait, his wife's companies are offshoring as much as anyone else.

    ummm...

    NADER '04 !!!1!
    • by hackmole (656682) * on Friday June 11, 2004 @09:42AM (#9397002)
      Crap. This is all crap. Does anyone know how many jobs we have "insourced"? Think 6 million. The economy is always churning. People lose and gain jobs everyday. Yeah, lets tax the hell out of companies that outsource, then we can lose 6 times the number of jobs. Seesh, you need to read beyond the headline
    • by Enry (630) <enry.wayga@net> on Friday June 11, 2004 @09:44AM (#9397031) Journal
      If Teresa Heinz Kerry were actually an officer [reuters.com] of HJ Heinz, she might hold some influence. She isn't, so she doesn't.
    • by geoffspear (692508) * on Friday June 11, 2004 @09:49AM (#9397083) Homepage
      Yes, and we Pittsburghers are much more upset about losing ketchup producing jobs than about how the entire steel industry has moved overseas.
      • by n3bulous (72591) on Friday June 11, 2004 @11:50AM (#9398389)
        The entire steel industry hasn't moved overseas. The US still produces about 100 million tons of steel every year, approximately 12% of the world total, and relatively close to the alltime high (135 million in 1953?). China, a much larger country with less regulation (think safety and health), only produces about 200 million tons a year.

        The loss of jobs is due to improved efficiency, unions pricing themselves out of the market, and low demand. It's quite difficult to compete with nations having cheaper workforces, but that's how capitalism is supposed to work. In the second reference below, it is stated the world uses 100 million tons less than it produces. Low demand means lower prices meaning fewer jobs.

        http://www.freetrade.org/pubs/speeches/ct-dg0225 99 .html
        http://www.useu.be/Categories/Trade/Dec0701 SteelTa riffsQuotas.html
    • by molarmass192 (608071) on Friday June 11, 2004 @09:51AM (#9397097) Homepage Journal
      Ummm, she inherited that money and the Heinz name from her former husband, the late Senator John Heinz, a Republican [heinz.org]. Also, she owns less than 4% of Heinz Co. stock and isn't even on the board. You can bet that her ex-hubbies Republican pals are on there though. Anyhow, I don't have anything against Republicans historically and was once one myself, it's the "new" far-right wing Republicanism that turned me off the party.
    • by Otter (3800) on Friday June 11, 2004 @10:24AM (#9397386) Journal
      Kerry will stop this offshoring nonsense!

      FYI, Kerry has already backed off from that position now that the primaries are behind him. Didn't you hear about the WSJ interview where he explained that his "Benedict Arnold" reference solely concerned tax havens and that he couldn't imagine where people had gotten the idea he was talking about offshoring? (His 30 or so speeches where "Benedict Arnold" directly referred to job transfers notwithstanding...)

    • by Schnapple (262314) <tomkidd AT viatexas DOT com> on Friday June 11, 2004 @11:57AM (#9398482) Homepage
      Kerry will stop this offshoring nonsense! oh wait, his wife's companies are offshoring as much as anyone else.
      Kerry's wife owns a minority share in Heinz, as a result of being the widow of a founding member of Heinz. Heinz does not "outsource" per se - they have manufacuring facilities in other countries to produce products to be sold in those countries. Since Ketchup and other products don't stay fresh indefinitely and shipping costs from one central location are prohibitive, this isn't the outsourcing at issue.

      More info here [snopes.com]

  • No way (Score:3, Funny)

    by Anonymous Coward on Friday June 11, 2004 @09:37AM (#9396957)
    Dey took arr jabs!
  • by Mz6 (741941) * on Friday June 11, 2004 @09:38AM (#9396962) Journal
    Here is a registration free link (for the NYTimes) [nytimes.com] courtesy of GOOGLE.

    Here is some advice that I took after I graduated college. During my last few years of college there was a lot of talk that companies may start outsourcing their work to places such as India. Living in an area where there is a large air force base I was given the advice to get a job there working with either with a contractiong company or the civil service (government). They are so strung for computer-minded people that they can offer up to a $60,000 hiring bonus on top of about $60-70,000 per year just to get you to work for them. And the best part? The US government isn't going to outsource your job anywhere. The only thing to worry about, however, is that your job can be eliminated. But the benefit of working for the civil service? They also have to find you a new job of similar pay.

    • Or an University... (Score:3, Informative)

      by Cyclopedian (163375)
      depending on how much they need the computer-minded people. However, they're very flexible in hiring young people and are willing to give them a chance to establish a work history that they can use in the future.

      -Cyc
    • by Epistax (544591) <epistax@gmailUMLAUT.com minus punct> on Friday June 11, 2004 @10:16AM (#9397300) Journal
      State governments actually HAVE been outsourcing .

      googl'd: http://msnbc.msn.com/id/4450796/

      Perhaps federal's safer?
    • by swb (14022) on Friday June 11, 2004 @10:46AM (#9397632)
      At least at the state level. Wasn't it Indiana that had offshored a computer system/call center associated with the unemployed?

      Also, state governments often LIKE to outsource stuff to the private sector. The bureaucracy associated with a state run project is huge -- everything from labor rules to material acquisition, and with more states needing to do more work with less tax revenue, these projects often get pushed into the private sector.

