Meta Group in eWeek article
Meta Group in eWeek article
Date: Sunday, May 19, 2002 10:05 AM
*** H-1B NEWSLETTER ***
Get the Facts on H-1B at
www.ZaZona.com
American technical workers like Tom in the story below need to get their
heads bashed in by baseball bats in order to get some sense knocked into
them. That's because they have been told that they will be replaced by
H-1Bs
as soon as they train them. Instead of saying no they just obey their
orders
and train their replacement. Just picture in your mind what a Teamster
at a
boatyard would do if his boss asked him to train a scab. If techies
continue
to prostitute themselves like this they will get just what they deserve
ruined careers and poverty.
This article discusses the relationship between outsourcing and H-1B
better
than any I have read yet. Rubin at "Meta Group" says that no technology
jobs
are immune from outsourcing and once these jobs leave they won't come
back
to the U.S.
Meta group was inducted into Skunks.org at
http://www.zazona.com/ShameH1B/Skunks.htm#META because they do studies
to
encourage companies to hire H-1Bs and to outsource in order to save
money
and increase profits. They gather data to show companies how much money
will
be saved by dumping American workers. The Meta Group and the ITAA often
work
in concert to spin their shortage propaganda.
I contacted Jed Rubin (I assume Jed and Howard are related) in February
because he wrote a paper that told companies that they could cut their
labor
costs by more than 10 times by moving to India. I was curious just how
cheap
labor was in India compared to US workers. Rubin was quite helpful even
though he knew all about my website. I didn't tell him that he is
considered
to be one of the Skunks (hehe :)
My question to him was: How much does a programmer in India make? Rubin
said, "The most recent salary information we have (from over a year ago)
indicates $300/month would be within the expected range." In a previous
newsletter we found out that programmers in Vietnam make a third as much
as
India so that comes to $100 a month.
http://www.eweek.com/article/0,3658,s=25210&a=26941,00.asp
May 13, 2002
Fair Trade on Jobs?
By Lisa Vaas
When, 18 months ago, bank of America Corp. moved to outsource IT support
for
human resources and other internal functions, Tom (not his real name), a
Bank of America programmer, thought it might not be such a bad deal. Not
only would the IT veteran get a severance package from the bank, but
he'd
also get a job with the outsourcer, Exult Inc., in office space the
Irvine,
Calif., company had leased in the same Charlotte, N.C., Bank of America
building where he was working. Same salary in the mid-60s. Same
colleagues.
It beat unemployment.
A year later, however, the deal turned sour. Tom is now being required
to
help train a group of 30 Indian programmers. HR support is to be shipped
offshore to two Indian companies, HCL Technologies America Inc. and
Hexaware
Technologies Inc. At the end of this month, once training is completed,
Tom
will join a total of 70 former Bank of America IT support staff who will
have lost their jobs to offshore outsourcing.
Many observers expected world events-including post-Sept. 11 nationalism
and
a recession-induced glut of IT skills on the domestic job market-to stem
the
flow of IT jobs to offshore outsourcers. They haven't. If anything, the
exportation of IT jobs from the United States to places such as India
and
the Philippines seems to be increasing. Gartner Inc. has projected that,
by
2005, 30 percent of all Global 2000 enterprises will be embracing the
offshore or nearshore-namely, Canada or Mexico-IT outsourcing model.
While
the United States is still home to about half of all IT workers, the
size of
the IT work force outside of this country is growing at about double the
rate-20 percent per year-of that in this country, according to Howard
Rubin,
a research fellow at Meta Group Inc.
Fueling much of that momentum has been the offshore expansion of large,
U.S.-based IT service providers. Electronic Data Systems Corp., for
example,
last year hired 6,000 offshore workers at a time when, according to a
recent
report by the Information Technology Association of America, the IT work
force in the United States shrank by 5 percent due to layoffs.
What's behind the acceleration in offshore outsourcing is obvious: An
unprecedented impulse by enterprises to slash IT costs. Meta's Rubin
calls
it the "El Nino of IT." For the first time in technology history, said
Rubin, there's both pressure on IT spending to shrink as a percent of
revenue, and absolute dollar spending on IT has dropped.
It's easy to see why offshore outsourcing makes U.S. businesses feel
like
kids in a candy store. Hourly labor costs run $25 to $40 for Indian
technology workers, compared with $150 to $200 for U.S. contractors.
Gartner's rule of thumb is that enterprises cut between 25 percent and
40
percent from project costs when using the offshore model.
It's not surprising, then, that enterprises such as consumer electronics
retailer RadioShack Corp. have been gradually increasing their use of
offshore IT outsourcing. The company in 2000 launched a pilot project to
let
Cognizant Technology Solutions Corp. handle the migration of a suite of
programs, originally written in Natural 4GL, to Visual Basic. Migration
and
subsequent operation of the system were taken over by a team of on-site
Cognizant managers and India-based employees. As Cognizant took over all
application management and any new development that became necessary,
five
RadioShack IT employees were consequently freed up to be retrained.
