It is easy to praise economic globalization during boom times; the challenge, however, is to defend it during the lean years of a business cycle. Offshore outsourcing is not the bogeyman that critics say it is. Their arguments, however, must be persistently refuted. Otherwise, the results will be disastrous: less growth, lower incomes -- and fewer jobs for American workers.
McKinsey Global Institute has estimated that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. Thanks to outsourcing, U.S. firms save money and become more profitable, benefitting shareholders and increasing returns on investment. Foreign facilities boost demand for U.S. products, such as computers and telecommunications equipment, necessary for their outsourced function. And U.S. labor can be reallocated to more competitive, better-paying jobs; for example, although 70,000 computer programmers lost their jobs between 1999 and 2003, more than 115,000 computer software engineers found higher-paying jobs during that same period. Outsourcing thus enhances the competitiveness of the U.S. service sector (which accounts for 30 percent of the total value of U.S. exports). Contrary to the belief that the United States is importing massive amounts of services from low-wage countries, in 2002 it ran a $64.8 billion surplus in services.
The secret of how to be miserable is to constantly expect things are going to happen the way that they are "supposed" to happen.
You can have faith, which carries the understanding that you may be disappointed. Then there's being a willfully-blind idiot, which virtually guarantees it.
Originally posted by HS Thomas:
The Outsourcing Bogeyman
So there you have it ; the number of programming jobs has just doubled. As will any other job you can think of :
[ March 24, 2004: Message edited by: HS Thomas ]
"....bigmouth strikes again, and I've got no right to take my place with the human race...."<p>SCJP 1.4
Originally posted by HS Thomas:
So where will the next Researchers come from ? China ? IBM Global Services?
Open Source ?
The other thing one hears is that there are jobs in management - er, what exactly are they managing ?
The secret of how to be miserable is to constantly expect things are going to happen the way that they are "supposed" to happen.
You can have faith, which carries the understanding that you may be disappointed. Then there's being a willfully-blind idiot, which virtually guarantees it.
The problem of offshore outsourcing is less one of economics than of psychology -- people feel that their jobs are threatened. The best way to help those actually affected, and to calm the nerves of those who fear that they will be, is to expand the criteria under which the Trade Adjustment Assistance (TAA) program applies to displaced workers. Currently, workers cannot apply for TAA unless overall sales or production in their sector declines. In the case of offshore outsourcing, however, productivity increases allow for increased production and sales -- making TAA out of reach for those affected by it. It makes sense to rework TAA rules to take into account workers displaced by offshore outsourcing even when their former industries or firms maintain robust levels of production.
Another option would be to help firms purchase targeted insurance policies to offset the transition costs to workers directly affected by offshore outsourcing. Because the perception of possible unemployment is considerably greater than the actual likelihood of losing a job, insurance programs would impose a very small cost on firms while relieving a great deal of employee anxiety. McKinsey Global Institute estimates that such a scheme could be created for as little as four or five cents per dollar saved from offshore outsourcing. IBM recently announced the creation of a two-year, $25 million retraining fund for its employees who fear job losses from outsourcing. Having the private sector handle the problem without extensive government intervention would be an added bonus.
THE BEST DEFENSE
Until robust job growth returns, the debate over outsourcing will not go away -- the political temptation to scapegoat foreigners is simply too great.
The refrain of "this time, it's different" is not new in the debate over free trade. In the 1980s, the Japanese variety of capitalism -- with its omniscient industrial policy and high nontariff barriers -- was supposed to supplant the U.S. system. Fifteen years later, that prediction sounds absurd. During the 1990s, the passage of NAFTA and the Uruguay Round of trade talks were supposed to create a "giant sucking sound" as jobs left the United States. Contrary to such fears, tens of millions of new jobs were created. Once the economy improves, the political hysteria over outsourcing will also disappear.
Office space in Bangalore is cheaper than Mumbai; and as Walter Rumsby knows the Mumbai IT sector is located in a special suburb.
I'm in Sri Lanka now buying land to build a house and prices for land vary from $6-$7 a square foot in the country to $300 a square foot in central Colombo. Commuting is a nightmare which explains the difference.
There are also massive differences in land prices in the States. A colleague of mine has got a house on 3 acres in Long Island; says it's worth about a quarter of a million. That's a hell of a lot cheaper than land in a suburb of Colombo.
"What the media won't tell you, because they're lazy sob's, is how many new jobs we're likely to generate in that same time period."
WHAT jobs? This is a serious question. We've pretty much outsourced the manufacturing economy, now we're outsourcing the service economy. What else is there?
I go back and forth between believing the sky is falling and then thinking I'm overreacting. But I really don't see a way around the trend that many of the highest paying jobs requiring the most education are now perfect candidates for outsourcing, and I honestly don't see what's going to replace that.
Here's an interesting quote from the linked article:
>>> "Our aim here is not cost-driven," he said. "It's to build a 24/7 follow-the-sun model for development and support. When a software engineer goes to bed at night in the U.S., his or her colleague in India picks up development when they get into work. They're able to continually develop products." <<<
What kind of development fits this model? I do recall a decade or so ago when people thought they could devise software factories where software could be developed on an assembly line. The idea is nonsense, but this makes it sound like management still believes in it.
"What kind of development fits this model?"
