Bidness as Usual in Jersey

Date: Sunday, February 09, 2003 7:19 PM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

In a previous newsletter the acronym BPO was introduced, but I prefer
this Dr. Dobb's definition - Bidness Process Outsourcing.

Remember that New Jersey bill that attempted to stop this kind of
"bidness" by requiring that all outsourcing by the state must be done
by US citizens or Green Card holders? That meant that nobody could take
those American jobs if they wanted to use the cheap young blood of
nonimmigrant visa holders such as H-1B or L-1.

It seemed that New Jersey would be a rare state that put American
workers first in line, but hold on there pardner!!! Senator Shirley K.
Turner just showed up in town to bring back the BPOs that love those
cheap bodyshops. She wants an ammendment to water down the bill by
allowing "any person authorized to work in the United States pursuant
to federal law." That means that for the bodyshops it will be bidness
as usual. Turner prob'ly wants to ship the rest of them there jobs in
Jersey right out of the country where the grunts are even cheaper.

http://www.ddj.com/documents/s=7790/ddj0302k/0302k.htm

Bidness Process Outsourcing
Dr. Dobb's Journal February 2003

The ongoing shenanigans in the boardrooms of large corporations have
made oxymorons out of terms like "business logic" and "business
ethics." Let's see. There's Enron, Westar, Aquila, Global Crossing, and
WorldCom. Then there is Stanley Works, Ingersoll Rand, Xoma, and Tyco,
all of which like thieves in the night moved their corporate
headquarters offshore to avoid paying U.S. taxes. (Of course, leaders
in Congress could have put the skids to this practice by denying
government contracts to such companies, but ultimately to no one's
surprise backed off. Hey, big dogs and politicians have to eat, too.)

The latest catch phrase making the rounds in fancy-dan boardrooms is
"business process outsourcing," which occurs when organizations turn
over business functions to third parties. In truth, there's nothing new
about the concept other than, of course, the name. Let's face it,
"business process outsourcing" has a better PR spin on it than, say,
"Sorry, we've just eliminated your job."

In the past, outsourcing generally has been relegated to functions
ranging from accounting and human resources to call centers. More
recently, however, the advent of technology in general and the Internet
in particular has enabled offshore outsourcing to engulf a multitude of
business processes, including software development. Estimates peg the
worldwide market for business process outsourcing at about $127 billion
in 2002. Market-research firm Gartner further projects it will grow to
$200 billion by 2005. Of this, about 60 percent of U.S. outsourcing
remains in country, with the other 40 percent distributed worldwide to
countries such as India, Russia, Ireland, and the Philippines all of
which have plenty of skilled, English-speaking, high-tech workers,
relatively inexpensive labor costs, and generally sound communication
infrastructures. In an interesting turn of events, some U.S. newspapers
have even been carrying employment ads touting jobs for engineers who
might want to return home to manage jobs outsourced from the U.S.

India, in particular, has fueled this growth, accommodating companies
such as Dell Computer, Sun Microsystems, General Electric Capital,
Hewlett-Packard, i2 Technologies, and Oracle all of which have moved
business segments to that country. Oracle, for instance, plans on
employing more than 4000 workers in India by the end of this year. And,
according to services chief Ann Livermore, HP is "trying to move
everything we can offshore."

As you might expect, all of this business process outsourcing stuff has
ignited a gold-rush of sorts. While any comparison to dot-com madness
might be an overstatement, lots of companies see a big pie and want a
piece of it. Local companies in India fighting for a share of that pie
include Wipro, ICICI Citigroup, InfoSys, OneSource, Evalueserve.com
Private, and TransWorks, among others. Muddying the waters are U.S.
software service companies like Cognizant Technology Solutions, which
plans on opening India-based business process outsourcing operations
this year. All in all, there are from 75 to 100 companies offering
business processing services in India, with the top 10 having perhaps
as much as 90 percent market share.

This competition, along with a soft global economy, has crimped
business process style in India, leading a recent Gartner report ("IT
Trends in India, 2002";
http://www4.gartner.com/1_researchanalysis/focus/itsvcs_fa.html) to
speculate on an upcoming dot-com-like bust. As in the dot-com
boom-and-bust, the lack of capital and inflated mergers and
acquisitions are stretching return on investments at the same time that
billings are being squeezed. Compounding the problem is pressure on
customers particularly those in the U.S. not to take business offshore,
thereby saving jobs at home. In particular, proposed laws like Senate
Bill 1349 (http://www.njleg.state.nj.us/2002/Bills/S1500/1349_I1.HTM),
introduced in New Jersey by state Senator Shirley K. Turner, would
prevent outsourcing of government contracts to non-U.S. citizens or
legal resident aliens. Specifically, the bill "provides that only
citizens or persons authorized to work in the U.S. pursuant to federal
law may be employed in performing certain State contracts...[and] is
intended to ensure that State funds are used to employ people residing
in the United States and to prevent the loss of jobs to foreign
countries." Turner's proposal was prompted by published reports about
telephone inquiries to welfare and food stamp clients under New
Jersey's Families First Program being handled by operators in India.
"I'm opposed to using taxpayers' dollars to send our jobs overseas,"
says Turner. From her perspective, companies that outsource offshore
are "in the long run undermining the fabric of our country." Turner's
bill unanimously passed the New Jersey Senate and is currently awaiting
passage in the state Assembly.

In fact, it is unlikely that even well-meaning laws will have an impact
on business practices such as outsourcing. Laws are made by politicians
and, as we've seen over and over, most politicians are the toadies of
corporate boardrooms. What's needed is a commitment to human decency.
Alas, that's probably asking too much of corporations in America.

Jonathan Erickson
editor-in-chief
jerickson@ddj.com

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