Posted on 05/23/2004 4:27:06 AM PDT by sarcasm
Louisville resident Jeffrey Antman has seen offshoring up close.
After graduating with a master's degree in mechanical engineering at age 21 in 1974, Antman spent the bulk of the next three decades working for local startups and technology firms, including IBM, Quantum and Storage Technology Corp.
In the 1990s, he personally assisted the transfer of local disk drive manufacturing offshore to China, where volume manufacturing could be done cheaper.
Today, the engineer says he is struggling to find a job. And he says the current trend in offshoring — sending highly paid professional jobs to low-wage countries — is to blame.
"Now, when the next big thing hits, all of the software to run it is going to be written in India, and it's going to be built in China. What's going to happen here?" Antman said.
Forrester Research released a report on Monday that claims more white-collar jobs are being sent to places such as India, China and parts of Eastern Europe than was previously thought. Forrester said that about 830,000 U.S. service-sector jobs, including software engineers and other technical specialists, will be sent overseas by the end of next year. The firm estimates that 3.4 million jobs will leave U.S. shores by 2015.
According to Forrester research, the average computer programmer in India earns roughly $10 per hour, compared with more than $60 per hour for the average American programmer.
One Silicon Valley offshoring expert — who believes offshoring is an important strategy for some companies — disputes the numbers.
"Everybody's getting a little freaked out over offshoring," said Vamsee Tirukkala, co-founder and executive vice president of Zinnov, an outsourcing consultant with offices in India and the Silicon Valley. "If you do it right, you can be more productive. But it has been overhyped and now there is an offshoring bubble, the same way there was a dot-com bubble."
Tirukkala, who was raised in India and educated in the United States, said some firms are unrealistically enthusiastic over offshoring because they've overestimated the cost savings.
But some of more recent support for offshoring comes from quarters far from the corporate boardrooms.
Sustainable Resources 2004, a forum that will take place in Boulder Sept. 30 to Oct. 2, will cover several issues, including offshoring as it focuses on world poverty. The event is co-sponsored by the University of Colorado, the Sustainable Village and Naropa University.
Steve Troy, executive director of the Sustainable Village, said the "digital bridges" created by information technology give Third World and other poor nations a chance for their citizens to make more money than they otherwise could. The result, he says, is a chance for those countries' citizens to become more active consumers of the things U.S. companies produce as well.
"In the long term, you could see poverty elimination," Troy said. "But even in the medium term, it is creating all these customers who are in turn creating new jobs, and new needs for goods and services."
Troy said eliminating poverty in foreign lands serves more than just the U.S. corporate desire to cut costs and serve new markets.
"One of the roots of terrorism is desperate people, poverty and hopelessness," Troy said. "You could make the strong argument that it (moving good jobs overseas) undermines some of the roots of terrorism."
But in the current climate — where U.S. workers are worried about job losses — companies are more likely to tout the cost savings of offshoring than any possible social benefit.
The Wall Street Journal reported earlier this year that IBM anticipates saving $168 million annually starting in 2006 through offshoring. IBM's plan — revealed in internal documents — included moving jobs away from IBM facilities including the one in Boulder, the newspaper reported.
The savings would result largely due to salaries, the report stated: A programmer in China with up to five years experience would cost the firm $12.50 an hour — less than one-fourth the cost of a programmer with benefits in the United States.
Sun Microsystems is another company with a large local employment base that is increasing its offshoring. Sun Chairman and CEO Scott McNealy, in a conversation with workers in April, announced plans to cut about 3,300 jobs. Affected facilities included the Broomfield campus, local workers said. But those job cuts would be in addition to the jobs lost to offshoring, McNealy said.
"I can also tell you that in addition to the reduction in the work force, there will be employees who will be affected by outsourcing well into (fiscal year 2005) and beyond," a transcript of McNealy's announcement reads.
Tirukkala and Forrester agree on one thing: Many companies who were not interested in offshoring before are getting more interested as the media reports an offshoring increase. But Tirukkala said offshoring will slow once expectations align with reality.
"The trend right now is if there is anything people can do by taking their laptop home and working from there for two days, well, that job will be easily outsourced," he said.
