more outsourcing news
more outsourcing news
Date: Monday, October 28, 2002 12:13 AM
H-1B and JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
There is very little good news in this series of articles about the new
trend in job destruction called outsourcing. The first article is soemwhat
positive because people are protesting the job destruction caused by NAFTA
and FTAA (now called TPA).
http://www.bangornews.com/editorialnews/article.cfm?ID=88344&town=Bangor&byline=JeffTuttle&cname=Statewide§ion=City&tt=9AM
By Jeff Tuttle, Of the NEWS Staff e-mail Jeff
Last updated: Saturday, October 19, 2002
Workers group protests trade pacts as unfair
BANGOR - A crowd of workers gathered outside the federal building Friday to
protest U.S. trade agreements they contend have sent thousands of
manufacturing jobs overseas.
Chants of "Where are the jobs?" came from magnifying glass-toting
demonstrators at the afternoon rally, sponsored by the Greater Bangor Area
Central Labor Council and other workers' rights groups.
The labor council's president, Jack McKay, said the demonstration was
designed to raise awareness of unfair trade policies that have cost the
state more than 22,000 jobs since 1994.
"The rules are written so they benefit the corporations," McKay said. "This
is about a type of trade that doesn't work for the people of Maine and in
fact for the people of the world."
Among those to address the crowd was 2nd Congressional District candidate
Mike Michaud, who faulted the president's "fast track" trade authority -
which prevents Congress from amending trade deals negotiated by the
administration - for quickening the exodus of jobs to countries with fewer
protections for workers.
"Right now we are being asked to compete with workers in other countries who
have no rights - no right to organize, no right to a safe working
environment, and no right to a decent, livable wage," Michaud said. "In the
end, none of us can compete on such an uneven playing field."
Moreover, the East Millinocket Democrat took the opportunity to criticize
his Republican opponent, Kevin Raye, for his support of fast track.
Raye has said that while he supports the authority - which he says is
necessary to compete in a global market - he would ultimately oppose any
negotiated agreement that was unfair or did not adequately protect workers'
rights.
Like Michaud, Raye has also said he opposes the North American Free Trade
Agreement, which also came under fire at the Friday demonstration.
Michaud was the only candidate to attend the rally, where many of the
protesters' placards were aimed at Republican U.S. Sen. Susan Collins, whose
Bangor office is located in the federal building.
"Snoozin' Susan, were you asleep while we lost our jobs?" read one sign,
which featured a character of a dozing Collins on a pillow reading "Fair
Trade."
Specifically, rally organizers faulted Collins for opposing amendments to
NAFTA that they said would have better protected workers.
Collins aide Megan Sowards on Friday defended the senator's support for
NAFTA and the president's fast track authority, which she said has opened
once inaccessible international markets to Maine farmers.
"Senator Collins supports free trade and believes it must also be fair
trade," Sowards said.
Collins is running against Democrat Chellie Pingree, whom rally organizers
praised as supportive of their cause.
The rally began with a skit in which a woman dressed as a vulture
symbolically snatched American jobs and brought them overseas.
It was all too familiar to laid-off shoe worker Cynthia Finney, who told the
crowd of her company's closure after the jobs were moved to China, where
workers earn a fraction of U.S. wages.
"This isn't a line from a skit," Finney said. "This is my life."
http://www.siliconvalley.com/mld/siliconvalley/4332783.htm
Posted on Mon, Oct. 21, 2002
Slowdown sending tech jobs overseas
By Jennifer Bjorhus
Mercury News
The U.S. economy might be stalling, but at least one niche is hot: shipping
technology jobs offshore.
The economic slowdown is speeding up the export of jobs, experts say. As
executives face smaller budgets and more pressure for profits, they find it
much cheaper to send work to contractors overseas. More U.S. companies are
following Silicon Valley's lead by shifting engineering and other
technology-related jobs to places such as China, Ireland, India and the
Philippines to cut costs.
The drift of jobs is worrying engineering groups, renewing fears that
white-collar tech jobs in the United States are going the way of blue-collar
manufacturing jobs: over the border and across the seas.
A major engineering group has asked Congress to investigate whether the
offshore trend, combined with U.S. companies importing foreign engineers on
H-1B visas, is partly to blame for high unemployment among U.S. engineers.
About 200 of the Fortune 500 companies now ship software work overseas,
according to Stephanie Moore, an outsourcing expert at Giga Information
Group in Cambridge, Mass. Fortune 1000 companies are quickly following.
