11 Outsourcing/Offshoring Articles
11 Outsourcing/Offshoring Articles
Date: Sunday, October 12, 2003 4:54 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Article 1
:http://moneycentral.msn.com/content/invest/extra/P62115.asp
Will your job move to India?
Article 2:
http://www.cnn.com/2003/TECH/biztech/10/04/india.jobs.reut/index.html
Jobs abound in India's tech sector
Article 3:
http://www.theregister.co.uk/content/7/33217.html
Intel CEO admits: jobs aren't coming back to US
Article 4:
http://newstodaynet.com/17sep/bu1.htm
Spryance to invest $5 m for Medical Transcription in Chennai
Article 5:
(link not available EETimes)
Design outsourcing appears inevitable, EEs told By Ron Wilson
Article 6:
http://www.washingtonpost.com/wp-dyn/articles/A6042-2003Oct9.html
Intel Chairman Says U.S. Is Losing Edge
Article 7:
http://www.informationweek.com/story/showArticle.jhtml?articleID=15202179
Delta Cancels Plans For Philippines Call Center
The airline says the decision to call off the project was made because
of security concerns.
Article 8:
http://www.infomaticsonline.co.uk/News/1144081
Wanted: chief sourcing officer - Gartner urges firms to appoint
outsourcing head honcho
Article 9:
http://www.sacbee.com/content/business/story/7579480p-8520557c.html
Oracle may trim 175 jobs - will move about 175 data processing jobs
from Rocklin to India by May
http://online.wsj.com/article/0,,SB106574731540500800,00.html
Skilled Workers Mount Opposition
Article 10:
http://english.eastday.com/epublish/gb/paper1/1031/class000100022/hwz160876.htm
Shanghai rises as hub for software - Companies have to pay, on average,
US$3,000-US$4,000 to each Indian engineer per month, while their
Chinese counterpart costs US$2,000-US$3,000.
Article 11:
http://economictimes.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=176684
Outsourcing is not a big issue in Washington State
http://moneycentral.msn.com/content/invest/extra/P62115.asp
Posted 9/30/2003
Extra
Will your job move to India?
Millions of U.S. jobs will be exported in the coming decade,
forecasters say. Here are the jobs that are especially vulnerable, plus
5 that aren't.
By Philipp Harper
One of the most unsettling truths about the job market today can be
found in two seemingly insignificant recent announcements by high-tech
powerhouses Oracle and Hewlett-Packard.
Software giant Oracle (ORCL, news, msgs) said it's moving 2,000
developer jobs from the United States to India, doubling the number of
developers it has on payroll there. Then Hewlett-Packard (HPQ, news,
msgs) announced plans to close a customer-service operation in Florida
and send the operation's 1,200 jobs overseas, again to India.Money
2004.
Smarter, faster and easier
than ever.
Though negligible when compared to the sheer numbers of job losses in
manufacturing, the shifts by two technology companies are alarming for
what they likely foretell: no less than the relocation of millions of
high-end technology and service jobs from this country to less
expensive foreign venues. In the process, there will be a redefining of
what constitutes safe employment in America.
Number of U.S. jobs moving offshore
Job category 2000 2005 2010 2015
Management 0 37,477 117,835 288,281
Business 10,787 61,252 161,722 348,028
Computer 27,171 108,991 276,954 472,632
Architecture 3,498 32,302 83,237 184,347
Life sciences 0 3,677 14,478 36,770
Legal 1,793 14,220 34,673 74,642
Art, design 818 5,576 13,846 29,639
Sales 4,619 29,064 97,321 226,564
Office 53,987 295,034 791,034 1,659,310
Total 102,674 587,592 1,591,101 3,320,213
Source: U.S. Department of Labor and Forrester Research, Inc. All
numbers have been rounded.
Its one thing to see a labor-intensive industry such as textile
manufacturing shift to foreign soil, especially when the process has
been going on for decades. Its quite another thing to watch the
United States lose jobs that require highly educated workers and the
support of a sophisticated technological infrastructure.
While current unemployment of about 6% isn't high by historical
standards, there's no denying this trend toward job exportation.
The next generation of vulnerable jobs
A study by Forrester Research predicts that U.S. companies will
transfer 3.3 million service jobs overseas by 2015, compared with just
102,000 jobs shifted in 2000. Meanwhile, the payroll associated with
those jobs will rise from $4 billion to more than $136 billion,
according to Forrester projections.
The early job exports are predominantly in the areas of information
technology (including software and product development), customer
service, back-office accounting and sales. Other major U.S.
corporations that have sent service jobs overseas, where wage rates can
be as much as 50% lower, include:
Dell (DELL, news, msgs), which opened a customer-support center for its
American market in India.
Delta Air Lines (DAL, news, msgs), which established reservations
operations in India and the Philippines.
American International Group (AIG, news, msgs), which set up a
processing operation in the Philippines to handle claims from its
American General Life subsidiary.
As the trend gathers steam, Forrester predicts, other and more
sophisticated types of knowledge-based work also will be exported.
The bottom line, says John Challenger, CEO of Challenger, Gray &
Christmas, the Chicago-based outplacement firm: Its false to think
the only jobs that could go overseas are low-skilled jobs that pay low
wages.
