Congressman Jay Inslee (D-Wash.): "U.S. won't stop outsourcing to India"

NEW DELHI: "People are worried about job security in the U.S. and therefore it is not terribly surprising to find a few people who will oppose outsourcing to other countries," said Inslee, a member of the Democratic Advisory Group on hi-tech issues.

"Some people may support the promulgation of legislation to ban outsourcing but the majority of U.S. industry and policymakers are not in support of creation of new trade barriers," Inslee, who is on a visit to India, told IANS in an interview.

"I don't think it (a ban on outsourcing) is going to happen. We want to keep our doors open. I believe any effort to restrict market access will adversely impact the U.S. economy. The policy of protectionism will not take us anywhere.

"For any economic growth to occur, a country needs to add more value to its products without increasing the cost and outsourcing to India helps U.S. companies do exactly that," added the Congressman.

The Indian government has reacted sharply against four American states -- New Jersey, Maryland, Connecticut and Washington -- reportedly proposing to ban outsourcing of government contracts to companies outside the U.S.

Commerce Minister Arun Jaitley said the move was against the principle of market access and India was placed on "high moral ground" to take it up at the World Trade Organisation (WTO) negotiations.

The New Jersey Senate had unanimously cleared a bill on December 16 preventing public enterprises in the state from outsourcing work, specifically to India. State Senator Shirley Turner had proposed the bill.

The bill prohibited public enterprises from shifting their call centres abroad for "cheap labour" with a view to creating more jobs for Americans as the unemployment rate in the U.S. had soared.

The bill was taken up for discussion by the Senate Committee in February this year but couldn't be passed and has now been put on hold. It is now likely to be discussed in the Senate next month.

Close on New Jersey's heels, other states like Washington and Connecticut are also reportedly mulling a ban on outsourcing contracts to India.

Inslee, a representative from the First Congressional district of Washington, however said there was no move in his state to introduce a bill that would make outsourcing difficult.

"Ours is a trade-oriented state and we will not take any step that goes against the principle of market access. Our ability to access other markets will diminish if we ourselves block access to the U.S. market. Trade is a two-way street."

India's vast pool of English-speaking and cheaper manpower, educational system and training programmes have helped transform the country into a global outsourcing superpower over the last few years.

India's software exports grew by 29 percent to $7.5 billion in the year to March 31, 2002, with some 60 percent going to the U.S.

The country's rapidly growing business process outsourcing (BPO) industry has virtually turned it into an electronic housekeeper to the world, taking care of a host of routine activities for multinational giants.

More than a quarter of Fortune 500 companies like General Electric, American Express, British Airways, HSBC and Citibank are shifting their back office operations to India.

Inslee, who is a part of the Congressional Caucus on India and Indian Americans, said Indian technology companies and professionals in the U.S. have played a very important role in the American economy.

"Indians in the U.S. have created tremendous intellectual capital and helped in the growth of the knowledge economy."

This is from unionvoice.org:

Did you hear this? This is from a letter suggestion from UNIONVOICE.ORG!!!!!!!!!

UINION!!!!!!!!!!!!!!!!!!!!!!!

____________________________

I am writing because I am increasingly concerned about the escalating practice of moving U.S.-based information technology (IT) and other computer service jobs abroad. I am aware that you have supported offshoring of IT jobs, particularly to India, and I'm strongly suggesting that you reconsider your position.

I understand from the Washington Alliance of Technology Workers and Forrester Research report that over the next 15 years 3.3 million U.S. service industry jobs and $136 billion in wages will likely move offshore to countries such as India, Russia, China, and the Philippines. The IT industry is already leading the initial exodus, with legal, accounting, and other sectors to follow.

Whether in highly visible corporations like Microsoft, or as part of other businesses such as an insurance company, IT work has fueled the aspirations of many local communities as well. It is in large part responsible for wealth creation in our country. While economic globalization may prove beneficial to multinational corporations, it is not at all clear that it will benefit most workers here or abroad. It is one thing to have access to cheaper goods, as globalization promises; it is another to have the jobs to pay for them. What we need for our future and security is for our jobs at all skill levels to stay here.

What is the future of our country if so many of our jobs, including government IT jobs, are moving offshore? It looks to me like a race to the bottom, with few social safety nets for the many workers who will be displaced.

My issue is not with IT workers in other countries, but with the practice of moving these jobs abroad with no apparent concern for U.S. workers, many of whom are highly trained and are now out of work.

Because this emerging issue is so important to our future, I urge you to support calls for an immediate congressional investigation into IT offshoring. We need to look much more closely at the ramifications of this disturbing trend -- on U.S. workers, the communities in which they live, and the future economic and technological security of this country.

__________________________________________

Which union do you belong, to, Willie Green?

The USSR, maybe?

A level playing field might be a nice start. Forget India and the like. Let's just discuss Mexico and Canada.

In those countries, they refuse to pay market prices for drugs.

A US company spends $10,000,000 researching, getting approval for a drug. The physical cost of producing a pill is $.10 once they have spent all that money. The company charges americans $4.00 per pill for the drug, to recoup their cost and to eventually make a profit.

