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Outsourcing As A Source Of U.S. Jobs 948

An anonymous reader writes "The Economic Times, India's leading financial newspaper, reports that Diana Farrell, Director, McKinsey Global Institute during her speech at Nasscom 2004 said that Bureau of Labour Statistics is predicting a job gain of 22m in the US by 2010, against a job loss of 2m, due to offshoring. You can read the full article here."
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Outsourcing As A Source Of U.S. Jobs

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  • by prostoalex ( 308614 ) on Tuesday February 10, 2004 @03:22AM (#8235117) Homepage Journal

    US unemployment right now is 5.6% [], the lowest it had been in 2 years.

    Silicon Valley will ad 17,000 jobs this year [] and 33,000 next year.

    • by Eskarel ( 565631 ) on Tuesday February 10, 2004 @03:28AM (#8235151)
      Unemployment statistics are trash. They don't include recent college grads or those who have been unemployed for a prolonged period of time because no one bothers to register unless they are eligable for unemployment benefits. After a while people are no longer eligable and so they stop registering as unemployed, the statistics assume they are employed which isn't necessarily the case.
      • by Monkelectric ( 546685 ) <slashdot@mon k e l e c t r i c . com> on Tuesday February 10, 2004 @03:39AM (#8235213)
        and they dont count underemployment. I know alot of engineers who are flipping burgers and selling stereos burdened by student loans (which survive bankrupcy!).
        • by Ungrounded Lightning ( 62228 ) on Tuesday February 10, 2004 @04:12AM (#8235357) Journal
          and they dont count underemployment. I know alot of engineers who are flipping burgers and selling stereos burdened by student loans (which survive bankrupcy!).


          The central planners talk of "jobs" as if they were all equal.

          Even assuming the numbers claimed by the Bureau of Labor Statistics' talking head are true, what good does it do to replace one lost 6-figure engineering position with eleven minimum-wage, no health plan, burger-flipper slots?

          Especially if, say, eight of them will be filled by illegal immigrants, two by engin-school grads who never got to engineer, and the eleventh by a former member of the (NON-minimum-wage, WITH health plan) burger-flipper's union, leaving the engineer still unemployed?

          Now multiply by two million.

          Great for the ruling class. Hell for the workers.
          • Even assuming the numbers claimed by the Bureau of Labor Statistics' talking head are true, what good does it do to replace one lost 6-figure engineering position with eleven minimum-wage, no health plan, burger-flipper slots?

            I think Slashdot is blowing the whole economy thing out of proportion because it has adversely affected the tech sector. If you'll all remember, we were riding high for 4 or 5 years on completely inflated stock prices, endless supplies of venture capital, and completely crazy busi

            • by EastCoastSurfer ( 310758 ) on Tuesday February 10, 2004 @09:26AM (#8236504)
              Well said. I would like to add, that the boom made a lot of people *think* they could do technical jobs when in fact they were underqualified.

              In my last job, (yes, I found a better paying job in this down economy) I interviewed countless wannabe techies trying to find someone to do rather simple stuff. Most people who came through the door were underqualified and wanted too much money.
            • by Kombat ( 93720 ) <> on Tuesday February 10, 2004 @10:11AM (#8236831) Homepage
              Many people work their entire lives in their profession and never earn more than $45k/year.

              Uh, buddy? That's a problem. How can anyone expect to pay off education debt, raise a family, and retire comfortably without burdening an already-crippled social security infrastructure if we begin to accept the notion that a $45k salary after 35 years of service is "normal?"

              I'm not saying they should be making 6-figures either, but I am saying that in our culture, it is impossible for a family to live comfortably on $45k/year perpetually, while trying to put 2.5 kids through college and save for retirement. It can't be done.

              Now, if both parents want to work and bring in that kind of money, well then it becomes possible, but if both parents are working, who's raising the kids? A stranger. And THAT, my friends, is a huge part of what's wrong with society today. THAT is why your kids won't listen to your or respect you.

              But I'm getting off-topic.
        • Additionally they don't count incarcerated felons. This may seem ridiculous but seeing as how there are over 1.3 MILLION [] people in the prison system, it is quite a sizable population (more than Rhode Island!) to exclude from employment statistics.
    • One more stat (Score:3, Insightful)

      by missing000 ( 602285 )
      A net loss of 2.2 million jobs in less than 4 years. []

      Glad to know things are good.
      • Peaks and valleys (Score:3, Interesting)

        by yintercept ( 517362 )
        Of course, if you looked at the stats in 1999, you would see the tech boom was pulling people out of retirement, it was pulling students out of school. A very large portion of the "lost jobs" stat was people who came from India because of the "labor shortage" in the US. What your 2.2 million stat does is compare peaks to valleys. In 2000, the papers were telling about how the brain drain was hurting countries like India. I am extremely happy that the globe is starting to see some economic balance.
    • by gurustu ( 542259 ) <> on Tuesday February 10, 2004 @03:45AM (#8235246)
      And still more :
      • In the last three months, more than 40 percent of the unemployed have been out of work more than 15 weeks. That's the worst number since 1983.
      • According to the monthly payroll survey for January, jobs rose by 112,000. Before you start cheering, that doesn't actually keep up with population growth.
      • Since the recovery officially began in November 2001, employment has actually fallen by half a percent, while the working-age population has increased about 2.4 percent.
      All of these facts (with more available) come from Paul Krugman's editorial [] in the NYT today. His column should be required reading for anybody who wants to talk about the economy.
    • by Colonel Panic ( 15235 ) on Tuesday February 10, 2004 @03:52AM (#8235269)
      Silicon Valley will ad 17,000 jobs this year and 33,000 next year.

      "Make it so" by putting it on a website.

      Hey, maybe we should announce some other things on websites for a better tomorrow:
      * The US Unemployment rate will be under 1% by 2006
      * The US budget deficit will be 0 in 2005
      * Martians will teach us how to harness zero point energy thus ending all reliance on foreign oil by 2010
      * Nobody will die of malnutrition next year!
      * All techies will get dates for Valentines day!
  • Well look at that (Score:5, Insightful)

    by Sarojin ( 446404 ) on Tuesday February 10, 2004 @03:22AM (#8235120)
    An Indian journal reporting that Indian outsourcing is good!
    • by sql*kitten ( 1359 ) * on Tuesday February 10, 2004 @05:34AM (#8235602)
      An Indian journal reporting that Indian outsourcing is good!