      Once in the hands of the private sector, there's often multiple layers of subcontracting that can involve offshoring. Somtimes it just seems like a giant shell game -- local business (with figurehead female minority ownership for easy contract grabs), pitches for state contract and then just subcontracts all the work out, skimming profits off the top and not really doing any work.

      In fact, it wouldn't surprise me if some consultancies have won business by equating offshoring with minority hiring, which should REALLY piss off the people the minority hiring laws were supposed to help.
  • Huh? (Score:5, Interesting)

    by Anonymous Coward on Friday June 11, 2004 @09:39AM (#9396972)
    The report claims that less than 3% of Q1 2004 jobs were lost to offshoring.... Estimates by Goldman Sachs are 20 times higher.

    So 60%? I don't think so...
    • Re:Huh? (Score:5, Informative)

      by Otter (3800) on Friday June 11, 2004 @10:19AM (#9397336) Journal
      To clarify, the question is what percentage of lost jobs were lost to offshoring. (Not correcting anything you said, just the part you quoted!) But, nonetheless, I agree that the 60% figure is ludicrous.

      Meanwhile, I'm comfortably ensconced in a US job offshored from Switzerland so I can't complain...

  • I feel for people who've lost jobs -- my wife lost hers, twice, and several of my friends did as well. But you know what? It keeps the labor market dynamic. "Well, if this is dynamic, I want none of it!" Sorry, but that's a kneejerk reaction: if people overseas can do it cheaper, and maybe even better, WE HAVE TO LET THEM. If we don't, then some day they'll come along and simply overpower us, because they -aren't- stagnant. Look at what happened (say) to American automakers when they were dismissive of Japan! How about textile workers? It's part of being in a global economy. Unless we wish to become entirely self-sufficient and isolationist, we HAVE to learn to do well what we do well: innovate, create jobs, create wealth and opportunity. But don't try to bail out a tepid economy with finger pointing and a leaky pot.
    • The problem is that in a level playing field, that is fine..

      But you also need to take into account that these foreign workers :

      1. Don't get Insurance
      2. Don't have the same working environments
      3. Don't have anywhere near the same cost of living

      So how can you compete when they can feed a family of 10 on 10K a year and have housing while you would be in poverty here if you made that much ?

      • No. That's not how it works. It -is- a level playing field, almost by default: their cost of living is lower than ours, regardless of the reason. That means that there are certain things that they can do cheaper. WE HAVE TO LET THEM. Eventually, their economy will get better, raising their cost of living... or it won't, and they'll no longer be a concern. But if you try to "level" the playing field, you're just kidding yourself. If someone else can do it cheaper, and you don't let them, YOU WILL LOSE: that's the only sure bet. Check history if you don't believe me; gov't instituted remedies in situations like this just don't work, as most socialist countries were fine examples of. Free market may not be fun, but it's the only game that consistently wins, because there's nothing artificial, and greed -- the great human motivator -- is allowed to run rampant.
        • It -is- a level playing field

          Not quite. Because of market collusion its possible to lower the quality of goods across the board and pay no price for it in the marketplace. THAT's why outsourcing to India works. If you are one of five widget makers, and you all subtly agree not to compete on quality, then it's easy to fire 90% of your customer service center, hire shoddy brute-force armies of programmers and end up paying far less than you would need to if your customers actually got a real choice of wi
          • Your argument makes it sound like "As long as we all band together and make cheap, crappy products, nobody can complain because they won't have any alternatives". Very few industries actually have NO alternatives, and quality products are always in demand.

            It's like saying Ikea, Target and Walmart and going to run the woodmakers of America out of business because you can buy such cheap, albeity low quality, furniture from them. Quality furniture will always be in demand, but low quality furniture may in
          • by kmac06 (608921) on Friday June 11, 2004 @10:49AM (#9397655)
            "If you are one of five widget makers, and you all subtly agree not to compete on quality, then it's easy to fire 90% of your customer service center, hire shoddy brute-force armies of programmers and end up paying far less than you would need to if your customers actually got a real choice of widget to buy."

            What are you talking about? American companies are around for one reason, and one reason only: to make money. They hire GOOD programmers in India CHEAPLY. They save money. Simple as that. There is no 'conspiracy' for a group of companies to not compete over quality: as soon as this happens, a new player will come in not following these rules and take over the market. It's how free trade works.

          • by Confused (34234) on Friday June 11, 2004 @11:05AM (#9397849) Homepage
            You got it nearly right, only the conspiracy theory is a little off. Why invent a conspiracy, when a few simple observations explain it also:

            If the customers don't care about quality, saving there is a sensible measure. The goal isn't to produce the best, it's to produce just good enough. Anything above that is wasted. If customers wan't better quality, there's a business oppurtunity by making them pay for it.

            The other assumption was, that the service from american is better than what poor starved indians provide. More often than not, the so called better service from americans was limited to read the brain-dead script with an american dialect instead of an indian one.
        • by Anonymous Coward on Friday June 11, 2004 @10:21AM (#9397358)
          Free Markets are like black holes, no one has ever seen one, but theoretical academics will argue to the death about what they are like. Economics is a soft science based on assumptions about human behavior.

          If US companies want to ousource, fine, just quit giving them taxpayer dollars (corporate welfare) and access to government R&D.
        • Only problem - this isn't a free market. I've got restrictions on what kinds of services I can offer that Joe Brain-Damaged in India doesn't have. I have no choice about whether to comply with these restrictions or not.

          Ergo it is not, by default, a free market. Not until India enacts labour laws offering the same degree of protection to its workers as the US does.

