Study Claims Offshoring Doesn't Cost US Jobs 830
SwashbucklingCowboy writes "Infoworld has an article up about a survey by the Software & Information Industry Association claiming that offshoring doesn't cost American jobs. The article quotes the executive director of the SIIA as saying, '[Offshoring] was used almost entirely as a form of expansion, not as a replacement.' Well, if a job is created elsewhere that could have been created in the US, isn't that a job lost?"
Speaking as someone who's lost opportunies (Score:2, Insightful)
That depends upon what they're measuring. (Score:5, Insightful)
It depends upon what they are measuring.
From TFA:
Notice the usage of "H-1B visas" in that statement? That tells you what they're actually looking for. Cheap labour. The cheaper, the better.
The question isn't whether there are enough H-1B visas available.
The question is how many programmers are there in the US vs how many programming jobs there are in the US.
I'm not seeing that question being asked. All I'm seeing is stuff on savings and such. If they're measuring cost savings, then they're not going to find any lost jobs, are they?
New Flash! Dishonesty can be profitable! (Score:3, Insightful)
Re: (Score:2, Funny)
Re:Speaking as someone who's lost opportunies (Score:5, Insightful)
who's saying that? (Score:5, Insightful)
Who's saying the job could have been created in the U.S.?
Re:who's saying that? (Score:5, Funny)
Everyone knows that the only jobs that count are the jobs in the United States. The rest of the folks in the world don't need jobs, they just need government cheese.
Not relevant. (Score:5, Insightful)
Sacrificing jobs in the United States in order to employ the rest of the world isn't something most people here are prepared to do, nor should they.
Re:Not relevant. (Score:5, Interesting)
Free trade never has existed. And it probably never will exist. That's because corporations have built in their own fair protections for their own benefit: copyright, patent, and intellectual property laws. In all the talk and bluster regarding free trade, people like you never ever mention these protectionist laws that benefit the big corporations.
Big businesses are just as protectionist as everyone else. They just don't want anyone to see or point out their hypocrisy when they sing the praises of free trade and deride the rest of us for the same protectionism that they practice.
Re: (Score:3, Insightful)
You: Thats pretty much the definition of a protectionist.
If you pull up the definition of protectionism, you get this:
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Our labor laws were enacted at a time when our economic status was radically different, much like a third world country of today. Given that, it is completely possible for third world countries to enact our style of labor rules. It probably would do them some good. Limiting child labor reduces the supply of labor, making employers compete for the adult laborers by raising w
Re: (Score:3, Interesting)
"Our labor laws were enacted at a time when our economic status was radically different, much like a third world country of today."
Oh no. The oldest ones come from around the 1930s. Our economy was in a depression back then, but it was still radically different from that of an undeveloped third world nation.
Besides, the country we have been mostly talking about in these offshoring debates is India, and they do have extensive labor laws. The one thing people complain about is that workers make very l
Why not just get out of tech? (Score:3, Funny)
Get a degree in law. In 15 years all Americans will make their living by suing one another.
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Of course, as the OP said, it can result in the loss of YOUR job. People sacrifice for the long term all the time, so suck it up and find another job like an adult.
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A greater separation between the rich and poor (or even rich and middle class) does not mean the poor and middle class are any worse off. You claim t
Re: (Score:3, Interesting)
I don't know what kind of jackoff thinks this is an insightful or humorous comment, but it's of interest to me that articles like TFA still make it to the mass media.
What a stunning bit of baloney it is to try to explain to Americans, as if to an idiot nephew, that no, when an American company opens a plant in Mexico instead of in
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I can do my job a lot cheaper in India too. Except that I can't.
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They are competing unfairly using government subisdies
The complete lack of proof in your post notwithstanding... welcome to the rest of the world. The US has done exactly that for decades - look no further than most primary industries like farming for examples. And even the US's closest "special relationship" friend who subscribe to the so-called "Free Trade Agreements" continue to get shafted by those same subsidies.
You reap what you sow, and I'm not at all surprised you've only just noticed that your own medicine tastes a lot like sour grapes.
Re: (Score:3, Insightful)
Re:who's saying that? (Score:5, Informative)
The problem is that for me to be "competative" to a multi-national corporation as a worker I must forgo the progress of the last century and my lifetime.
I'm more "competitive" when I demand lower wages, lower my standard of living, lower my need for healthcare, lower my need for a clean environment, lower my expectations to talk with someone who actually knows english, etc, etc.
Unfortunately, there is no right answer here. Outsourcing looks great on paper for the bottom line. It seems to be failing for customer support, helpdesks, and call centers because even if you get a hold of a person that speaks good english and can help you with your problem, at least here in the USA, I still feel cheated for some reason, and the liklihood that you get a person that can speak good english and help you with your problem is unlikely at best.