But he said many offshoring efforts fail because the executives planning them fail to see the hidden costs of sending jobs to foreign lands.
"Offshoring works," he said. "But you can't just say, 'I'm going to go over there and save money.'"
Costs such as having a staff to communicate with the foreign office during off hours and expensive — sometimes frequent — travel are often not considered, Tirukkala said. Costly communication breakdowns and cultural misunderstandings are also factors in offshoring failure, he said.
But Antman said companies should have a wider interest in keeping jobs in the United States than just the bottom line.
"I think we're at risk of becoming a Third World country," Antman said. "We had taken the knowledge jobs, and sent factory jobs overseas. And now we are chopping off the top of the pyramid. What are we going to do when those jobs are all gone?
"They say that the stockholders benefit. But what are they going to do when the country has no jobs for educated workers? We can't compete with someone who's going to be paid a nickel to our dollar. No matter how smart, or how experienced you are, you can't compete with an educated worker overseas who wants to make $2,500 a year," Antman said.
$50K is about $25/hr and probably less since most programmers don't work "only" 40 hrs/wk
Seeing that S. Carolina is the only source of the M3 in the world, 100% of them.
That is a key point. Maybe even the key point to consider in this debate.
Commo problems... in my old shop we had to fix everything the imports programmed. Some of 'em would name objects or called routines after family member's names. No jive.
The local Manpower agency is offering jobs for eight bucks an hour to people who want to drive a half hour to Washington PA and work in a banking cal center. Oh, it's only four hours a day, evening shift.
Yes, $50K is $25./hour.
Then add 3 weeks' paid time off for vacations/holidays. Then add FICA, health insurance, FUCA, SUCA, and miscellaneous other benefits.
You get $40-$45/hour fairly easily.
Don't misunderstand me: I am not arguing that this is too large a figure; I think it's reasonable (and much of it is legally required.)
And that's fine... but too often it's senior/executive management wo benefit... NOT the stockholders.
Corporations are rogue beasts -- wild in growth, fueled by fiat money and no accountability except loyalty, fealty and a cut to the great Federal and Money-center "upstreams".
At the beginning we chartered them, and kept a unilateral sovereign's right to change or revoke that charter. It was once -- at the start -- that individuals were sovereign and the government was chartered (a non-revocable charter that, I hold too) and governments acting as agents of The People would issue charters containing restrictions and demanding fealty and preservations of interests of the People upon whose behalf such charters were issued.
Such interests include primary and dominant regard for mainataining National resources in manufacturing, engineering and technology -- not to mention jobs. Simple rule -- why should I allow you the use of my car or of my house if you shall be me no rent nor abide any rules nor cut me into the good profits -- not to mention not ruining my property and my own wherewithal? Yet that is what corporations do -- and know they claim the sovereignity of individuals and then some. They are Super-Individuals enjoying immuninties and priviledges no individual may claim.
No greater nor grotesquely porcine, and swarmily unctuous welfare mama is there than the great corporations!
That is rogue. Bad mojo. Rebellion, Trespass, Extortion and Theft.
Like dinosaurs they are all dead, and so big yet the death notice is long to travel to all parts of the leviathans. Should they not fall over on us, nor in their remaining mortal and morbid grotesque dances chance to step on any of us.
That is almost all I ask -- almost -- except that I too want my fair cuts of their flesh -- for we must eat and feast enjoyably on their dead corpses.
" Corporations are rogue beasts -- wild in growth, fueled by fiat money and no accountability except loyalty, fealty and a cut to the great Federal and Money-center "upstreams". "
Just remember, every dollar the federal gov't spends has to be made by the blood sweat, and tears of an individual, a small business owner, and corporations great and small.
It's hard to grasp, but one way is to go into a federal agency - pick commerce, or education - and look around at all the people - with no sense of urgency or purpose beyond watching the clock. Those that work hard, do so with futility, because very little that benefits the country actually goes on. Yet every federal employee must be paid.....and they get paid out of the toil of the taxpayer. It boggles the mind to see the lack of reverence for the taxpayers dollar. It is simply obscene.