          You know what's really interesting? India's new government is already doing that. And despite the fact that it has only raised the cost of wor

    • I pretty much agree.

      The job loss numbers also don't seem to tell the whole story, I think for those quarters quoted there was a net job gain overall.

      Despite the harping, the last Labor department figure I've seen, I think for Q1 2004, was that unemployment was about 5.9% with other figures being favorable as well. I thought that figure is very nice, especially considering we were comming out of an overheated economy in the 90's where those considered completely unemployable were given a second look. I th
    • That's not what the Indian gov. thinks. Ever hearl of the Bhopal chemical disaster? It happened because the Indian Gov. forced Union Carbide to use insufficiently trained Indian workers rather than Carbide's own, better trained employees. http://www.bhopal.com/facts.htm

      The purpose of this globalization of labor resources is to pit one labor market against another, forcing wages down. NAFTA actually decreased Mexican wages. It increased profits for American companies using Mexican rather than American labor
  • by Anonymous Coward on Friday June 11, 2004 @09:40AM (#9396985)

    was answered by Sanjay Patel, who couldnt comment as his superiour had popped down the shops in Delhi for a curry

  • Question (Score:5, Insightful)

    by USAPatriot (730422) on Friday June 11, 2004 @09:40AM (#9396990) Homepage
    How is this being "downplayed" if there is very little to play up?

    Yes, when you take a survey, you expect people to be honest, the very few that aren't honest won't make much of a dent in distorting the picture.

    Anyway, I don't know why slahsdot is playing protectionist when it comes to tech jobs in the US. You people enjoy the fruits of offshoring in cheap computers, gadgets, and other electronics. Tech jobs aren't any more sacred than manufacturing jobs. Adapt or die.

    • Re:Question (Score:5, Insightful)

      by MarkPNeyer (729607) on Friday June 11, 2004 @10:17AM (#9397311)

      Slashdotters are playing protectionist, because unfortunately many of them fall into the category of people who believe in "rights for me but not for you."

      Ask a slashdotter what they think about the USA PATRIOT act, and you'll definately get an earful. "Keep the federal governemnt out of my own buisness; that gives them too much power!"

      But then float the idea of taxing corporations so that they'll keep jobs in america, and a lot of those same slashdotters will say it's insightfull; that it's got merit and should be considered. Here's an idea - why don't we just raise taxes on companies that fire anyone, companies that don't make cheap products, companies that smell funny ... etc etc. It dosen't seem to bother the slashdotters because it isn't their freedom we're talking about; it's somebody else's.

    • Re:Question (Score:3, Informative)

      by nelsonal (549144)
      From CNBC yesterday in a story about this, the labor suveys ignore employeers with fewer than 50 employees, and also do not count layoffs of less than 50 people.
  • well (Score:4, Funny)

    by Anonymous Coward on Friday June 11, 2004 @09:40AM (#9396991)
    I have to reply as an Anonymous Coward b/c my indian replacement took my slashdot account!
  • BPO jobs: (Score:5, Informative)

    by anandpur (303114) on Friday June 11, 2004 @09:41AM (#9397000)
    It is not downplayed in India. BPO jobs: Devil in sheep's clothing? [indiatimes.com] Call centres put Indian mores on the hook [indiatimes.com]
    • Re:BPO jobs: (Score:3, Interesting)

      by bpowell423 (208542)
      I loved the last quote of the "Call centres put Indian mores on the hook" article. According to the article a lot of Indians are dropping out of university to work at call centers because it's quick money, and pretty good pay, relatively speaking. The quote is "A good college education is vital in the long run for career growth. What if the call centre bubble bursts one day?" Sounds a lot like kids here in the US that dropped out of college to join the dot-com bubble. Now some in India are worried abou
    • Re:BPO jobs: (Score:3, Interesting)

      by beforewisdom (729725)
      Interesting.

      The person making the complaint in the article is an Indian Catholic Priest.

      So an Indian who serves a religion exported from the west is complaining about young Indians working jobs exported from the west because it interfering with social customs not exported from the west.

  • Does it matter? (Score:4, Insightful)

    by 91degrees (207121) on Friday June 11, 2004 @09:43AM (#9397014) Journal
    There is a big attitude that ofshoring is taking away people's jobs.

    What bull! Of course, These jobs don't belong to you in the first place, but that's missing an important point. There are always more jobs. Many of them will NOT be offshored. People need employees. People will create jobs when there are some free workers. If you can't get a job writing tedious code that a trained monkey can do, learn to do something that requires real skill and talent.
  • by Dagny Taggert (785517) <hankrearden@@@gmail...com> on Friday June 11, 2004 @09:46AM (#9397045) Homepage
    ..within my department at work. The company recently exported some data entry positions to India. Our IT manager claims this is just a natural progression to the "next thing", just as we made the move to a service-based economy. But what is the next thing? A progression to service seems natural in hindsight; can anyone point to what is after that? Of course, I hear people say that wages overseas will eventually climb, making companies here rethink this outsourcing strategy. But when? 50 years from now? I am no alarmist, but this is beginning to really, really worry me.
  • by doudou42 (691076) on Friday June 11, 2004 @09:47AM (#9397059)
    ... is to be the best ! No matter the cost, if no one is able to do your job, you are safe. With the development of automatic code generation, middleware and so on, the number of coder will fall in a near future. Trying to reduce offshoring is just a way to gain time. Remember the beginning of the modern era, when labor worker where replaced by machines... but there are still manual worker, they are doing "haute couture" and earn a lot of money. Now, it is the same thing with software. But, maybe we are all wrong, maybe there ain't enough job for us all, not enough place, not enough ressources... Want to drive a SUV ? Eat super maxi menu ? We can't go on like this, it is time to slow down, relax and live a better life. The more is not always the best.
  • My job has not been shipped offshore. There is no risk of my job being shipped offshore.