5 safer sectors
The employment picture does have a bright side, though: plenty of good
jobs in growing sectors are essentially unexportable.
Most are in services industries that figure to be among the fastest
growing segments of the U.S. economy in coming decades. These
industries run the gamut from fast-food server to physician, from
security guard to bank president, and they can be found with employers
both large and small.
Challenger identifies five sectors with an especially low risk of
exportation:
Health care. You cant go overseas to see a doctor or nurse or get
physical therapy, Challenger points out. The aging of Americas
population makes health care a good long-term career bet, he adds,
singling out medical transcription and nursing as two particularly hot
areas.
Other in-person services. These are the jobs, like those in health
care, that require a face-to-face interaction between provider and
client. They are spun off by almost every human activity and interest.
Teaching and training of all kinds constitutes one potential growth
area, Challenger says, because education is being thought of as more of
a life-long thing.
Real estate. Just as land is not exportable, neither are many of the
activities involved in its development. In addition to real estate
service, the category also includes residential and commercial
construction and the burgeoning home-improvement industry.
Financial services. As usual, it makes sense to follow the money.
Americas vast capital holdings have spawned entire industries
dedicated to their preservation and growth. Like the money itself, the
jobs associated with it will be kept at home.
Security. One outgrowth of the war on terrorism is increased demand for
all types of security and military personnel. I see a lot more of this
being needed over the next 20 years, Challenger says.
The services sector, in particular, is approaching red-hot status.
General hiring in the services sector will be 22% greater on campuses
this year than last, according to a recent survey by the National
Association of Colleges and Employers, made up of college and
university career counselors. And the most aggressive recruiters, says
Bill Currin, director of Wake Forest Universitys Office of Career
Services, are those from financial services companies.
Currin also notes that while government hiring is projected to be down
this year, a worker shortage is developing at the federal level that
will become acute in the next few years.
Hot jobs for the short run
Projections by the federal Bureau of Labor Statistics provide
additional clues as to where the jobs will be in coming years.
For the 2000-2010 decade, the BLS predicts, technology will account for
eight of the 10 fastest-growing occupations, as measured by percentage
increase. They are:
Where the jobs are
# jobs added % increase
1. Computer software engineers, applications 380,000 100
2. Computer support specialists 490,000 97
3. Computer software engineers, systems software 284,000 90
4. Network and computer systems administrators 187,000 82
5. Network systems and data communications analysts 92,000 77
6. Desktop publishers 25,000 67
7. Database administrators 70,000 66
8. Personal- and home-care aides 258,000 62
9. Computer systems analysts 258,000 60
10. Medical assistants 187,000 57
Of this group, the two software engineering jobs would seem to be the
most susceptible to eventual relocation overseas. The two non-tech
positions -- home-care aides and medical assistants -- are the least
so.
When measuring the total numbers of new jobs created, the top 10 skew
heavily toward in-person kinds of service jobs; food preparation and
restaurant work, customer service, nursing, retail sales, and office
and clerical work are among the occupations that dominate. Computer
support and applications-software engineering are the only tech
categories represented.
Where technology jobs are concerned, its important to distinguish
rapid job creation from an inability to be exported. As more countries
achieve parity in their technology infrastructures, they could be
magnets for jobs that currently are U.S.-based, depending on
differentials in labor costs.
An ignored jobs source
Another potential source of export-proof jobs -- one that perhaps is
being overlooked -- is Americas small-business community.
While the BLS payroll survey indicates that 1.1 million jobs have been
lost since the U.S. economy began to pull out of recession in the final
quarter of 2001, its household survey indicates a gain of 1.4 million
jobs.
This discrepancy may be attributable to the fact that the payroll
survey often fails to capture self-employed workers or those who labor
for the smallest companies. The household tally, by contrast, does
account for such jobs.
So while looking for work that doesnt travel well, job seekers would
do well to think small.
http://www.cnn.com/2003/TECH/biztech/10/04/india.jobs.reut/index.html
Jobs abound in India's tech sector
BANGALORE, India (Reuters) --Software engineer Prakash just quit his
job in Bangalore, but he's not worried.
"The market is booming. I can pick and choose a firm of my choice,"
said the 28-year-old engineer, who has been in the industry for about
five years.
Companies are slashing payrolls in the United States and Europe to cut
costs, moving software work offshore and creating thousands of jobs for
India's low-cost engineers.
Headhunters are scrambling to fill the new jobs.
"The shelf life of a job hunter has come down to two weeks from about
two months," said Gautam Sinha, chief executive at TVA Infotech, which
is placing about 90 software workers a month, double the number from
the start of the year.
Top home-grown software exporters such as Wipro Ltd and Infosys
Technologies Ltd are also on a hiring spree but the bulk of their staff
additions are entry-level positions.
India's software sector, including the back-office services industry,
added 130,000 -- nearly 25 percent -- to its workforce in the year to
March, taking the sector to 650,000. Wage costs are rising but are not
yet a threat for a nation that churns out about 200,000 engineers per
year, analysts say.
Software workers with two years of experience are paid about 25,000
rupees ($545) a month, roughly one sixth of what their U.S.
counterparts earn but a princely wage in a country with an average per
capita income of $480 a year.