We as consumers, and as businesses pay higher health coverage in order to pay for drug benefits.

The mexican and canadian governments on the other hand, refuse to allow drug companies to make "obscene profits" in their countries. They tell the drug company, that they can sell their drug for $.13 cents a pill, generating 3 cents in "profit" or they will copy the drug and sell it themselves.

The US companies have no protection, so they sell the pills for slightly more than the cost of ingredients and manufacture.

This is not a level playing field. This reduces the expenses of doing business in Canada and Mexico, at the expense of americans.

You are an American worker, why is this your fault? This is not even a matter of output. The american worker also has to deal with higher taxes to pay for the military that a Canadian doesn't have to, because Canada doesn't need a strong military because they are our neighbors.

Until matters like these are equitably resolved, it isn't unreasonable for our country to level the playing field.

Isn't that what capitalism is all about? Level playing fields, competing on merit? We subsidize by proxy the defense and the medical bills of our neighbors and then our companies move over american jobs to these places because the subsidies are nice for the bottom line.

That isn't a free market. It's stacked against hard working, solidly producing workers.

Your analysis is a sound one. The question you pose is that of politics. I would like to believe that our country is powerful enough to extract a retribution for the actions of the Mexican and Canadian gov'ts. So why does it not?

I believe that this is precisely because a good half of Americans, including many on this board, share the anti-corporate views of those governments. They do think that the profits of our drug companies are obscene.

This has nothing to do, however, with whether as consumers we should subsidies some of our fellow citizens just because they want to enjoy the salaries higher than the market dictates.

The only way you could see yourself as subsidizing overpaid (technical) workers is the increased prices you would have to pay for your toys made by American workers. And you are right; you would have to pay a higher price.

Work like engineering and software design/programing is difficult and takes a high level of training and experience to do competently. Americans who can do that work have industriously invested time, money and shullsweat to earn their prices.

Their work is now being shipped to other countries because of the simple fact that the cultures thereof do not have the ethic and motivation that American has, or they would not need American jobs given to them by opportunists.

I get the impression that you, for the thrill of being able to own new toys, are willing to see the infrastructure of America's technical talent base destroyed. To be able to buy cheap things, and therefore more of them! And you speak of this base, shallow personal desire as a foundation for government regulated business policies.

Most folks I know, while they may secretly be captured by the same vision, have the societal consciousness to be ashamed and remain silent.

You are not overpaid if you get more money than an Indian worker does --- you are more productive than he is. But if you are three times more productive and he makes $10,000 per year, then you should get $30,000 --- but not $40,000. If the latter is the case, the job moves overseas.

You sound like an economics professor -- correct as far as you go, but because of gross oversimplification, you don't go far enough.

Costs of power for industrial processes and cost of transportation for product also need to be factored in -- and those are only two more components of a simplified model.

But there are other issues here. Capitalism is one aspect -- but so is national security and civic responsibility. Lowering the cost of goods is one aspect -- but also having consumers who earn enough to not only buy the consumer goods but also support our military (which costs more than the next 10 militaries in the world combined.)

I could go on but you should get the point.

This is a common fallacy:

I am not going to repeat the argument: if you are interested, I gave specific examples to make precise the issue at hand. In essense, the question is not whether American workers are good --- they are and better than anyone else --- but whether they are pair in proportion to how much better they are. This has nothing to do with culture or ethics: if American workers are three times better than others, they should be paid three times more. But not four times more.

You are too much in haste to explain opinions of others by their morals or the lack of thereof. Their understainding of basic economics may be a better explanation.

Capitalism is one aspect -- but so is national security and civic responsibility. Lowering the cost of goods is one aspect -- but also having consumers who earn enough to not only buy the consumer goods but also support our military (which costs more than the next 10 militaries in the world combined.)

A agree with your concern. The devil is in the detail, however. Which sector should we be protecting? Oil? Steel? How does AT&T outsourcing of the customer service call center threaten national security? Not at all. Yet this is what most people lament about. And their laments amount to them wanting me to pay programmers $75/hour (via the services purchased) just because they already enjoued them in the 1990s and want to maintain THAT lifestyle, no matter whether it was warranted then or now.

ADC Telecommunications Alcatel Telecom U.S. CYRIX Corp DSC Communications EDS Ericsson Fujitsu Communications Inc. Hewlett-Packard-Convex Honeywell-Micro Switch Intervoice, Inc. MCI Network Services NORTEL Raytheon E-Systems Rockwell International Corp. Samsung Siemens Southwestern Bell Telephone Texas Instruments

The list include French (Alcatel), Japanese (Fujitsu), Canadian (Nortel), German (Siemens), Swedish (Ericssons), and Samsung (Korean) companies.

So were these companies also wrong when they relocated operations in the U.S., outsourced various functions to the U.S., and gave jobs to Americans instead of folks back home?