    Of course, I've escaped the rut of the corporate/educational/medical IT structure and gone into business for myself. There's no more worries about losing my job because some corporate bigwig doesn't know how to use a computer correctly. I don't worry about the High Point Furniture Market doing badly, causing a warehouse glut and staff cutback. I can no longer use victim-mentality to explain what goes wrong with my career.

    These days, if I don't make much money, it's because of the ups and downs of the retail cycle. It's because I need to get off my butt a bit more and do some work. It's because of a lot of things, but it isn't because of offshoring of my job.

    Want to be insulated against offshoring of jobs? Learn carpentry, or HVAC maintenance, or any number of trades. Then, buy yourself a van, hit the road and work for yourself. The rewards are greater, the hassles are more easily managed, and you get paid extra for working with bigger problems or worse customers.

    Oh yeah, and you'll get a thank you occasionally, from those you do the jobs for.

  • I helped do my part (Score:5, Interesting)

    by Anonymous Coward on Friday June 11, 2004 @09:52AM (#9397101)
    As a U.S. IT worker, I helped do my part for GE outsourcing. I traveled to New Delhi and GE's new facility in Haryana State where I helped to set up the infrastructure for helping to offload work from the GE financial units.

    I can tell you that I did not feel the least bit sorry for the American call center employees whose jobs were sent to India. The Americans in the call center were men and women right out of high school and college with crappy attitudes and a streak of laziness a mile wide.

    The Indian workers had master's degrees and had drive and ambition. The Americans did not even care about the job competition and thought they were owed work. Sorry, I cannot agree with protecting an entitlement!

    That being said, there is still a barrier. Despite English being the common language between India and the U.S., Most Americans cannot understand the Indian accent and get rather frustrated. (I am sure it works both ways. ) Also, some of the Indians take a "Brahman" or intellectualy superior view and treat their American customers like crap, especially women.

    The offshoring will level off in my opinion. Some companies will still try to gain competetive service level where empathy and understanding are part of the customer experience.
    • That being said, there is still a barrier. Despite English being the common language between India and the U.S., Most Americans cannot understand the Indian accent and get rather frustrated. (I am sure it works both ways. ) Also, some of the Indians take a "Brahman" or intellectualy superior view and treat their American customers like crap, especially women.

      I wonder if this will change over time. I note that voice recognition is finally hitting the mainstream. I don't believe it's prime-time yet, but pr

    • by arnie_apesacrappin (200185) on Friday June 11, 2004 @10:31AM (#9397462)
      I can tell you that I did not feel the least bit sorry for the American call center employees whose jobs were sent to India. The Americans in the center were men and women right out of high school and college with crappy attitudes and a streak of laziness a mile wide.

      I worked in a GE sub business that moved some of our calls to the GE facility in India. I will agree that our call center staff in America was as you described. If they would have gone through and done drug testing about half of the call takers would have been fired

      That being said, there is still a barrier. Despite English being the common language between India and the U.S., Most Americans cannot understand the Indian accent and get rather frustrated. (I am sure it works both ways. ) Also, some of the Indians take a "Brahman" or intellectualy superior view and treat their American customers like crap, especially women.

      I had to sub at our SecureID reset desk right after the transition. Because we had offices in Canada as well as the US, we had some French-Canadians call in from time to time. If you want to have some fun with accents, try to have a call between a French-Canadian and someone working a desk in India.

      The main problem I had with the GE facility is that I don't feel they ever delivered the level of training the told us they would. During US business hours we were told we would get people that spoke English at a rating of 8 or better, on a scale of 1 to 10. In the time I dealt with the call center, we couldn't even get them to use the military phoentic alphabet. I'd hear things like "C as in kite, J as in giant."

      The solution we finally discovered was to use instant messaging between the sites. We would have conference calls where all the Americans would talk to each other and the Indians would talk to each other, but for communication between the groups, it was all IM.

  • by GillBates0 (664202) on Friday June 11, 2004 @09:56AM (#9397136) Homepage Journal
    It may be useful at this point to take a look at this report [acton.org] titled "Multinational Corporations in the Third World: Predators or Allies in Economic Development?".

    For a good part of the latter half of the last century, MNCs (which are incidentally mostly US owned corporations) have been trying to *market* their goods to third world countries with an aim to get their earnings up (expanding markets = more money). This has often resulted in loss of local jobs and industry and made the countries more dependent on foreign corporations, and local unions/organization have often opposed opening up local economies for this reason - but mostly to no avail.

    Lately, we've seen that corporations have figured out that the skill/education levels in these so called developing countries have been increasing, and it's more cost effective to shift their manufacturing/services divisions abroad. This has caused widespread annoyance due to loss of jobs in the developed countries.

    But really, is it the people's fault anywhere? Is it fair for people living in developing nations which have been invaded be these megacorps to just serve as profitable markets for the MNCs while being denied economic benefit from them? A bit of pondering may reveal that it's profit minded corporations which have been sucking peoples from both sides for their benefit (and for their parent countries' since the profit trickles down in the form of jobs/cashflow).

