Where the Good Jobs Are Going

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.”

I was stunned when my friend told me about $300,000+ houses on .08 acres of land. They look like townhouses with a sliver of light between them.

Of course what you are saying about too many people ruining things is the little detail that a lot of Freepers forget when they suggest that people move to where things are cheaper. If everyone moves out to these lower-cost areas, they will ruin them as low-cost areas. That's why I talked about the "McMansion Line" in New Jersey. That's the commuting line (to New York City) that will support $400,000+ McMansions and it has been moving rapidly southward and westward since I was a child, raising housing prices in its wake.

Hmmm, I guess I need to accept that threads on this topic are pity parties. It's like when a woman is upset about something and tells you about, you're not supposed to offer solutions? She just wants to bitch? Same deal here. Nuff said.

You are not a very insightful person. The tech sector was supposed to be the antidote to sending all our manufacturing jobs to other more slave-labor-like countries and for a while it was working. Now that pure greed and short-sightedness is taking over corporate American (again?) we could be on the verge of losing much of the tech sector. This will sink our economy. Remember the bubble economy of the late 1990’s?? The tech sector almost exclusively fueled our “great” recovery (this is a testament to the size and importance of the tech sector). If the tech sector can create a boom it sure as H-E double hockey sticks can create a bust. Huck, this means YOU. I don’t can what you do – you will be hurt. Of course when your job is cut I doubt anybody will care.

Since when is it conservative to root for the demise of your beloved country in the name of short-term greed?

Actually, my wife and I have taken about a 28% cut in pay in the past year due to two lay-offs. It isn't fun, which is my point. Even with a "conservative estimate", there are people who simply aren't finding any work. Even skilled temp work is under $10 a hour, if you can find it, and it wasn't that low even in the early 1990s before the boom.

Look I work in IT. And in many sectors the jobs are being shifted overseas. In my opinion it is very unfair. Some people simply cannot adapt well when they have been in IT for 20-30 years are making good money then have to take a 20 to 30 thousand paycut.

No matter how you slice it when you say that the man who complained sounded like a real loser reveals all too well what is in your heart.

I work for a great company that does not outsource, but if I saw them outsourcing my job to foreign countries I would go contractor and milk them for what I could before they booted me out the door.

Why aren't all these folks with such amazing backgrounds not out starting new companies with the purpose of attracting new customers totally disgusted with the actions of these corporate blobs like I am. Millions of us are out here looking for such companies and whenever I sense I'm dealing with overseas workers I do my best to find another avenue.

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,

Yes, he will be teaching Asians and the Indians to take even more of the IT jobs...

The tribe with most children wins!

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

Just like America does -- in China. I once read that the average business in Japan employs 5 people (before the current bust). Think about that. A lot of their businesses are service-based.

As a fellow ITer, I can say that most of the non-IT people in this country do not care about our plight, they think we were overpaid for sitting at our cubes.

One good reason this is being done piecemeal ---one job category at a time. No one cared when garment workers were permanently put out of work, then no one cared when factory workers lost their jobs. The IT people got it next and higher skilled manufacturing types too.

Well, I'd suggest you factor in more tax expenses to help pay for all the "services" we MUST offer all these new American dream seekers, probably more for insurance as a result of what I'm sure will be increased crime, more expenses for the schools because what they don't get in taxes, they'll send friendly reminders home with the kids of all the things they need due to budget restrictions, etc.
All this BS is just creating a race to the bottom.

In my opinion it is very unfair. Some people simply cannot adapt well when they have been in IT for 20-30 years are making good money then have to take a 20 to 30 thousand paycut.

Right. They all deserve a job for life, provided by someone, at good pay, just cuz.

He was being abit insensitive. People are having a hard time right now.

It's called tough love. You say you know what's in my heart, but really you have no idea. The cure for a hard time is grit and deterimination, not whining and a list of excuses.

Good question. Maybe they spent all their money. Maybe they lived beyond their means. Maybe they like the comfort and security of a paycheck too much to put their talent on the line in the free market. They want someone to take care of them and protect them. Maybe.

Me... I'm a network geek; they're going to catch hell farming out what I do to somebody 6,000 miles away!

I hate to interrupt your whistling by the graveyard but if the tech sector jobs leave there is no need for network geeks (in case you have not noticed, there are tech sector jobs at the other end of your network – no tech sector jobs, no need for networks – or less need for networks). The only different between you and other tech sector jobs is your lay-off notice will come a month or two after the tech sector workers that use your networks are all gone. As the tech sector job leave and tech sector service workers (network geeks) are forced out of work, network geek salaries will drop like the proverbial lead zeppelin. Your family jewels are as much in the vise and any other tech sector worker.

Dude, I am not rooting for anyone's demise. Quite the opposite. I am rooting for people to succeed. Was it unfair when the California gold rush ended? Hell, most prospector's didn't make much anyway. Point is, that's life. Opportunities come and go for different reasons. Someday we'll be renting ALL our movies by remote control, and all those people working the register at Blockbuster will be out of a job. Unfair?

Maybe it takes a while to build a company. I worked for a small technology company that was kicking butt and taking numbers for many years (since 1968). Today, competing with the big boys is very hard – we were purchased by a very large company that was our main competition. The big company is championing outsourcing to India as a great way for them to make even more money despite the fact there has been a salary increase freeze for the last two years. Somebody is getting very rich, it just is not the employees.

This country is in trouble and blind selfish people like Huck are part of the problem.

Huck, you sound like a blow-hard that really has little to no knowledge on this subject.

So these are the "benefits" of free trade?? Boy, what a great system! This economic system will do much more harm to Americans and our way of life than OBL and his terrorist killers could ever dream of!

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