      The thing that winds me up about India is that it is quite two faced (as a country I mean, this isn't a criticism of any individual Indians). On the one hand, it's happy to take Western high-tech jobs. But on the other hand, it's always after aid and handouts from Western taxpayers. The way I see it, it can be a poor country that gets state aid, or it can be a wealthy country that competes with us, but it can't be both.

      India needs to be told once and for all by Western governments, right, you are a high tech country now, you are taking jobs from our taxpayers which proves it, we'll spend our state aid budgets on real poor countries from now on. 'Cos once India needs to start paying for its own vaccination programmes and reading classes, suddenly it'll have to start taxing its own people to pay for it, and the artificial advantage in price will disappear. Then we'll see how well India competes on a level playing field.
      • According to this article [], about 68 million Indian households have TV sets, scooters, and maybe refrigerators, and that's growing rapidly. Simultaneously, though, over half of India's children don't get enough to eat.

        So, yes, India is becoming richer, but it's going to take a long time for that wealth to make it all the way around the community.

      • by PaneerParantha ( 713034 ) on Tuesday February 10, 2004 @07:59AM (#8236094)
        to Canada. sn o=22785

        The amount was 13.5 billion dollars.

        US used to grant an aid of $25 million to India annually. That too was stopped when Congress got worked up over some issue. But India is now attracting investment, not aid. See the various projects underway here: b.php?u bb=forum;f=2
  • by Transient0 ( 175617 ) on Tuesday February 10, 2004 @03:23AM (#8235122) Homepage
    or in dividends to stock holders.

    The argument that India will need to import American goods for the growing tech sector and that this will result in even more jobs seems a little specious.

    Is the global economy being turned on it's ear? Will the U.S. now be making cheap consumables to send to the IP producing countries in Asia? And why would India not simply start manufacturing the products it needs itself?
    • by smallpaul ( 65919 ) <paul.prescod@net> on Tuesday February 10, 2004 @03:38AM (#8235209)

      $22 million in jobs or in dividends to stock holders.

      Do you think that shareholders stick their money in socks when they get it? I don't. I either invest it again (which creates jobs) or I spend it (ditto).

      The argument that India will need to import American goods for the growing tech sector and that this will result in even more jobs seems a little specious.

      Why? There are things we make that they do not and vice versa?

      Is the global economy being turned on it's ear? Will the U.S. now be making cheap consumables to send to the IP producing countries in Asia?

      Manufacturing does not imply "cheap consumables." You can also make high end sewing machines. Robotics. Advanced materials.

      And why would India not simply start manufacturing the products it needs itself?

      Sigh. Have you never heard of comparative advantage []? The total output of the Indian economy is limited by all sorts of infrastructural issues which make it impossible for them to manufacture everything themselves cheaply.

      • by Lemmy Caution ( 8378 ) on Tuesday February 10, 2004 @03:45AM (#8235247) Homepage
        The wealthy need not spend their money in ways that create jobs. They can buy land - which drives up the price of land for the ones who don't have it yet - they can buy goods from overseas and luxury goods - the production of which doesn't create very many jobs.

        A flatter distribution of income creates more jobs producing things that benefit more people: the more important a part of the market the lower to middle class is, the more productive power goes to address their needs.
        • by rcs1000 ( 462363 ) * <rcs1000 AT gmail DOT com> on Tuesday February 10, 2004 @05:49AM (#8235644)
          If they buy land, then they buy it from somebody. The person that has sold the land now has the money in his (or her) pocket.

          If they spend their money overseas, then it creates jobs in Italy or Taiwan, and the money is spent on video games made by Nintendo or Electronic Arts.

          Which means these companies make a profit, which is good because otherwise your 401K would be empty and you wouldn't be able to afford to retire.
      • surplus value (Score:5, Insightful)

        by Doc Ruby ( 173196 ) on Tuesday February 10, 2004 @04:08AM (#8235336) Homepage Journal
        The US product is about $10.5T:year, with about 100M workers earning about $40K:year. The $4T income are less than 40% of the revenue, with the other 60% representing corporate profit and taxes. Since corporations pay so little proportionately in taxes, and capital gains less still, the extra value is taken in corporate profits funneled to the very rich. Some estimates indicate that 15K US households (probably about 75K people, or .001%) own 5% of the Earth's property. The lack of job growth in the US, despite the looting of the Treasury for subsidies to these rich people, once again destroys the argument of "supply side" economics. After the debacle of Reagan's supply side, the last time these unemployment numbers were close to this high (excepting Bush Sr's next-closest nadir), you'd think this nonsense would be rejected. But I guess greed blinds even the survival instinct, when so much loot is flying through the air, without any merit to where it lands.
        • Wrong. (Score:3, Informative)

          by rcs1000 ( 462363 ) *
          -1, completely no understanding of government finance or economics

          Your figures are absolutely and completely wrong.

          Firstly, corporate profits as a % of US GDP have been falling for the last 8-10 years, and represent c. 8% of GDP from 12% at their peak. In the last 100 years profits as a % of GDP has ranged from 6-12%. (Source: Datastream.)

          Secondly, taxes are paid of out of income. Either through consumption taxes (out of income) or straight income taxes. Corporate taxes (see this weeks Economist at www.e
        • Re:surplus value (Score:4, Insightful)

          by Dr. Bent ( 533421 ) <> on Tuesday February 10, 2004 @11:47AM (#8237871) Homepage
          Some estimates indicate that 15K US households (probably about 75K people, or .001%) own 5% of the Earth's property.

          There will always be rich people, my friend. It's a fundemental feature of human social structure. Someone has to decide what times the train run (Rich People) and someone has to run them (Poor People).

          500 years ago, there were maybe a couple dozen people who owned a good 80% of the earth's property...they're called Monarchs. The real difference between then and now is not that the rich people have slightly less, it's that we've invented a whole new class of people: The Middle Class.