    I think it's just the completion of a circle. Not flamebait - sincere concerns.

    Some quotes:

    Multinational corporations (MNCs) engage in very useful and morally defensible activities in Third World countries for which they frequently have received little credit. Significant among these activities are their extension of opportunities for earning higher incomes as well as the consumption of improved quality goods and services to people in poorer regions of the world. Instead, these firms have been misrepresented by ugly or fearful images by Marxists and "dependency theory" advocates. Because many of these firms originate in the industrialized countries, including the U.S., the U.K., Canada, Germany, France, and Italy, they have been viewed as instruments for the imposition of Western cultural values on Third World countries, rather than allies in their economic development. Thus, some proponents of these views urge the expulsion of these firms, while others less hostile have argued for their close supervision or regulation by Third World governments.

    Incidents such as the improper use in the Third World of baby milk formula manufactured by Nestle, the gas leak from a Union Carbide plant in Bhopal, India, and the alleged involvement of foreign firms in the overthrow of President Allende of Chile have been used to perpetuate the ugly image of MNCs. The fact that some MNCs command assets worth more than the national income of their host countries also reinforces their fearful image. And indeed, there is evidence that some MNCs have paid bribes to government officials in order to get around obstacles erected against profitable operations of their enterprises.

  • by RyoShin (610051) <.tukaro. .at. .gmail.com.> on Friday June 11, 2004 @09:57AM (#9397142) Homepage Journal
    Has no-one thought of the possibility that Goldman Sachs might be wrong ? I don't know how trusted they are (I'd assume at least a bit, as they're used as a reference,) but even the most trusted firms/whatever can be wrong.

    I'm not saying the Labor Department is right, but there's a chance that Goldman Sachs is wrong. I mean, they are estimates. I could do some quick researching, round to the nearest hundereds places, and report that as an estimate.

    You're all pessimists.

    /prefers to be an optimistic pessimist: Plan for the worst, try/hope for the best.
    • by TheSync (5291) on Friday June 11, 2004 @10:18AM (#9397326) Journal
      How can anyone be right? The whole concept of comparing a job in the US with a job in a developing country is crazy. You may be able to track the movement of certain business elements, but the value equation is generally completely different.

      How do we know that a new outsourced job isn't taking some business processes off the plate of a US worker so they can be more efficient with other business processes?

      How do we know that someone working for a US company in India isn't actually creating jobs in the US through their work?

      When Linus was creating Linux in Europe, who knew he would be creating tons of IT jobs doing Linux work in the US? Would it have mattered if Linus lived in Bangalore?
    • I'm going to go with the pessimistic attitude because I already know that numbers coming out the government are skewed heavily to favor the administration.

      We saw it just recently with the terrorism report. we saw it when tabulating the 'estimates' of the amount of weapons of mass destruction in Iraq.
      We saw it when the administration intentionally withheld the true figures for the new Medicare/prescription card bill.
      We saw it when the administration skewed and suppressed environmental research to support th
  • Un-Patriotic (Score:5, Insightful)

    by DrugCheese (266151) on Friday June 11, 2004 @10:03AM (#9397191)
    Ship 100,000 jobs overseas - It's a free market and a free country

    Drive to Canada to buy medicine for your grandma - you're un-patriotic

  • Misleading Summary (Score:5, Interesting)

    by DRue (152413) <drue&therub,org> on Friday June 11, 2004 @10:04AM (#9397196) Homepage
    The report claims that less than 3% of Q1 2004 jobs were lost to offshoring.

    It's not 3% of all jobs - it's 3% of the jobs that have been lost. Quit with the mindless troll attitude. Don't blow the outsourcing thing out of proportion.

    Oh, and by the way - all you ACLU loving /.ers - If you really believe in personal freedoms - you gotta side with Bush on this one. Companies ought to be able to do what they please within the law. All the local (MN, but it's everywhere) no smoking legislation lately is driving me nuts. Lets get the government out of business - yes that means that some companies will outsource some of their labor. Nothing new here!
    • by DRue (152413)
      Correction - the article actually says 2.5%, not 3%. It's as if the poster wishes that more jobs were outsourced so that he can be more pissed off at Bush. Sad, really.
  • by xyote (598794) on Friday June 11, 2004 @10:04AM (#9397198)
    The number I'm seeing is 4,633 jobs lost to offshoring in the first quarter. Okay. So assuming a 6:1 US to offshore salary ration, then we should have seen only a 27,798 increase in offshore positions. If the increase was more then the US has had a net loss of jobs. And we definitely have not see enough of an increase in the US job level to maintain current emmployment levels in light of new workers entering the workforce. I'm talking about tech jobs mainly. So this may be good for the US economy but the economy and the workforce are not the same thing. It's sort of like saying that putting your children up for adoption is good. It may be good for your family's budget but it's definitely not good for your family.
  • "And we'd like to welcome the technology workers of America to the global economy. Please, have a seat and make yourself comfortable. If you fight it you'll only waste time you should be spending upgrading your skills."

