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Where the Good Jobs Are Going
Time Canada ^ | August 4, 2003 | Jyoti Thottam

Posted on 07/28/2003 11:01:09 AM PDT by Willie Green

For education and discussion only. Not for commercial use.

Forget sweatshops. U.S. companies are now shifting high-wage work overseas, especially to India

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 paid—the 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 leaders—and nonunion workers, who make up most of those being displaced—aren´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 optimistic—as 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 here”—not 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 operations—say, assessing loan applications and credit checks—that 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 Bombay—about 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 replacement—a common practice in the domestic outsourcing industry—when 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


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government
KEYWORDS: globalism; outsourcing
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To: dfwgator
Technology in Africa is nowhere near what it is in India. Any attempt to move technical jobs there won't take place for decades. (And perhaps by then the union thugs will have nipped it in the bud by getting an early start organizing there. Maybe there will be a "Congan Brotherhood of IT Workers" in place before the first IT job appears in Congo!)
61 posted on 07/28/2003 12:55:36 PM PDT by Redcloak (All work and no FReep makes Jack a dull boy. All work and no FReep make s Jack a dul boy. Allwork an)
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To: Huck
It's like Peter Drucker said, the majority of people now have to manage themselves, and society is totally unprepared for it.
62 posted on 07/28/2003 12:57:17 PM PDT by dfwgator
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To: Redcloak
I bet that's what they said about India in 1985.
63 posted on 07/28/2003 12:57:55 PM PDT by dfwgator
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To: Huck
For half a household? Sure. The article doesn't mention the missus. If she can pull down 23K they will be right where they were. Or, if she already works, then times aren't as desparate as the article suggests. I wonder how many cars they own, what models, what size TV, what sort of cable/dish subscription, and other niceties they still maintain.

If the missus takes a job, then the kids may need daycare, they may need to pay higher auto insurance costs, etc. And it really isn't that easy to find basic low-skilled jobs anymore. I'm sure they can cut back to save money. It sounds like they are trying to cut their utility costs. But it often costs money to cancel things like a cell-phone contract, dish service, or car lease, so that's not always a great option.

Having been laid off in the economy that lost George, Sr. his job (twice, actually) and having been laid off once in this economy (my wife wais laid off in both, too), I can definitely say that it is much harder to find a job this time around. There are so many resumes that it is difficult even to get a recruiter to call you back and a temp agency laughed at the minimum amount that my wife wanted (her unemployment would pay more below that rate), which was not a laughable figure in the early 1990s. Things are worse than they were.

But my point is simply this: His employer isn't responsible for his finances. It's his mortgage and his bills. Live within your means and quit WHINING.

Whining is human nature. I'd stop reading human interest pieces like this if you don't want to hear it.

64 posted on 07/28/2003 12:58:10 PM PDT by Question_Assumptions
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To: Question_Assumptions
One can only hope that McGreasy will be run out of town!
65 posted on 07/28/2003 12:59:14 PM PDT by sauropod ("Come over here and make me. I dare you. You little fruitcake, you little fruitcake.")
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To: dfwgator
It's like Peter Drucker said, the majority of people now have to manage themselves

Was that in a book?

66 posted on 07/28/2003 1:00:09 PM PDT by Huck
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To: Huck; Question_Assumptions
Um hmmmm.... You take a 1/3 cut in pay and you try it.
67 posted on 07/28/2003 1:00:15 PM PDT by sauropod ("Come over here and make me. I dare you. You little fruitcake, you little fruitcake.")
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To: Huck
Yeah ... ain't it wonderful. Not all progress is good.

Oh and BTW ... dealing with or trying to compete with countries that utilize slave labor or 50 cent an hour labor and/or uses government substities has NOTHING to do with fair trade

68 posted on 07/28/2003 1:00:45 PM PDT by clamper1797 (Conservative by nature ... Republican in Spirit ... Patriot by Heart ... and Anti Liberal BY GOD)
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To: Huck
Then move. Or, he could just keep whining about it.

Moving also costs money. If they switch to renting, they lose their tax write-off for the mortgate and wind up with (effectively) another income drop (not that renting is a bargain in New Jersey, either). If they need to buy another house, they need to raise the down payment and closing costs, and need to find a buyer for their current house (which takes time). If they move out of the area, there is no guarantee that they will find a job in any other location (and if he is a tech worker, the odds are good that he'll have a harder time finding a job, as an ex-coworker that did more to a cheaper area has found out the hard way). Yes, people can find a way to make it. I've been there and done that. But it isn't easy. And when you add H1B and L1 visas to the mix, I think people do have something to whine about.

69 posted on 07/28/2003 1:02:22 PM PDT by Question_Assumptions
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To: sauropod
Um hmmmm.... You take a 1/3 cut in pay and you try it.

I'd prefer not to, but my financial planning, my debts and obligations, my savings, and my lifestyle are all consciously designed to withstand it easily.