Manufacturing simply makes sense for many people. It means cheaper goods for us as consumers and it moves a ton of the nastyness of manufacturing out of our back yard. None of the pollution, or any of that jazz.
I personally have more issues with the hiring of illegals here in the us than outsourcing.
hooie (Score:3, Interesting)
Re:who's saying that? (Score:4, Insightful)
I realize that those suffering from such extreme paranoia are often unable to consider things rationally, but for the sake of any other readers I submit the following:
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"If you download it from someone, that's a sale we aren't making."
Because (Score:2)
Offshoring is racist - because jobs and resources can go across borders, but not American workers.
Re: (Score:3, Informative)
I generally do not answer ACs, but in your case I will. You are making me roll on the floor laughing. Like most Americans when talking about immigration and other countries you do not have the slightest clue what are you talking about. The only developed countries with tighter rules than America are France and Israel. EU is way more lax. Japan has also been relaxing rules year after year.
This is easy to expose as bulls (clap) hit. (Score:2)
Cheers.
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The report did correctly state at least one factor in outsourcing: "Seventy-three percent of respondents report a positive impact on profits".
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Exactly! Especially with the upcoming minimum wage increase, there are many jobs being created oversees that would not exist in the United States even if there was more protectionism.
Instead of Mattel opening a factory in China to make its stupid toys, they would buy them direct from a Chinese company.
As far as tech jobs, I think American companies like Google will be focusing on new technology rather than engineering implementation of old tech. Abroa
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Um, bullshit. As someone who was working corporate during that time, many jobs were 'let' and no, those jobs did not come back home at any time. So, those jobs were lost. Saw it with my own eyes.
"Somewhere in there it trickles down, but you can take an economics class to learn about that."
That's an affir
Re: (Score:3, Insightful)
The GP didn't say that the same jobs were created; I think the statement was that there are more jobs now than there were then.
You've hinted at the issue that has been around for quite some time, and that will remain: all jobs are not equal. That is, if I lose 100 architect jobs, but gain back 500 retail jobs, I have a net change of +400 jobs; but that says nothing about the real value of those jobs, nor about the wealth-generating ability of those jobs.
Personally I don't like that the (US) economy is shi
Where does free trade put us in 100 years? (Score:5, Insightful)
What, exactly, is the long-term, steady-state outcome of globalization going to look like for the U.S.? I mean, it doesn't seem like what we're doing right now is really sustainable. Massive current-account deficit (trade deficit), loss of manufacturing capacity and jobs in exchange for service-sector jobs, etc. I keep hearing people say that "the future is the service sector," but forgive me if I'm econometrically challenged, but I'm not quite sure how that's supposed to work, long term.
If all we have left is service sector jobs, and we're basically paying each other to do stuff, while at the same time importing all our manufactured goods from abroad and exporting little to nothing (or at least less than we're importing), how do we keep going? It seems like that's a ticket to economic collapse. There's no way that people here can compete on wages with folks in Asia and other parts of the Third World, just because of the cost of living, so eventually all the jobs that can be exported and offshored, will be. The only jobs left are ones that have to be done in person: doctors, lawyers, truck drivers, waiters, etc. But they're all selling their services to other people in this country, so in the long run, you're still hemorrhaging cash.
The line I keep hearing from politicans is that, somehow, "American innovation" is going to keep us so far ahead of the rest of the world technologically (apparently forever) that we'll be able to sustain this lifestyle. But I don't see that happening. And frankly, the basis for it seems suspiciously ethnocentric/racist. Now, I don't particularly care about ethnocentrism or racism per se, but in this case I think it's leading to a fallacious assumption, namely that Americans are somehow naturally superior to the rest of the world, and that we'll naturally figure out a way to stay on top, even when we're driving cars made in Japan using gasoline from Saudi Arabia and watching DVDs made in Malaysia on players produced in the PRC. I just don't buy it. Our educational system isn't that good, and a country filled with unemployed people isn't exactly going to roll out the welcome mat to immigrants, no matter how skilled they are (particularly if they're skilled, in fact). That we've managed to maintain the lead in technological development over the past 100 years is remarkable, but there were also two World Wars in there to spur development (not to mention razing much of Europe), plus waves of economic expansion and immigration, and a whole lot of luck. It's enough to make a nation dangerously cocky, and as an American, that worries the hell out of me.
So what exactly does a first-world country that's gotten accustomed to a very high standard of living do, in the brave new world of free trade? I'm just not sure I see a way out through that, which doesn't involve either a sinking average quality of life, or hyperinflation followed by economic collapse.