"Multinational company salaries are 50 to 60 percent higher at the
entry-level and 30 percent higher at the middle management level when
compared with Indian IT services companies," Bombay-based Kotak
Securities Ltd said in a recent report.
Wage hikes
A fall in U.S. employment visas for foreign workers are partly driving
the expansion plans of high-tech firms such as IBM, Accenture Ltd and
Oracle Corp. in India. Visa curbs discourage Indians from seeking
employment abroad and some are returning from a stint overseas.
"Clearly, the romance of jobs overseas is no longer there for most
Indian techies," said Pandia Rajan, the managing director at Ma Foi
Management Consultants, a leading headhunter.
Walk-in interviews are common in the shining offices of companies in
the technology hubs of Bangalore, Madras and Hyderabad in the south and
Delhi and Bombay in the west.
India's call centers have been magnets for job-hunting youth in the
past few years, but it is only in the last six months that software
jobs are flooding the market after a two-year crunch. India's software
services exports rose to $9.5 billion in the past year to March and are
forecast to grow 26 percent this year.
"Many Indians overseas are uncertain about their tech jobs and are
coming back," said Smita Goswamy, who runs HR Solutions, a small
consultancy in the western city of Baroda.
International hiring
A full-page advertisement from IBM screams: "The global giant is at
your desktop with the opportunity of a lifetime. Can you afford to
ignore it?"
Internet media giant Yahoo Inc. and Fidelity Investments, the number
one mutual fund firm, are among other large companies moving technical
support work to India.
Yahoo, which set up a software center in Bangalore in July, is tapping
local colleges for talent, said Venkat Panchapakesan, who shifted from
Yahoo's U.S. center to head its software unit.
Accenture and Oracle are expanding furiously but their staff in India
is still less than a quarter of Infosys and Wipro, which employ about
17,000 and 21,000 people respectively.
"Overseas firms are even hiring from mid-sized local players," said
Bangalore-based Shambhu Agrawal, who handles technology placements at
ABC Consultants.
http://www.theregister.co.uk/content/7/33217.html
Intel CEO admits: jobs aren't coming back to US
By Andrew Orlowski in San Francisco
Posted: 05/10/2003 at 20:11 GMT
They're calling it the 'jobless recovery' - but it's a misleading
phrase. New jobs are being created in the tech sector, only CEOs are
making sure they're in China and India, not at home in the United
States.
Craig Barrett admits to the New York Times today that while Intel has
maintained a steady head count in the US, it has hired a thousand new
software engineers in India and China.
Barrett has a curious phrase to justify this new trend. "To be
competitive, we have to move up the skill chain overseas," he said.
(What's a skill chain and what do you find at each end?) The Times
cites an estimate that a million jobs have been moved offshore since
March 2001.
Gartner predicts one in ten tech jobs will be moved offshore by the end
of next year 2004 and half of them will be skilled engineering
positions. (see US tech industry staff decimated in offshore stampede.)
The trend is nothing new: but for the first time it's affecting the
technocrat middle class, who in the United States (and increasingly the
UK, too) must bear the costs of further education. The benefits, and
inevitability of globalization were preached while first manufacturing
then service jobs went off shore.
Now an engineering degree no longer guarantees employment. 14 per cent
of tech companies have already moved R&D offshore, CIO magazine
reports, but more ominously 60 per cent of firms have only just started
discussing the subject. By next year the first ripples could turn into
tsunami. .
http://newstodaynet.com/17sep/bu1.htm
Spryance to invest $5 m for Medical Transcription
NT Bureau
Chennai, Sept 17:
Spryance Inc, a healthcare BPO firm, is infusing $ five million
in its India operations to augment its medical transcription (MT)
activity by upgrading its Quality Assessment (QA) hub at Tidel Park,
Chennai, and to install a second QA facility as a back up and for
catering to increasing global demand for high value health information
management (HIM).
Raj Malhotra, president
and CEO, Spryance Inc Talking to the media yesterday, Raj
Malhotra, president and CEO, Spryance Inc, said, 'since we started
three-and-half years ago we had phenomenal progress in the medical
transcription market and will be leveraging our proven technology and
infrastructure into new arena of health care management like billing
and coding outsourcing'.
Spryance India Pvt Ltd (SIPL), an Indian subsidiary of Spryance
Inc, US, does sub-contract MT processing for over 125 US hospitals and
clinics through 35 medical transcription service organisations (MTSOs)
with a growth exceeding 25 per cent in the past consecutive 12
quarters. The soft arm of the World Bank, the International Finance
Corporation (IFC) ploughed in $3 mn and another $4 mn contributed by
management, resulting in the paid up equity of $ seven million for the
Spryance, Inc. For India operations, Spryance is now investing $ five
million taking its overall investment in the country to $ nine million
till date.
Malhotra says that India is on the right course to become
healthcare BPO capital of the world 'with vast pool of man power
resource yet to be tapped with adequate training for quality conscious
product delivery'.
However, presently India accounts for $80 million of more than
$16 billion MT business worldwide that is part of global Health
Information Management industry worth Rs 200 billion, growing
exponentially every year. The Spryance chief expects India to net $
three - four billion in MT outsourcing alone. As the MT industry in US
face declining takers in that profession, the demand for outsourced
market for MT grows by 13 per cent to touch $ seven billion in 2008, as
per a US industry survey.
