Lawmakers Can't Arrest U.S. Job Shift to India to Lower Costs

Bloomberg ^ | 12/31/03 | Bloomberg

[Pikamax]

Lawmakers Can't Arrest U.S. Job Shift to India to Lower Costs Dec. 31 (Bloomberg) -- Bob Thibodeau founded Financial Systems Architects in 1998 to help companies such as Citigroup Inc. handle electronic transactions. By 2001, he was driven out of business. Lower-cost Indian competitors undercut his bids on two straight contracts, he said.

[LibertyAndJusticeForAll]

Engineering majors traditionally have been among the most politically Conservative students on campus.
I wonder if America's ex-engineers, now employed at Home Depot, will still be voting Republican in November?

[templar]

. Watch the Republicans blow this - it will kick them out of power and keep them out for another 50 years, if we have a country left by then.

The Republicans may lose a few house and senate deats, but Bush will be re-elected. Not so much because of his policies, but because the Democrats will not run anyone against him that has a genuine chance of winning. The same way the Republicans ran Dole against clinton when Dole was possibly the only candidate that couldn't beat him. I think, maybe, they are repaying a favor. Besides, why would they want to defeat the Republicans? The pubbies are getting all kinds of stuff through without opposition that the Democrats want (even though they may pretend they don't) and that would be soundly defeated if they were the ones trying it.

[LoudRepublicangirl]

They will need to resource taxpayers to India because there won't be any of us left either.

[Lael]

Lawmakers Can't Arrest U.S. Job Shift to India to Lower Costs

Oh!, I don't know about that...give me a couple of nights to DREAM up some ways...

By 2008, even the Republicans will rush to reregulate this fiasco!!!

See the Tradeorg website...some of the ways they list for reviving Manufacturing sound pretty punative.

[The Duke]

There are still some things that can't be outsourced or offshored. I started my own business.

Think again. I've started my own business that offshores exactly the services that you're saying can't be offshored. Plenty of satisfied customers, too.

[Lael]

Tradeorg = TradeAlert.org

Sorry.

[CasearianDaoist]

I agree. I was, however, not talking about this year's election when I made this comment. I never understood the Dole run. I looked at as a generational crisis in the Republican Party. In a way the Democrats are experiencing the same thing now, that is if you buy the notion that Clinton was a fluke and that he was more deeply flawed than even the Democrat leadership understood. His presidency was not a real transition because he masked how far to the left he really was.

I am now as concerned as you are by Bush's "CINO" qualties. I feel "triangulated." THe Campaign Finance Reform still has me reeling. I could almost buy the Medicaid business as an enevitability, but CFR is a shocker. I expect the second amendment to come down this year. Sooner or later the Dems will get back into power and brother look out.

I am deeply fearful.

[hedgetrimmer]

Here is a business of a totally different sort started by a former techie I know.

[Ciexyz]

Great, there's a great new service industry--helping US companies outsource jobs overseas.

[Ciexyz]

....end the burdensome, onerous, punitive, taxation and regulation of every aspect of our lives!!!!

Tell that to the city of Pittsburgh PA, they're determined to raise an many taxes as they can. They just got the state legislature to declare them a distressed city which will allow them to tax suburbanites who work in the city. They've also proposed an income tax on all workers, a $100 a head tax on employers for each employee, taxing non-profits, raising parking fees, raising local millage etc. etc.

[RussianConservative]

U.S. workers who aren't designing computer chips or answering telephones will be working on the next level of high technology, such as nanotechnology, the science of manipulating atoms or molecules for commercial application, Commerce Department Undersecretary Phillip Bond said in an interview

Pie in sky...that is all. America is on way to personal Communist Experience, one closed factory at time.

[Noumenon]

Oh, really? The typical small business owner that comprises my customer pbase requires face-to-face contact and an on-site presence in order to properly asses their business methods and address their security issues. Most of them wouldn't dream of dealing with someone who isn't even local much less an American citizen. What I do cannot be effectively done via telephone or website quesionnaire.

Broadband satellite installations also require a physical presence. You can't offshore that, either. The follow-on services and products that the custoemr requires make for a profitable enterprise. No one's going offshore for that.

[RussianConservative]

Well then US face same brain drain as England and France now...more likely US engineer move to Russia, since of 3 it is most like US.

[VeniVidiVici]

American Express customer service. I figured it out because every rep was named Preet, Jugdesh, Zima, or some other Indian name.

Not only that but the line quality sucks. Happened to me too with Amex. The first one I asked where she was calling from. "Ft Lauderdale". Um, yeah, right. Second one fessed-up and said New Dehli - a sales call for Providian.

I also have two open issues with Netgear support via email. Of course, they are all from India too (and if they tell me to install this flippin driver one more time I'm going to puke).

I play with them, say "what?" a lot and ask them to repeat everything. Then tell them no to whatever they want from me.

[stylin19a]

here's the rest of that goofy quote:
Lowering U.S. salaries would make sending jobs to India less likely because ``the whole economics of that proposition starts to look quite a bit different,'' Ballmer said in a recent speech
Who the heck are they kidding?? Who the heck is stopping them from lower these salaries ?
I don't believe this for a minute.
I have yet to see MS or anybody offer these jobs @ 50k a year. I bet if they try they'll get applicants. It's my guess they wont. 50k is still more than they want to pay - especially if they only have to pay 6 bucks an hour, not 25 bucks an hour.

[RaceBannon]

you guys dont get it.

IT was first, but I am NOT IT.

I am Mechanical Engineering.

And I havent worked since June 2001 in my field, and there are NO jobs being created for me now!!