Re:Where does free trade put us in 100 years? (Score:5, Insightful)
First off, there is no long-term stability in the world economy, period. It is a system of dynamic equilibrium (we hope!) There may be a decade here or there of moderately stable conditions, usually ones of comfortable growth. The last time that happened was in the 50's and early 60's, which started to stagnate in the late '60's and came unhinged in the early '70's between the unpegging of the U.S. dollar from gold, and the first oil shock.
That said, the U.S. position relative to the rest of the world is likely to decline in the next few decades as the rest of the world catches up. This is a good thing, certainly for the rest of the world. Wealth for Indians does not mean poverty for Americans, UNLESS Americans cease to have anything of value to offer the world. Given the dynamic nature of parts of the American market (leaving out heavily subsidized and protected industries like farming) it is likely that there will continue to be value that Americans can provide the rest of the world. It may not be sufficient to support your enormous parasite load (litigation lawyers) but it should be enough to keep you from starving.
The squeeze for the U.S. is less from globalization as such than from the role of the dollar as the world currency. This is what is supporting the current account deficit. Because everyone wants a significant fraction of their wealth in dollars, everyone is happy selling goods to the U.S. in return for those dollars. In the short term this is ok--I once heard it described as "they send us TVs and cars and we send them little pieces of paper with 'In God We Trust' written on them". But it will maintain an artificially high value for the U.S. currency, which distorts the American economy by, amongst other things, encouraging outsourcing by making foreign workers artificially cheap.
This is not a stable situation in the long term. Galbraith apparently once suggested the creation of an artifical unit of international currency, not unlike the Euro, to protect any one nation from this kind of thing (at the time it was the post-war British economy that was being battered by the same phenomenon, as everyone wanted pounds sterling but no one wanted British-made goods.) Encouraging an orderly transition to Euros as the world currency would help the U.S., but it would also be a blow to some of the less savoury aspects of America's self-image.
Worst case, at some point American production falls so low that no one wants to buy anything from you any more (and protectionists step in to prevent the purchase of American land and assets by foreigners.) In that case we all get to experience a run on the dollar, and a global economic realignment. Who knows what the world will look like after that, but it won't look much like what we have now. Best case, the flexibility and robustness of the international currency system keeps things more-or-less stable, and America becomes one of the many wealthy nations around the world, but not the singular power it is now.
The one thing we do know: free trade is almost always better for everyone than protectionism, but free movement of capital and goods must go alongside free movement of people to maximize the benefits and minimize the costs. Otherwise local populations can be held hostage to corporations and governments who can move capital in and out of regions, but the people cannot migrate to improve their own lot. Money should not have freedoms that people do not.
For bunnies sakes, guns to solve everything? (Score:3, Interesting)
The best example is Argentina a few years back. What people did was organize themselves, skip using the wortheless currency at all, and started bartering their goods and services.
They did not run for their guns, their ran for their phones, called their friends and organized friendly bartering markets.
You guys in the US, sometimes are really scary.
Re: (Score:3, Insightful)
Just curious....
They seem to think the same thing about sales...
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Increasing the amount these workers make would not significantly effect prices. Doubling the rate of the 90 poun
Re:It's racism against Americans (Score:4, Insightful)
Maybe there's a reason why they only get paid $0.70 per box: that's all they need to pay to get the workers. If you eliminated the vast supply of cheap, illegal labor, you might create a labor shortage and drive wages up. But when you've got people willing to work for peanuts, that's what the jobs are going to pay.
This cost isn't included in most (at least not that I've seen, anyway) analyses of illegal labor, because it's hard to quantify. The presence of a vast cheap-labor pool prevents wages from increasing, and also prevents mechanized technology from being brought to bear on problems. There's a reason that a mechanical cotton-picker wasn't invented until long after the South's Great Migration: when you had slaves, and later sharecroppers, there was no impetus to spend the capital necessary to mechanize.
Try it some time, eh? (Score:3, Informative)
Offshored jobs aren't replaced by better ones - they're replaced by low paying service jobs. There are a flood of high end jobs that no applicant in America is qualified to fill: you can't get those jobs without lower end job experience and you can't get lower end job experience anymore because it has all gone overseas.
Now, I suspect you'll be telling me all these success stories about college students paying for plane tickets to India and
Re:Protectionism (Score:4, Insightful)
Hell with that. I'm against offshoring for two reasons:
1. In my own extensive experience with work coming back from offshore, it's crap. Period. Anything that we save in up-front cost, we have to pay down the line when the the bugs are getting fixed.
