Outsourcing's Uneven Impact (Different Cities Feel More or Less Pain)

Business Week ^ | February 22, 2007 | Peter Elstrom

[2ndDivisionVet]

The mere mention of outsourcing and its impact on the U.S. is enough to elicit strong emotions on either side of the issue. Proponents argue that relocating low-skill service jobs, like those in customer service or data entry, to foreign shores is necessary to ensure the productivity and competitiveness of the U.S. economy. Detractors say American companies are betraying their own workers and destroying the middle class, all in the name of the almighty dollar (see BusinessWeek.com, 11/8/06, "Outsourcing: Job Killer or Innovation Boost?").

But amid the debate over whether outsourcing is good or bad for the U.S., an important point has been largely ignored: Outsourcing is as much a regional issue as it is a national concern. Certain cities and areas are hit hard, while others remain largely unscathed.

The overlooked point is made plain in a new study from the Brookings Institution that attempts to predict which parts of the country will be most affected by the loss of jobs to foreign shores. Metro areas in the Northeast and the West are most vulnerable, while those in the Midwest and the South are less so, according to the study. "There had been almost no work done on which metropolitan areas would be most affected," says Howard Wial, an economist with Brookings, a think tank based in Washington. "We wanted to address that."

[CarrotAndStick]

http://timesofindia.indiatimes.com/Euro_techies_want_India_stamp_on_CVs/articleshow/1782159.cms


European techies want an India stamp on CVs

[ 20 Mar, 2007 1118 hrs IST | PTI ]


HANOVER: India enjoys an unparalleled reputation as an outsourcing destination for the high-tech sector and the Diaspora of homegrown computer programmers has long been transforming the global economy.

But some European entrepreneurs are turning the globalisation equation on its head, recognising India as a bold, hungry market that is likely to assert itself in new ways and eclipse much of the West in the coming years.

Employees of the German unit of outsourcing giant Hexaware now spend months at a time living in India, taking a pay cut as they draw an Indian salary and live in average Indian apartments to get a taste of real life in the country.

“Our staff has to understand the culture and system in India. You can't do that over the phone or a brief induction training course," Gerrith Hermes, the CEO of Hexaware's German unit, said at the world's largest high-tech fair, the CeBIT.

“You need three or four months living and working in India to begin to understand how people react there and why some approaches work better than others,” he said.

Hexaware is an Indian company that employs some 150 people in Germany -- a reversal of the standard globalisation set-up in which Western companies cut costs by sending jobs to low-salary, low-cost markets such as India.

Hermes says Hexaware's practice of sending its German staff to India to watch and learn is less a quirk than a preview of rapidly changing dynamics in the 21st century economy.

"I could well imagine that in the next few years German students won't necessarily do internships at German companies but rather go to India," he said.

[mikeybaby]

I feel that characterizing "customer service" as a low skill job is wrong-headed and dangerous.
As a factory rep for a relatively high tech product, our customer service people were skilled, well paid, and knew as much (in some cases more) about the product than the reps did.
The really sticky stuff, or issues that required a specific level of technical expertise or knowledge of the customer or the geography, were handed off to the reps.
In some cases I only learned of the resolution to a problem from the customer.
Worked for us.

[camle]

the problem with outsourcing is that by the time you add in whatever is necessary to maintain the level of service, you lose all of your cost savings. So they don't monitor the contractors with any real vigilance, and service declines rapidly.

But then again, you can't shake down government employees for campaign contributions like you can contractors, so this represents a way for the pols to steer tax money from providing services, laundering it through contractors, into their own pockets.

that's why politicians like outsourcing.

but the other side of the coinc is that you have a choice of overpaid union employees who cannot be fired doing a job for high wages, or underpaid, untrained staff doing the same job, only their bosses skim the money off the top, which means less service for the same money - but wait! there's more:

The long term effect is that the contracted employees end up making the same money as their union counterparts, and the service winds up costing much more, but the politicians don't care because all that extra is going right back into their pockets.

The real solution is getting the government out of the business entirely. like that will ever happen.

[starbase]

Oh, don't get me started on this one. I just had the most horrible experience with Amazon.com. I've been living outside the country, doing teaching jobs in Asia, and I only just returned last month (and I might go back to Asia soon, I think I've been culturally corrupted!)

Anyway, I had to buy some important software from Amazon, and I had like $300 on my Amazon check total from a previous order I'd canceled. So I sent an email to their help desk asking that if I wanted the $300 back how would I do that? Then I realized the software would come in at around $300 so I went back to the site and my money was gone, my account said $0.

Turns out that, just because I asked the question, some Indian idiot actually started the refund process without my permission! Well then you have to send emails and wait 24hrs because they go out of their way to hide the 800 number (to save themselves money) So finally after 48 hours of waiting (that's two days, for this simple thing) I got someone to stop the refund, and I told them the exact order to spend the money on.