          And the middle class is hurt the most by high income taxes (at any level). I don't know if you've noticed it or not, but rich people already have money. More accurately, they already have assets (stock, real estate, bonds, annunities, etc...). People who think that high income taxes put the tax burden on the rich are fooling themselves. If you really wanted to put the tax burden on the rich, you'd have a wealth tax, but putting the tax burden on the rich isn't what the income tax is all about.

          The purpose of a progressive income tax is to prevent the middle class from becoming rich. Since middle class people are almost entirely dependent on thier income, taxing it ensures that they will never have enough disposable cash to start a business, invest in a new private business, or do anything else that might lead to financial independence. This is why a progressive income tax is a key plank in the communist manifesto. [] It's designed to crush the ability of the middle class to raise enough capital to become financially independent.
        • Re:surplus value (Score:4, Informative)

          by workindev ( 607574 ) on Tuesday February 10, 2004 @01:03PM (#8239011) Homepage
          The lack of job growth in the US, despite the looting of the Treasury for subsidies to these rich people, once again destroys the argument of "supply side" economics. After the debacle of Reagan's supply side, the last time these unemployment numbers were close to this high (excepting Bush Sr's next-closest nadir), you'd think this nonsense would be rejected

          If you examine the Reagan Economic Record [] you'll see that Supply Side economics worked very well. During the Reagan years, real family incomes [] increased for all income quantiles, proving that a rising tide indeed does lift all boats.
    • First of all I'm Chinese American so don't mistake this as a racist rant... anyways being that the US's physical goods are being made in China and the US's abstract products are now being made in India - who profits in the US? I only see high ranking execs (CEO's, etc...) and people who own a ton of stock - making any money. What happens to the middle class? Will the US keep having a middle class?
      • No, the middle class is on its way out, big time.

        A two class society is what we're getting, which is good. The middle class just screws everything up with their incessant caterwauling about "rights", "dignity" and their inexplicable habit of voting against the interests of those benefactors of society, the glorious corporations.
    • Re:22 million jobs (Score:5, Interesting)

      by arc.light ( 125142 ) <> on Tuesday February 10, 2004 @06:21AM (#8235727)
      not $22 million in jobs.

      Just to stay even with the number of new workers entering the workforce, the US needs to add 300,000 jobs per month. Multiply 300,000 by 12 months by 6 years (the difference between now and 2010) and you get 21.6 million, a number suspiciously close to the 22 million cited in the article. I'm guessing that the job creation number is based on horseshit.
  • in the long term (Score:3, Interesting)

    by tsunamifirestorm ( 729508 ) on Tuesday February 10, 2004 @03:25AM (#8235133) Homepage
    in the long term, a foreign country succeeding will make the entire world better...
    of course in the long term, we'll all be dead.
  • Right... (Score:5, Insightful)

    by Einer2 ( 665985 ) on Tuesday February 10, 2004 @03:26AM (#8235140)
    "People don't understand what a great opportunity offshoring is for US companies. Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs."


    You see, that doesn't quite work when it's the high-paying jobs going overseas. The only jobs that can't are those that require physical presence, and I can only see so many ways to creatively remove a clog from a toilet.
    • Re:Right... (Score:5, Insightful)

      by Frymaster ( 171343 ) on Tuesday February 10, 2004 @03:48AM (#8235256) Homepage Journal
      it allows US companies to concentrate on their core competencies

      ack! if i have to hear that "core competencies" argument one more time i will scream... louder.

      it's basically just a rehash of david ricardo's "comparative advantage" argument. it goes like this: there is a surgeon and a typist. the surgeon types 60 wpm, the typist only 40. however, despite the fact that the surgeon is faster on the keyboard, it is better overall for the typist to do the typing and leave the surgeon to surgery.

      that analogy, of course, makes good sense.... but when you start expanding it to global economics it becomes shakey. we in north america have been fancying ourselves the surgeons for a long time and been foisting the "typing" work (like making sweatshop running shoes) onto the "third world".

      the breakdown is this: comparative advantage theory leads to a narrowing of the economic base. if your country doesn't have the infrastructure and labour force to create an auto industry the theory is you shouldn't try. just stick to labour-intensive, capital-light industries like agriculture or textiles. this has proven to be bad news for the developing nations of the world because it a) ties the entire economy to a few industries b) offers little room for development. an economic ghettoization if you will.

      and now india is foisting this argument back on the united states.

      the fact of the matter is this: every economy needs diversity. there need to be un and low-skilled jobs and there need to be highly-skilled jobs. there need to be labour and capital intensive industries.

      if the united states focuses exclusively on "more creative, more value generating jobs" then a dot-com burst (or the equivalent) can do greater damage to the economy as a whole... in the same way that a bad coffee harvest can tank a small latin american country.

    • Plumber = $$$ (Score:5, Insightful)

      by Atario ( 673917 ) on Tuesday February 10, 2004 @04:09AM (#8235340) Homepage
      Hey, don't knock toilet unclogging. Plumbers make serious dollars.
    • Re:Right... (Score:3, Insightful)

      by skifreak87 ( 532830 )
      Well for one thing, I personally do not consider tech support/call centers as high paying jobs. Just because a job requires education, does not make it necessarily high-paying. It does not make economic sense (in terms of the global economy) to pay U.S. workers more than Indian workers for the same production - whether or not outsourced work is just as productive is a different argument. It only makes the U.S. companies less competitive.

      The problem, as I see it, is that too many people are relying on th
      • Protectionism (Score:3, Insightful)

        by Einer2 ( 665985 )
        Trust me, I'm normally one of the most vocal opponents of protectionism. However, beyond a point, you simply have to drop ideology and adopt a more pragmatic position. The loss of so many jobs overseas without a new industry to replace them (and right now there really isn't one) will seriously weaken our country.

        And regarding the analogy - a better one would be to consider import of raw materials. The government has a long history of imposing tariffs on foreign sources of raw materials when they threaten
  • Jobs are relative (Score:3, Insightful)

    by Neppy ( 673459 ) on Tuesday February 10, 2004 @03:28AM (#8235147)
    22 million more jobs, but how much will the population increase by then? this reduces the increase in employment, so the number 22 million looks a lot more impressive than it actually is.
  • so.. (Score:5, Insightful)

    by Anonymous Coward on Tuesday February 10, 2004 @03:30AM (#8235157)
    we lose 2 million engineering jobs, and gain 22 million pizza delivery jobs. Sounds like a great trade-off to me!

