'Outsourced' Programmers Finally Get Same Benefits

'Outsourced' Programmers Finally Get Same Benefits As Laid-Off Factory Workers--A Fair, But Costly, Development

Companies lay off workers for many reasons--they're employed in a unit that isn't profitable, they worked on a discontinued product, the employer is downsizing, etc. Or they work in an industry that's losing ground to foreign competitors with lower costs. Given the myriad ways in which one could suddenly find himself or herself out of a job, is there any justification for the government singling out the latter category for special benefits--like an extra year's worth of unemployment payments?

Not really, but as long as the feds practice this kind of economic discrimination through the Trade Adjustment Act, it's only fair that IT workers who have been "offshored" get the same treatment as factory workers. It's a wrong the government has finally righted, with a little nudge from the courts. Here's how it went down, and why the feds' decision--right or wrong--may end up costing taxpayers a lot of money.

In a ruling that got astonishingly little attention given its political sensitivity, the Department of Labor this month effectively reversed its longstanding position that software developers aren't eligible for assistance under the TAA, which was written with rust belt factory workers and Southern textile shops in mind. Labor held that coders didn't qualify because they weren't manufacturing a physical product, or, in the department's narrow legalese, an "article."

That distinction never made any sense and just about everyone except the bureaucrats seemed to know it. Just because a product doesn't arrive on our shores in a crate doesn't mean it's not subject to the same economic laws of production, supply, and demand as, say, a box of ball bearings.

Labor came to this fairly obvious conclusion only grudgingly. Four CSC workers who were laid off because production of the app they worked on was moved to India applied for, and were denied, TAA benefits. They sued, and their case was heard by the U.S. Court of International Trade. The court ruled that Labor's position on software not being an "article" deserving of TAA status was "arbitrary and capricious." The department was forced to reverse itself, opening the door for thousands of IT professionals who feel that their jobs have been "offshored" to claim TAA benefits.

(If you're an IT worker whose job got outsourced, you really should buy each of those former CSC employees a couple of cold ones!)

So why was Labor so stubborn on this issue? Here's one theory: This country has already gone through the restructuring of its manufacturing sector. You'd be hard-pressed to find a factory of any size still pumping out commodities in the United States. What's left are a lot of smaller, leading-edge shops that employ workers with highly specialized engineering skills. For manufacturing workers, TAA benefits are a bill that's mostly been paid.

Not so with the technology and professional services sectors. The rationalization of these industries on global lines is just beginning. Outsourcing has been a hot-button issue for years, but to date only a small percentage of IT and services work has actually gone abroad. But that's changing--fast. Evolving technology is making offshoring progressively easier to manage and less expensive, and managers are becoming increasingly comfortable with the practice as they gain experience with it. As a result, big IT services vendors like EDS, IBM, and CSC are set to double or even triple their Indian head count over the next couple of years.

They wouldn't be doing that unless they were set to send lots more work to that country. All this means that tens of thousands of U.S. IT workers currently employed could soon have to go through a career transition--either to a higher-level IT job (yes, there will be lots of them...see manufacturing above) or to a different profession. Labor's new ruling requires the government to help pay their "transition costs." The department is surely aware of this and may have resisted granting TAA eligibility to programmers for as long as possible. After all, who's going to pay the bill? Yeah, you guessed it.

Many of us "computer programmers" would do just that, however competition and intellectual property rights stifle innovation. The amount of capital required to be successful is a significant barrier to entry for most small businesses. The current small business programs are not sufficient to offset the risk of a failed entrepreneurial endeavor.

Generally software engineers are very intelligent and to a small degree business savvy in regard to identifying business problems to be solved. However, they are generally very risk adverse and not always good at marketing their solutions. Overcome the risk factors and offer some protections from the "800 pound gorillas" and you would see a flurry of new enterprises spring up.

Software development is expensive and time consuming when done correctly. Lobby your representative for more tax based incentives and investment programs. Ask them for better liability protections for small enterprises. Have them lobby the fed for better protections from international IP piracy. Give these entrepreneurs a fighting chance and they'll begin the fight.

Until then stop babbling on about how they need to start their own businesses in an industry that I doubt you understand.

"Actually, the biggest area of new growth in the outsourcing arena is in back office areas."