2. I am of the unpopular belief that there's nothing wrong with looking out for the self interest of my family, my friends, and myself. Our lives and livelihoods are more important to me than some stranger I've never met and never will meet. And yes, if it came to a choice between me starving, and that stranger starving, I'd pick the stranger every time. I place value on my own life above others -- it's called survival, though these days we're supposed to call it selfish.
/rant.
Re:Protectionism (Score:5, Insightful)
In Keynesian economics, there is a model called the Injection-Leakage Model [amosweb.com] that describes the circular flow of production, income, and resources between producers and consumers within a national economy.
In short, you work for a business, which pays you for making goods or services. You then use your money to then buy from other businesses. There is a circular flow of money.
Investment, government purchases, and exports inject money into the system, making more money available for everyone in the economy. Savings, taxes, and money spent overseas come out in the form of leakage, reducing the amount of money in the system for everyone.
Offshoring is just another form of leakage. And no, it is not good.
Study paid for (Score:3, Funny)
This message was brought to you by stylusinc.com. Tank you for letting us helping you!
No. (Score:2, Insightful)
No. Another job can be created here instead.
Indeed (Score:4, Insightful)
Offshoring IT means new people will never get into the industry at all.
IT now demands high level network administrators and accomplished programmers. Americans cannot reach that level of expertise without starting out as a lower level programmer, software tester, sysadmin, tech support person, etc. - and those jobs have gone overseas.
The higher level jobs can't be filled because no new qualified workers are coming into the US workforce, and the qualified people are entrenched in jobs they won't leave, or are afraid to leave. And yes, before you say otherwise, I know this. I am a data center manager and I see our ads go unfilled constantly. Which is why since before this data center came up, I kept our jobs from going overseas and made sure we grow our talent right here, in house. My lead network administratress started out as our receptionist and then a tech support rep, then a tester, then a sysadmin, then a network admin. At other companies, that ain't gonna happen. Ever.
So no, another job was not created here - except low paying service jobs like Wal Mart cashiers, and super high end jobs that newcomer Americans can never qualify for.
Oh yeah (Score:2)
Re: (Score:2, Funny)
He's not as safe from harm as you might think.
Uh-huh - Ask the Intel employees that lost jobs (Score:5, Insightful)
Just to highlight this - there was an entire division of Intel that was closed down and re-opened in India a few years ago. You could relocate to India or loose your job. Real simple choice. Speak Hindi??
Re:Uh-huh - Ask the Intel employees that lost jobs (Score:5, Insightful)
Re: (Score:3, Informative)
In Tim Harford's "Undercover Economist" book, which I recently read, he gave a great example.
Did you know that instead of manufacturing GM cars in Detroit, you could grow Toyotas in Iowa? There's this new technology that just became available! You put a bunch of corn on shi
Re:Uh-huh - Ask the Intel employees that lost jobs (Score:5, Insightful)
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I was just trying to make the point that the efficiency gain in shifting to Bangalore -- to the extent it exists -- simply frees up those Americans to satisfy some other demand. And, that the new jobs will come in bits and pieces that don't make the news.
Re:Uh-huh - Ask the Intel employees that lost jobs (Score:5, Insightful)
"frees up those Americans to satisfy some other demand." is just code for "Break Americans out of the middle class and put them into poverty".
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Marxist (not a smear -- that's his handle), do you think it would be fair to say that since 1900 in America over 100 million jobs have been "destroyed" by outsourcing and technology? Such as horse trainers, carriage makers, textile workers, etc. Would you say that the forces responsible for that caused less real compensation?
This is accomplished by keeping the person out of wor
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By technology before 1950, and by outsourcing after 1963, yes. I make that distinction of periods of time for a reason- there's a SIGNIFICANT difference in jobs created by technology that fueled the expansion of the middle class before 1963, and outsourcing that has destroyed the middle class since then.
Such as horse train
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You make it sound so logical. You know, using two jobs that occurred when there was no outsourcing and which are of virtually no current use.
Unfortunately the local mechanic and auto factory worker who replaced them are now being outsourced out of existence along with the textile worker. So, the answ
Europe (Score:3, Funny)
High unemployment, higher taxes and social programs pushing their governments into massive debt.
Insightful?! (Score:5, Insightful)
That's BS.
That's called underemployment - the total reduction of an educated, skilled workforce to menial labor which itself can be automated.
That means a loss of buying power which means that in the end, those SAME Northwest LA drycleaners will be hurting for customers.
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Can you actually point to any sources which credibly claim that those foreign IT workers who aren't "treated like human beings" are complaining at all about their treatment? It seems to me like their treatment is probably far better than anything they could have achieved prior to acquiring jobs in IT. Personally I think you're the one
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Look at the oil industry, they increased profits... what happened? They increased consumer costs more to increase profits more.