Spryance Inc factoring the growing prospects of Medical
Transcription as 'a subset of overall Health Information Management has
given high priority to its India operations which is delivering five
million lines of transcription a month with Total Quality Management
(TQM) has its credo and being handled at its hub centre in Tidel Park,
Chennai'.
In India Spryance employs around 900 people around 500 of them
under home based franchisee system, 150 at QA hub in Chennai and
another 300 micro entrepreneurs. By 2003, it plans to expand their home
transcriptionists to 800, who would be serviced and evaluated by the QA
hub. 'We offer proprietary on-line training programme for our workforce
as per American Association of Medical Transcriptionists (AAMT)
guidelines along with traditional modules for both MTs and editors,'
says Malhotra.
'Spryance will continue to dominate in MT segment of healthcare
outsourcing, as more and more medicare providers, hospitals and MTSOs
in US look upon India as lucrative outsourcing centre for quality
health documentation enhancing cost management and improved
productivity,' asserts the chief executive. But with a rider that
Spryance approach to MT processing would be of 'high corporate
professionalism involving the workforce in quality guidance and helping
them to move up the value chain within the industry'.
September 24, 2003
Design outsourcing appears inevitable, EEs told By Ron Wilson
Electrical Engineering Times
September 24, 2003 (3:51 p.m. EST)
SAN JOSE, Calif. A panel session at the Custom Integrated Circuits
Conference here Tuesday (Sept. 23) debated the implications for
U.S.design engineers of IC design outsourcing.
Panelists offered free-market platitudes, candid warnings, reassuring
economic generalizations and some incisive observations that may help
individual designers find a foothold on what promises to be a slippery
slope for the profession in the coming years.
Rakesh Kumar, president of operations-outsourcing venture TCX Inc.
(Poway, Calif.) said the U.S. has a long history of outsourcing its key
industries, including the steel and automotive businesses. He noted
that the electronics industry has followed suit, outsourcing the vast
majority of packaging, assembly and test.
"Every industry has done this," Kumar said. "The only difference is at
what point the outsourcing curve turns over ? at 20 percent, 50 percent
or 100 percent of the U.S. capacity." The question is not whether the
U.S. will outsource chip design, but whether it will retain some design
capability or send out everything, Kumar said.
Kumar posed three questions for the panel: Is chip design outsourcing
inevitable? What role will it leave for the US? and What can an
individual engineer do about it?
Ann Lee Saxenian, professor of political science at the University of
California Berkeley and an author on the subject of economic
globalization, documented a substantial flight of the electronics
industry from the U.S. She said the U.S. share of the global
semiconductor market would drop to 30 percent by 2010, while the
Asia-Pacific share would rise to 35 percent and Japan's declined to 20
percent.
In contrast to the overall figures, she noted, 40 percent of all
fabless semiconductor revenue flowed into Silicon Valley companies in
2002.
Saxenian described the redistribution of the industry not as
outsourcing but as a new global division of labor. In this new order, a
once monolithic industry is disaggregating, with individual tasks
migrating to locations that can perform them most productively.
Seen in this light, she said, the U.S. would likely retain dominance in
IC architectural design, in investment into the semiconductor industry
and in design of chip manufacturing equipment and EDA tools.
Ed Ross, president of TSMC USA, charted the competitive landscape in
the Chinese, Taiwan and U.S. semiconductor markets. Contrary to most
U.S. executives, Ross said Taiwan and China have collectively become a
hotbed of design activity. "There are about 350 design houses in
Taiwan today, and 500 in mainland China," he said. "Many of these are
small, but not
all of them. And some are very sophisticated."
Right mix
China in particular had the right mix of advantages to prosper rapidly,
he added. "The industry receives heavy government investment in China,"
Ross said, "and benefits from a very strong local market. But on the
minus side, China currently suffers a critical lack of experienced
managers, and their continued lack of effective legal protection for
intellectual property could become a serious limitation."
On balance, Ross said, China would mature as a design community more
rapidly than Taiwan "for one simple reason. They are importing a lot of
managers from Taiwan who have already been through the experience." If
there is a dark cloud looming over the Chinese industry, Ross said, it
is that the huge fab building campaign could lead to global
overcapacity by 2005 or 2006.
Werner Goertz, vice president at outsourcing megastore Wipro
Technologies (Bangalore, India,) added a different perspective. On a
macroeconomic scale, Goertz said design outsourcing was a nonissue. He
showed data indicating that the total number of jobs projected to leave
the U.S. from outsourcing by 2005 about 3 million would be only
slightly larger than the number of jobs lost through normal operations
in the U.S. in the boom year of 1997.
Further, Goertz said productivity increases from outsourcing enriched
U.S.-based companies that outsourced design work. Hence, in a
trickle-down view of engineering economics, the job loss benefited the
U.S. engineers.
Geortz counseled engineers to effectively run for high ground, or move
their careers away from basic design and into architectural design or
design management tasks least likely to be outsourced.
Behrooz Abdi, a vice president heavily involved in mixed-signal design
at Motorola, said outsourcing is not just about lower salaries. He said
the underlying problems were that productivity growth had outpaced
demand, and that companies had lost their differentiation. This has
forced faster time to market and lower development costs as a
substitute for successful new products.