    There are two scenarios here, let's play with them a little bit:

    1:
    We tax local companies who offshore to make offshoring less palatable. We tariff products coming into the US from companies who are offshoring but use certian tax shelters and place their corporation offices outside the US so the taxes don't affect them.
    Outcome:
    Other countries raise tariffs in response. Companies here in America lose customers because their products are so expensive compared to solutions and products purchased elsewhere by independant companies outside the US. American companies close shop unless they are 'saved' by tax breaks/loans/subsidies - the same companies that were taxed into not outsourcing.

    2
    We recognize the fallacy of America as an independant microeconomy. We allow companies to outsource labor which can be performed more cheaply elswhere. Displaced workers are forced to upgrade skills or accept a lower sallary.
    Outcome:
    Those who upgrade their skills earn more money, increasing the economic power of the US Labor force. National GDP increases, companies become more profitable, etc.

    There is no realistic way to stop outsourcing the tech worker. All one can do is try to stay ahead of the curve. Get your MBA and manage outsourced projects. Move to a smaller company where outsourcing IT doesn't make sense. Start your own company.

    Eventually the global economy will level out, and half of the tech work done here will be done there. This will happen regardless of the measures we are taking to slow it down. In the end our products are still competitive on the global market, and we still carry 1/3 of the international GDP. Fighting it is only going to slow down our economy and speed up the rest of the world's economy.

    If you really want to keep your current life style, you'll learn to roll with the punches, pick yourself up and get back in the game.

    -Adam
  • What a crock! (Score:5, Insightful)

    by gregor-e (136142) on Friday June 11, 2004 @10:08AM (#9397231) Homepage
    Once again, we see the old "conservation of jobs" myth that assumes that jobs are a fixed commodity that can be "lost". The reality is that companies that are able to achieve savings by offshoring will have extra capital for other projects. Companies will seldom outsource their core competency, since that's just asking for trouble. So, if a company is able to save money on non-core business process outsourcing, they should have more money to invest in core projects.

    It also turns out that offshoring is a complicated business. I have participated as tech lead in three offshored projects. Only one of these ended up "profitable", costing us less than domestic talent would. Even though offshore workers earn a much lower salary than their US counterparts, the markup on their services is not small. We were paying $35/hour for talent that we could get for about $55/hour domestically. I think a lot of companies will experiment with offshoring and quickly discover that there are many sharp rocks under those inviting waters. The companies that are seeing biggest gains are those that set up offices in the offshore countries and hire the locals as employees, rather than consultants.

    From a larger view, the baby boomers are starting to retire. If you check your census statistics, that is a huge skill deficit that we just don't have the population to replace in a growing ecomony. Therefore, if we wish to continue similar growth rates to what has happened over the past 50 years, we will need to:

    1. Immigrate
    2. Automate
    3. Offshore
    Remember 1999? Companies were recruiting waiters and putting them through IT training, just to make up the shortfall. If you knew where the power switch on your computer was, you could get an IT job. Well, back then, we had a shortfall of 4.7 million skilled workers. If similar growth is projected forward and the baby boomers are subtracted from the labor pool, we're looking at a shortage of over 20 million skilled workers by 2010. This will make the shortage of 1999 look like a picnic. Some predictions even show us using up all the available offshore talent by 2012 or so.

    So whine all you like about offshoring. Soon, it'll be the only thing that keeps our economy growing.

    • Re:What a crock! (Score:3, Insightful)

      by kbradl1 (753762)
      My parents are baby boomers and I work with several baby boomers. Yes they all want to retire, but guess what..... they can't. They have to pay for their kids rising costs of college. They have rising medical insurance costs and prescription drugs to pay for too. Retirement age as is the age to receive Social Security is rising because less people have the money to retire. Many baby boomers have lost their pensions and are returning to the work force. This means baby boomers are still competing for th
  • Offshoring problems (Score:4, Interesting)

    by Chief Typist (110285) on Friday June 11, 2004 @10:14AM (#9397290) Homepage
    A family member is currently a project manager for a new software product being created in India. As such, I have some insights into the situation -- and I don't think the current offshoring craze will last too long.

    The basic problem is because there is approximately a 12 hour time difference between the US and India. This makes business communications quite slow. For example, at 6 AM in the US, it's 6 PM in India.

    What happens is that the normal project related problems pop up during the day -- and if you need input from "the other side" then you have to wait up to 8 hours. Or make your best guess and verify it with "the other side" at a later time.

    As developers, we all know this happens a lot during product development. What used to take a few minutes with a call or a quick meeting can take a day or more. This dramatically slows down the development cycle.

    Of course, management is excited about the fact that the labor cost is about a third as expensive. They are now starting to realize that this benefit is offset by the cost of lost revenue (products that are late can't be sold!)

    So long term, I don't see offshore development being used for new product development. It's likely that it will continue to be useful for product maintenance and support since they have a lesser need for constant communication.

    -ch
  • "Companies were asked if workers had been replaced and taken at their word."

    Because a statistically significant number of companies are scared to reveal the truth they will lie to the gov't about how many people they are offshoring?

    The bureau has always taken companies at their word. Are you going to pay for them to audit american companies for labor statistics? It's stupid to assume that you'll get better numbers by holding a gun to someone's head. They'll lie if they want to lie just to see what you'll do. You'll be forced to implement laws and consequences for lies, and if you discover a company was lying then you get to prove it in court.

    It isn't worth it.

    The BLS has always surveyed a number of companies and a number of households for their information. These surveys produce unemployment numbers and a ton of other interesting statistics about the job economy.

    If this bothers you then you'll really go wild when you learn that they only survey a small number of companies instead of all the companies in the US.