Moore estimates that global revenue from offshore software work will hit
$7.68 billion this year, up 20 percent from 2001. Forrester Research
estimates that corporate budgets for offshore software outsourcing will
probably more than double by 2004.
Valley technology companies pioneered the concept of going offshore for tech
talent more than a decade ago, along with General Electric and Microsoft.
But now the practice is becoming common outside the technology industry.
The list of companies contracting for offshore tech services reads like a
corporate ``Who's Who'' list: Target, Visa International, Gap, Boeing,
Citigroup, Nordstrom, Bank of America and, of course, Oracle, Cisco Systems,
Hewlett-Packard and Microsoft.
San Francisco brokerage Charles Schwab last year moved part of its
information technology division to a contractor in Bangalore, India, where
about 150 people do programming for Schwab's internal computer networks and
Web site. The move followed a 25 percent companywide layoff. Schwab
spokesman Greg Gable said the layoffs included an unspecified number of
contract engineers in its tech division.
Franklin Templeton Investments in San Mateo, too, has shifted about 20
percent of its tech work to service providers in India and elsewhere.
Even the state of California has contracts worth $76.6 million with five
tech services firms that outsource some tech work overseas, according to
records maintained by the state's Department of General Services. A
department spokesman said he didn't know whether the work on those contracts
was being done overseas. The state has no rules about it, he said.
Some experts say the growth in offshore tech services is less about
increased U.S. demand than about aggressive marketing by Indian firms. Some
of the biggest are Infosys, Wipro Technologies and Tata Consultancy
Services, all based in India.
U.S. tech services companies are also in on the game. Tech consultants such
as IBM Global Services; Accenture, a Bermuda-based Arthur Andersen spinoff;
Electronic Data Systems; Computer Sciences; and PricewaterhouseCoopers are
all racing to set up overseas operations. Many go to India. Other hot spots
include Ireland, the Philippines, Eastern Europe and China.
Although most of the overseas software work remains basic maintenance and
applications development, vendors are moving up the value chain to software
architecture, strategy and systems design. The Philadelphia Stock Exchange
recently hired Cognizant Technology Solutions, which has a New Jersey
headquarters and 10 development centers in India, to build new software
architecture for its computer networks to run the exchange in real time.
Back-office work is moving overseas even faster, experts say. India's
leading software association expects the country's sizable share of
back-office work, such as handling customer service e-mails and payroll
processing, to surge more than 60 percent this year.
Shifting work to low-cost areas is a way to rein in costs in a tough market,
executives say. Tech executives surveyed last fall by Forrester reported
saving 25 percent on projects by going overseas. A software engineer fresh
from college in India might earn $5,000 a year, compared to about $50,000 in
the United States.
Not everyone agrees on how big a threat the drift poses to U.S. engineers.
Norman Matloff, a professor of computer science at the University of
California-Davis, argues that the actual number of software jobs being
shipped overseas is a fraction of the country's total. And it will remain
small, he argues, because nothing beats face time at the soda machine for
finishing engineering jobs right.
Still, the increase in overseas outsourcing is making hard-hit tech workers
anxious.
The jobless rate for all engineering doubled in the second quarter of this
year, from 2 percent to 4 percent, and increased even more for computer
scientists and electronics engineers, according to the IEEE-USA, the U.S.
arm of the Institute of Electrical and Electronics Engineers.
Some unemployed engineers express a deep sense of outrage and betrayal.
Echoing critics of globalization, they argue that companies are selling out
technology jobs that were supposed to be the future of the U.S. workforce.
Labor experts say no one knows how many engineering jobs the United States
has lost because of the recent uptick in offshore outsourcing. The bigger
issue, some say, is the U.S. tech jobs that fail to materialize because of
the overseas hiring.
``It's worrisome,'' said Terry Oldberg, a Los Altos Hills engineer and
organizer for the Programmers Guild. ``We're not organized to fight it.''
http://www.pcw.co.uk/News/1136170
US companies ship IT jobs offshore
By Nick Farrell [22-10-2002]
Outsourcing trend continues as downturn prompts cost-cutting moves
US technology jobs are being shipped to China, Ireland, India and the
Philippines in a bid to save cash.
According to US news reports, the economic slowdown is speeding up the
export of jobs as companies find that it is cheaper to hire workers in other
countries and get them to telework.