Instead, the refund process did stop, but then they immediately shipped a second order I had placed! Not the software I needed so badly. They said the "system" decided which to send, but a person manually stopped the refund process, if they told me the "system" would then choose my next order, I would have canceld all orders except the one I wanted! An American would have warned me, but the Indians just stopped the refund, then let random chance choose my next paid for order!

Then I tried to pay-by-checking-account directly for super speed, and to make a long story short, the software interface (probably written in India by people who lie through their teeth about what they can write, I have seen them do this) was so buggy and filled with errors that they couldn't even take the money out of my checking account that was sitting right there!

And calling in was useless, I soon found that, even if I could understand the person (who was 90% of the time in India) they would tell me anything to get me off the phone. Only when the 10% of the time I got an American would they just plainly tell me what would or would not happen. But Indians are afraid of getting fired if they don't look "useful", so they said all sorts of things.

In short, I'm still waiting for the refunds from both purchases, it made me so angry I sent everything back, only to learn a check refund takes....3 to 5 weeks!!! And I'm still waiting for it. Outsourcing is destructive and a total burden on the consumer. I won't shop from Amazon.com again.

[RipSawyer]

Only when the 10% of the time I got an American would they just plainly tell me what would or would not happen.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

I don't know how much longer that will last. I find that more and more I am running into the same problem with Americans, even our formerly courteous and helpful South Carolinians in some cases. I sometimes get the equivalent of the old joke in which you ask,"could you tell me how to get to (name a town)" and the old farmer leaning on his gate with folded hands deadpans, "yep", with no other comment forthcoming.

[starbase]

could you tell me how to get to (name a town)" and the old farmer leaning on his gate with folded hands deadpans, "yep", with no other comment forthcoming.

Ah yes, I remember a variation of that joke. Then the driver gets angry and says "What? Are you stupid?", and the farmer says, "I'm not the one who's lost".

Yes I think you're right, I've been on a rant on other threads about how I was living in Asia, have just returned, but the "recruiters" at job boards are these silly, immature rude little people, and they're Americans!

So far, they've used that position to openly spar with me, when I'm only talking to them because I want to talk about posted jobs.

I can't believe it, these youngsters (twenty somethings) really can't seem to differentiate between a man talking to them because he's talking business, and a man talking to them because the 20-something is personally important.

I'm on the verge of going back to Asia (where I received a job offer after sending 4 emails to colleagues in teaching) rather than stay here and talk with even one more of these silly people!

So I agree, things have deteriorated, and I was only out of the country for 3 years! Amazon used to be flawless, and job recruiters seemed more serious, now both are in a state of degradation. I think I'll leave and won't return till I can purchase that self-sustaining small farm I've always wanted, then I can stay out of the decline!

[Non-Sequitur]

bump

[mikeybaby]

I am sympathetic, but in some cases "outsourcing" is not the culprit.
My wife worked as an IT consultant for GAP (the clothing guys) at their regional HQ in Columbus, OH, for 2 1/2 years.
The majority of the programmers were Indian and Russian ("insourced", I guess).
The Indian guys were generally competent, but the Russian guys were spooky good.
The main problem she encountered arose when trying to re-code or update existing (production) software.
The code was generally sound, but the comments (generally unreadable at best, misleading at worst) were horrible, with language being the main culprit.
Think reading a Chinese manual that has been produced for the US market times 100.
The Russians used the brute force approach (this sonofabitch is going to work or else), the Americans called a meeting, and the Indian guys were busy trying to split up a pack of smokes between the four of them.
Wild.

[starbase]

Yes I have a background in software design, and Indians and Russians do seem to be the two main groups of "others" besides Americans. In my experience, the Indians lied constantly, but could write code sometimes. And the Russians stole other working code they found, took it apart, and then used what they learned from others. That's why they seem so fast and able to learn anything. But in a vacuum I think their IT industry would look a lot like, well, Russia's!

It's funny their methods strongly reflected their national characters.

As far as outsourcing being the problem, all I can say is that my entire experience with Amazon had been exclusively positive, I leave the country for three years, and when I come back the service and performance is atrocious, and the ONLY people I find to talk to are Indians. So I lay the blame on them and on Amazon for making the customer pay for the 20 cent an hour help from an alien culture that doesn't understand us (remember the "help desk" people are actually IN India!, they've probably never been to a first world country, so how can they "serve" us at a first world level?)

[Malesherbes]

Last week I got a call from a university I attended wanting a contribution. The guy calling had an Indian accent. I thought at first he was another alumnus who happened to be from India. Then it occurred to me that maybe the university was outsourcing their dunning process.

[cinives]

The only way to buy online is via credit card. No one wants chargebacks on their merchant account so they pay better attention to you.

[cinives]

When Raytheon came out with their first Loran-C product for the maritime industry, I was a beta tester for one model. The manual was written by their Japanese tech writers and translated by someone obviously Japanese.

The first instruction after the connectivity diagrams was:

Flip switch up for all happiness make.

I have that manual page framed on my office wall. I've laughed about it for almost 30 years.