Oil isn't really part of the off shoring of jobs bit. Well, if it's off shore.
But... I would say the majority of the corporations are the same.
In related news, study claims Moon is Green Cheese (Score:2, Insightful)
Reality is based on observation.
Offshoring cost me my job (Score:5, Interesting)
Thanks,
Jim
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Only if you don't add in the 20% loss in the labor force due to the DOL illegally reclassifying people as disabled.
I do not understand all the whining about lost jobs due to offshoring.
Of course you don't if you're profiting from it- in other words are a traitor.
Sure it sucks in your case, but that is one anecdote, where the statistics at large paint a different picture.
Not the real statistics- only the fakes put ou
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Regarding other's bitter comments, it hurts when your life is turned upside down. I am fine because of my solid faith. But those who work endless 14 hour days (including commute time) and who are devoted to their jobs, they suffer the most when their dedication is rejected. Its a rejection of their core being.
I think a deeper economic analysis needs to be made of the situation. Thats what I am studying right now. Its more tricky
Comment removed (Score:5, Insightful)
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I agree though that just saying it is a lost job without checking the requirements isn't correct. You c
every job lost is a job gained. (Score:5, Funny)
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We paid off the tab, fired the offshoring firm, and automated better at home. We wound up reducing our on-shore costs by about the same amount we were hoping to with the offshoring, only we didn't have to pay the offshoring
Duh (Score:2, Insightful)
Wow, that is some astoundingly simplistic logic there. Good work!
Temporarily it may be a job lost, but cutting costs allows for further expansion of a business. (if the business is intent on growing, which 99.9% of businesses in the US ARE interested in doing I think.) I've been of this opinion all along that off-shoring was no great threat to jobs in America, just like buying Japanese cars or clothing made
Re:Duh (Score:5, Insightful)
Expansion to where? Third world countries may benefit from having a pool of low-cost labor with little regulation, but that doesn't help the labor at home. Even if they are lower level IT/support jobs that are typically affected by outsourcing. How can you expect to train the next generation of workers if theres no bottom rung for them to start from? Take a look at Monster.com postings and see the experience demanded for jobs. A system where the entry level really doesn't exist cannot sustain itself for the long term.
If you don't want the risks of losing your job due to IT off-shoring, go move to France. I'm sure you'll find the rewards there are in much less frequent supply than here in the U.S.
I know France is used as an insult, but if they protect their middle class rather than let the greedheads in corporate management gut their job base for their short term gain before ejecting with their golden parachutes onto their next abomination, maybe its not so bad.
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No, Because there wasn't an American to fill it (Score:2)
Is there really a skilled labour shortage? Everyone wh
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That's because the real skilled labor shortage is in HR departments who know NOTHING about IT to begin with and wouldn't know a skilled worker if they hacked in and stole the HR person's bank account information. HR people are idiots who couldn't program their way out of a paper bag and can't be counted on as a valid source of information in IT skills.
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Of course everyone is going to answer "No, we didn't bleed any American jobs, we just added-on to current numbers." I would imagine that the companies that fired large numbers of American programmers just didn't respond. And of course a survey by an industry group is going to come to exactly the conclusion that the industry group wants to put forward: th
Yeah but (Score:4, Insightful)
Yeah but when the economy turns down, who are they gonna lay off, the guy in California making $50/hour or the guy in Mumbai making $9/hour? Sure, everyone's happy when things are humming along, but the cracks will show later.
I lost mine (Score:2)
Not that I've
Economy is Dynamic & Hard to Quantify These Th (Score:2, Insightful)
Another company could become more competive and grow here as well as overseas. Different jobs that better utilize American talents may be created here.
Or a company may just slash jobs that go overseas.
Life and economics doesn't have a Tivo attached to it.
Slight twist (yeah, a bit OT) (Score:2)
If a movie is downloaded that could have been purchased, isn't that a sale lost?
expansion, not replacement.. wth? (Score:3, Insightful)
Above was going to be my original post, but it's pretty clear many others beat me to the punch, and it's (in my opinion) also seemingly clear there is a lot of opinion and sentiment the article is talking out its private parts.
It's interesting to me the ones making decisions to do the outsourcing are the ones funding the studies to somehow assuage their collective guilt. There's lots of empirical evidence jobs have been and continue to be lost through outsourcing.
yea right... (Score:2)
Comment removed (Score:5, Insightful)
A few simple facts. (Score:3, Insightful)
2. You are not entitled to a job.
3. If someone else is willing to do the same work for less money than you do, too damn bad for you.
4. Yes, it is a race to the bottom. No, that isn't necessarily a bad thing in the long run. When you want to fill a container you have to fill the bottom first.