    Seriously, we can't sacrifice professional jobs for low-level service jobs, even if there are more of them. If we do that, we'll have a rich and poor caste system. Wait a minute...
    • Re:so.. (Score:5, Funny)

      by Skyshadow ( 508 ) on Tuesday February 10, 2004 @03:41AM (#8235228) Homepage
      we lose 2 million engineering jobs, and gain 22 million pizza delivery jobs. Sounds like a great trade-off to me!

      When all the tech jobs finally dry up and the only thing the US does better than the rest of the world is high-speed pizza delivery, I'll be first in line to work for Uncle Enzo. Being the Deliverator is actually sort of a long-standing ambition of mine...

      The Deliverator used to make software. Still does, sometimes. But if life were a mellow elementary school run by well-meaning education PhD's, the Deliverator's report card would say: "Skyshadow is so bright and creative but needs to work harder on his cooperation skills...

      The Deliverator is a Type A driver with rabies. He is zeroing in on his home base, CosaNostra Pizza #3569, cranking up the left lane of CSV-5 at a hundred and twenty kilometers. His car is a black lozenge, just a dark place that reflects the tunnel of franchise signs -- the loglo. A row of orange lights burbles and churns across the front, where the grille would be if this were an air-breathing car. The orange light looks like a gasoline fire. It comes in people's rear windows, bounces off their rearview mirrors, projects a fiery mask across their eyes, reaches into their subconcious, and unearths fears of being pinned, fully conscious, under a detonating gas tank, makes them want to pull over and let the Deliverator overtake them in his black chariot of pepperoni fire...

  • Poor wording (Score:5, Insightful)

    by smallpaul ( 65919 ) <paul.prescod@net> on Tuesday February 10, 2004 @03:30AM (#8235160)
    Even though I am a fan of free trade and offshoring, I found this economist's choice of words disturbing: "People in the US are looking at it as a job issue. They are not economists and therefore, they don't necessarily see the whole picture." Funny, I thought that every human being (even economists) had only a part of the picture. People working in the dismal science should be more humble about what they know versus what they think they know.
    • They are not economists and therefore, they don't necessarily see the whole picture.

      Yep, that'd be me. I certainly don't see the whole picture when I've been harped at for years to "buy American" only to see the corporations buying foreign when it comes to labor. Go ahead and call it sour grapes but I'll be looking for creative ways to "offshore" my money in the form of purchasing products from overseas. Yes, I know. I'm probably just making the problem worse.

  • by Elpacoloco ( 69306 ) <elpacoloco&dslextreme,com> on Tuesday February 10, 2004 @03:30AM (#8235163) Journal
    I see no examples of these new jobs that they keep talking about. Just about corporations saving money.

    Corporations saving money is no guarentee of employment at all -- they could just increase their dividends to attract more investment. They could just increase their CEO's salary.

    Even if they do make new jobs, there's no distingishing between wage-slaving jobs against salaried professionals.

    New jobs added WHERE, wise guy. :P
  • Just one catch.. (Score:4, Insightful)

    by eclectro ( 227083 ) on Tuesday February 10, 2004 @03:30AM (#8235166)
    From the article;

    She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring.

    All of these jobs are going to be in the "service sector". It does not say what the quality of those jobs are. Also, even "service sector" type jobs are being exported to india now (programming, call centers).

    My prediction - in 2010 we will all be selling hamburgers to each other.

    "Would you like to supersize that for just $.39

  • In 6 more years? (Score:5, Insightful)

    by Malk-a-mite ( 134774 ) on Tuesday February 10, 2004 @03:34AM (#8235178) Journal
    "She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring."

    When have 5+ year estimates ever been accurate in economic matters?

    Secondly -
    Tomorrow's Jobs (from []
    "Services. This is the largest and fastest growing major industry group and is expected to add 13.7 million new jobs by 2010, accounting for 3 out of every 5 new jobs created in the U.S. economy. Over two-thirds of this projected job growth is concentrated in three sectors of services industries-business, health, and social services."

    Social services? Wheeee.... big money here I come..... :-/
  • Can't Outsource me (Score:5, Insightful)

    by king-manic ( 409855 ) on Tuesday February 10, 2004 @03:35AM (#8235186)
    There have always beens some jobs that cannot be outsourced. Even if a telecoms help desk is all foreign they can't outsource service crew off shore. It make sense that with a slow recovery of the US economy (no thanks to bush) that there will be more jobs.

    Jobs like DB admin need to be close to the DB and to where the info is coming from to properly administer it. System Analysts and Network analysts must be on site to do their job. Service technicians can't do it from over seas. Web developers can be outsorced but it's almost artistic and cutural gulfs make workign with foreign firms difficult. (Our Firm tried, the indian firm kept trying to use Lime green in their color schemes, no matter hwo often we told them we don't like lime green that).

    The outsourcing only spells the end to abundant positions as low level code monkeys. We'll just have to move on and try to adapt like workers did durign the 80's when many manufacturign firms went over seas. There are still a large amount of blue colalr workers despite this, and We'll still have jobs even though an indian firm might be competign with us.

    PS: I don't like bush but I'm not a democrat, in fact I'm Canadian. We have more than a vested interest in your prosperity, because it spills oevr here. It does seem liek he's responsible for you current economic slump, by spending so much on defence and offering Tax cuts that the budget won't support. Think more debt. Real soon.
    • by Grei ( 69192 ) on Tuesday February 10, 2004 @05:31AM (#8235589)
      I hate to be a naysayer, but DB Admin work (or even DB maintenance work) does not require that much in the way of an onsite person. I've been doing remote DB work for 7 years, most of it international...only once have I ever been on a customer's site and that only to do a tape backup that hadn't been done in over 3 years.

      With the right equipment on site, a person in their underwear and sitting in their home can do all of the necessary work. Believe me...I've been doing it for the last few years as part of the downsizing my company's going through (after all, why pay the extra money for an office after you've already cut all of the technical people's pay?).