    I love a good cynic in the morning. No wonder some people are so unhappy about outsourcing - they're never happy about anything.

    -Adam
  • by Scot Seese (137975) on Friday June 11, 2004 @10:34AM (#9397493)
    Offshoring creates a much larger problem that none of these articles have touched on. I call it the "Bob Factor." Here's how it works-

    Bob worked for CitiGroup in Chicago. Bob was earning $80,000/yr for his database programming position in a light supervisory position with a few other coders under him. Bob had fifteen years experience and has worked on numerous mission-critical multimillion dollar projects.

    Bob lost his job a year ago to offshoring.

    Bob is now in his late 30's or 40's. Bob has a mortgage, car payment, spouse and kids to support. Bob cannot afford to quickly change careers. Starting over gets a lot harder with age for financial reasons.

    Bob is now willing to relocate to smaller midwestern markets like.. South Bend, Akron, Indianapolis, etc. etc. Bob will now be competing with you for the $48,000/yr job that you had your eye on.

    These displaced IT workers with gobs of experience and resumes 3x thicker than yours are out there competing for the same jobs that new graduates and guys with a few years and a couple certifications were hoping to get. They are the ones making new positions in IT harder and harder to find.

    Ph33r the Bobs, people. They are making it harder to GET jobs or CHANGE jobs. And worse yet, they are destroying the IT salary horizon by bringing superior job skills to the table for entry and mid-level positions out of need, creating an environment where the average REAL-LIFE starting salary for IT is DECLINING.

    In the area I live in, people with Masters' degrees and a handful of certifications are showing up for entry-level programming positions advertised at ~ $25,000/yr in the paper.

    Offshoring is doing precisely the same thing to the IT market that the Japanese did to big steel in the U.S. in the 70's and 80's. The U.S. government did absolutely nothing to level the playing field then - What makes you think they will now? Who has more lobbyists buttonholing congressmen in the hallway on their into work? You, Joe Schmoe Slashdot reader, or Tata?

    Signed,
    Frustrated former IT shmuck changing careers
    • ..

      As a few readers have pointed out so far - The Bobs are earning less money, so consequently they are injecting much less back into the tax base and are not purchasing the same amount of goods and services.

      How much less?

      If 830,000 people are forced to take jobs elsewhere for 50% less pay, that's 33.2 billion dollars/yr in lost income. That's assuming they are able to find jobs AT ALL.

      This is using the "$80,000/yr" figure from my first post. Obviously not everyone that has lost their job to of
  • "Rightsource" (Score:3, Interesting)

    by Le Marteau (206396) on Friday June 11, 2004 @11:05AM (#9397845) Journal
    My boss used that word in a meeting just the other day. After she paused, I asked her, "Did you say 'rightsource?". And she said, yes, that means outsourcing, when it is the right thing to do.

    I can't stand it. I feel like I'm living in a fucking Dilbert cartoon. It drives me up a wall, how people try to change words to make things 'feel better'. That is one of the many reasons I'll never be in corporate management, because I don't deal in bullshit, and could never say 'rightsource' with a straight face.

    Mod me down, please. I have too much karma, and I just needed to ventilate. I just found that funny, and disgusting, at the same time.
  • Dodgy statistics (Score:3, Interesting)

    by AlecC (512609) <aleccawley@gmail.com> on Friday June 11, 2004 @11:24AM (#9398079)
    Your job and 830,000 others are gone.

    This is very dodgy stiatistics. The fact that 830,000 jobs havce been sourced overseas doies not mean that 830,000 jobs have disappeared: that would be to assume no growth at all.

    I don't have figures for softw3are developers, but The Economist reckons that the number employed in the US in call centers (one of the other major outsourcing scapegoats) has been essentially constant for about 5 years. Which suggests that one of the major drivers for outsorurcing is not so much cheapness as availability: the US has used up all the people able and willing to do that sort of work. Outsourcers have already found the hard way that the savings are way smaller than expected - even negative. But if you cannot get the people at home, overseas looks good.

    Which is not to say that nobody has ever lost their job to overseas outsourcing - of course they have. But it is to suggest that there are still jobs somewhere in the onshore US for all those displaced - though maybe not where they currently live. But this is the US way - make firing easy so peopel will hire easy. The alternative is the European way: make it so difficult to fire someone that you don't dare set up a risky venture because the downsizing costs will double your losses.

    Historically, the upside of the US attitude to jobs has worked very well. Why is Silicon valley in Californai, not England? Because the US has a risk-friendly, failure tolerant attitude. Losing out to outsources is the downside of the same coin.
  • by dekeji (784080) on Friday June 11, 2004 @11:32AM (#9398178)
    What do you think the alternative is to off-shoring? If US companies don't off-shore to India, do you think Indians will just sit around, twiddle their thumbs, and keep buying expensive US-made products? Not on your life: they'll build highly competitive domestic industries, with their entire staff based in India, using cheap labor, completely beyond US regulations, taxation, or control. They'll import less from the US and export more to the US and offer cut-throat competition to US companies in other markets. The consequence will be many US companies going out of business entirely. Numerous examples show that countries can go from wastelands to economic powerhouses in a few decades, and India is ahead of the pack already.

