Powell Reassures India on Technology Jobs

New York Times ^ | March 17, 2004 | STEVEN R. WEISMAN

[MannyP]

Powell Reassures India on Technology Jobs By STEVEN R. WEISMAN

Published: March 17, 2004

EW DELHI, March 16 — Secretary of State Colin L. Powell, encountering the other side of a tempestuous debate in the United States, sought to assure Indians on Tuesday that the Bush administration would not try to halt the outsourcing of high-technology jobs to their country.

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In discussions with Indian leaders and college students, Mr. Powell found that the issue of the transfer of American jobs to India by leading technology companies was as emotional in India as in the United States.

But whereas American politicians have deplored the loss of such jobs, it was clear that the anxiety in India focuses on threats by some members of Congress to try to stop the transfer by legislation.

Responding to a questioner in a session with students who asked if he supported or opposed outsourcing, Mr. Powell said: "Outsourcing is a natural effect of the global economic system and the rise of the Internet and broadband communications. You're not going to eliminate outsourcing; but, at the same time, when you outsource jobs it becomes a political issue in anybody's country."

Mr. Powell told the students what he had said to reporters earlier in the day after a meeting with Foreign Minister Yaswant Sinha: an appropriate American response to outsourcing was to press India to open up to imports of American investments, goods and services.

He said one purpose of his trip was to explain to India that because outsourcing had created a political problem in the United States, India could help by lowering its trade barriers. He said he was making that request, not as a condition for the United States allowing outsourcing to continue, but because it was in India's interest to be more open.

In February, Gregory Mankiw, chairman of the White House Council of Economic Advisers, stirred a political outcry when he called the outsourcing of jobs a long-term "plus" for the economy. While Mr. Powell said Tuesday that "it is the reality of 21st century economics that these kinds of dislocations will take place," he was quick to add that the Bush administration would work to train people for new jobs.

In Washington, the White House endorsed Mr. Powell's comments.

"The secretary made clear in his remarks that we are concerned when Americans lose jobs, and we are focused on creating jobs for American workers, and the best way to do that is to open markets around the world, including in India," said Claire Buchan, a spokeswoman for the White House.

But David Wade, a spokesman for Senator John Kerry, the presumptive Democratic presidential nominee, said Mr. Powell's comments demonstrated how the Bush administration has "failed to fight for American workers."

[neutrino]

To all of the isolationists economically...go ahead and add legislation to "your jobs" (as if they are yours, remember a job is something that is offered - the owner is the person who signs the check!)...but go ahead...create legislation to restrict companies from offshoring some jobs. They watch the loss of innovation and the jobs leaving altogether!

If only it were all so simple.  Have you read the WSJ article about the U.S. Tax Code and offshoring?  It was published on March 12th.  You can read it here.

A quick summary is that a provision of the code, in place since the early 1900's, rewards companies handsomely for sending jobs offshore.  So a viable first step might be to quit subsidizing the practice.  Surely you wouldn't advocate corporate welfare?

Just let me get this straight, you want government to legislate private business, right? This is the Republican way, right?

I do believe that you're straining at a gnat, after having swallowed an elephant.

Let's see now - what sort of government legislation do we have regarding private businesses.  OSHA, of course.  Minimum wage laws.  Workmen's compensation.  Required matching of employee social security taxes.  Mandatory overtime.  Family leave.  And then there's affirmative action.  Oh, and we also have small business set asides, as well as set asides for women and minority owned businesses.  Then we have SBA loans.  And SCORE (Service Corps of Retired Executives) who can provide various advice to small businesses.  The INS imposes certain paperwork requirements for hiring new employees.  The EPA controls businesses too.  And public companies are controlled by the SEC - if you don't think so, ask Shell about oil reserves.  Ask Martha Stewart about being a control person of a public company - she owns 61% of the stock of her company, you know.  And yet she won't be permitted to be an officer or director.  That surely sounds like control to me.

And you're concerned about legislation?  Now if we really want to get down and dirty, and compete in the global marketplace, we might consider doing away with all of the above.  If a worker gets hurt or killed, that's too bad.  If we can hire someone for fifty cents per hour, plus room and board, we should be able to do it.  If we want to work our employees a hundred hours a week with no overtime - well, if that don't love it, they can leave it.  Investors can learn to embrace the concept of caveat emptor.  We should eliminate access to the courts for consumers, and product liability should be a concept stricken from the legal jargon.

You will find little popular support for such a position.  A series of changes to the tax code, a variety of tariffs and other adjustments to the trade paradigm, and perhaps some restrictions on the award of government contracts should suffice to correct the current problem.  Those changes are minimal considering the existing regulatory structure.  