It is the gov't, the political class that populates it that really needs fixing. They simply take and spend too much money.
While there are corporations and individuals that get rich off of gov't contracts - I view them as extensions of gov't - it is the vast number of small business that are the real engine of the economy.
No, I do not think returning to the days of gov't chartered business is a good idea. Let companies compete within a fair system. That they are offshoring just shows how bad an environment it is here in the US to have assets and employees. Companies do what companies do. Don't blame them for offshoring - they are only doing what they must to make a profit.
" The country as a whole cheered when they sent steel jobs overseas, thus decimating huge areas of PA, WV and Ohio"
Unions killed the steel industry there, making the cost of labor impossibly high. There is still a latent sense of entitlement in many of those areas, which is why they languish even today.
It is the cost of doing business that is driving high-tech offshore today. It's gov't not unions that are the driver this time. The effect is the same, though.
Hotdog, Where are you located and how many jobs have you interviewed for in the past 2 years?
Well the States of Delaware and Nevada would beg to differ! THey are big at low-cost corporations, and usually take a firm aggressive stance pro-corporation in any lawsuits. Usually -- because very recently the Delaware Courts made what may be a landmark ruling for a shareholder against the Corporation.
Still .. my bigger point, and one I'm stlll mulling around is that the very fundamental structure of the modern US corporation is busted. Irredeemably.. That is the ways that ownership are structured, and the ways that government oversight is applied -- regulation and original charter, recourse in courts of equity and liability in criminal courts -- all bulloxed up. Major.
Presently creates a bad ownership. Preverted in every direction. Doesn't lay our responsibility and anywhere close to properly specifiy who is due what, etc.
I'm suggesting that the "corporation" as a vehicle for doing business in close association, of easily trading shares of commonly owned property, of limiting liability -- that in entireity from charter, to what has grown up in case law and legislation, in regulation about both corporations, shareholders, officers and employees has to be completely redone.
I'm located in TN but work in plants all over the world. We don't have any plants here in TN but they let me move here (office in the home) so the wife could be close to the kids (since I travel so much). I haven't interviewed for any jobs in the past two years but I checked my history and can tell you I have been offered 14 jobs in the past 2 years. I'm happy where I'm at...yes I could make more money but money isn't everything to us. God then Family are the priorities.
"I think we're at risk of becoming a Third World country," Antman said.
Amen, I could move and get a job - uprooting my family and destroying my child's ties but I want to stay for my family's sake. Having paid off my house and having no debt makes me leery of acquiring any. I too am in TN but I have not had the experience you have. I have been out of the job market for a few years (long story) and just recently started looking. I have found there to be a glut of engineers in the Memphis area and have had headhunters offer me interviews almost everywhere but here.
If the subject is even brought up in Congress you'll see the Dow sink below 3,000 and the commencement of the next Great Depression (which won't be too good for the job market). An awful lot of the perceived value of American corporations stems from the legal advantages they possess.
Some. And some vehicle that provides limited legal liability to money-only investors is needed. If we expand "legal advantages" to mean more generally -- legislation that protects corporations generally beyond simple limited liability, or that gives them special and more valuable status in regulation, or garnering of contracts, or grants of exclusions in markets and territorys, or grants of patent-like copyright (e.g. look-and-feel) and patent, or outright grants of money, or discounted use of federal, state and city property, or a harsh rule of bakrupts for individuals with an easy one for corporations, or exculsive access to fiat money originations -- whwre those boons are garnered by bribery, emouliebnt and entangled alliance between legislators, politcal parties and corporations -- then yes we agee.
The stock prices reflect one thing: the publics wages and borrowings are being herded into those pens -- and those pens almost alone. The only alternative is government securities.
Let this come up in debate and the house will come down while the president dodges and equivocates. Gonna be an avoid at all costs issue I'd bet, that or a smile and pleasantries snowjob.
Yup we are headed to being a third world country besed not only on offshoring but also, illegal aliens, the belief that food stamps is farming when we import our food from abroad, welfare for people who multiply rather than learn ABCs etc.
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