      Just my two cents.
  • by Anonymous Coward on Tuesday February 10, 2004 @03:38AM (#8235210)
    For one thing India is still at a trade deficit with US. For every job that indians get from US, there is are range of stuff US companies are dumping here and killing local business.

    Opening the market works both ways. Deal with it.
    • No doubt. For such a highly concentrated group of supposedly educated people, Slashdotters sure don't seem to know a thing about economics.

      This will probably help the local economy here which relies on highly on office furniture manufacturing. All those Indian IT professionals have to sit on something.

  • by JakiChan ( 141719 ) on Tuesday February 10, 2004 @03:39AM (#8235217)
    My worry is that the economists say "Oh don't worry, we'll replace those jobs." But not with anything I've remotely studied to do. A job at my current level may not be available or even practical. Most places won't let you get a second bachelors degree. And somehow I don't think a university will accept me for a chemistry masters program when I have a degree in Computer Science. Sometimes I get the feeling that to these economists going from being a skilled worker to a Deliverator is acceptable as long as I'm employed.

    I used to think the reality portrayed in Snow Crash was just current trends taken to some unreal extreme. Now as I watch the destruction of the middle class I'm not so sure.
    • by MagPulse ( 316 ) on Tuesday February 10, 2004 @03:52AM (#8235265)
      Actually you should have no problem getting in to a Chemistry Masters program. You will have a longer prereq phase to catch up to those with an undergrad background in it. E-mail or call an admissions advisor at a school you're interested in. Even if you can't jump right in to their Masters program, they'll tell you what you have to do. Worst case you would have to be a non-degree student and take the classes you need.

      It is true that most places frown on two Bachelors degrees unless they're from different colleges, like one in CS and one in art or theater. Once you get your Bachelors, you can load up on as many Masters and PhDs as you have time for.
  • by NixLuver ( 693391 ) <stwhite@kc h e r e t i c . c om> on Tuesday February 10, 2004 @03:41AM (#8235231) Homepage Journal
    I just don't see this as a big motivator to the US economy. The 'savings' of outsourcing are mostly in the form of taxes not paid to the government (by the time the infrastructure - ie, Stateside project manager, Stateside liason, overseas liason, overseas management, and programmers, the actual salary savings is fairly small). Also, the profits of this reduced cost simply are not going to be realized in reduced cost of the product, but in terms of lining the pockets of the major stockholders (I hope I'm wrong, but history would suggest differently).

    The largest percentage of the outsourced jobs are high-paying; perhaps we'll eliminate a single 80k job and replace it with 4 20k jobs? Or does somebody think that American business is going to hire local techies to architect products and the humble outsource labor forces will selflessly implement the design?

    I have nothing against India or the programmers that are taking advantage of the avarice of American companies in order to better themselves. I would do the same thing in their shoes.

    I do, however, blame an American business culture where todays stock prices have become more important than the ultimate survivability or long-term health of the company. After all, on a long enough timeline, everyone's surviveability is zero, eh?

  • by Anonymous Coward on Tuesday February 10, 2004 @03:42AM (#8235236)
    Don't worry. Our wonder boy in the White House has it all under control.

    Just lowered the taxes of the most filthy rich 5% of the population, got us a $500 billion deficit and compensated for that by dismantling the useless social programs for the poor and old.

    Maybe the rich will use that tax-break to create more job and not simply line their own pockets. And maybe those poor slackers on welfare/medicare will die away and stop siphooning money from the well-off, respectable, white protestant heterosexual married people like the rest of us.

  • by grape jelly ( 193168 ) on Tuesday February 10, 2004 @03:42AM (#8235237)
    [Ms Farrell] pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring.
    According to the labor predictions [] from the Bureau of Labor Statistics [], the total growth of jobs between 2000 and 2010 is 22,160,000 jobs. Surely you can't account for all of this growth strictly based on one aspect of corporate behavior.

    Also, to satisfy the cynic in me, remember that these are merely predictions, which are possibly skewed to make the current market look like it'll be stronger, which will in turn (hopefully) make investors and consumers more confident, (hopefully) making the economy stronger.

    Lastly, could this also be like George Bush's predictions that there would be approx. 1.7 million new jobs last year, as opposed to the 53,000 jobs lost last year (as reported by CBS news tonight).
  • by Colonel Panic ( 15235 ) on Tuesday February 10, 2004 @03:45AM (#8235243)
    Great quote from the article:
    They are not economists and therefore, they don't necessarily see the whole picture.

    Yes, economists have such a great track record when it comes to figuring out what's going to happen next, don't they?
  • I smell bull (Score:5, Interesting)

    by shaldannon ( 752 ) on Tuesday February 10, 2004 @04:06AM (#8235321) Homepage
    Diana Farrell, director, McKinsey Global Institute, said, "People in the US are looking at it as a job issue. They are not economists and therefore, they don't necessarily see the whole picture. What's going to happen is that offshoring is actually going to benefit US businesses even more than India." She said it was a profoundly new way of doing things and would change the structure of organisations. Offshore was about global wealth creation and integrating economies, she explained, adding that it would create more high-value jobs in the US than people could imagine today.

    Based on the research that the McKinsey institute had carried out, Ms Farrell said conservatively, for every dollar invested in the offshore space, $0.58 was directly saved. This could be either redistributed to investors or customers. But she added that there were indirect benefits to the US, in terms of the import of US goods and services into India by Indian service providers, and so there was some transfer of profit back to the parent in the US. She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by '10, against a job loss of 2m due to offshoring.
    I'd like to know what she's smoking. I see a lot of this as someone with a comfortable job spouting off:
    1. Job loss in the last few years has continued unabated in the tech sector. By all reports, the new jobs created have been nontechnical, particularly in construction.
    2. This doesn't account for the fact that many people have dropped out of the labor market altogether (going back to school, early retirement, panhandling).
    3. Economists have a pathetic record for prediction. Right now we're in what's been termed a "jobless recovery." If that's a recovery (I remain unconvinced) then just where does Ms. Farrell see those 22 million jobs coming from in the next 6 years, and just when does she think they'll appear?
    4. Additionally, Ms. Farrell claims that cost savings from shipping jobs overseas will be passed on to the consumer. Ignoring the tendency of corporations to pass cost savings on to executive compensation rather than to stockholders or even (gasp!) consumers, just how would consumer savings help the average unemployed Joe on the street get a new productive job?
    5. On top of this, consider the setting for the comments. Ms. Farrell is telling a group of people in India not to feel bad about taking our jobs because eventually we'll turn out better than we started out. This is yet more bull in an article already reeking of manure. All it is designed to do is assuage someone's conscience.
    It's one thing to say something substantive on the subject, but all that's been presented is trite expressions of hope that things will get better. I'm sure I'm not alone in hoping that they do get better, but until something meaningful is said, it's only so much bull.
    • Re:I smell bull (Score:5, Insightful)

      by schrockn ( 216805 ) on Tuesday February 10, 2004 @05:46AM (#8235634)