5. If you think you're better than the people 'your' job was outsourced to, prove it.
Re:A few simple facts. (Score:4, Interesting)
you're a young-ish kid, right? 20's or earl 30's tops?
your arrogance of 'prove it' shows you have no compassion for your own fellow US workers.
some day this 'stuff' will happen to YOU. and maybe then you'll "get it".
Re: (Score:3, Interesting)
In defense of the GP poster, I am 35, and it it has happened to me. However, I, like the grandparent poster probably does, I believe in being responsible for my own welfare.
When I was replaced by Indian labour (because as lead sysadmin I was the highest paid) I could have bitched about it, and whined and cried. I just said 'ok' and moved on. Picked up the pieces and went on with my life.
But then again, I am the type of
Study Correct (Score:2)
The important information (Score:2)
"a survey by the Software & Information Industry Association"
Don't be Selfish (Score:2)
Moreover, the people in the third w
Say it with me: "The economy is not zero-sum" (Score:5, Informative)
No, a job created elsewhere instead of here does not automatically mean that it "costs" us a job here. Jobs aren't a resource that is mined from the Earth, jobs are created by the economy. If that overseas person does well enough, it may "create" two jobs here.
It's not even right to speak of jobs being "created"; a more appropriate verb might be funded. There's a "job" that involves you being my personal punchmonkey, but there's no way we're going to come to mutually beneficial agreement about that "job", so it isn't funded.
But the flip side holds; the net impact could be more than one job "destroyed". It's not zero-sum.
The whole thing is very complicated, because even if off-shoring a developer creates/funds five jobs over here, it may be the case that none of them are development work. Or one off-shored developer may well create three more development jobs, but not in Silicon Valley. (No, you don't get to say all three of those jobs are cleaning up after the off-shore guy; if off-shoring is a net negative value, the economy will eventually cut off the off-shoring, even if that means driving a particularly stubborn company that refuses to see it as a negative value bankrupt.)
But one thing it's not is "zero-sum".
(Even if you don't "like" capitalism, it's vital to come to understand what capital is and why capital produces more capital. Communism, and to a lesser extent socialism, can be seen as starting with the assumption the economy is a zero-sum game, and they end up creating a self-fulfilling prophecy on that front as in their zeal to make sure capital/wealth is evenly distributed, they destroy the mechanisms of capital/wealth creation. Actually, they end up with a negative-sum game. I'm not defending any particular instantiation of capitalism at this time, I'm just saying you damn well need to understand why it does what it does if you want to understand how economies work.)
Not necessarily (Score:3, Interesting)
Not necessarily. It's entirely conceivable that a firm cannot profitably expand operations and pay the wage required to hire a U.S. worker. However, the firm might be able to expand by hiring labor in another country (for a lower wage). In that case, the owners of the U.S. company (which often includes the company's own employees) would benefit. Keep in mind that foreign labor is not necessarily a perfect (or even very good) substitute for domestic labor.
This is not a zero-sum game, and it's very easy to oversimplify matters. I'm not saying that U.S. workers are not or cannot be replaced by foreign workers, I'm just saying that it's possible that foreign workers could be employed where otherwise there would be no job.
A similar argument has sometimes been made regarding investment outside of the U.S. After all, if you invest money in China, you're giving up investment in the U.S, right? Well, it's not that simple. One paper [ssrn.com], for example, claims that a 10% increase in foreign investment will lead to a 2.2% increase in domestic investment.
The point is, outsourcing/offshoring is a complex issue. Since it's such a new phenomenon, it will take some time for researchers to come to a consensus about its general effects.
My experience with offshoring says otherwise (Score:5, Insightful)
So, IOW, while we aren't actively replacing American workers, there are jobs that would otherwise have gone to American workers had they not offshored.
In economics, this is called opportunity cost.
The bottom line is the same, though: Instead of hiring American workers, they are paying foreign contractors
Now on to my experience. I was part of a team doing embedded development for a consumer electronics platform. We were under tremendous time pressure to get the product to market, so management decided to offshore the development of drivers which I had been working on. When I handed over my drivers to the offshore team:
- The driver was responding to interrupts, and used an interrupt driven model.
- The framework for using DMA was setup.
- The framework to work with the kernel's block specific device driver interface was setup.
- I estimated that it would have taken me another 4 to 6 weeks to complete the driver. The only things I had left to do were to write the routines which actually transferred the data to and from the device.