70 posted on 07/28/2003 1:04:09 PM PDT by Huck
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To: clamper1797
NOTHING to do with fair trade .... or free trade either
71 posted on 07/28/2003 1:04:16 PM PDT by clamper1797 (Conservative by nature ... Republican in Spirit ... Patriot by Heart ... and Anti Liberal BY GOD)
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To: dfwgator
The thing that concerns me is that we have a service-based and consumption-based economy. If you cut wages and jobs broadly enough, people will stop using services and stop consuming and then we'll be where Japan is. And there is no end in site to where Japan is and deflation is starting to kick in. I think our biggest hope lies in the Bush administration letting the dollar weaken. That will simultaneously make imports and overseas outsourcing less attractive and exports more attractive while preserving asset values within the US.
72 posted on 07/28/2003 1:06:25 PM PDT by Question_Assumptions
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To: Question_Assumptions
So there are challenges. What a pity. Golly, Question_Assumptions, no one said life was easy. I am not saying making adjustments is easy, especially if, like the guy in the story, you are not prepared for them. But he is there now, and he ought to get on with it.

I don't relate to this "I am a tech worker" mentality. You are a tech worker if someone is paying you to do tech work. If they ain't paying you to do it any more, guess what? You ain't a tech worker. You're an ex- tech worker. Maybe you'll do tech work again. Maybe you won't. I believe folks have a real hard time grasping that. It's a marketplace. If you can't sell your skills at a certain price, and you need that price, something has to give. Either get by on less, or find something else to sell.

73 posted on 07/28/2003 1:07:37 PM PDT by Huck
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To: jrp
Now all our code is written and tested in house by folks who care about the quality of their work and have a stake in the success of our company.

That used to be the driving force in American business - until greed took over as the driving force.

74 posted on 07/28/2003 1:07:37 PM PDT by Last Visible Dog
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To: Question_Assumptions
The thing that concerns me is that we have a service-based and consumption-based economy. If you cut wages and jobs broadly enough, people will stop using services and stop consuming and then we'll be where Japan is. And there is no end in site to where Japan is and deflation is starting to kick in.

Japan is service based? I thought they made lots of stuff?

75 posted on 07/28/2003 1:10:10 PM PDT by Huck
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To: Huck
Oh please. And when they put you in the socialist gulag by dictating what you can earn because of the regulations and taxes you have to pay, you think you can "huck and chuck" your way out of it?

I pay close to 1/2 my income in child support. I am in the process of trying to get a second job just so I can live.

I know all about "living within my means" so don't even go there.

You still don't get my point do you? All I want is to live free and pursue happiness ("life, liberty, and the pursuit of happiness").

What a maroon.

76 posted on 07/28/2003 1:10:59 PM PDT by sauropod ("Come over here and make me. I dare you. You little fruitcake, you little fruitcake.")
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To: need_a_screen_name
Didn't Microsoft or somebody recently say that in the next decade they will shift 3 MILLION jobs overseas? Maybe we should arm Pakistan a little more so India will be in no shape to receive them?? *wink*

Heh, like your line of thinking. B-) I'll drink to that! >B-)
77 posted on 07/28/2003 1:12:04 PM PDT by Nowhere Man ("Laws are the spider webs through which the big bugs fly past and the little ones get caught.")
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To: sauropod
Oh please. And when they put you in the socialist gulag by dictating what you can earn because of the regulations and taxes you have to pay, you think you can "huck and chuck" your way out of it?

You sound a little paranoid. And hostile. No one is going to put me in a gulag. As far as regulations and taxes go, they are for the most part outside of my control. I can't write tax or regulatory policy, but I must live under it. Therefore, hell yes, I will huck and chuck and survive. I'll never starve. And a lot of the time my cup runs over. But maybe that's all in how you look at it.

I pay close to 1/2 my income in child support. I am in the process of trying to get a second job just so I can live.

Well, that might explain your hostility, but I didn't attack you, so you needn't be hostile to me. I am sorry your family didn't work out and I wish you the best of luck.

78 posted on 07/28/2003 1:14:50 PM PDT by Huck
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To: Huck
This guy shutting off lights in the house isn't going to make me shed any tears. It's called capitalism and the free market. If you can't stand the heat, become a socialist.

Yep. Capitalism and the free market gave us slavery. That is something to be proud of.

Sending a wake-up call to pig-headed quasi-conservatives is not whining. If you tell somebody it is bad to eat their seed corn, do you consider that whining.

I have no respect for people like you - you are in the "I got mine who gives a damn about the future of our country” crowd

HINT: it is not “conservative” to say “to hell with the future of my country”

79 posted on 07/28/2003 1:19:44 PM PDT by Last Visible Dog
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To: Huck
You'll notice that you simply cannot do a lot of what people did during the Depression to get by. You can't send your kids out to work 8-hour days and confiscate their wages to pay the family's bills. You can't pull them out of school after the 8th grade and send them into a factory. You can't get a job bathing one day a week and not having a telephone. And the infrastructure simply is not there to do without electricity (no coal stoves to heat the water pipes, no ice men selling ice out on the street). And salaries, rents, and land prices were not as unbalanced as they are today.

I could equally argue that American's should just be able to go off into the woods, cut down some trees, and start to farm like some of their ancestors did, too. But the truth is that America today is not the same America it was 200, 100, or even 50 years ago.

80 posted on 07/28/2003 1:21:18 PM PDT by Question_Assumptions
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