      All of this antiglobalization and anti-free trade banter drives me up the wall. The trend of outsourcing and globalizing IT jobs is about the best possible example of free trade I have ever seen, because the jobs being exported actually do have labor standards and do dignify the population; and it is very good for America.

      Take some hypothetical math here. Say there are 100,000 U.S. Programmers making about 80,000 dollars a year (with benefits and business side social security tax). That's

      80,000 * 100,000 = 8,000,000,000 dollars a year.

      Now imagine, aggregated, U.S companies via outsourcing eliminate those jobs (so-called creative destruction) and instead pay 100,000 indian folks an average of 20,000 a year.

      100,000 * 20,000 = 2,000,000,000 dollars a year.

      So, for 2 billion dollars Indian programmers are delivering the exact same amount of business value as the 8 billion dollar American programmers.

      The end result? Well, at first, 100,000 less American jobs, and 6 billion more dollars for our "evil" corporate masters.

      Yes some of that money will go to the clever executive who thought of the idea. Yes some of that money will go (gasp!) investors, who probably include many of the readers here.

      And where will the rest of that money go?: to investment; to research; to newer jobs, etc. This is the inexorable march of progress here people. Can I predict what those new jobs will be? Of course not. Otherwise I would have already thought of it. But someone will drive innovation. This is all about a more effecient allocation of resources.

      Undeniably, it sucks for those 100,000 programmers. There are a lot of hidden costs to creative destruction, soceital costs that do not show up in GDP numbers (family and emotional distress, for one). But those people, like lots of other people have, will have to reinvent themselves, to discover new talents, to retrain. In the end, it will be good for the country, and the world, as a whole. I mean, I'm sure it sucked for typewriter makers when computers gained popularity, or for horse farmers when the car was first mass produced, but for the whole soceity the creative destruction of those jobs was a good thing.

      In any case, this is the best possible outcome from the development of a large educated populace in India. We are utilizing their resources, rather than competing against them. A worse scenario, from the American perspective, are the Indians out-innovating us and driving entire American businesses out of business in the global marketplace.

  • by PotatoHead ( 12771 ) <doug&opengeek,org> on Tuesday February 10, 2004 @04:17AM (#8235373) Homepage Journal
    been thinking about this lately. (I am still employed, but my company is having a pretty rough time right now.)

    We are going to see more jobs. If Bush gets his way, most of them are going to be in competition with 'undocumented' (Ahem..), I mean ILLEGAL workers. So, we all know those are not going to pay well. Lots of people are going to be devalued for sure.

    Jobs that involve people skills are going to become more important. Somebody needs to manage the teams, make deals, and other things. I have been seeing another trend along these lines as well.

    Working professionals are forming groups to cut overall costs. So far I see this happening with law, accounting, taxes and other similar traditional services, but maybe technically oriented groups have a chance doing this as well.

    Having your own in-house technical people may be too expensive, but buying some quality time locally, sans language and distance issues might be worth a small price premium. Personally, I hope this is an area that Open Source can begin to play a little harder.

    I can't help but wonder what effect the growing license fees companies, like Microsoft, ask each year have on the job market. There are a lot of dollars going to one place that used to go elsewhere.

    With Open Source working as it should and some greater degree of acceptance, perhaps some of this money will be distributed more evenly. Companies could choose to keep minimal staff and pay high license fees for one size fits all software, or...

    They can choose to employ some more staff and combine that with services from a number of competing firms to solve their problems. The greater number of potential solutions might yield competetive advantages as well depending on who is involved.

    If this sort of thing begins to really happen, polishing up those people skills might be the way to go. Your technical background will be valuable for advising execs on critical decisions and evaluating potential partners.

    I have been getting some experience doing this on the side for a little while now. Once the execs learn there is a cheaper way, they need people to facillitate getting it done for them. Being able to work hands on, in a pinch, helps as well. I sort of ended up doing this for a couple of people I met when I began networking a couple years ago. (fear drives a geek to do strange things, I know!)

    Thinking along these lines seems better than a long job search in any case. So, here it is, for what it is worth.

    Anyone doing anything similar? Have any luck? Suggestions? I just might need them soon!
  • by be-fan ( 61476 ) on Tuesday February 10, 2004 @04:18AM (#8235375)
    Jesus breakdancing Christ. If I see one more hand-waving post devoid of either fact or theory, I will scream.

    Free-trade is a basic tool of a capitalist economy. It has a proven track-record of working (eg: France under Napoleon, the modern EU, the US of fucking A!). There are also lots of statistics that show that protectionist laws save a few jobs at the cost of much greater costs to the rest of the economy. A certain law that protects US textile workers saved 75,000 jobs at a cost of $15 billion a year. That $200,000 that each of those textile jobs is costing is being taken right out of *your* pocket. That's money you could have, but do not.

    Free-trade is also the only thing that makes sense in a democracy. People have rights, and it takes a very strong argument to limit those rights. Strong moral arguments give us reason to limit the right of people to commit murder. Strong economic arguments give us reason to limit the right of companies to form cartels. There are no such arguments in favor of protectionism. Morality says that people should hire whom they damn-well please, and economics says that this freedom is best for the economy in the long run. The only arguments we get in favor of protectionism is crap about patriotism, and hand-waving about "the destruction of the US middle class." Two points: One, as a Virginian, I care about as much about a guy in Texas as I do about a guy in Afghanistan. Two, the middle class did just fine when farm work, which was a middle class job, disappeared. They did just fine when factory work, another middle class job, disappeared. They'll do just fine when the programming jobs disappear!