Abdi agreed that the best path for individual engineers and for
companies was to innovate at the systems level rather than trying to
differentiate themselves on the basis of chip or circuit design.
Gloomier view
Brian Fitzgerald, chief executive of the small design services house
ChipWrights (Boston) was pessimistic.
"I think design outsourcing is necessary to a small company in order to
compete," Fitzgerald said, "but in the long term I think it is bad for
the country." Fitzgerald said he is continually approached by offshore
design shops offering to work "three to five times cheaper than we can
do it here.'' The more outsourcing, the more global competition is
lowering engineering salaries and career opportunities in the U.S.
"One of my engineers comes to me and says he has to have a 10 percent
raise. I know he's good, but I also know I could get maybe five times
more work done for the same money I'm paying him now. So what am I
going to do?" Fitzgerlad asked. ''The more we cut away at the
incentives for people in the U.S. to take up engineering careers, the
more we undermine out ability to innovate."
The panel's consensus was that IC design outsourcing is inevitable, and
probably irreversible. The U.S. will be left with product
specification for the domestic market, architectural design and
investment from venture capital firms. All individual engineers can do
in the face of a flood of outsourced design work is to flee to the
relative safety of system architecture, or target highly individual
analog or RF design talents.
They can also cling to the hope that the water stops rising, panlists
said.
http://www.washingtonpost.com/wp-dyn/articles/A6042-2003Oct9.html
Intel Chairman Says U.S. Is Losing Edge
By Jonathan Krim
Washington Post Staff Writer
Friday, October 10, 2003; Page E01
One of the founding fathers of the nation's high-technology industry
warned in dire terms yesterday that U.S. dominance in key tech sectors
is in jeopardy, threatening the country's economic recovery and growth.
Speaking via satellite to a global technology summit in Washington,
Intel Corp. co-founder and chairman Andrew S. Grove said that the
software and technology service businesses are under siege by countries
taking advantage of cheap labor costs and strong incentives for new
financial investment.
"I'm here to be the skunk at your garden party," Grove said, noting
wryly that his remarks coincidentally fell on the same day as one
devoted to promoting nationwide screening for depression.
Grove, 67, singled out China and India as key threats. India's booming
software industry, which is increasingly doing work for U.S. companies,
could surpass the United States in software and tech-service jobs by
2010, he said.
More ominously, Grove said, the software and services industries --
strong drivers of U.S. economic growth for nearly two decades -- show
signs of emulating the struggles of the U.S. steel and semiconductor
industries.
In the case of steel, U.S. companies never recovered, dropping from
nearly 90 percent of worldwide market share to roughly 10 percent. The
semiconductor industry, Intel's core business, faced similar challenges
in the 1980s, when it began its drop from 90 percent to 40 percent of
the world market, Grove said, before aggressive trade and other U.S.
policies helped it recover and stabilize at about 50 percent.
Grove said that even as the U.S. economy is improving, tech employment
is not.
According to industry figures, more than 500,000 technology jobs were
lost from mid-2001 to mid-2003. Many of these were due to a contraction
of the tech sector after the dot-com bubble burst in 2000.
But Grove acknowledged under questioning that the tech industry itself
is responsible for numerous jobs leaving the United States, as firms
take advantage of considerably cheaper labor costs in India and
elsewhere.
Grove said he is torn between his responsibility to shareholders to cut
costs and improve profits, and to U.S. workers who helped build the
nation's technology industry but who are now being replaced by cheaper
labor. Grove did not offer a solution, saying only that the government
needs to help decide the proper balance between the two. Otherwise, he
said, companies will revert to their obligation to increasing
shareholder value.
Recent estimates from financial consulting firms paint a stark picture
of "offshoring," which allows companies to get software development and
other services at one-third to one-sixth the cost.
The Gartner Group, a market research firm, estimates that 10 percent of
jobs at U.S. information technology vendors will move offshore by next
year.
Throughout all U.S. companies, Forrester Research predicts the loss of
roughly 3.3 million jobs by 2015.
Grove said that the move offshore has been aided by the
telecommunications bubble of the late 1990s. So much infrastructure for
high-speed Internet connections was laid, much of it never used, that
the cost of achieving high-speed communication plummeted. As a result,
Grove said, "the engineer sitting 6,000 miles away might as well be in
the next cubicle."
Grove chided U.S. policymakers for all but ignoring the problem.
"What is the U.S. public policy?" he asked. "I am hard put to find a
document" outlining a policy strategy.
He said he had detected no recognition of the problem from any of the
presidential candidates.
Grove also criticized the nation's overburdened patent system, which he
said is causing an abundance of innovation-slowing litigation.
He said that the inability of patent examiners to handle the workload
has led to a backlog of important applications, but also less than
thorough vetting of patents that perhaps should not be granted.
Grove also said the country lags dangerously behind in popular use of
high-speed Internet connections, funding for science and technology
research, and education.
http://www.informationweek.com/story/showArticle.jhtml?articleID=15202179
Delta Cancels Plans For Philippines Call Center
The airline says the decision to call off the project was made because
of security concerns.