Most of the back office jobs being outsourced low-skill Customer Services, data entry, and Accounts Receivable jobs (balancing the checkbook isn't real accounting) are being outsourced. Only a small sliver of the jobs being outsourced are college degree level science, engineering, and computers jobs. This is called why getting a college degree is important.

"Areas such as accounting."
Please don't compare someone in A/R who tries to "balance the accounts" with an accountant with five years of education and a CPA. It's true that the A/R and payroll jobs manned by people who have, at most, an associate degree could be done just as well, but for much less money by workers in India. However, you can't outsource the financial analysts who project your sales or your internal auditors who make sure that your compliant with the U.S. accounting rules to India. Considering that GAAP rules are significantly different from accounting standards anywhere else in the world, you really think that a Fortune 500 company is going to outsource rules on how it recognizes revenue or accounts for inventory to an accountant in Mumbai?

"As an example of this look at Dell."
As a consumer, I'm thankful for Dell and it's innovative structure because it has led to a significant decrease in the price of PCs. I don't think that the price of my computer should be increased to pay the salaries of people working in Dell's payroll and A/R departments, especially since they don't add to the value of my computer.

"At some point, this house of cards collapses as the actual producers of goods or services bypasses the US overhead and do it all themselves.... going directly to the US market."
It's true that companies in China might one day completely take over the manufacture of plastic garden thongs and the little figurines that they put into McDonald's Happy Meals. But manufacturing cheap crap isn't the great strength of U.S. business; innovation is. For instance, who came up with the idea of the Ipod... a little American company called Apple. What American business needs is less highly paid white collar workers whining about being laid off and more of those workers starting their own companies and working on the next "Ipod."

Actually, you've missed several developments.

It is becoming common for xrays to be read in India by doctors... not exactly unskilled or low skilled jobs.

And when I said engineering jobs were being outsourced, I meant EXACTLY that.... college degreed electrical and mechanical engineers. Many trained here, but who chose to return to their native countries where even with lower wages their standard of living is much higher.

As far as Dell goes.... the trend for them is to define the specification for a product they want, overseas companies design and produce to those specifications. Note, this process uses marketing people at Dell and engineering people at overseas companies.

If you've read the news lately you have seen where Microsoft has pledged several BILLION dollar to educate and train programers in China.... again, college educated jobs.

Now accounting.... yes, the Indians have focused on the US accounting markets, setting up college programs in India to train college level accountants for the US in India. These programs are overseen by Accountants who were trained and worked in the US.

The high tech manufacuring business is rapidly moving to China... they may actually produce more NOW than Tiawan, and certainly they produce more than Japan. Yes, China does produce some horrible crap, however they are now the #1 producer of advanced CNC machines... not exactly crap.

You also have to remember, some countries, notably China, are not really known as respecting intellectual property rights. So while Apple invented the iPod (actually, products had already been around for awhile - see iRiver)(Apple was just better at marketing it), it won't take China long to start knocking it off.

"It is becoming common for xrays to be read in India by doctors... not exactly unskilled or low skilled jobs."
Let me get this straight... U.S. hospitals are going to send their Xrays all the way to India to be read and then get them turned around in time to get the patient treated. Are they also going to perform surgery over the Internet?

It doesn't even make sense for lab results to be sent to India. The postage, time concerns, etc. make that impossible. (BTW, lab and X-ray technicians are fairly low-skilled positions, one only needs a JC degree for that type of work).

"And when I said engineering jobs were being outsourced, I meant EXACTLY that.... college degreed electrical and mechanical engineers. Many trained here, but who chose to return to their native countries where even with lower wages their standard of living is much higher."
It isn't the Indian and Chinese students' (or the U.S. schools or companies that might hire them) frakking faults that U.S. teens won't get off their a**es and study for their SATs and that they aren't being encouraged to study math and science. MIT and other top U.S. schools are going to pick qualified American students over foreign students; it's just that there isn't enough qualified U.S. students who want to study engineering, math, and science.

"As far as Dell goes.... the trend for them is to define the specification for a product they want, overseas companies design and produce to those specifications. Note, this process uses marketing people at Dell and engineering people at overseas companies."
Michael Dell's job (and as a consumer of his products I support him in this endeavor) is to get his computers to consumers as quickly and cheaply as possible. It isn't his fault that foreign companies can do it cheaper than U.S. companies.

"If you've read the news lately you have seen where Microsoft has pledged several BILLION dollar to educate and train programers in China.... again, college educated jobs."
Again, the fact that American teens spend all their time text messaging and playing video games is Microsoft's fault how? (BTW, the Gates foundation also gave a big grant to Chicago public schools).

