Posted on 07/28/2003 11:01:09 AM PDT by Willie Green
For education and discussion only. Not for commercial use.
Little by little, sab maglione could feel his job slipping away. He worked for a large insurance firm in northern New Jersey, developing the software it uses to keep track of its agents. But in mid-2001, his employer introduced him to Tata Consultancy Services, India´s largest software company. About 120 Tata employees were brought in to help on a platform-conversion project. Maglione, 44, trained and managed a five-person Tata team. When one of them was named manager, he started to worry. By the end of last year, 70% of the project had been shifted to India and nearly all 20 U.S. workers, including Maglione, were laid off.
Since then, Maglione has been able to find only temporary work in his field, taking a pay cut of nearly 30% from his former salary of $77,000. For a family and mortgage, he says, that doesn´t pay the bills. Worried about utility costs, he runs after his two children, 11 and 7, to turn off the lights. And he has considered a new career as a house painter. It doesn´t require that much skill, and I don´t have to go to school for it, Maglione says. And houses, at least, can´t be painted from overseas.
Jobs that stay put are becoming a lot harder to find these days. U.S. companies are expected to send 3.3 million jobs overseas in the next 12 years, primarily to India, according to a study by Forrester Research. If you´ve ever called Dell about a sick PC or American Express about an error on your bill, you have already bumped the tip of this offshore outsourcing iceberg. The friendly voice that answered your questions was probably a customer-service rep in Bangalore or New Delhi. Those relatively low-skilled jobs were the first to go, starting in 1997.
But more and more of the jobs that are moving abroad today are highly skilled and highly paidthe type that U.S. workers assumed would always remain at home. Instead Maglione is one of thousands of Americans adjusting to the unsettling new reality of work. If I can get another three years in this industry, I´ll be fortunate, he says. Businesses are embracing offshore outsourcing in their drive to stay competitive, and almost any company, whether in manufacturing or services, can find some part of its work that can be done off site. By taking advantage of lower wages overseas, U.S. managers believe they can cut their overall costs 25% to 40% while building a more secure, more focused work force in the U.S. Labor leadersand nonunion workers, who make up most of those being displacedaren´t buying that rationale. How can America be competitive in the long run sending over the very best jobs? asks Marcus Courtney, president of the Seattle-based Washington Alliance of Technology Workers. I don´t see how that helps the middle class.
On the other side of the world, though, educated Indian workers are quickly adjusting to their new status as the world´s most sought-after employees. They have never been more confident and optimisticas Americans usually like to think of themselves. For now, at least, in ways both tangible and emotional, educated Americans and Indians are trading places.
Uma Satheesh, 32, an employee of Wipro, one of India´s leading outsourcing companies, is among her country´s new élite. She manages 38 people who work for Hewlett-Packard´s enterprise-servers group doing maintenance, fixing defects and enhancing the networking software developed by HP for its clients. Her unit includes more than 300 people who work for HP, about 90 of whom were added last November when HP went through a round of cost-cutting.
We´ve been associated with HP for a long time, so it was an emotional thing, Satheesh says. It was kind of a mixed feeling. But that is happening at all the companies, and it´s going to continue. Satheesh says that five years ago, computer-science graduates had one career option in India: routine, mind-numbing computer programming. Anything more rewarding required emigrating. Until three years ago, the first preference was to go overseas, she says. Nowadays her colleagues are interested only in business trips to the U.S. People are pretty comfortable with the jobs here and the pay herenot to mention the cars and houses that once seemed out of reach. Employees in her group earn from $5,200 a year to $36,000 for the most experienced managers.
And as American companies have grown more familiar with their Indian outsourcing partners, they have steadily increased the complexity of work they are willing to hand over. Rajeshwari Rangarajan, 28, leads a team of seven Wipro workers enhancing the intranet site on which Lehman Brothers employees manage personal benefits like their 401(k) accounts. I see myself growing with every project that I do here, Rangarajan says. I really don´t have any doubts about the growth of my career.