    The predictions in this article are precisely those predicted by economic theory. A certain class of jobs will be destroyed, but many more jobs will be created. Such predictions have been borne out numerous times before (NAFTA really didn't cause all American jobs to be sucked to Mexico, did it???) and will be borne out again.

    Of course, this is assuming you believe in capitalism. If you'd prefer the stability of a socialist system, then by all means, move to a communist country! I take particular pleasure in saying this --- as a liberal I rarely get the chance to call *other* people communists, but that doesn't change the fact that calls for protectionism are nothing less than attempt to subvert the capitalistic ideals of this country!
    • by gad_zuki! ( 70830 ) on Tuesday February 10, 2004 @05:19AM (#8235557)
      >NAFTA really didn't cause all American jobs to be sucked to Mexico, did it???

      Why, yes it did.

      Good piece here []

      >If you'd prefer the stability of a socialist system, then by all means, move to a communist country!

      Logical fallacy here. You are ignoring other solutions like better economic planning and fixing the problems our policies have done.

      Good piece at the nation here: []
      The business-backed politicians who pushed the agreement through the three legislatures promised that NAFTA would generate prosperity that would more than compensate "ordinary" people for its lack of social protections. Foreign investors would make Mexico an economic tiger, turning its poor workers into middle-class consumers who would then buy US and Canadian goods, creating more jobs in the high-wage countries.

      But as soon as the ink was dry on NAFTA, US factories began to shift production to maquiladora factories along the border, where the Mexican government assures a docile labor force and virtually no environmental restrictions. The US trade surplus with Mexico quickly turned into a deficit, and since then at least a half-million jobs have been lost, many of them in small towns and rural areas where there are no job alternatives.

      Meanwhile, Mexico's overall growth rate has been half of what it needs to be just to generate enough jobs for its growing labor force. The NAFTA-inspired strategy of export-led growth undermined Mexican industries that sold to the domestic market as well as the sixty-year-old social bargain in which workers and peasant farmers shared the benefits of growth in exchange for their support for a privileged oligarchy. NAFTA provided the oligarchs with new partners--the multinational corporations--allowing them to abandon their obligations to their fellow Mexicans. Average real wages in Mexican manufacturing are actually lower than they were ten years ago. Two and a half million farmers and their families have been driven out of their local markets and off their land by heavily subsidized US and Canadian agribusiness. For most Mexicans, half of whom live in poverty, basic food has gotten even more expensive: Today the Mexican minimum wage buys less than half the tortillas it bought in 1994. As a result, hundreds of thousands of Mexicans continue to risk their lives crossing the border to get low-wage jobs in the United States.
      Lets not forget that free trade is largely an illusion when farmers keep getting subsidized and when social safety nets, wages, and the environment take a beating in the name of 'free trade.'
      • In theory "Free Trade" is a good thing however in practice it has led to a global race to the bottom for wages in all countries.

        What modern megacorporations have forgotten is the social contract which allowed them to exist in the first place. Simply stated the corporation would be allowed to accumulate capital and generate profits for its shareholders in exchange for creating jobs for workers in its marketplace.
        In the past the management of the corporation lived in the community they could see the effe
    • Fine, personally I'm not arguing against free market - companies can send jobs to India if it's more economic, more jobs in western countries etc etc etc

      But this is interesting.

      it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs.

      That's a typical motivation - the problem is, do companies actually have a good handle on their core competencies. Is customer service just a commodity? In this informa
  • by Wansu ( 846 ) on Tuesday February 10, 2004 @04:26AM (#8235398)

    "Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs."

    What higher paying, more creative, more value generating jobs?
  • by sir_cello ( 634395 ) on Tuesday February 10, 2004 @04:48AM (#8235463)

    The reality is that outsourcing is good for the economy over the long run - low paid, low skilled jobs are moved elsewhere, and the economy focuses on new jobs. We've all heard these arguments in terms of blue collar work ("car manufacturing, etc"), yet the demand for information technology workers filled the gap.

    The same goes for what's happening now: in the long run it will be good. The danger is in the short run: sudden loss of jobs without the ability to restructure could be damaging.
    • by dafoomie ( 521507 ) <dafoomie&hotmail,com> on Tuesday February 10, 2004 @06:20AM (#8235725) Homepage
      low paid, low skilled jobs are moved elsewhere

      We're not moving burger-flippers. We're moving upper middle class technical jobs. Good paying jobs that you need a degree for.

      and the economy focuses on new jobs

      What new jobs? Not one person has demonstrated what these new jobs will be. They make references to new, "knowledge" based jobs. What the hell are those? The only jobs we're creating are low level burger flipping jobs, that we will soon have to compete with Mexican immigrants for if Bush has his way.
  • Where's the beef? (Score:4, Insightful)

    by labradore ( 26729 ) on Tuesday February 10, 2004 @04:57AM (#8235493)
    Without even speaking to the fact that these numbers seem quite dubious, there is almost no logical analysis in this article. The author, has failed to logically connect outsourcing jobs offshore to creating jobs in America. She has failed to characterize the 22M new jobs as a real benefit to the American popluation. Forgive me, but this article seems to like kind of work that one might expect from a contractor who bids a project at 1/5th the price of his competitors. It's reminicent of, say, the work done by some foreign outsourced service companies. The article is bareboned, uninspired and almost totally without merit as news. Only the editors who published and linked to this story could feel more ashamed of it than it's author.

    That would appear to be the good news. I think that the bad news is that outsourcing isn't going to last long as a real solution for cutting certian labor costs. Instead, companies are going to realize that it really is dangerous and conterproductive to export too much proprietary data and work to outside firms. Instead of purely outsourcing a job to India or elsewhere, companies are going to put more effort to set up real offices in those countries bringing the foreign workers in-house. It has been going on for a while, but recent progress in telecommunication has led companies to choose quick-and-dirty outsourcing to bridge cultural and political gaps and reap cost savings. As executives become more adept at dealing with the foreign cultures and labor marketplaces (esp. by acquiring foreign executives who understand the foreign places) they will be able to achieve both better cost savings and better overall security by untying their internal organization from traditional geographic divisions. Companies will further embrace doing whatever part of their business "needs" to be done in whatever part of the world they can do it cheapest. It's still globalization, but it's more pervasive than just redistributing production centers and opening new markets to sales. It's re-distributing the locus of control within each company.