Now, 6 months and several deadlines go by, and we haven't heard anything regarding the drivers. Finally, we get our code back:- The interrupt code has been removed. The driver now works on a polling basis. Keep in mind how acceptable this would be in a real time system.
- The DMA code has likewise been removed.
- The driver doesn't interface at all with the kernel's specific device driver interface - instead, it uses a hack by which it talks to the block layer, bypassing the development track of every other said kind of device.
- Oh, did I mention that the driver didn't work?
So, not only are we now behind schedule, we ended up shipping a broken driver to the customer. Several of our customers missed the Christmas selling season because our code wasn't delivered in a timely manner; worse, it's now 6 months late and doesn't work.We had to spend several months of engineering time to debug/redo the driver to get it to a working state. Here's what offshoring cost my company:
In the end, offshoring was a net loss for everyone involved:
The only people who are getting rich from offshoring are the offshoring companies. The only reason why this fraud is allowed to continue is because it's hard to prosecute across national boundaries.
And, if anyone is wondering, we later learned that the engineers who wrote the broken code were formerly Java developers who had no experience writing embedded code. My company would not ever have hired these guys had they interviewed with us, yet we saw no problem in contracting a critical part of product to them.
Take a lesson from Spinal Tap (Score:3, Funny)
No... No: This one goes up to eleven.
obligatory (Score:3, Funny)
Another Example: (Score:5, Insightful)
Now, the DVD player is made in China, and lets say the labor to make the DVD player cost about 1/20th of what it costs in the U.S. (it is probably actually cheaper than that). That means, that the same DVD player would cost at least $800 if made in the U.S. (in reality, it would cost much more... I am not including the differences in enviornmental regulation, defending frivolous lawsuits, medical insurance, taxes, etc. all of which would be much higher in the U.S.).
Right now, when a DVD player cost $40, it means that DVD players are cheap and ubiquitous. The store is making money selling the DVD player and the DVDs you will buy to put into the player (all that is money made in the local economy). Movie companies are spending hundreds of millions on movies, expecting to recover that money in part on DVD sales - and most U.S. movies (and virtually all DVD manufacturing) happen IN the United States, creating tens of thousands of jobs.
Now, lets say we ban foreign manufactured media playing devices from being sold in the U.S., and now *CHEAP* DVD players are $800 (of course, assuming the same escilation of pricing, you would expect a good quality one to be around $8000). You have made DVD players into a luxury good, outside the realm of afordability to a good chunck of Americans. Not only are stores selling less DVD players and DVDs, but Hollywood cuts back on movie production because they can no longer recoup so much back from DVD sales (people without DVD players, don't buy or rent DVDs).
Now, if you look at the jobs that would be added to the U.S. by manufacturing DVD players locally, and how many jobs would be lost because fewer people could afford DVD players, it is easy to see you aren't creating any jobs locally by requiring that DVD players be made in the U.S. In fact, most likely you would end up losing a whole lot of jobs in the U.S..
If a company outsources IT, that can give free up money that it might use to make more TV commercials (which create jobs in the U.S.). Or it could free money to allow it to expand its retail outlets (creating jobs in construction and for the people working at the outlets in the U.S.). It could also allow the company to lower the price of its goods, meaning more people in the U.S. could afford the products being sold.
People are also ignoring the fact that as people overseas get more jobs and more money, they now have more money to purchase OUR goods and services. China, India, and elsewhere are now customers for many American products, unlike say Cuba, or Iran, or some other country that is economicly isolated from the United States because of artificial trade barriers.
Re: (Score:3, Insightful)
Money is simply a device used to exchange goods and services. If global bankers were making "as much money as they can from everyone else", it would be as useless as Monopoly money. Money is valuable so long as money is changing hands. It is not being horded in the basement vaults of rich people, like some sort of Scrooge McDuck comic.
American wealth is exported
What wealth is being expor
Does that mean we need more H1B's? (Score:3, Insightful)
We all have a right to live in a carboard box. We all have a right to starve. We all have a right to be miserable and poor. You do not, however, have a right to a shopping cart to push your belongings around in. Handy tip - For a cheap drunk, Listerine is 40% alcohol. Even if you stink, your breath won't.
America is not only addicted to oil it's addicted to cheap labor and has been so since day 1. From indentured servants and slaves to Irish and Chinese to Italians and Polish to high tech coolies from India and "undocumented workers" from Mexico and Central America.
Today's big business maxin: Give a man a fish then you'll realize no profit. Teach a man to fish and you'll create a competitor. Giving only works if you can create a repeat customer. So give a man a pack of cigarrettes instead. He'll be back to buy more.