Her experience with a leading brokerage will probably help. Financial-services companies in the U.S. are expected to move more than 500,000 jobs overseas in the next five years, according to a survey by management consultant A.T. Kearney, and India is by far the top destination. U.S. banks, insurance firms and mortgage companies have been using outsourcing to handle tech support for years. Now these firms are using Indian workers to handle the business operationssay, assessing loan applications and credit checksthat the technology supports. Kumar Mahadeva, CEO of the thriving outsourcing firm Cognizant, explains the appeal: It becomes logical for them to say, ‘Hey, you know everything about the way we do claims processing. Why not take a piece of it?´
The next logical step, says Andrea Bierce, a co-author of the A.T. Kearney study, is jobs that require more complex financial skills such as equity research and analysis or market research for developing new business. Evalueserve, a niche outsourcing company in Delhi, already performs research for patent attorneys and consulting firms in the U.S. In April, J.P. Morgan Chase said it would hire about 40 stock-research analysts in Bombayabout 5% of its total research staff. Novartis employs 40 statisticians in Bombay who process data from the drug company´s clinical research.
But as educated workers in India are finding new opportunities, those in the U.S. feel the doors closing. Last week Bernie Lantz drove 1,400 miles from his home in Plano, Texas, to begin a new life in Utah. He is 58 years old, a bachelor, and had lived in the Dallas area for 24 years. I´m leaving all my friends, he says with a sigh. It´s quite an upheaval. Lantz used to earn $80,000 a year as a troubleshooter for Sabre, a company based in Southlake, Texas, whose software powers airline-reservations systems. But over the past two years, Sabre has gradually standardized and has centralized its software service. As Sabre began to outsource its internal IT services, Lantz says, he became convinced that jobs like his were becoming endangered. He was laid off in December. (A company spokesman denies that Lantz´s firing was related to outsourcing.)
Discouraged by a depressed job market in Dallas, Lantz realized he would have to do something else. In the fall he will begin teaching computer science at Utah State University in Logan, and in the meantime he has learned a lesson of his own: Find a job that requires direct hands-on work on site, Lantz advises. Anything that can be sent overseas is going to be sent overseas.
Pat Fluno, 53, of Orlando, Florida, says she, like Maglione, had to train her replacementa common practice in the domestic outsourcing industrywhen her data-processing unit at Germany-based Siemens was outsourced to India´s Tata last year. It´s extremely insulting, she says. The guy´s sitting there doing my old job. After 10 months of looking, she is working again, but she had to take a $10,000 pay cut.
To protect domestic jobs, U.S. labor activists are pushing to limit the number of H-1B and L-1 visas granted to foreign workers. That would make it harder for offshore companies to have their employees working on site in the U.S. Those programs were designed for a booming high-tech economy, not a busting high-tech economy, says Courtney of the Washington Alliance of Technology Workers. Courtney and his allies are starting to get the attention of lawmakers. Several congressional committees have held hearings on the impact of offshore outsourcing on the U.S. economy, and lawmakers in five states have introduced bills that would limit or forbid filling government contracts through offshore outsourcing.
Stephanie Moore, a vice president of Forrester Research, says companies are concerned about the backlash but mainly because of the negative publicity. The retail industry is very hush-hush about its offshoring, she says. But within the boardroom, such outsourcing enjoys wide support. In a June survey of 1,000 firms by Gartner Research, 80% said the backlash would have no effect on their plans.
The advantages, businesses say, are just too great to ignore. They begin with cost but don´t end there. Jennifer Cotteleer, vice president of Phase Forward, a Waltham, Massachusetts, company that designs software for measuring clinical-trials data for drug companies, has for the past two years used offshore employees from Cognizant to customize the application for specific drug trials. Lately she has been relying on their expertise to develop even more-tailored programming. I certainly couldn´t have grown this fast without them, Cotteleer says. Her company is growing 30% annually, on track to reach $65 million in revenue this year. What I´ve been able to do in very tough economic times is manage very directly to my margins, she says. I´m providing job security for the workers I do have.
