Posted on 05/23/2004 4:27:06 AM PDT by sarcasm
Louisville resident Jeffrey Antman has seen offshoring up close.
After graduating with a master's degree in mechanical engineering at age 21 in 1974, Antman spent the bulk of the next three decades working for local startups and technology firms, including IBM, Quantum and Storage Technology Corp.
In the 1990s, he personally assisted the transfer of local disk drive manufacturing offshore to China, where volume manufacturing could be done cheaper.
Today, the engineer says he is struggling to find a job. And he says the current trend in offshoring — sending highly paid professional jobs to low-wage countries — is to blame.
"Now, when the next big thing hits, all of the software to run it is going to be written in India, and it's going to be built in China. What's going to happen here?" Antman said.
Forrester Research released a report on Monday that claims more white-collar jobs are being sent to places such as India, China and parts of Eastern Europe than was previously thought. Forrester said that about 830,000 U.S. service-sector jobs, including software engineers and other technical specialists, will be sent overseas by the end of next year. The firm estimates that 3.4 million jobs will leave U.S. shores by 2015.
According to Forrester research, the average computer programmer in India earns roughly $10 per hour, compared with more than $60 per hour for the average American programmer.
One Silicon Valley offshoring expert — who believes offshoring is an important strategy for some companies — disputes the numbers.
"Everybody's getting a little freaked out over offshoring," said Vamsee Tirukkala, co-founder and executive vice president of Zinnov, an outsourcing consultant with offices in India and the Silicon Valley. "If you do it right, you can be more productive. But it has been overhyped and now there is an offshoring bubble, the same way there was a dot-com bubble."
Tirukkala, who was raised in India and educated in the United States, said some firms are unrealistically enthusiastic over offshoring because they've overestimated the cost savings.
But some of more recent support for offshoring comes from quarters far from the corporate boardrooms.
Sustainable Resources 2004, a forum that will take place in Boulder Sept. 30 to Oct. 2, will cover several issues, including offshoring as it focuses on world poverty. The event is co-sponsored by the University of Colorado, the Sustainable Village and Naropa University.
Steve Troy, executive director of the Sustainable Village, said the "digital bridges" created by information technology give Third World and other poor nations a chance for their citizens to make more money than they otherwise could. The result, he says, is a chance for those countries' citizens to become more active consumers of the things U.S. companies produce as well.
"In the long term, you could see poverty elimination," Troy said. "But even in the medium term, it is creating all these customers who are in turn creating new jobs, and new needs for goods and services."
Troy said eliminating poverty in foreign lands serves more than just the U.S. corporate desire to cut costs and serve new markets.
"One of the roots of terrorism is desperate people, poverty and hopelessness," Troy said. "You could make the strong argument that it (moving good jobs overseas) undermines some of the roots of terrorism."
But in the current climate — where U.S. workers are worried about job losses — companies are more likely to tout the cost savings of offshoring than any possible social benefit.
The Wall Street Journal reported earlier this year that IBM anticipates saving $168 million annually starting in 2006 through offshoring. IBM's plan — revealed in internal documents — included moving jobs away from IBM facilities including the one in Boulder, the newspaper reported.
The savings would result largely due to salaries, the report stated: A programmer in China with up to five years experience would cost the firm $12.50 an hour — less than one-fourth the cost of a programmer with benefits in the United States.
Sun Microsystems is another company with a large local employment base that is increasing its offshoring. Sun Chairman and CEO Scott McNealy, in a conversation with workers in April, announced plans to cut about 3,300 jobs. Affected facilities included the Broomfield campus, local workers said. But those job cuts would be in addition to the jobs lost to offshoring, McNealy said.
"I can also tell you that in addition to the reduction in the work force, there will be employees who will be affected by outsourcing well into (fiscal year 2005) and beyond," a transcript of McNealy's announcement reads.
Tirukkala and Forrester agree on one thing: Many companies who were not interested in offshoring before are getting more interested as the media reports an offshoring increase. But Tirukkala said offshoring will slow once expectations align with reality.
"The trend right now is if there is anything people can do by taking their laptop home and working from there for two days, well, that job will be easily outsourced," he said.
But he said many offshoring efforts fail because the executives planning them fail to see the hidden costs of sending jobs to foreign lands.
"Offshoring works," he said. "But you can't just say, 'I'm going to go over there and save money.'"
Costs such as having a staff to communicate with the foreign office during off hours and expensive — sometimes frequent — travel are often not considered, Tirukkala said. Costly communication breakdowns and cultural misunderstandings are also factors in offshoring failure, he said.
But Antman said companies should have a wider interest in keeping jobs in the United States than just the bottom line.
"I think we're at risk of becoming a Third World country," Antman said. "We had taken the knowledge jobs, and sent factory jobs overseas. And now we are chopping off the top of the pyramid. What are we going to do when those jobs are all gone?