RadioShack turned over the maintenance and operation of other home-grown
systems-including one used for overnight retail store polling and
written in
Tandem C-to Cognizant for offshore outsourcing. Unlike other companies,
RadioShack hasn't laid off anyone as a result of offshore outsourcing.
RadioShack CIO Evelyn Follit said the company takes great pride in the
fact
that, since the outsourcing was announced, RadioShack has been
retraining 60
of its 512-member IT staff in project management and analyst skills.
Follit, in Fort Worth, Texas, said Cognizant has had no problem
delivering
the level of IT skills to support RadioShack's applications. One of the
reasons-and a factor in why offshore outsourcing makes sense today for
many
companies-is that the $4.8 billion retailer doesn't do much development
anymore. Increasingly, the company uses off-the-shelf packages, such as
Retek Inc.'s enterprisewide supply chain package, that don't require
heavy-duty programming skills.
Once U.S.-based companies turn to offshore outsourcing, it's rare for
them
to bring jobs back. United States Cold Storage Inc., a refrigerated
storage
company in Cherry Hill, N.J., for example, turned to Cognizant's
offshore
services in 1999 to help it upgrade from an outmoded IT infrastructure
to a
Web-enabled environment. At the time, its 11-person IT staff was running
30
separate IBM S/36 minicomputers and had no e-commerce or Web skills. And
the
company was having difficulty finding and retaining IT staff, said
Director
of Transportation Larry Alderfer. Cognizant, through its offices in
India,
helped USCS deploy a new Web-based transportation system that uses
AS/400s,
IBM's WebSphere application server and a Java interface. The systems are
now
the foundation of the company's e-USCold business-to-business site. In
all,
Cognizant took over 95 percent of USCS' development and support
activities.
But that was 1999. This is now. Finding and retaining IT workers with
all
but the rarest skills is hardly an issue. Why, then, doesn't USCS
reverse
course and hire domestically?
"It's an ongoing debate," Alderfer said. "It's a great market to hire
people
in now. There's a lot of well-trained technical people now available, in
all
aspects, whether it's Web-based or traditional programming. But we still
have the situation where we have to manage those people. With the
outsourcing, we don't have all those headaches. We tell them the cost
and
when it's required, and they deliver when they're expected to."
Who Goes, Who Stays?
As the pace of offshore outsourcing quickens, the million-dollar
question
for U.S. technology workers is: What jobs, if any, are immune from
outsourcing?
For his part, Meta Group's Rubin said he believes that all IT skills, no
matter how specialized, are vulnerable to offshore outsourcing.
In general, however, network management, desktop support and security
may be
less likely to be shipped offshore than some development-oriented
skills,
experts say. That's because those jobs are too localized to export. At
USCS,
for example, the five or so remaining IT employees are responsible for
those
job functions. "[Those roles are] so critical, we feel you have to have
people right on it," Alderfer said.
Ultimately, the only way an IT worker can ensure that his or her job is
somewhat protected is to tenaciously entwine technical knowledge with
business knowledge, Meta Group's Rubin said. That's exactly what John
Brudi
is doing. When RadioShack announced its outsourcing plan in 2000, Brudi
had
been working as a DB2 programmer at the company for about six months.
Now
he's five months into a seven-course track at George Washington
University
offered through ESI International that will eventually turn him into a
project manager, armed with the Project Management Institute's Project
Management Professional certification.
"Where all the development is outsourced, you've got to have people to
manage that," Brudi said. "You'll [always] have some internal
development,
but the majority can potentially be outsourced. ... You've got budgets,
schedules to deal with. It has to be managed by someone."
The onshore need for people close to the business with the right
combination
of IT and business skills was echoed by Kim Ross, CIO of Nielsen Media
Research Inc., in Dunedin, Fla. Even though Nielsen began outsourcing to
Cognizant in 1995, Ross has been training IT staff in Web security and
Java
architecture-skills they've been learning side by side with Cognizant
contractors. Why? Ross said Nielsen will always need programmers with
business knowledge to run data about television viewing and Internet use
through its statistical processing systems and high-performance decision
support systems. For the most part, that work can't be outsourced, he
said.
Developers must be focused on the core business.
For those tech-focused IT professionals who so far haven't been
motivated to
acquire strong business knowledge, the message is clear: Like
agriculture,
textiles and auto manufacturing before it, IT has become industrialized.
The world is your competition.
IT Careers Managing Editor Lisa Vaas can be reached at
lisa_vaas@ziffdavis.com.
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