Creative use of offshore outsourcing, says Debashish Sinha of Gartner Research, offers benefits that outweigh the direct loss of jobs. In an economy that has shed 2 million jobs over two years, he contends, the 200,000 that have moved overseas are less significant than the potential for cost savings and strategic growth. But he concedes that when you´re a laid-off employee who can´t find a job, that´s hard to understand.
Perhaps some will follow the example of Dick Taggart, 41, of Old Greenwich, Connecticut. After 18 years in financial services, most recently at J.P. Morgan Chase, he now works for Progeon, an affiliate of the Indian outsourcing giant Infosys, as its man on Wall Street. One week out of every six or seven, he takes securities firms to India to show them the savings that are possible. He knows the transition is painful for the workers left behind, but he has seen it before. It was the same thing when we moved from Wall Street to New Jersey and then to Dallas, he says. Guess what? This is next.
With reporting by Sean Gregory/New York City
I believe people here are more concerned with govt manipulation. What other govt. on earth actually actively lobbies and subsidies companies to leave, taking many jobs and lots of money with them?
They feel betrayed. You're talking gold rush and remote controls. Was the govt. stabbing gold rushers in the back? The only way these situations are comparable, is if the govt. was scheming and artificially ended the gold rush early on behalf of a foreign power.
I agree in principle that we are all responsible for our own decisions. At the same time, if you work in the IT market you come to an understanding that you might be facing a situation that was nearly impossible to plan for. My wife was making a good salary with a systems integration consulting company when we bought our modest home in NJ, we have car payments on two mid level cars (Taurus and Maxima), and the standard monthly bills. We were careful to put money away in case of emergency/unemployment. In my wildest dreams I did not imagine that she would wind up making $8.00 an hour at a local retail chain.
So if someone does want to complain about H-1s, outsourcing, absurd property taxes, or immigration, dont be too hard on them as these are valid complaints. Saying Its capitalism sounds fine, but it is the Feds responsibility to govern international trade.
Clueless. The I got mine, who gives a damn about you mentality.
Please take a trip to India. That is what we could end up with if everybody becomes as short sighted as you. WHO THE HELL can afford to rent movies when nobody has a job?
There is a cost for freedom. There is a cost for this great country. Freedom is not cheap.
We live in the greatest country in the world (at least for now). It cost money to fund the greatest country in the work. This cost is reflected in cost of living and ultimately the cost of labor. So very rich fat-cats find out they can make even more money if they stop paying the expensive labor cost in this great country. They want to live in this great country but they dont want the workers in their company to live in this great country because it cost them too much money.
Huck, you see no problem with this.
Anybody that can see beyond the bottom line knows this will hollow out the middle of our economy and it will collapse upon itself (it has happened before). But the jokes on you Huck. The fat-cat ultra rich can move to some other country when this one is spent. You cant.
Shipping your labor to other countries so a company can avoid paying the costs of maintaining the greatest country in the world (at least for now) is a big problem.
The free market gave us slavery.
Huck, I assume you are a big supporter of slavery. By gosh, if your labor is nearly free just think of the profits you can make.
They could always train dolphins - they actually will work for food.
Huck, I suggest you give it up. You're trying to carry on a debate with a group of people who represent the Dems' next labor constituency. This group cares not a whit about market-place theories of capital and labor. All they want are guarantees, and they're wrapping themselves in the flag asserting that job protection should be an American policy objective.
Where I largely disagree is that this guy doesn't sound like a loser to me. He's found a job and he's taking measures to cut costs, and he should be applauded for that, whining or no whining. I also have sympathies for people over 40 and particularly those over 50 who have a difficult time retooling their lives, even if they realize that they've made a terrible mistake.