By Paul McDougall, InformationWeek
Oct. 10, 2003
URL:
http://www.informationweek.com/story/showArticle.jhtml?articleID=15202
179
Delta Airlines Inc. says it has canceled plans to open a call center in
the Philippines because of security concerns. "Our security people
decided it would not be a good move, given the current political
environment," Lee Macenczak, senior VP of sales and distribution at
Delta, told InformationWeek on Friday.
Macenczak wouldn't comment on the nature of the concerns, but Muslim
separatist and terrorist groups, including some believed to have ties
with foreign terror groups such as Osama bin Laden's al Qaeda network,
are known to be active in the country.
The call center was to have been operated by outsourcing vendor Sykes
Enterprises Inc.
Delta originally planned to move some call-center operations, such as
passenger reservations and the handling of baggage inquiries, to the
Sykes facility and a portion to a facility in India operated by Wipro
Ltd. as part of a cost-cutting strategy. Delta has moved ahead with the
Indian operation.
http://www.infomaticsonline.co.uk/News/1144081
Wanted: chief sourcing officer
By Rachel Fielding [06-10-2003]
Gartner urges firms to appoint outsourcing head honcho
Companies need to spend up to 10 per cent of the value of outsourcing
projects on building internal teams to manage them, according to
Gartner.
The analyst is predicting the emergence of a chief sourcing officer, as
outsourcing failures force companies to better manage contracts.
The trend towards outsourcing IT services, and particularly offshore
outsourcing, has accelerated rapidly in the past 18 months.
Gartner predicts that by 2005 the majority of IT spending in Europe
will be via outsourcing.
But most business have not developed a suitable structure to manage
outsourcing relationships because most deals are aimed at slashing
costs.
Gartner estimates that European companies waste 6bn on poorly
managed deals each year.
The analyst maintained that companies should spend between five and 10
per cent of outsourcing costs on managing the projects, rather than the
current two to five per cent.
Ian Marriott, vice president of IT services and sourcing at Gartner,
said: "Two years ago, eight out of 10 customers would have expressed
satisfaction with their outsourcing projects. Today it's five out of
10," said Marriott.
"Outsourcing is tough, expensive and a lot of companies don't have the
skills to manage deals properly. You need the right people, processes
and controls in place to make it work."
This will result in a growing demand for a chief sourcing officer,
which Gartner likens to a "casting director".
The candidate would need a combination of business and technical
skills, and would assume responsibility for maintaining and managing
the relationship with suppliers.
But the analyst warned that it has yet to come across any company in
Europe with a formal architecture in place.
"Companies don't have the skills they need to do this, and a lot of
companies don't have the support at board level to staff these teams
properly. The board just wants 40 per cent off the budget."
http://www.sacbee.com/content/business/story/7579480p-8520557c.html
Oracle may trim 175 jobs
Rocklin officials say the firm will move the payroll and accounting
work overseas.
By Clint Swett -- Bee Staff Writer
Published 2:15 a.m. PDT Saturday, October 11, 2003
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up here.
Software giant Oracle Corp. will move about 175 data processing jobs
from Rocklin to India by May, a Rocklin official said Friday,
continuing a nationwide trend of technology companies shipping
employment to lower-wage countries.
An Oracle spokeswoman would not confirm the company's decision, other
than to say it is continuing to grow in strategic markets such as India
and would deploy its talent in those countries.
But Rocklin economic development manager Cindy Schaer said sources
within the company have confirmed the decision.
"It's very disheartening," said Schaer, who added that Rocklin also has
been hit by layoffs by Hewlett-Packard Co. in Roseville as well as
Intel Corp. in Folsom.
The Oracle jobs are primarily in payroll and accounting, paying between
$30,000 and $45,000 a year, Schaer said.
Oracle, based in Redwood Shores, is one of the world leaders in
database software. The company has 40,000 employees worldwide,
including more than 3,000 in India. That figure will likely double over
the next several years, wrote company spokeswoman Deborah Lilenthal in
an e-mail.
She declined to say how many people Oracle currently employs in
Rocklin, but Ed Graves, Placer County's economic development director,
put the number at about 650.
Along with data processing personnel, the Rocklin facility also employs
software engineers and marketing staff, Schaer said.
Oracle isn't alone in moving jobs overseas. Hewlett-Packard and Intel
also have significant facilities in Asia.
Countries such as India turn out skilled technology workers whose wages
are typically five to 20 times lower than comparable U.S. employees,
said John Challenger, chief executive officer of Challenger, Gray &
Christmas, a Chicago-based outplacement firm.
Estimates on how many tech jobs have been moved overseas are hard to
come by. But a recent report by the Gartner Group estimates that one
out of every 10 jobs created by U.S.-based information technology
companies will move offshore by the end of 2004.
And the trend will only quicken as telecommunications systems tie the
world more closely together, said Challenger.
"You are not going to stop this, and the technology will only
accelerate it," he said. "Electronically, it's no different if a worker
sends their work in from Sacramento or from Bangalore (India)."
Displaced Oracle workers in Rocklin might see a healthier job market
than their peers at other companies who lost jobs months earlier, said
David Lyons, a labor market consultant with the state Employment
Development Department.
New statistics indicate the employment picture is improving and could
look even better by May when the bulk of the Oracle cuts are scheduled
to be made.
The unemployment rate in the Sacramento area, for instance, now stands
at 5.3 percent, down from 5.4 percent a year ago, Lyons said. And he
said there are scattered reports of increased hiring.