    Here's some predicitons: The biggest U.S. export for a while is going to be culture. Foreigners who want to work for U.S. globalized companies in their own countries are going to have to work in many ways within western cultural frameworks and they will bring that culture home to their families and neighbors. The U.S. dollar will continue a long, slow decline in (relative) value, as will the Euro, eventually. This is a natural result of the strengthening of competing currencies of the foreign nations which will be supplying the new, eager middle-class labor forces. As more countries follow India's example of embracing western culture and education, they will gain a share in the job market.

    Hopefully, as western culture (particularly the English language and the values of capitalism) become more pervasive, people will also break down political barriers. It all does seem a long way off, but almost certainly the 100 years of the 21st century will witness more and faster changes in the human landscape of the world than the 20th, due to the interconnectedness of the world (think about, for instance, that probably for all of the next 100 years, people will be able to make a phone call or send email anywhere in the world instantly. In 1900 this was hardly even a dream.) and the continuously-increasing pace of technological advance. Probably third world nations will not disappear, but wealth and poverty are likely to be distributed more evenly (geographically, anyway) throughout the globe. That is, after all, what we're ultimately worried about in out own small way. We (all) want the opportunity to make ourselves useful and prosperous. It's just going to take some suffering and upheaval before things equalize. Buckle up.

  • by PizzaFace ( 593587 ) on Tuesday February 10, 2004 @05:18AM (#8235555)
    A data point on the quality of outsourced tech support:

    My neighbor's HP Pavilion kept putting a window on her screen last week, saying her Windows license had expired, and that she needed to enter her credit card number and expiration to validate her copy of Windows, but not to worry because her credit card would not be charged.

    My neighbor is in her 80s, but her memory is good and she didn't remember anything about an expiration date for Windows. So she called HP support and got a man with an Indian accent. She told him the problem, and he asked, "How old is your computer?" She told him it was a couple years old, and he said, "If it's that old, Windows could be expired. Try entering the information as requested and see what happens."

    Fortunately, my neighbor is much smarter than HP's outsourced call center, and didn't take their advice. She called me and we cleaned mimail.s [] off her computer. She promises she won't buy from HP again.
  • by cruachan ( 113813 ) on Tuesday February 10, 2004 @05:57AM (#8235672)
    As a European independent consultant/developer contracting to a range of clients in the SME and similar sectors I've seen absolutly no impact from outsourcing over the past few years and I'm still scratching my head trying to figure how it could.

    The problem is that for my clients the idea that they could develop any system specification sufficently precise to give to an outsourcing company is frankly ludicrous. For example I've been writing a medium sized clothing hire program for a client for the past 6 months. This sounds like an ideal 'specify and hand out to india' project, except that the client really didn't have much idea what they wanted when we started beyond 'we want a hire program', 'here's an old DOS based-system that does something like' and 'we have these bits of paper'. The amount of iteration, exploration, respecification and general systems analysis that has gone on from then is frightening, but hardly unusual. In the process I've crawled though virtually every aspect of the business and even sat in with them on visits to their suppliers, associates and clients. You can't do that from india.

    Now, of course I've considered splitting the work by doing the systems analysis myself and subcontracting the rest to india. However because of the iterative nature of the process that's not really feasible, plus the relatively small size of the project would mean setting up overheads etc would negate the cost saving. Some might say that the development process shouldn't be iterative but I should insist on completing and signing off a full spec up front, but while that could be done it wouldn't lead to satisified clients, and my clients do have the wit to realize that.

    The same goes for all my clients. I simply don't see how they could replace me by outsourcing to india because they simply don't have the analysis skills to do so. The only way I can see it happening is with a larger 'software' house who can scale by having multiple projects which they outsource for, but do the analysis work here. Trouble is it's difficult to see how the additional overheads of such a company could compete with my almost complete lack of them.

    Now, having worked in big business IT a few years ago (financial & manufactoring sectors) I can see how outsourcing would work there because the analysts developed tight specs which were then handled by the programmers - obvious candidates for shipping offshore. Even their though I distinctly remember when I reached analyst (and even analyst/programmer) level that I spent large amounts of time walking around manufacturing plant and talking with people to understand jobs I was adding IT functionality too worked. In fact doing what I do now to some extent, but on an intra-company level.

    So, I'm not disputing that development jobs can be outsourced, but surely because of the human interaction needed for much analysis and development work there is a natural limit as to how far it can go and result in satisfied clients. Also, because the use of IT increases all the time in breadth of penetration into the business environment I'd postulate that the general trend for work will be upwards - although there will be a natural impact while the pecentage of work that can be done by outsourcing reaches it's natural effective level, and this impact will be sever in some areas of developer employment but non-existent in others.
  • by beforewisdom ( 729725 ) on Tuesday February 10, 2004 @07:35AM (#8236009)
    The people who control the US high tech companies are billionaires or at least millionaires several times over.

    Its not about the cash for them anymore. Its about points, being the top player in the game for the thrill of it, and staying in the game.

    Given that it is about staying in the game, outsourcing jobs to India is irrational because it will ultimately put them out of the

    Indian tech workers are smart, politically aware, and socially aware.

    They will not be content with the American business colonialism of outsourcing.

    They will use outsourced American jobs to build up funds and to learn how to run tech companies( or given our greedy, short sighted, overpaid American NOT to run a tech company)

    Once they do, they will form their own Indian owned tech companies.

    Unlike the American tech companies paying Indian wages and selling their products at American prices these early Indian owned tech firms will sell their products at Indian prices.

    They will either drive American Tech companies out of business or their competition will severly limit their profits.

    In short, American CEO jobs will be outsourced to India in the end. They will be out of the game


  • by peter303 ( 12292 ) on Tuesday February 10, 2004 @10:52AM (#8237161)
    The high end jobs pay about $11,000 a year in social security and medicare taxes (counting the employer half of the contribution). 3.3 million of these will off-source to locations where no tax is paid, just as the boomers are retiring.

The only function of economic forecasting is to make astrology look respectable. -- John Kenneth Galbraith