Stop Offshoring
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Monday, December 29, 2003
 
The San Jose Mercury News conducted a roundtable discussion concerning the affects of globalization on Silicon Valley. A transcript appears here. I did not agree with all of the points of views, especially the optimistic beliefs of the panelists that the U.S. will somehow emerge from the offshoring trend a stronger competitor. However, it was comforting to hear that they recognize the plight of unemployed American workers at the expense of foreigners.

Some interesting quotes from the article:

"I think that the truth is that we don't actually have any data on what jobs have gone offshore, where they've gone, the nature of those jobs. We've got anecdotal information. I think it's essential that we get a handle on the facts as much as we can. We should have some national discussion and some policy issues emanating out of whatever is going on. Without knowing what's going on, we're liable to make some mistakes. The concern I have is that investment in research and development has been declining for the last five or six years. Our ability to attract scientists and excellent students is now suffering; and our ability to innovate in the tech sector is no longer unique. I think it would be a mistake to assume that the next new thing will inevitably be ours and the jobs inevitably will be created."

"One of the things that has changed most dramatically over the past few years is the kinds of jobs that are leaving the United States. It used to be very low-end, and it's now moved into the engineering ranks. The presumption is that Silicon Valley is going to continue to be able to distinguish itself by climbing up the value chain. Can we do that? If not, will we simply have fewer people employed here?"

"Although the economy is showing some signs of life, we are not creating jobs in the United States sufficient to even keep up with population growth at this point. The question is why? I don't know that any of us really know all the answers to that. Some of the job loss has been because of productivity gains here. Some of it appears to be offshoring of jobs."

"I have a neighbor who recently was sent to India to train a whole unit. He has just been told that he's been laid off. The whole place where he works is now going to the people he trained. He's got a master's degree from an excellent university, in a scientific field. He is feeling not very well appreciated here in America."

"I had a conversation recently with a venture capitalist who said more and more, companies that get started here have 12 people here, the CEO, the CFO, the COO, the marketing director, and a few other people. They're being asked by VCs, 'Why aren't you doing your work offshore? How are you going to drive down your costs? How are you going to be competitive?' It raises the specter of shell companies that are founded in the Valley but don't have very deep roots or very big employment bases."



Wednesday, December 17, 2003
 
A friend at Oracle is losing her job because the company is offshoring her department to India. Tell me again, how does moving jobs offshore help Americans?

Proponents of offshoring claim that, by offshoring, American companies are creating more global consumers who will buy their products, resulting in increased sales. That, coupled with cost savings from hiring foreign workers, will result in more profitable companies that will be able to hire more American workers. I see two major fallacies with that argument: (1) what makes these offshoring supporters believe that a consumer in India will choose to buy from an American company versus a local company, and (2) if companies believe they benefit from offshoring, what incentive do they have for hiring more American workers when they need to hire additional employees?

To illustrate the foolishness of buying into their argument, I make the analogy between American companies and a family. As a parent on a tight budget, would you ever choose to neglect your own children in favor of feeding another child because it is cheaper to do so? If your conscience allows you to do so (mine definitely WOULDN'T), then once you earn more money, why would you would use that to feed your children when you could feed more other children beause they cost less to support? And would you rationalize your insensitive actions by saying that the other children will in turn take care of your own children whom you neglected?

It may sound like an absurd argument to some, but is it really? The difference between the family and American companies is that a family conjures more and stronger emotions than a company would. But would you ever accuse parents of being prejudiced when they choose to help their own children at the expense of someone else's? Yet those are the same accusations that offshoring proponents fling when they accuse opponents of being xenophobic (which seems to be a popular argument they like to use). We're not xenophobic -- we just happen to believe that it's good to show LOYALTY and PATRIOTISM to fellow Americans, just as it's expected that a parent shows loyalty to his or her children. Anyone who attacks those principles must not believe in them... or lack a better argument.

Wednesday, December 10, 2003
 
I did a search on Google News for articles on offshoring. Here's one recent article.

Offshoring of IT Jobs Expected to Accelerate - internetnews.com
http://www.internetnews.com/ent-news/article.php/3110511

"Forrester Research predicts that $136 billion in wages, or 3.3 million jobs, will move offshore in the next 15 years.

"Most of the analysts speaking at CDExpo say that number, as large as it sounds, might be wishful thinking. The actual numbers will be much higher."


The article also goes on to say that the jobs not heading offshore (for now) include upper-level and management jobs. That makes sense -- the people who make the decisions to replace their American workers with cheap foreigners know their own jobs are safe. Let's see if they think offshoring is such a great idea when it's THEIR jobs in jeopardy.


Monday, December 08, 2003
 
Here's a poem about offshoring that I wrote, inspired by Edgar Allen Poe's The Raven.


Once upon a workday dreary, while I toiled, weak and weary,
Coding until I thought I could do so no more,
While I sat, nearly napping, and on my keyboard continually tapping,
I heard the familiar sound of rapping, the sound of knocking on my door.
'Twas my manager, I turned to find, knocking on my cubicle door,
Only him, and nothing more.

"I have news", he said, "to confirm the rumors in your head,
It will take but a moment and not a minute more."
He beckoned me to follow, and as we traversed the halls now hollow,
I found it hard to swallow, as we approached his office door,
For inside I saw a man dressed emaculately from head to floor,
The VP, I judged from what he wore.

The VP said to me, "You're just the fellow I wanted to see,
We can begin as soon as I close this office door.
The company is spending too much, and I'm here to cut such and such,
You may think I lack the human touch, but we will spend less to hire more.
In a week, I must terminate your team and show you all the door,
So we can move your functions to Bangalore."