Economic considerations (Score:3, Interesting)
I think some insights from the field of economics would be helpful in determining the net effects of offshoring.
First, there are many software development projects which are "on the margin" meaning they're not profitable if developers are paid $90k but become profitable if developers are paid $30k. As a result, reducing the cost of software development by hiring Indians will cause marginal software projects to become profitable, causing more software projects to be undertaken than otherwise would. In other words, just because someone is paying an Indian $30k to do something does not mean he would otherwise be paying an American $90k to do the same thing; instead, without the Indian, he might not pay anyone to do it.
Even if there is still a net loss of programming jobs to India, that would just mean that the embedded cost of software would go down, because companies like Wal-mart would have to pay less to Oracle, IBM and SAP in licensing fees etc. As a result, their prices would be lower in any competitive market. (Note that the cost of enterprise software is an "embedded cost" in many of the things you buy). Furthermore, consumer prices would be lower for things like computers and software. As a result, people would have more money to spend on other things, and employment would expand in other sectors.
Although demonstrating it would require several more steps, we can be certain that offshoring will not lead to a net loss of US jobs across all sectors, and that the average American worker will have his income increased rather than decreased by it.
Also note that Americans' programming skills would not "go to waste" when they're laid off and forced to take jobs at McDonald's. American programmers could simply get jobs at $60k/yr rather than $90k because they would be much more competitive relative to Indians at that salary, but would still make more than working at McDonald's. At the new salary, many offshored jobs would move back. Only when the average programming job pays $7/hr would a programmer be tempted to abandon his skills and work at McDonald's. That could only happen if programming talent were so abundant worldwide that an American programmer's skills would be nearly worthless anyway. At that point it would benefit both the economy and the programmer if he learned to do something else.
you get what you pay for (Score:4, Interesting)
I studied through high school in India and came to the U.S. for college. I remember my CS classes. Our teacher was a dinosaur. He knew about pascal and some basic but he was taught by idiots and consequently his code never got beyond the Hello World level. We were supposed to be learning C++. He did mean well though and freely admitted being ignorant which helped immensely because we were forced to learn by ourselves. I count myself as being very lucky. Several teachers would have shoved what they learned by rote knew down our throats. The quality of software you get back reflects this education, and the price you pay for it. You want good software from India go hire a bunch of IIT and BITS grads and have them do it. You will pay though. Or alternatively, wait a decade or so. Software outsourcing is (paid for!) real world practical training for the next generation of teachers and thats something thats been sorely lacking.
As for the call center jobs... well you could complain about Indians who can't speak English (or American as the case is) but frankly the communication barrier has very little to do with accents or language. I know guys from here that can understand Indian accents easier than they can understand people from central Illinois and Texas. You guys try to imitate Apu frequently enough. Rather, the headache with support people is because they have crappy scripts to read from. Support would suck even if it wasn't outsourced unless you have someone on the other end of the line who actually knows the product he is trying to support. That costs companies money and companies that value their profits more than their customers know they can get away with crap service. Ideally they'd love to not bother with support at all.
Tell it to the programmer for BofA... (Score:3, Interesting)
Who was so despondent after being laid off, she blew her brains out in the parking lot of the Bank of America IT facility in Concord California.
I think well remember that. The programers were offered severence packages ONLY if they would sit and teach their new Indian replacements their jobs. Who were flown here, from India, to learn their new jobs, and then flown back.
Lets see who desperately needs to reduce IT costs...
2006 - 3rd Quarter After Tax Income - Source Google Financials
Ohhh yeah, damn they are gonna go broke! Quick ship those IT jobs off to someplace where we can get shit code for pennies on the dollar that is nothing but slopped together cookie cutter trash based on Microsoft crap frameworks.
Re: (Score:2, Insightful)
The only idiots to claim that are class warriors attacking the middle class. One day the middle class will figure out that they're being attacked, and bullets will be flying in the economics departments of major colleges for insults such as this.
Hint to idiots: "Full Employment" to most people means 0% unemployment, not moving 20% of the labor force to disability to create an artificial 5% unemployment rate.
Re:No. Learn arithmetic. (Score:4, Insightful)
Re: (Score:2)
Re: (Score:3, Insightful)
Wow.
Sounds like you really got screwed.
MOD PARENT UP!! And create an IT Guild... (Score:3, Insightful)
loans so they could learn to fit nut A onto bolt B. Comparing task-based assembly with the
modern skills needed to build software (communicating with customers, unit testing, integration,
design & design patterns, refactoring, multiple computer languages, framework knowledge,
OS knowledge, databases, & ongoing professional development) is insane. My father got paid
a tidy sum at the time in the late 70's to