Jerusalem's radiographers, Vietnam's architects

Date: Thursday, August 21, 2003 1:18 PM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

Tarun Das, head of the Confederation of Indian Industry. said that
there is no economic limit to what can be outsourced to India. Das
should have also mentioned the fact that Congressional betrayal of
American workers knows no limits either.

This article discusses how radiologists in Jerusalem are practicing
medicine on un-suspecting American patients. Israel is competing with
India for low salary, high-tech jobs in everything from telemedicine to
movie-making, and in some cases they are winning the battle to undercut
American workers. Israel's Free Trade Agreement (FTA) with the U.S.
allows them to have have easier access to our economy than India and
therefore some competitive advantages.

India isn't going to fade anytime soon from the medical business
because they now offer low cost heart bypass surgery. Even with airfare
it's far cheaper than getting the surgery done in a U.S. or UK
hospital. Perhaps HMOs will soon require US patients to fly to India to
get heart surgery.

Outsourced medical diagnosis also takes place in Bangalore. Go to the
following links to find out more about this new brand of cost cutting
telemedicine:

Bangalore's Remote Healthcare Services
http://makeashorterlink.com/?P3CA14AA5

Massachusetts General Hospital's Telemedicine Program
http://makeashorterlink.com/?L19A32AA5

[link not available, magazine at http://news.ft.com/home/europe]

Financial Times: Service industries go global

By Dan Roberts and Edward Luce

Published: August 19 2003 21:21 | Last Updated: August 19 2003 21:21

Clutching her side in pain, the woman with suspected appendicitis who
was rushed to a hospital on the outskirts of Philadelphia last week had
little time to ponder how dependent her life had become on the
relentless forces of globalisation. Within minutes of her arrival at
the Crozer-Chester Medical Centre, the recommendation on whether to
operate was being made by a doctor reading her computer-aided
tomography (CAT) scan from a computer screen 5,800 miles away in the
Middle East.

Jonathan Schlakman, a Harvard-trained radiologist based in Jerusalem,
is one of a new breed of skilled professionals proving that geographic
distance is no obstacle to outsourcing even the highest paid jobs to
overseas locations. The migration of white-collar work has moved up the
value chain from call centre operators and back-office clerks to
occupations such as equity research, accounting, computer programming
and chip design.

The trend - still only a trickle at present - may look to some like a
temporary fad pursued by companies seeking to cut costs. For trade
unions in the US and Europe, it heralds a fundamental restructuring of
rich-world economies, akin to the globalisation of manufacturing in the
1980s and the outsourcing of unskilled service jobs in the 1990s.

At present, only 35 patients' scans are transmitted each day from US
emergency rooms to Dr Schlakman's small team of doctors in Israel. But
with senior radiologists costing up to $300,000 a year to hire in the
US and many emergency cases arriving at night, the use of medical
expertise based in a different time zone and earning less than half US
rates is almost certain to
rise. "It's much more expensive to use night staff in the US because
they need time off the following day," says Dr Schlakman. "Radiography
is probably the best area to start with because a lot of it is based on
computer imaging, which you don't need to be physically present for."

In Vietnam, a team of 50 architects is working on behalf of 16 UK
architectural practices that have outsourced some of their technical
drawing and three-dimensional computer-generated design work. Trieu
Nguyen, technical and compliance manager at Atlas Industries, used to
teach architecture to university students in Ho Chi Minh City. Today,
his days may be spent checking technical drawings for a new secondary
school in the English home counties. Typical pay at Atlas is about
$6,000 net a year, high by local standards - Vietnam's average per
capita income is about $400 - but a fraction of comparable workers
receive in the UK.

Like Jerusalem's radiographers, Vietnam's architects use broadband
internet connections as a link to their markets; but occasionally
customers will make the journey themselves.

During the past year, Singapore's Changi airport has begun receiving
empty aircraft from the US. A growing number of US-based airlines are
sending their fleets to Asia for maintenance. Lower wage rates for
skilled aerospace engineers more than compensate for the $60,000 it can
cost to fly across the Pacific.

At the centre of this service revolution is India. Just as China is
fast becoming the new workshop of the world for light manufacturing,
India has its eye on the globe's professional services.

A growing clutch of Indian companies provide computer-generated
animation and special effects services for the western film industry.
Reuters, the financial and media group, is preparing to open a
production facility for preparing and analysing the financial data it
sends to screens in investment banks - threatening some of the 1,150
staff currently doing the work in the
UK and US. And there are signs that India will take a slice of offshore
fund management and other financial services in the next few years.

"There is no economic limit to what can be outsourced to India," says
Tarun Das, head of the Confederation of Indian Industry. "The only
limit that we can see is a political backlash in the west against the
migration of jobs to India and elsewhere."