I'll consider tax credits and incentives, but NO LEGISLATION...or kiss our leadership good-bye!!!

Let's take a look at a certain vibrant, growing economy - China.

From the Mercury News: "Increasingly, China is seeking to use its buying power to dictate separate technical standards for products sold within its borders, hoping to give a leg up to its own producers."

Source.

That sure looks like legislation to me.  And it certainly seems to be having the desired effect.  So China effectively restricts free trade, controls companies - and has notable success as a direct result!

Free trade is an obsolete strategy.  It is failing.  It is destroying the U.S.  If something isn't working, the rational response is to do something different!  Why not join the vanguard of the new economic thinking that will lead to new solutions instead of defending the U.N.'s globalist free trade agenda?

[harpseal]

I do agree we need to reduce the burden on budiness but I find it interesting that Powell is trying to get India to reduce its trade barriers and not threatening some kind of retaliation in thi srealm. Everyone talks about us starting a trade war.

We are already in a trade war being waged against the USA by India China and some other nations all we are doing is disarming in the face of attacks.

Merely another example of the White House caving in when they should stand tough.

[William Terrell]

One of these days we are going to have to embrace the FACT of the Global Economy. Outsourced jobs create better budgets for comanies to invest in innovation. Remember, an 'isolationist economy' will kill America and American jobs! The future is in innovation, not remedial outsourced jobs.

Yep. The people of Russia had to embrace the FACT of the communist revolution. (Hint: because something may be a FACT does not mean it is GOOD.)

Innovation. Innovation. This means the innovative products and processes will be in America or India? If in India, what good does that do us?

I do believe that during America's greatest growth and ascendancy to power was when it was "isolationist". (Incidentally, the word "isolationist" is an artificially loaded term like "racist", "feminist" and "homophobe" intended to stifle debate and scrutiny that its subject cannot stand.)

Only the most shallow thinkers, or those with destruction of national sovereignty and globalist agenda, can possibly think bleeding the wealth of the nation to foreign countries can be good for the nation.

"Innovation". LOL! Who gives a shit if a corporation grows wealthier if that wealth is not turned into the very nation whose free system allowed them to exist in the first place?

[ninenot]

Obviously, in absolute numbers, (even subracting the fake degrees) India/China have more hanging around.

So what?

If the question is "skills available in the USA" the answer is YUP, they are here. Trust me, it doesn't require an MS in CompSci to write application code--and in most cases, it doesn't require a BS, either.

A good designer has to understand the BUSINESS side as well as the TECHNICAL side, meaning that they are less populous--in ANY country. But a good application coder should work closely with the designer (and the user group, if necessary) to make the code useful for a long time to come.

[CompProgrammer]

I still think that we need to focus on getting a 1% (or other %) tariff on all imported goods and services. I don't think that the consumption tax will have the desired effect. It's not clear to me and I don't think it will be clear to the voting public how the consumption tax will help in the battle against offshoring. I think we should focus like a laser on this tariff issue. It's easy to understand.
In addition, we need to get rid of the tax breaks for offshoring outlined in the Wall Street Journal article.
I think the question of a 1% tariff on all imported goods and services should be asked to every Congressional candidate and the presidential candidates.

[Mr. Mojo]

The administration publicly "reassuring" Indians about the security of tech jobs (many of which were once held by currently unemployed Americans) is a move of nearly unprecedented political stupidity.

[Mr. Mojo]

Ping

[CasearianDaoist]

A good designer has to understand the BUSINESS side as well as the TECHNICAL side,

Well if you use modern project management methodologies, development methodologies like RUP and wrap CMMI around it you really do not need that many people up front. That is how the (good) Indian shops do it. It works,I have done it. On large projects the day is long gone when the grunt programmer ever sees the customer. You have seperate requirements, QA andarchitecture Depts. that handles it and the Chief architect sees that it gets down. These method are highly interative so the client always has something to play with to make sure that the product is correct. It takes really good process management but it is the only way. The Indian projects tend to be huge, hundreds of thousand of lines of code and very large teams.

[ninenot]

The value of CMMI is debatable, from what I've seen from Matloff--all the Indian shops claim CMMI certification and STILL produce 100,000 lines of junk at a crack.

Whatever happened to CASE tools and Yourdan? Dead???

[CasearianDaoist]

Yourdan, which was good stuff has been absorbed by the RUP (Rational Unified Process, it is an Object Oriented, UML approach with lots of detailed Use Cases.)

Old style water fall case is gone, but some of it lives on in data modeling (entity/relationship modeling/diagrams) In the java world, there is a bug push toward "round trip engineering" were tools the generate models generate code ( and visaversa)

In development methodologies now there seems to be a divide between RUP/OO methodologies and the so called "agile" methodologies ("Scrum" "Extreme Programmimg") that were considered flaky just a little while back. There are some large Extreme Programming projects going on in investment banks in NYC right now (some with off shore resources.)