A major engineering group has asked Congress to investigate whether the
offshore trend, combined with US companies importing foreign engineers on
H-1B visas, is partly to blame for high unemployment among US engineers.
Analyst Giga Information Group has announced that more than 200 of the
Fortune 500 companies now ship software work overseas, and that the Fortune
1000 companies are quickly following suit.
Forrester Research estimated that corporate budgets for offshore software
outsourcing from the US will probably more than double by 2004.
Companies contracting for offshore technology services include Target, Visa
International, Gap, Boeing, Citigroup, Nordstrom, Bank of America and, of
course, Oracle, Cisco Systems, Hewlett Packard and Microsoft.
San Francisco brokerage Charles Schwab recently moved part of its IT
division to a contractor in Bangalore.
Some experts have suggested that the growth in offshore tech services is the
result of aggressive marketing by Indian firms.
Most of the overseas software work is concerned with basic maintenance and
applications development, although there are moves towards software
architecture, strategy and systems design.
The Philadelphia Stock Exchange recently hired Cognizant Technology
Solutions, which has a New Jersey headquarters and 10 development centres in
India, to build a new software architecture for its computer networks to run
the exchange in real time.
http://www.sanmateocountytimes.com/Stories/0,1413,87%257E11271%257E907288,00.html
Article Last Updated:
Sunday, October 06, 2002 - 9:46:49 AM MST
Local firms part of growing employment trend
SRINI MADALA doesn't have to explain the benefits of offshore outsourcing to
his potential customers anymore. Now he only has to persuade them to pick
his company, SoftSol, among a crowded field of outsourcers.
"I used to have to spend half my time telling them why they should outsource
and the other half telling them why they should chose me. Today I spend all
my time telling them about my company," Madala said.
Fremont-based SoftSol specializes in cutting technology costs for its
clients by doing work more cheaply at its engineering hub in Hyderabad,
India.
Cisco Systems, Sun Microsystems and IBM have all worked with SoftSol. Madala
claims outsourcing can cut technology costs by as much as 50 percent.
SoftSol and other local companies are part of a growing employment trend. As
the economy has soured, corporations have looked for ways to trim expenses.
To many, outsourcing technology operations is an easy solution.
Madala has experi-ence more demand for his services, but new competitors
have arrived on the scene.
"We have big companies, including some from India, that are competing for
clients and throwing a lot of money at the market," Madala said.
One of those companies is Covansys Corp. The Michigan-based company has a
technology office in Milpitas.
Covansys has more than 1,400 employees at Indian development centers in
Chennai, Mumbai and Bangalore. Covansys gained 12 percent, or $48 million,
of its revenue last year from its Indian outsourcing operations.
Covansys clients include big names like Ford Motor Co., Gap, Lands End and
Coca-Cola. The company claims outsourcing to India has cut the technology
costs of clients by 40 to 50 percent.
Madala expects SoftSol to have $20 million in sales this year, the same
revenue it had in 2001. Unlike the double-digit growth experienced during
the past three years, Madala expects his business to be stable due to
increased competition.
Gartner Dataquest analyst Jennifer Black estimates nearly all of the world's
top 1,000 companies will outsource their information technology functions by
2004.
"Speed and agility are everything because nothing is certain and change is
constant," she said.
Seema Giri, chief operating officer of Astrowix Corp., uses 30 software
engineers in a New Delhi office to outbid competitors with cheap talent from
India for project management jobs. Fremont-based Astrowix has helped Kaiser
Permenante with its Y2K preparation and later with its project management.
This year Astrowix has begun offering Microsoft-certified training. Giri
said those services are more wanted in India than in the United States.
"Interest in India is high because a lot software development work is still
happening there. We are hiring and we plan to continue to expand in India,"
Giri said.
It isn't just local firms that are providing outsourcing services. More big
businesses are housing their software development and programming operations
in Asian countries, where talent and office space are cheaper, said
Stephanie Moore, an analyst for research firm Giga Information Group Inc.
"U.S. vendors have had remote, low-cost delivery options for years. They
just haven't been willing to publicize them. IBM, EDS and Accenture
combined, for example, now have more than 40 of their own remote development
centers in geographies such as India and the Philippines," Moore said.
Tom Anderson can be reached at (510) 353-7006, or
tanderson@angnewspapers.com
http://www.masshightech.com/displayarticledetail.asp?art_id=60245&search=outsource+outsourcing+outsourced+
Outsourcing stacks up
09/30/2002 07:45 AM
By Anne Taylor
Imagine saving 90 percent on your software development costs by outsourcing
the work.