Ramesh Sharma, head of Moving Pictures India, a Delhi-based company
that makes documentaries and provides animation and special effects
services for western production companies, says that his advantage is
exactly the same as that of Indian information technology or call
centres. The same cost advantages that attracted General Electric,
banks such as HSBC and Standard Chartered, and BT Group, a UK telecoms
company, to relocate back-office and treasury operations to India are
prompting others to see what the country's English-speaking graduates
are capable of.

"Our animators are just as qualified as most western animators," says
Mr Sharma, whose company has won outsourcing work from Dutch, Italian
and British production companies. "The key element here is that they
provide the same quality service for roughly a quarter the price."

Moving Pictures has been sending film crews around the world to make
documentaries for western broadcasting companies. "We make a
documentary for $25,000 when it would cost $100,000 in the
Netherlands," Mr Sharma says. The only limit he can imagine is the
extent to which foreign companies can shoot their films at India's
large film studios in Bombay and Hyderabad: "You would have to fly in
all the extras if you wanted them to be white."

Ajay Lavakare, chief executive of RMSI, an Indian "geographic
information services" company, says India is now a world leader in this
niche sub-sector. By analysing maps and satellite images, RMSI helps
insurance companies assess whether their risks are too concentrated, it
helps ordnance surveys in creating sophisticated maps (in the UK and
Japan) and it provides
computerised road maps for vehicles.

"Which western company can assemble a project team of 200 people
including qualified geologists at the drop of a hat?" asks Mr Lavakare.
"The advantage is not just in our lower costs - it is in the easy
availability of highly qualified English-speaking technicians."

The cost advantages are even more striking in healthcare. Naresh
Trehan, director of Escorts Heart Institute in New Delhi, says that an
increasing number of foreigners is coming to India for heart bypass
operations. The average cost, including air fare, is about $7,000 -
roughly a quarter of what it would be in the UK private sector. And
there are no waiting lists.

"Last year we did more than 4,000 eart bypass operations - the highest
of any single institute in the world," says Dr Trehan. At 0.8 per cent,
Escorts' mortality rate was comparable with international standards.

Indian companies in almost every sector are beginning to wake up to the
commercial logic of such arguments. "What is to stop Indian legal
companies from providing legal services to the UK, which also has a
common law system?" asks Omkar Goswami, a leading economist. "If it can
happen in accountancy and the medical profession, why not law?"

But there is also growing awareness in India of the potential for a
popular backlash in the west against the "loss" of jobs. "Protectionism
can take on very sophisticated guises," says one Indian executive. "We
believe that India will increasingly become the target of such
arguments and we must act to defend ourselves."

One consequence is that Indian companies now play down their success;
western journalists are increasingly refused access to call centres in
Madras, Hyderabad, New Delhi and Bombay. More importantly, India's
government is adopting a strikingly new trade negotiating position,
hoping to secure a market access agreement for service professionals in
the Doha round of global trade talks. This contrasts markedly with
India's traditional suspicion of open markets. "India has finally
struck economic
gold," says a senior trade official. "We have to adjust our policies
accordingly."

Another policy change involves heavy lobbying by Indian trade
associations in Washington, DC, where US politicians are under pressure
to react to the impact of overseas outsourcing on the still-struggling
technology industry. In New Jersey there has been pressure to ban
outsourcing of public sector contracts to offshore processing centres
such as India.

The sensitivity is well understood by technology companies but many
feel compelled to look at moving jobs to lower-cost countries because,
as one Microsoft executive put it recently, "our competitors have
already got this religion".

A internal presentation by a human resources director at International
Business Machines obtained by union campaigners at the Washington
Alliance of Technology Workers summed up the problem: "One of our
challenges is to balance what the business needs to do with the impact
on people and this is one of those areas where this challenge hits us
squarely between the eyes.
Our competitors are doing it, so we have to do it."

Marcus Courtney, a campaigner at the Washington Alliance, says the
result is a hollowing out of the US IT industry at all levels. "When
you have a software developer with postgraduate level qualifications
having to train his replacement in India, you realise this not about
skills," he says. "This is about a global economy that is increasingly
based on the lowest-cost
labour, and multinationals are beginning to exploit that."

Europe, too, fears a repeat of the job losses that hit manufacturing in
the 1980s and 1990s. "It's just a trickle right now but we're very
worried that higher-skills jobs are beginning to go too, such as
information technology," says Peter Morris, policy adviser at the
Communication Workers Union in the UK. "In theory, there is no limit:
any job which can be done remotely could disappear abroad."

While unions in the US and the UK argue that India's advantage in
service industry outsourcing lies in its "sweatshop" wages and working
conditions, few Indians take such descriptions seriously. Working
conditions at India's call and IT centres - whether directly managed by
western companies or by Indian-owned contractors - are considered among
the best of any type of
employment. Wages are high by Indian standards. And in spite of an
average 50 per cent annual growth rate in revenues - expected to
continue indefinitely - India's business processes outsourcing sector
still employs fewer than 200,000 people. That number is certain to rise
rapidly.

Additional reporting by Andrew Bibby

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