The bottom line is to "spiral" rather than waterfall - get something to the user as quickly as possible and iterate the whole life cycle as quickly as you can.

QA formalisms are becoming much more common place.

CMMI works great when you have a known set of problems and a large organization, particularly if that organization's main business in not technology production in and of itself (corp.IT shop etc.) It is also very effective in large integrated systems that combine software and hardware development(the DoD came up with it, after all.) It is less useful in areas where the problem is less defined and rewuirements and design are always in flux, and that is often the case in core technology companies. Team Size , project size and agility are the factors that must be weighed. Parts of CMMI are always useful (everyone should be able to pass a level 2 certification, that is just common sense.

What really matters is a hot, high powered team that works together well and under a lot of pressure, and hands on management with good, honest judgment, experience and both deep and broad knowledge - oh, and very thick skin and an ability to listen to subordinates.

That is the real trick of successful offshoring - getting requirements, Architecture, development and QA all going in parallel in a well oiled team. If you look at someone like Infosys's web site it is like reading the Soware engineering institutes Exec. summaries. The management are all a bunch of Carnegie Mellon CMMI nuts.

[optik_b]

"Who will be the American Putin is the question. "

I hope to God no one. I don't want a Czar. I like living in a free republic.

[oceanview]

that's correct, neither he nor anyone on his economic team understands it at all. Kerry doesn't either, but he can demagogue it.

[phil_will1]

"Where can one find info on the FTR?"

Here ya go.

http://www.fairtax.org/

http://www.geocities.com/cmcofer/

http://www.scrapthecode.com/contactus.htm

[phil_will1]

"It's not clear to me and I don't think it will be clear to the voting public how the consumption tax will help in the battle against offshoring..........

I think the question of a 1% tariff on all imported goods and services should be asked to every Congressional candidate and the presidential candidates."

Its clear to you that a 1% differential in the cost of imports would cause a significant shift in consumer preferences, but a 23% shift won't? Are you serious?

[WRhine]

that's correct, neither he nor anyone on his economic team understands it at all. Kerry doesn't either, but he can demagogue it.

Oh I think Bush and his economic team understand Offshoring very well.

Though seemingly baffling, I would not attribute the perplexing reasons why this administration aggressively supports the interests of India, China and the CEOs who are exporting American jobs and technology to these countries with sheer incompetence. They know EXACTLY what they are doing.

Standing up for America and her interests on Trade is just not IN the Bush agenda.

[A. Pole]

Now if we really want to get down and dirty, and compete in the global marketplace, we might consider doing away with all of the above. If a worker gets hurt or killed, that's too bad. If we can hire someone for fifty cents per hour, plus room and board, we should be able to do it. If we want to work our employees a hundred hours a week with no overtime - well, if that don't love it, they can leave it. Investors can learn to embrace the concept of caveat emptor. We should eliminate access to the courts for consumers, and product liability should be a concept stricken from the legal jargon.

This would require a dictatorship in Pinochet style.

[phil_will1]

"It's not clear to me and I don't think it will be clear to the voting public how the consumption tax will help in the battle against offshoring.."

The consumption tax may not help prevent offshoring; it would change the pricing dynamic for goods, rather than services. The point I should have been clearer about is that if the demand for our hard goods goes up dramatically, the offshoring of labor wouldn't be felt so much. On the other hand, it isn't clear to me what a 1% tariff on goods and services, even if practical (and I'm not sure it is), would accomplish.

[CompProgrammer]

Here is Pearlstein's column where I saw his idea for a 1% tariff.

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A49659-2004Feb17&notFound=true

I wrote an email to Pearlstein, but he has not responded.

[ninenot]

The consumption tax CAN be helpful. C Corp's will NOT have to pay income tax, which would allow (e.g.) Ford Motor to drop its prices by about 15%.

While consumption in general will be negatively affected by a 23% tax, the volume of imports will be reduced--while at the same time, exports of US-manufactured goods, now free of the cost of US Income Tax, will go up a bit.

While it's probably not fair to state that the consumption tax would be a net POSITIVE for jobs in the USA, it's not likely to hurt them.

[Euro-American Scum]

This WILL be the downfall of the Bush Administration.

I seriously doubt it. There's a reason why offshoring has slowed to a trickle and the massive layoffs of the past have slacked off as well. It's an election year. Wait until Bush is back in the White House. Within three years, you won't see any opportunities in in the U.S. besides Wal-Mart greeters, burger flippers, and liberal lawyers suing what remains of the wealth right out of the country.