That’s what happened for NanoVia in Londonderry, N.H. NanoVia specializes in
optical technology for ultraviolet drilling systems used to manufacture
everything from drug delivery systems to microchip packaging.
The company needed a software tool that did complex mathematical
computations for its systems. Initially, they approached the University of
New Hampshire because the state offers matching grants to companies that use
New Hampshire universities for research and development.
“We found a group at UNH and we discussed the project,” said Todd Lizotte,
NanoVia co-founder. “They came back to us with a time frame of 18 months of
work at a cost of $50,000 to $100,000.”
Lizotte said his company was most concerned with the amount of time the
project would take.
So NanoVia started looking on the Web for consultants with a background in
mathematics and computer science. They got in contact with a man working in
St. Petersburg, Russia, who said he was interested in the work and that it
would generate income for the university there.
NanoVia sent the project specs and a quote came back. Time to deliver: four
weeks. Cost: $3,500.
“He wanted 50 percent down and 50 percent within 30 days of completion,”
Lizotte said. “We figured we were only at risk for $1,750.”
The work took nearly six weeks, but NanoVia was pleased.
“We had the program and it was as he said it would be,” Lizotte said. “It
works and we’re happy with it.”
“Our optical technology is still our core, and we’re focused on that,” he
added. “(Outsourcing) is a good business decision.”
Another local company that has saved money through outsourcing is ArrAy Inc.
in Westborough. The company debugs, enhances and maintains software that its
clients need to get to market. ArrAy outsources some of the maintenance work
to a company in the Ukraine called SoftServe.
Chief executive Charles Palmer said that while cost savings were not the
primary reason for going overseas, he said it was “an assumed benefit.”
Plus, SoftServe was willing to work around ArrAy’s schedule.
“The Ukraine company agreed to adjust their work to overlap our work day by
a minimum of 6 hours a day,” Palmer said.
ArrAy saved at least 50 to 60 percent of the cost of doing the work
internally, Palmer said. “That’s based on a fully loaded cost including
communication kit between the two organizations and management overhead.”
Large U.S. companies are averaging about 40 percent in cost savings by
outsourcing software development and services overseas, says Stephen Lane,
research director at Boston’s Aberdeen Group. He recently completed research
on the outsourcing market.
“Some of the big companies got into offshore outsourcing back when there was
a real problem with IT resources, when projects couldn’t be done here fast
enough,” Lane said. “Cost was a side benefit. But in the intervening years,
we’ve gotten to the point where cost savings are a primary driver.”
According to Lane, India is at the top of the outsourcing list, with 60
percent of its $6.2 billion export revenues coming from offshore software
services.
In fact, India’s largest software exporter just got some help from a local
venture capital firm. General Atlantic Partners in Greenwich, Conn., made a
$100 million investment in Patni Computer Systems, an IT consultancy and
solutions provider based in India, with U.S. headquarters in Cambridge.
“We believe that India represents a tremendous market opportunity,” said
John Wong, a partner at General Atlantic who will sit on Patni’s board.
“This is particularly true now, when companies are focused on reducing costs
and improving processes. With the right combination of skills and expertise
to provide superior service to clients globally, Patni is very well
positioned to capitalize on this movement.”
The outsourcing movement is picking up speed as other countries such as
Ireland, Russia, China, Bulgaria, the Phillipines and many others try to get
in on the money to be made.
“The world outside the U.S. is growing in size and technical skill,” said
Marty Anderson, a senior lecturer in management at Babson College. “This
means people in any country can outsource to many other countries. Japan
outsources some design to firms in the U.S. Nokia and Ericsson outsource to
the U.S. and dozens of other countries. The U.S. outsources expensive
software tasks to Singapore, India, Indonesia and other locations.”
Some people worry whether outsourcing software services overseas will create
job losses in the states. Organizations such as the Institute of Electrical
and Electronics Engineers (IEEE) have begun to ask President Bush and
members of Congress to address the issue.
Paul Harrington, who runs the Center for Labor Market Studies at
Northeastern University, says it’s difficult to measure job losses.
“I don’t know the magnitude, but look at NAFTA’s impact on manufacturing. It
was pretty big,” Harrington said. “The fact is that our engineering
enrollments are still going down. We’re unable to produce the labor supply
to keep these jobs here.”