Most likely, this is just Oracle management trying to make people think they're not really replacing American jobs with overseas jobs.
The secret of how to be miserable is to constantly expect things are going to happen the way that they are "supposed" to happen.
You can have faith, which carries the understanding that you may be disappointed. Then there's being a willfully-blind idiot, which virtually guarantees it.
Originally posted by Tim Holloway:
Why can't Indians buy books via Amazon.com?
42
Originally posted by Tim Holloway:
This time it is different. Last time, we just worried about being supplanted. This time there are documented cases (like Boeing's tech writers) where jobs definitely have transferred. Also, the length of the dry spell has been much longer and the average length of unemployment much longer. Plus the hiring salaries are off. History almost never repeats itself exactly.
What hurt me was that in those earlier recessions, I was able to work as a consultant. Onshore consulting firms have now all but dried up and blown away. I'd never spent more than 7 continuous months without a paycheck durings the 80's and 90's.
Originally posted by Tim Holloway:
So personally, speaking, it's a whole lot different. And from what my myopic little eyes can see, I'm not alone.
The big question all along has been how much of the current job crunch is due to companies getting labor offshore and how much is due to companies simply not employing laborers at all. Only a true recovery will bring that distinction into relief.
Originally posted by Jeroen Wenting:
Or are Indians just cheap and don't want to spend US prices on books seeing they have all those cheap Indian editions at home?
It was developed by scientists and engineers at the Indian Institute of Science in Bangalore who were looking for a way of taking the internet revolution to India's rural masses.
Originally posted by Don Stadler:
I suspect the bulk of the pain is caused by similar causes to those in the earlier tech crunch. The offshoring adds to the problem of course, but I think it's not the major causative factor.
The secret of how to be miserable is to constantly expect things are going to happen the way that they are "supposed" to happen.
You can have faith, which carries the understanding that you may be disappointed. Then there's being a willfully-blind idiot, which virtually guarantees it.
To repeat. No it wasn't. I was there. And actually in the time frame you mentioned, the golden jobs were in things CICS and JES internals. The PC market was just getting started.
MH
Originally posted by Don Stadler:
Could be. I knew a CICS expert at that time who was doing very well. I suspect the bulk of the COBOLers who didn't know the fancy stuff weren't doing as well, however. True?
The secret of how to be miserable is to constantly expect things are going to happen the way that they are "supposed" to happen.
You can have faith, which carries the understanding that you may be disappointed. Then there's being a willfully-blind idiot, which virtually guarantees it.
Originally posted by Tim Holloway:
My Handspring was a Visor Deluxe and it ran $250 new (when the last one wore out, I got a replacement for $80 on eBay). It has the SpringBoard slot in it. I noticed that the Simputer has gotten cheaper, however. Also added memory, I think.
Originally posted by Tim Holloway:
I'm afraid I didn't notice. I was in mainframe tech support doing assembly language. But I do recall the president of our company telling us at a companywide meeting about then that recessions were good for us because in lean times companies looked to cut costs by computerizing.
Originally posted by Tim Holloway:
It was the late '80s/90s recession that was the first time I felt any pain. That was when all the companies were going to "downsize their way to greatness". I'd left my "job-for-life" position to go back to school and found it difficult to get a job afterwards. Finally had to move to another city, but I worked various contract and perm jobs and was never more than 5 months between paychecks. There's a lot of difference between 5 months and 28 months.
Also never had to take a pay cut like I did this time around.
Most of the numbers thrown around are vague, overhyped estimates.
Cushioning this process (outsourcing) for displaced workers makes sense.
recent testimony by N. Gregory Mankiw, the head of President George W. Bush's Council of Economic Advisers. No economist really disputed Mankiw's observation that "outsourcing is just a new way of doing international trade," which makes it "a good thing."
McKinsey Global Institute has estimated that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. Thanks to outsourcing, U.S. firms save money and become more profitable, benefitting shareholders and increasing returns on investment.
Even if the most negative projections prove to be correct, then, gross job loss would be relatively small.
The best way to help those actually affected, and to calm the nerves of those who fear that they will be, is to expand the criteria under which the Trade Adjustment Assistance (TAA) program applies to displaced workers.
"I believe in coyotes and time as an abstract Explain the change the difference between What you want and what you need there's the key"
It was the late '80s/90s recession that was the first time I felt any pain.
I should think a causative might have been GW I - Gulf War I. And mysteriously very large relational databases hit the scene.
Politicians have never had such instant access to people's feelings on such topics before or people to news and knowledge.
The secret of how to be miserable is to constantly expect things are going to happen the way that they are "supposed" to happen.
You can have faith, which carries the understanding that you may be disappointed. Then there's being a willfully-blind idiot, which virtually guarantees it.
Originally posted by Tim Holloway:
An English farmer would hesitate to spend $200 for a productivity aid? I don't think you've priced combine harvesters. $200 is about one year's income in parts of India and China. A Combine is about 10 years (after-expense) income for a family farmer. To say nothing of the amount of fuel it consumes. Farmers are big into co-ops.
Oh, I dunno. An angry mob outside the castle gates is a pretty good indication of feelings
"I believe in coyotes and time as an abstract Explain the change the difference between What you want and what you need there's the key"
That new kid is a freak. Show him this tiny ad:
a bit of art, as a gift, that will fit in a stocking
https://gardener-gift.com
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