While I do think there is a good chance that a lot of the India outsourcing will be a fad (or that increases in prices as Indian IT firms have to compete for talent and a rising cost of living that accompanies increased salaries), there is a problem that we could hit a point where there simply are not enough jobs out there for everyone who wants one. And since our economy is currently built on luxury goods, services, and consumption, an overall drop in salaries which results in belt-tightening will send shockwaves through the entire economy which could cause one heck of a downward spiral. At that point, we will hit deflation or worse, given the debt load that many Americans are carrying.
If you look at history, including the most ancient of history, a population in debt that feels trapped and disenfranchised is a recipe for disaster. In ancient Sumeria, there were cycles where the rich would lend to the poor who eventually would lose their land upon an economic downturn (i.e., a bad harvest) until they were all indentured servants. At that point, they would rise up and threat to kill the rich people until land was confiscated and given back to them, only to start the cycle all over again. It isn't in anyone's best interest to have a large population of angry people who feel trapped and have no way to sustain themselves. Trust me. They will start coming after your money no matter how well you planned and how hard you worked.
You don't have to look throughout history. Look at Indonesia , Chile,Argentina or Nigeria today.
Then you must have never been laid off yet, at least not for any length of time and certainly not recently.
Unemployed for 20 weeks now...and counting...
That's it!! Export LIBERALISM!!!
That'll teach em! he he he he he
Self sufficiency is A Good Thing, free markets are A Good Thing. I think any conservative would agree. But you're talking about the individual - there are a couple of players here, and it's easy to get lost in the layers.
Individuals (with jobs)
Companys/Corps that hire people
Federal Government
Other Nations/Governments
Our gov't is responsible for maintaining a level playing field so that we can compete equally with other nations. THEY control the levers like tariffs & trade policy & trade agreements (Dept. of Commerce I think). If America is losing MILLIONS of jobs, good service sector jobs, something is wrong. And yea, we can all retool and become house painters. But I think the middle class needs a little (at least temporary) protection here.
I don't blame business - their main goal in life to make profits, bfd. I DO blame the gov't for letting this happen without a fight. Try to see a bigger picture. I think you're arguing from the pov of the individual, where others talk about what should be done by our gov't.
They are comparable in that they are external forces outside of our control that impact our plans and expectations and goals regarding personal enrichment.
There is very little you or I as individuals can do about international trade. Even if we can have some effect, it won't help someone's immediate desire to get back on a paying basis. Therefore, the way I see it, the thing to do is to filter out of mind all the excuses and externals about which I have no control, focus on the things that are in my control, and make my own success. How many successful businesses were launched, or careers started, during the worst days of the Depression?
This came to mind, don't know why...
Capitalism requires the rule of law. The rule of law requires trust and trust requires security. If you destroy the security that people feel, they will lose trust and the rule of law will collapse. Capitalism and property rights soon disappear.
One of the problems I have with a lot of Freepers, particularly the libertarians, is they tend to view liberty, capitalism, democracy and a whole host of other Western values as ends. They aren't ends but a means to the real ends which are security, safety, and a happy life. I am a conservative who values liberty, capitalism, democracy, and Western values because I think they are best able to provide security, safety, and a happy life, not because I have some mystical attachment to them. If communism, collectivism, anarchy, tribalism, or any other system did a better job, I'd support it.
The flip side of that, though, is that when liberty, capitalism, democracy, and the other Western values don't seem to be ensuring security, safety, or a happy life, people will look for alternatives. This is why people were so quick to give up their liberty to national security agencies when they felt threatened by terrorism. Liberty is nice but being alive is nicer. Yet many Freepers seem surprised when so many people come to that conclusion.
My father travelled into China after WWII, before the communists took over, and saw the living conditions there. He never found it difficult to understand how the communists took over. When you are so despirate that you are willing to haggle for the unfiltered garbage off of a ship just to have something to eat, anyone offering you security, safety, and a happy life is going to sound good.
So, yes, the unhappy unemployed are the Democrats next great constituency. And?
That's not it at all. Take nothing for granted. And I have picked up a few clues along the way. Best of luck to you.
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