Aberdeen’s Lane adds, “There will always be concerns about loss of control,
protecting IP, loss of jobs and pressures not to do it. But U.S. companies
are not sitting still. In the current economy, operational costs are the
single biggest issue and companies are increasingly going to (outsource
overseas).”
“I can’t see this trend reversing itself,” said U. Srinivasa Rangan,
associate professor of strategy and international business at Babson
College. “Once the work goes offshore it’s difficult to bring it back. It’s
the same trend that we have seen with U.S. manufacturing. It allows U.S.
companies to focus more on critical issues. Once it starts rolling and as
long as outsourcing companies deliver, it will continue and grow.”
http://www.ciol.com/content/news/repts/102100502.asp
Ernst&Young has announced that they would open its first offshore
development center at Technopark. The back office services include software
development, application maintenance, knowledge management, multimedia
content development, technical help and desk services for the Middle East
region.
Cyber News Service
Saturday, October 05, 2002
THIRUVANTHAPURAM: Ernst & Young would open its first offshore development
center (ODC) in India at Technopark. To begin with Ernst & Young Middle East
(E&Y ME) would utilize their center to develop key software to automate the
internal procedures followed by the company for its 17 offices across 12
middle-east countries.
Announcing the decision, Khosrow Dabir-Alai, Chief Operating Officer of E&Y
ME said, "Kerala presents an industry friendly approach and the state
appears to be committed to the process of reform. The physical,
communication and power infrastructure meet our global standards". E&Y ME
currently employs over 1,700 people in its offices in the region.
Software development services, ITES and network management services for
E&Y's clients in the Middle East region are potential areas for setting up
the center in India. "This is our first step into India and we are bullish
on our growth prospects in Kerala. We have come to Kerala with the objective
of transferring the bulk of our back office services to India and we intend
to do this as fast as it is practicable," Dabir-Alai said.
The back office services include software development, application
maintenance, knowledge management, multimedia content development, technical
help and desk services for the Middle East region. P K Kunhalikutty, Kerala
Minister for IT and Industry described the E&Y ME's decision as a strong
vote of confidence in the state's ongoing reform process.
"It provides a strong fillip to Kerala in realizing its full potential as
India's leading destination for investment by IT and ITES companies," he
said. Rajiv Vasudevan, CEO of Technopark said that E&Y is the first true
blue transnational global leader reposing confidence in Technopark and
Kerala.
It has recognized the distinct value proposition that Technopark offers
today--a uniquely holistic enabling environment for knowledge organizations
at 1/3rd the cost of comparable facilities elsewhere. The Middle East
practice of Ernst & Young is an independent professional firm, which has
operated in the region since 1923 and is a full member firm of E&Y
International. During the past seventy-nine years the firm has evolved to
meet the developments within the area.
"The fully equipped facility is housed in a 50-storey building with a
state-of-the-art telecommunications infrastructure."
http://www.ciol.com/content/news/repts/102100407.asp
AmEx global service center set up in Gurgaon
As a part of its strategy to provide world class servicing through a global,
distributed customer-servicing network, AmEx has established its global
service center in Gurgaon. The fully equipped facility is housed in a
50-storey building with a state-of-the-art telecommunications
infrastructure.
Cyber News Service
Friday, October 04, 2002
NEW DELHI: Kenneth I Chenault, Chairman & CEO, American Express Company
(AmEx) formally inaugurated the American Express Global Service Centre in
Gurgaon, Haryana. Spread over an area of 137,000-sq. ft., the center would
offer voice and data based customer services, fraud and risk modeling and
financial processing to AmEx customers worldwide.
The establishment of the Global Service Center in Gurgaon is part of AmEx’s
strategy of providing world class servicing through a global, distributed
customer-servicing network. In recent months, AmEx has entered into several
strategic relationships with leading providers at locations in Gurgaon, New
Delhi, Mumbai and Bangalore.
The new proprietary service comes is expected to complement this
infrastructure and will employ several hundred full-time positions
initially,
with room for growth in the future. This distributed service network
initiative of AmEx in India would complement its Global Service Center
network and provide additional capacity to serve its growing business.
The service network supports a variety of the Company’s card, financial
services and travel related businesses around the world. Elaborating on the
American Express Global Service Centre, Chenault said, "India today commands
a unique competitive edge in the realm of IT-enabled Services. The vast pool
of human talent, location advantage and improving infrastructure combine to
qualify India as an important destination for ITeS and the correct choice
for
American Express."
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