"Now accounting.... yes, the Indians have focused on the US accounting markets, setting up college programs in India to train college level accountants for the US in India. These programs are overseen by Accountants who were trained and worked in the US."
Considering that the Big Four throw big bucks at my alma mater UIUC, the fact that you think that an accounting firm forging a strategic partnership with an Indian university means that the Big Four are going to start "outsourcing" audits to India makes me laugh muchily. U.S. accountants have to be certified in order to sign off on an audit. To be certified, an Indian auditor would have to take the necessary classes stateside, pass the test, and maintain one's qualifications through continuing education. Furthermore, the U.S. accounting standards are so different from international accounting standards that it would be counterproductive for any international university to teach them. (I should know; I didn't get to spend a semester overseas because of my major).

Instead of trying to use cheaper Indian labor to take over for its American auditors, what the Big Four are doing through their partnerships with Indian universities is making sure that there are enough qualified accountants in India to audit the public companies there. This is actually a good development for American investors and companies as it should inspire more confidence in Indian companies, which have historically been known for cronyism.

"The high tech manufacuring business is rapidly moving to China... they may actually produce more NOW than Tiawan, and certainly they produce more than Japan. Yes, China does produce some horrible crap, however they are now the #1 producer of advanced CNC machines... not exactly crap."
However, no intellectual property rights which is why Microsoft and other cutting edge companies aren't keen on expanding into China.

"You also have to remember, some countries, notably China, are not really known as respecting intellectual property rights. So while Apple invented the iPod (actually, products had already been around for awhile - see iRiver)(Apple was just better at marketing it), it won't take China long to start knocking it off.)"
Again this is actually hindering China's ability to become an economic superpower. Sure, they'll start knocking off Ipods for half of Apple's price. (There's already American knockoffs of the Ipod being manufactured legally). However, the Chinese aren't going to come out with the next "Ipod" --- Chinese inventors aren't going to risk bringing a ingenious invention to market and then having their neighbor steal their idea and profit from it.

I'll agree with you that America isn't very good at manufacturing. Anyone who has owned both one of those lemons from GM and a Japanese car knows that this is the case. However, where America reigns supreme is in the area of innovation. The Internet didn't come from China; it came from the U.S. It doesn't matter how many customer service or manufacturing jobs are outsourced to India; as long as we maintain that edge America's going to be fine. (And the best way to maintain that edge is by computer programmers who were supposed to feel sorry for 'cause they lost their cushy six figure jobs to outsourcing to get off their butts and start thinking of the next Google).

Again, you are overlooking something.

X-rays... have you ever heard of something called the Internet? The xrays are scanned at high res (if they aren't taken digitally in the first place) emailed to Doctors in India, examined, results emailed back.... faster and much cheaper that having a Doctor do it stateside. Of course, there are the HIPPA questions, but nobody seems too worried about that.

Accounting.... those colleges in India ARE training in US accounting standards.... again, as I said, they are doing so to target the US market. The Indian government recently announced just such a program.... last fall? Can't remember exactly when.

You say in one place 'However, no intellectual property rights which is why Microsoft and other cutting edge companies aren't keen on expanding into China.' and yet you agree with me in another place that Microsoft has recently announced that they are going to spend several BILLION dollars in China training computer programmers. Isn't this self contradictory?

Yes, the US has stayed at the top through innovation, but increasingly as new ideas are developed they are actually produced elsewhere. The basis of the technical skills needed to do so is shrinking thereby. How do you get to be a top engineer if there are no lower jobs to develop your skills? How do you get to be a top auditor if there are no jobs available to you below that? Do you walk in to a top job right out of college, or do you work up to it?

I look at the big picture, but I am also conversant with the individual pieces.... I guess that's what I get for being a student so long at so many levels.... and having so many alma mater's.

I have worked in engineering areas of many different kinds... I know many engineers who have left the field through reduced opportunities or reduced wages.

Engineering is a tough field requiring years of hard work. The US has lost over 50% of it's machine tool capacity in the last 10 years.... not a healthy trend.

And yet, marketers who have much less training and technical skills earn more on average.... something is wrong in that picture.

Can you blame students for not wanting to go into engineering?

Which profession is regarded higher in today's society - engineering or athlete?

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