"They say that the stockholders benefit. But what are they going to do when the country has no jobs for educated workers? We can't compete with someone who's going to be paid a nickel to our dollar. No matter how smart, or how experienced you are, you can't compete with an educated worker overseas who wants to make $2,500 a year," Antman said.
Hear, hear! This is how the "free" market correction will look.
The $60 is total costs including benefits and employer paid taxes. India costs are now at about $30 per hour. The big difference is the $60 per hour American pays about $30 per hour in taxes, everything from sales, fuel, property taxes, etc. So companies are really saving money by cutting out Uncle Sam.
In my troops you would have stalled at second class.
Sometimes the Honerable truth hurts bvw...have a nice day
About you, fortunately, I can say, "Not a representative subset." In knowing the job market, and in absense of the humility that without which social observations cannot be made for lack of a zero-point reference.
And who will pick up their share? How the benefits will be paid? You see, the laid off workers still need the doctor when they get sick and will need to support when they get old. In meanwhile they will pay much less taxes if any.
The companies/CEO will reap the short term profit from free access to American market (no tariffs) and will be perplexed when the market will start to shrink.
I'm still waiting for ONE response. That's right, not one response in ten years.
It seems I'm trained in the wrong disciplines, and live in the wrong state. And the main problem is that I'm over 55.
For the same reasons they tell lies such as wars for oil, womens' reproductive health, and the meaning of the second amendment.
They assume, and hope, that most people are uninformed and will just accept it as fact.
Even if they do, won't many of those products be outsourced themselves? So workers in China are buying PCs with Chinese motherboards, memory and disk drives, running software written in India?
Companies will tell you that still, a percentage of those sale profits come to America since American corporations are operating in the black using outsourced labor. But if the majority of laborers don't live in America, then to whom are those American profits going? And to whose benefits and retirement accounts? Executives and CEOs?
"$60 per hour for the average American programmer."?! Why are they lying?
I suspect that they are lying so as to undercut any sympathy for American programmers and to promote the idea that the jobs are being outsourced because those programmers are grossly overpaid. In fact, the basic problem is that the cost of living in India is much lower that it is here. An American programmer could not survive on the wages being paid to Indian programmers. Hence, few of those jobs will be offered to American programmers, at any wage.
I hate to say it,but everybody lies.
It seems to have become the great American pastime.
Lie,get caught in the lie,apologize.
In fact, they will probably excuse the lie, claiming that the figure includes benefits and the employer's share of the FICA tax. Nevermind that they made no mention of this in their original statement. Hence, the correct description of their actions might be...
Mislead, get caught, give dishonest explanation, mislead again.
I think you hit the nail on the head...no...not over 55 (I'm in the same age range)...wrong state could be the problem...You have to go to the job...it doesn't come to you. Try the Automotive Industry...they are dying for good Electrical Engineers...that is if your willing to relocate. Good luck in your ventures!
Project managers will make around $75K, which is approx. $60./hour WITH BENEFIT LOADING--socsecurity, health, dental, vacations, holidays, etc.
Basic experience programmer should be about $50K, or around $40./hour with full bennies loading.
I love this stuff; same as the "Largest Consumer Marketplace In The Universe" garbage re: China.
At $10./hour, it's not likely that these programmers are going to be buying a lot of Cadillacs, (nor Chevy Vegas.)
Furthermore, WHICH products "manufactured in America?"---damn few left these days.
The vision is still much the same as it was in the 19th century when it
was argued that if only the Chinese could be persuaded to legthen
their shirttails by a foot the mills of Lancashire would work around
the clock.
So, let me see, Hotdog has been in the business for 27 years......that's not good enough for you. He was an Eagle Scout........but that's not good enough for you.....
Do I have this right? Is there anyone, other than yourself, who is qualified to comment on this?
I'm with Hotdog......the work is there. One must move to where it is, or generate the opportunity where you are.
"If you want to build bridges, you must go to where the rivers are."
"I've been sending out resumes for...let's see...over ten years now. Aerospace, power plant, instrumentation, nuclear, electrical engineering."
Maybe at age 55 folks expect you to have focused a little more on your specific areas of expertise. It is a very rare engineer that is proficient in all the areas that you mentioned - most likely you are applying for jobs that you really aren't qualified for.
Send me your resume, and I'll give you more specific feedback. If after 10 years of looking and you've not had a SINGLE response........the problem is not the market, or offshoring.
Who do you know that has built nuclear plants, launched space shuttles, activated steam turbines and mobile launch platforms, built office buildings, worked as a machinist, electronic tech, plumber, electrician, TV repairman (remember those?), built airplanes from scratch, done masonry, concrete work, architecture, roofing, AutoCAD, project management, and castrated goats?
Thanks for the offer, but there is nothing wrong with my resume. There is simply no demand in post-industrial America for someone like me who knows how do do everything pretty well. It just confuses the hell out of the HR people who vet the resumes.
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