My head immediately began to spin as the news slowly settled in,
Why had I not seen this misfortune coming before?
I thought my job was secure, what with everything our team endured,
To ensure our company's future, I didn't know if we could have done more.
"Where did you say our replacements will come from after you show us the door?"
Quoth the VP, "Bangalore."

I left the office in a daze, unbelieving we had bought into the craze,
The shortsighted thinking that considered only compensation and nothing more.
I sought out my fellow team mates, so that we could all commiserate,
There was nothing left but to wait, until the other shoe hit the floor.
The word kept ringing in my ears, leaving me empty to the core,
The VP's dreadful voice: "Bangalore."

The next day the VP sought me again, to reveal more of his dastardly plan.
"I must ask a big favor of you, even if you consider it a bore.
The team in India needs to know how to make all of our systems go.
My success rate with them was low because their English is poor,
And that's why I am asking you to transfer your knowledge store.
You must train your replacements in Bangalore."

I had no response to him, although a kick in the teeth was my whim,
I could not believe he had the nerve to ask what he implored.
To train those who would replace me would be the utter height of folly,
I had to make him see that he would get from me nothing more.
I managed a polite "No thanks" as I stormed across the floor --
I will NOT help Bangalore!

Then all of a sudden I snapped awake, and wondered if those memories were fake,
Was the whole ordeal a dream and nothing more?
I was still gainfully employed, but my nightmare had taken my joy.
Looking at my wife and boy, I knew what I must now strive for --
To warn others that offshore outsourcing is not a fad but much more.
Beware the threat of Bangalore!


Saturday, December 06, 2003
 
In the last posted article, there was a reference to Indiana's decision to cancel their IT contract with an Indian outsourcing firm. I tried to find more details about the story, and here it is.

Indiana nixes offshore deal to protect jobs - CNET News
http://news.com.com/2100-1022-5111987.html

"Citing the need to protect local businesses, the state of Indiana terminated a software contract it had awarded to an Indian company--a move indicative of growing opposition to offshore outsourcing."


With this decision and Dell's announcement to move some technical support functions from India back to the U.S. (see Nov. 25 article), I hope this signals the start of companies opening their eyes to the negative aspects of offshoring.

Wednesday, December 03, 2003
 
Here's another article submitted by a reader of this blog.

The Rise of India - BW Online
http://yahoo.businessweek.com/magazine/content/03_49/b3861001_mz001.htm

"No wonder India is at the center of a brewing storm in America, where politicians are starting to view offshore outsourcing as the root of the jobless recovery in tech and services. An outcry in Indiana recently prompted the state to cancel a $15 million IT contract with India's Tata Consulting. The telecom workers' union is up in arms, and Congress is probing whether the security of financial and medical records is at risk. As hiring explodes in India, the jobless rate among U.S. software engineers has more than doubled, to 4.6%, in three years. The rate is 6.7% for electrical engineers and 7.7% for network administrators. In all, the Bureau of Labor Statistics reports that 234,000 IT professionals are unemployed.

"The biggest cause of job losses, of course, has been the U.S. economic downturn. Still, there's little denying that the offshore shift is a factor. By some estimates, there are more IT engineers in Bangalore (150,000) than in Silicon Valley (120,000). Meta figures at least one-third of new IT development work for big U.S. companies is done overseas, with India the biggest site. And India could start grabbing jobs from other sectors. A.T. Kearney Inc. predicts that 500,000 financial-services jobs will go offshore by 2008. Indiana notwithstanding, U.S. governments are increasingly using India to manage everything from accounting to their food-stamp programs. Even the U.S. Postal Service is taking work there. Auto engineering and drug research could be next."


What is alarming about this article is that the offshoring phenomenon is just the tip of the iceberg where India is concerned. IT service exports employ less than 1% of the Indian workforce, and Indians have less than 3% of the American IT-services industry. Unless something is done about it, those numbers are sure to go up -- at the expense of American workers.

Monday, December 01, 2003
 
Here's a blog from the Java.Net site giving yet another argument against offshoring.
http://weblogs.java.net/pub/wlg/380

"I am a true [believer] that the legislation currently being proposed to lower the H-1B and L-1B visa quotas will not go far enough. I think these visas should be abolished until all of the unemployed and laid-off IT workers and engineers who are US citizens are back on a payroll. The fact that a US company thinks that hiring a barely-English-speaking worker in India or the Philippines is going to solve their competitive problems is just absurd. This is such a shortsighted solution that it makes me sick to think that the people in these corporations actually think that they are making sound business decisions. When the high-tech people being displaced by these policies don’t have the income to purchase the products being made off-shore, who exactly, Mr. and Ms. CxO, do you think is going to buy your stuff? You think the worker in India is going to run out and buy it? I doubt it."

"As a developer, I’ve worked for a company that thought it was just the greatest idea to hire half of our development team from an Indian outsourcing company. The PR on the Indian developers was that they were fully qualified and were less than half the price of some of the members of our engineering team. Sure sounded like a plan. Well in reality it was, and continues to be, a terrible idea. The ‘fully qualified’ engineering team was not even close to qualified. They not only completely screwed up the code base, but they cost us more work in the end to fix their mess. Then there was the 2-day turn around per incident because of the time differences between them and us. Every little thing was an email, wait a day, another email, and wait a day. Things that should have taken minutes to resolve took days. It was a complete fiasco."

Sounds like the experience I had at my last company!


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