[oceanview]

and what kind of profits does MSFT make in India? Very little, in fact India and China may well replace MSFT and own the software industry if the open source movement takes full hold. But Ballmer and Gates could care less, along with Carly Fiorina and all the rest of the corporate elite running America's tech companies. They have their loots of cash, to hell with everything and everyone else.

[chimera]

Many services jobs, including most in health care and education, can't be done overseas.

Health care's time is coming, too. Already many functions of the in-office radiologist are going overseas. Just transmit the picture to Dr. Sanjeeb in Bangalore to look over and render an opinion on. He'll work for a third of what Dr. Wilson in the US will. Sorry, Doc, go work at Mac's.

Who will take the picture? Well, how about an automated system? I saw an article the other day that described what was almost like a self-service MRI. The patient arrived at the office and a minimum-wage orderly told them where to go and what to do. The patient presented himself to the MRI machine, which had been remotely programmed in Bangalore by Dr. Sanjeeb's assistant, a med-tech who works for maybe a tenth of what a US technician would cost. The machine tells the patient what to do, how to lie down, when to hold his breath and when to breathe again. All monitored remotely in Bangalore. If there is a mishap or a question, Dr. Sanjeeb's assistant comes on the speaker phone and tells the patient what to do.

The final evolution may be the "robot" surgeon I was on the TV just today. It was not really a robot, but a surgical machine operated by a "remote presence", including audio, visual, and tactile feedback. A remotely-located surgeon stuck his hands into some manipulator gloves, and the machine mimicked his every move. So here is a vision of the future: for 10% of the local cost, Dr. Sanjeeb in Bangalore does your surgery by remote control. No need for domestic medical professionals. Cheaper and "better" to do it overseas.

So all those on FR and elsewhere who cheer the disappearance of so-called "meaningless" jobs from the domestic economy, who praise the "free market" for making such wonders possible, all I can say is, be careful for what you wish for and cheer for. The throat you cut may be your own one day.

[oceanview]

many will not, I've posted that many times and the usual crowd comes along to flame me. I guess the Rs can make up the slack by giving amnesty to Mexicans for their votes. Yeah, that'll work.

[Incorrigible]

``Not only are Indian companies a third of the cost, but they actually are better,'' Thibodeau said in a telephone interview from his office outside Boston. ``It's really kind of scary.''

I will argue the "better" part of the proposition here.  The importation of many incompetent programmers from India during the internet boom days and the subsequent "anyone can be a web designer" schools had led to some very sloppy programming in the late nineties and early 2000s.  As someone in the business since the 80's, I was appalled at the quality of programming I came across in my consulting business.  Bad process, bad programmers and high costs led to a lot of dissatisfaction on the part of the business units funding these efforts.  Thus, you can get bad process and bad programmers but for a lot less cost by subbing to India.  This at least had something of a balming affect on the business units. 

``The idea that corporate America is stepping up and hiring again is ludicrous,'' Stephen Roach, Morgan Stanley & Co.'s chief economist, said in a Dec. 9 televised interview with Bloomberg News.

Mr. Roach should know.  Although every firm on the street has done some outsourcing, Morgan Stanley has practically no IT department in the US.

While outsourcing, as the migrating-jobs trend is known, benefits companies such as Microsoft Corp. and Texas Instruments Inc., it has triggered a debate about whether the U.S. economy is better off

Microsoft is not a big outsourcer relative to it's staff size. 

Microsoft Corp. employs 250 workers in India and is on track to double its workforce to 500 by 2005.

Like I say, 250 is not a lot but it's growing.  Many other companies have benefited more than Microsoft.

Both Bear Stearns Cos. and a unit of American International Group Inc. have hired Satyam Computer Services to develop software and maintain computer systems.

Nearly every firm on the street is using Satyam.  Those that aren't use TaTa.

To answer the challenge, Microsoft Chief Executive Steve Ballmer last month said in New York that the U.S. must churn out more math and science graduates. That would raise the supply of computer engineers -- and push down their salaries to about $50,000 a year, he says. That's about what the average U.S. high school teacher earns.

Others have pointed out the fallacy of this argument already.  The reason I spent my Friday nights in the science library while getting my electrical engineering degree was so that I could add more value in my career than others who were studying business, liberal arts, pre-law and of course, education.  If I'm not going to be paid for my effort, then what is the value of that study?  (Hi Open Source fans!) The reason that India graduates so many engineers is that compared to other fields of study, engineers will earn much more during their career in India.  Much more so than those answering the phones and even they live better than 80% of Indian citizens.

Many people besides Ballmer have suggested we need to increase the supply of engineers.  They never finish the equation to see if the results equal the inputs.

Though most of my attorney friends are miserable with their careers, the number of attorneys in the US just crested 1 million.  I presume there is value in the effort to pass the bar.  Though I was debating with a friend of mine weather an Indian lawyer who passed the New York bar can practice law from India.  It's coming I think.

The competition from overseas comes as growth in the U.S. workforce slows after increasing 54 percent between 1980 and 2000, said Harris Miller, president of the Information Technology Association of America. The workforce will grow only 3 percent in the next two decades as the baby boom generation, born after World War II, retires.

And this is really a major factor.  My generation, Generation X, is small in number.  Thus the decrease in jobs may in fact reflect the decrease in elementary school enrolments from 30 years ago.  That's when a lot of school buildings were turned into school district administration buildings or just sold off to developers.  (Yes, new suburbs are experiencing growth pains but the overall school attendance has decreased significantly).  Immigration has helped and the secondary baby boom (20 and younger -- Generation 9/11) will bump it up but not to the same level as the 50s and 60s.

Now if only we could get those Indian programmers to contribute to US Social Security, we'd be all set.