Is Alcatel, which is a French company, cutting American jobs and as you said "outsourced 100% of all manufacturing and purchasing, much of it back to the Frogs in France." doing the right thing or the wrong thing?

The list include French (Alcatel), Japanese (Fujitsu), Canadian (Nortel), German (Siemens), Swedish (Ericssons), and Samsung (Korean) companies.

So were these companies also wrong when they relocated operations in the U.S., outsourced various functions to the U.S., and gave jobs to Americans instead of folks back home?

Of course, the point was made simple. But we also were discussing the IT sector, were the costs you refer to are negligible.

Okay. Here are some "hidden" IT costs from outsourcing IT.

(1) Only 15% of IT projects are completely successful, and maybe another 15% to 30% are partially successful. The rest fail completely. The primary cause is that the customer requirements are not all correctly gathered (resulting in the wrong system being built), and/or the requirements that are gathered are not fully understood (resulting in the right system being built wrongly). The primary cause of this is FAILURE TO COMMUNICATE CORRECTLY. This has nothing to do with programming skills. Working with people 12 time zones away, whose understanding of the English language is a bit different, and who come from cultures where no one wants to ever admit they don't understand something, will result in a much higher failure rate for systems projects.

(2) When a company places its key back office systems and corporate data offshore, legal recourse for having the data hacked, damaged, and stolen and sold to competitors (industrial espionage) is very limited. Bottom line, they can sue but will be SOL.

(3) Permitting their IT workforce to become predominantly foreign permits terrorist economic attacks. It is then easy to build back doors, put trojans into the software, and do all kinds of bad stuff. Diversion of shipments for purposes of theft. Use of the shipping containers of private companies to be used to ship terrorist personnel and material with completely legitimate (i.e. not forged) documentation. Diversion of capital for theft. Access to customer data for purposes of theft using customer credit cards. Access to customer data for purposes of identify theft for terrorist cover identities. Shall I go on?

Guess what...outsourcing IT goes WAY beyond just the dollar per hour costs of programmers. The reality is the value of IT personnel to a corporation is vastly more than just their knowledge of the programming language de jour. The ability to effectively produce and then protect useful systems for corporations goes far, far beyond simple programming skills. The fact that you are ignorant of that may be because you are not that knowledgable about IT. But the corporate officers and board members should know it. The fact that they apparently don't will eventually come home to roost...when it is far too late.

WashTech News
May 30, 2003

Story by David Beckman

Despite appeals from many of his constituents to help stem the flow of high-tech jobs to countries like India, U.S. Rep. Jay Inslee (D-WA) of Washington state is in New Delhi this week, where he assured Indian government officials and business executives that any measures currently before state legislatures or the U.S. Congress which aim to curb offshore outsourcing are likely to fail.
“These bills won’t go anywhere,” the Associated Press reported Inslee as saying Wednesday.

Inslee said he traveled to India this week to promote trade opportunities for his state’s businesses, namely Boeing and Microsoft. He was also scheduled to be the keynote speaker at the Third Annual Baramati Initiative on Information Computer Technology and Development.

but whether they are pai[d} in proportion to how much better they are

The whole thing boils down to the fact that the modern day "free traders" are actually shills for the WTO and the UN, and their plans to 'haromonize' wages around the world. Go read the Doha agenda, and the GATT Uruguay Round. Of course, wages in the developing countries mustn't go up, ours must go down.

Americans seduced by the idea of free trade are just the handpuppets of the WTO and its insistance on becoming the source of all governance for the globe (no America, no Constitution or rights for Americans when they are done with us). It isn't free trade that is pushed here. It is wage harmonization and cultural relativism.

Governments get in the way of so-called free trade by regulating labor and setting standards (no sweatshops,no child labor, safe work environments). The standards imposed by our goverment are not echoed in the developing countries. Imposing our standards on the developing countries would raise their wage immediately closer to our level, but no globalist will interfere with the sovereignty of the developing nations. They will however interfere with the soveriegnty of our nation, by buying off our politicians and suing us for "protectionism" if we try to protect our interests as citizens.

Transnational corporations do not want America to exist. They benefit from regional trading blocs.

"The European Union, the North American Free Trade Agreement (NAFTA), Mercosur in Latin America and the emergence of the Asia Pacific Economic Cooperation (APEC) agreements are significant players on the world stage. Goods and services flow freely within these blocs, but are subject to inhibitions between them. The European Union is moving towards complete harmonization of standards, regulation and fiscal provision. The enlargement of NAFTA southwards and consolidation in the Asia-Pacific region are so far looser forms of national cooperation but there is a march of inevitability towards a consolidation of these blocs. The major beneficiaries, of course, are TNCs which can exploit economies of scale and harmonize their strategies across regions. The real conflict comes when one considers labour markets. "

http://216.109.117.135/search/cache?p=uruguay+wage+harmonization&url=jSPRT-2eJwcJ:r0.unctad.org/wir/pdfs/wir94br_buckley.en.pdf

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U.S. companies will continue to outsource jobs to India to cut costs despite a move by some American states to curb flight of government contracts, said Congressman Jay Inslee.