Hiring at insurance and financial services companies, which might need
the kind of skills possessed by the Oracle workers, has been
particularly strong, Lyons said.
Still, there are uncertainties clouding the picture.
For instance, the area has lost thousands of technology jobs in the
past year, meaning there are still numerous skilled workers sending out
resumes.
In addition, state budget cuts are likely to result in significant
layoffs next year.
"What kind of effect that will have on the local economy is still
unknown," Lyons said.
About the Writer
The Bee's Clint Swett can be reached at (916) 321-1976 or
cswett@sacbee.com.
http://online.wsj.com/article/0,,SB106574731540500800,00.html
Skilled Workers Mount Opposition
To Free Trade, Swaying Politicians
By MICHAEL SCHROEDER and TIMOTHY AEPPEL
Staff Reporters of THE WALL STREET JOURNAL
A new anti-free-trade movement is emerging in the U.S., comprising
highly skilled workers who once figured they would be big winners in
the globalized economy but now see their white-collar jobs moving
overseas in growing numbers.
The new opponents to lowering trade barriers are especially vocal, and
their complaints already are getting the attention of Congress and the
White House. Their concerns got an unexpected boost Thursday when Intel
Corp. Chairman Andy Grove, a pioneer in the American high-tech
industry, warned that the U.S. could lose the bulk of its information
technology jobs to overseas competitors in the next decade, largely to
India and China.
Mr. Grove, speaking by satellite at a Business Software Alliance
conference in Washington, acknowledged that Intel has been part of the
trend he described. Given cost and productivity pressures, the Santa
Clara, Calif.,-based semiconductor maker reluctantly "has no choice"
but to continue sending work abroad, Mr. Grove said.
The new free-trade opponents include design engineers, skilled
machinists, information-technology experts, and chief executives of
specialized manufacturing concerns, among others. They long believed
they were largely protected from foreign competition because of their
advanced degrees, English language skills and the supposed necessity of
dealing face-to-face with customers. But now they worry their jobs are
at risk.
At the focus of their ire are big U.S. companies that have shifted
business to China and India, which are becoming increasingly successful
at nabbing service, information technology and high-end manufacturing
work that until recently have been the preserve of U.S. firms.
Companies seeking to lower their costs have either moved operations
abroad or have contracted with foreign companies to supply essential
services.
Multinational companies counter that globalization brings benefits. A
recent McKinsey study concluded that at least two-thirds of the
economic benefit from sending jobs offshore flows back to the U.S.
economy in the form of lower prices, expanding overseas markets for
U.S. products, and fatter profits that U.S. companies can plow back
into even more innovative businesses. "If the economy were stronger,
there wouldn't be such a negative feeling" about the offshore work,
says Dianna Farrell, director of McKinsey Global Institute.
The white-collar, free-trade opponents are linking up with organized
labor and old-line manufacturers, deepening the opposition in the U.S.
to liberalized trade and making Congressional passage of any trade pact
more problematic. While veteran manufacturing groups are leading the
campaign, the combined forces are turning more politicians into trade
skeptics and threatening to arrest a 50-year march toward ever-lower
barriers to trade.
The new combatants have made a surprisingly deep impact on policy
already, pressuring the Bush White House to get tough on China and
handing Democratic presidential candidates a new issue with which to
attack Mr. Bush. A number of usually free-trade lawmakers cite the
white-collar groups for swaying their votes against such recent
measures as trade pacts with Chile and Singapore, although both bills
ultimately were enacted. The new activists also rounded up bipartisan
supPORT 66,69,254,99,131,171
The wave of professional job losses in recent years sparked grassroots
opposition in several states within the past year. Connecticut workers
and managers founded TORAW -- The Organization for the Rights of
American Workers, which represents information technology specialists,
as well as Mad in the U.S.A. Two small manufacturing-company owners in
Wisconsin formed SAM -- Save American Manufacturing, which protests
Chinese trade practices.
James Pace, a computer consultant, became an early organizer of
information technology workers after he realized many of his friends
were being laid off due to foreign competition. At first, he thought
the problem was U.S. firms bringing in foreign workers on special visas
to fill information-technology slots. He then realized the issue was
much broader, including moves by companies to set up overseas
operations. Mr. Pace, who was active in past lobbying against
motorcycle-helmet laws, and colleague John Bauman founded the
white-collar group TORAW, which has grown to 180 members in 23 states
in nine months.
Tens of thousands of U.S. tech jobs were lost when high-flying Internet
companies crashed in the late 1990s, a major cause of the recession.
Even though the economy is on the mend, the job market has remained
sickly. White-collar worker groups believe that many of their jobs are
lost for good. Furthermore, they argue declines will deepen as U.S.
companies send more work abroad and replace Americans with lower-paid
foreign workers on temporary visas who will later take the jobs to
their home countries.
Goldman Sachs & Co. estimates that about 200,000 service jobs, a large
percentage in information technology, have been shipped abroad to U.S.
foreign affiliates during the past three years. In a report, which does
not include foreign outsourcing by contractors, Goldman also says that
manufacturers have moved overseas in the past three years as many as
500,000 jobs -- increasingly skilled design and technology positions --
or about 20% of the total manufacturing losses for the period.