    Besides, I also don't see any justification for calling these jobs "American jobs" in the first place. Just because the US happens to have been able to build a large industrial base when other nations were in shambles doesn't mean that that kind of extraordinary situation is a God-given right. Postwar US economic success was a lucky, but temporary, windfall. Americans, like the rest of the world, have to learn to live with real, tough competition from other nations and the real possibility of economic disaster--the US has no more found a "magic formula" for wealth than any other nation, even though many US politicians arrogantly proclaim otherwise.

    Furthermore, it was primarily the US that dragged other nations kicking and screaming into the current system of globalization and the US has benefitted, and continues to benefit, handsomely from that system. Outsourcing is, in effect, at the very core of why the US wanted globalization in the first place: you get economic efficiencies from comparative advantage. It makes no sense to come back and complain about that the system is doing what it was designed to do now that it is actually starting to work as desired and as expected.
  • by Abraxis (180472) on Friday June 11, 2004 @11:32AM (#9398181)
    Well, duh! If you ask the company, nobody is "replaced"-- departments just get downsized, and new divisions open up overseas doing the exact same job, but there is absolutely no corelation between the two... no sir!

    About a year ago I was working as a contractor for a certain very large hardware/chip company. My immediate manager (an engineer) and über good guy wasn't "replaced" -- he was just sent to India to train somebody how to do his job, and then was send to the "redeployment pool" (laid off) a few weeks later as part of a massive downsizing of the department... nope, no replacement going on here!
  • by $criptah (467422) on Friday June 11, 2004 @11:44AM (#9398322) Homepage

    I am a recent graduate who found himself in a toilet when it came to getting a job. I have been working in the industry since my freshman year in college. By the time I graduated I had experiences with almost everything: from kernel development, to Java to PHP and system administration. Yet it took me forever to find a job. Now that I am gainfully employed I constantly wach out and see how I remain employed in the coastal United States. Here are my survival tips.

    Look for a job where you can get into business-to-business relationships. When you deal with large companies, your job has a higher chance of staying in the States because companies like quality service. Dell was forced to bring its business customer support because managers did not enjoy talking to people who could not assit them in a reasonable manner. Moreover, once you get into B2B, you get to meet a lot of people; if you leave a good impression, some of them could help you out in the future.

    If you are stuck with a job that involves receiving specifications over e-mail and then sending the code somewhere else, RUN. Unless you code something that is used for military of the government (meaning you have at least one level of clearance), you job is done. You must get out and do more things. I do not know what things you should do, but you must do something besides being a code monkey.

    Learn how to do business; learn how to benefit your current employer or start your own shop. People do not create companies in order to employ more people. Businesses are here to make money. If you show your employers that you can benefit the company, they are likely to keep you closer.

    Learn languages, cultures, and traditions. Improve your communication skills and presentability. Being flexible in the global economy is very important. I got my first job only becuase I was the only applicant who spoke fluent foreign language. I could talk and relate to our development team, something that other candidates could not offer. Based on my previous experience, I am going for one more foreign language, my fourth. Staying neatly groomed and socializing with your co-workers helps as well. I would not want to employ a person who is not welcome by the rest of my crew.

    I followed these rules and, fortunately, I was able to find different jobs even during the recession. Also, remember whatever does not kill you, makes you stronger. Learn from other peoples' mistakes and do not forget to do so from yours.

  • by trance9 (10504) on Friday June 11, 2004 @12:46PM (#9399070) Homepage Journal

    You can buy and sell IT JOB futures here:

    http://www.ideosphere.com/fx-bin/Claim?claim=ITJ OB S

    Includes a lot of links to BLS statistics and gives you some idea of whether you will have a job in a few years. If this claim trades above $0.50 then market participants expect the job market to expand; below $0.50 and it is expected to shrink.

    Put your (play) money where your mouth is: You can get a high score in this game by predicting the future. If you really think all the jobs are going overseas sell sell sell.

    It's kind of an experiment, and a non-profit/academicy/free thing so give it a whirl.
  • by jgardn (539054) <jgardn@alumni.washington.edu> on Friday June 11, 2004 @04:44PM (#9401936) Homepage Journal
    Outsourcing is merely a product of freedom. If you want to stop outsourcing, make employees in the United States more competitive on the world market. We can do this by:

    (1) Lowering or eliminating employer taxes. That's right, companies have the pay the government for the right to hire someont to work for them.

    (2) Lowering or eliminating employee taxes. With lower taxes, employees will be willing to work for less.

    (3) Reducing regulations surrounding employment. While employers are spending money scrambling to find ways to immunize themselves from RSI injury lawsuits, they are spending untold billions to consultants and for expensive products. This is one example of many thousands.

    (4) Reducing the cost of living by reducing the cost of goods. The only way government can do this is by lowering taxes and by reducing regulations.

    (5) Increase the value of our employees. Make reading a requirement for elementary school graduation. Make generally useful skills in the workplace (ethics, responsibility, hard-work, good attitude) requirements for high school graduation. Encourage studies in colleges, trade schools, and universities in math, science, engineering, and other profitable areas. Discourage the politicization of our college campuses and keep the focus on teaching and training. Make the cost of obtaining an education cheaper with less regulation and lower taxes.

    When hiring someone in the United States is cheaper and more profitable than hiring someone in India, then we will stop outsourcing. President Bush is no more responsible for this phenomena than the Tooth Fairy is responsible for the bombs being dropped in Hiroshima.

    In short, instead of complaining, compete!

"In matters of principle, stand like a rock; in matters of taste, swim with the current." -- Thomas Jefferson

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