Intel's Mr. Grove called on government and industry to create public
policy to help reverse what he sees as the growing trend of job losses.
He advocated taking 1% to 2% of U.S. agriculture and other subsidies to
increase university research and development funding, tightening patent
application and litigation requirements, and expanding the number of
U.S. households with access to the latest Internet technology.
Brad Matthews is one of the new trade foes. Last year, he earned
$71,000 testing computer programs as a consultant for Citigroup Inc. in
Hartford, Conn. But after the 56-year-old lost his job to an Indian
firm, he joined TORAW which staged a protest in Manhattan during a July
conference on outsourcing. After concluding he'll never land another
computer job, he's working as a trucker. (Citigroup declined to comment
on Mr. Matthews or its outsourcing policy.)
The Communications Workers of America union is pressuring politicians.
In May, Rep. Jay Inslee, a Seattle Democrat, told Indian officials
during a trip to New Delhi that he supports outsourcing deals.
"Protection is a knee-jerk action," he told his hosts.
But following several sessions with CWA lobbyists after the lawmaker
returned home, Mr. Inslee joined with a fellow Washington Democrat in
the House two months later to ask for a Congressional study of the
economic impact of outsourcing.
Nine states are considering measures to ensure that information
processing work required by state contracts is done in the U.S. Last
year, a bill in the New Jersey Legislature to limit state computer work
to U.S.-based employees stalled because of lobbying by multinational
companies. Still, New Jersey forced a computer-services contractor to
relocate an 11-employee help-center to Camden, N.J., from Bombay -- at
an additional cost to the state of nearly $1 million a year.
Says Virginia's technology secretary George Newsome: State officials
don't dare "say 'offshore outsourcing' out loud."
Write to Michael Schroeder at mike.schroeder@wsj.com1 and Timothy
Aeppel at timothy.aeppel@wsj.com2
http://english.eastday.com/epublish/gb/paper1/1031/class000100022/hwz160876.htm
City rises as hub for software
Shanghai software companies are embracing an increasing amount of
outsourcing orders as overseas technology giants recognize the city's
strength in talent and relatively lower costs.
"The city's software outsourcing industry has taken off in the past few
years and its growing strengths have persuaded many multinationals to
shift orders here from former star countries like India and Ireland,"
said Song Jinbiao, director of the technology import and export
department at Shanghai Foreign Economic Relations and Trade Commission.
He made the remark as the city announced yesterday it is hosting the
Global IT Outsourcing Summit 2003 from October 14 to 15. About a dozen
executives from information technology giants such as NEC Corp, Tata
Group, Microsoft Corp and NTT Data will give keynote speeches at the
event.
As of the end of last year, Shanghai had 1,207 major software companies
with revenue totaling 11.7 billion yuan (US$1.4 billion).
Software exports were valued at US$175 million last year, nearly 2.4
times more than that of 2000. They accounted for about 12 percent of
the country's total.
"The majority of the exports are out-sourcing projects from overseas,"
Song said.
Shanghai's software is mainly exported to Japan, Europe, the United
States and regions of Hong Kong and Taiwan. So far, Japanese companies
such as NEC and Fujitsu have set up sub-contract centers in the city.
They are responsible for passing the orders to Shanghai's software
exporters.
In addition, Microsoft Corp and Hewlett-Packard have set up global
software research and development centers in the city, while Ericsson
AB has opened a telecom-munications software research and development
center.
Indian software giants National Institution Information Technology -
better known as NIIT - Tata and Infosys have also set up businesses
locally, laying a solid base for Shanghai's software outsourcing
industry.
Wang Deming, president of Shanghai Venus Software Ltd, a local company
which mainly targets the Japanese outsourcing market, said its export
business witnessed a noticeable rise last year.
"The company's clients such as NTT Data and NEC have shifted a big part
of their orders from India to China," he said. "Japan's sagging economy
has also pushed them to outsource orders to lower-cost markets such as
China."
Wang's company, which employs about 500 people, has enjoyed an average
20 percent growth in export orders since the early 1990s.
Last year, it sold US$4 million worth of orders to Japan. Wang expects
the figure to jump by 50 percent to reach US$6 million this year.
"Compared with India, China has advantages in language, location and a
lower cost of software engineers," he said.
Companies have to pay, on average, US$3,000-US$4,000 to each Indian
engineer per month, while their Chinese counterpart costs
US$2,000-US$3,000.
Last year, Shanghai also had 86 IT companies with more than US$500,000
in software exports, 22 more than in 2001.
Shanghai Daily news
http://economictimes.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=176684
Outsourcing is not a big issue in Washington
SOFIA TIPPOO
TIMES NEWS NETWORK[ THURSDAY, SEPTEMBER 11, 2003 09:51:48 AM ]
BANGALORE: Some parts of America may find it a touchy issue. But the
state of Washington doesnt think outsourcing is a big deal. So says
Sam Reed, secretary of state, Washington. One bill was introduced by a
legislator on the matter, but it was considered a political stunt and
dropped, he told TNN.
There is a general appreciative trend in this state regarding
outsourcing. We do not look at the issue in a short-sighted way. We see
that in the long run it could be good for the overall economy. A few
people have lost their jobs and some more are likely to lose their jobs
in the next few weeks. But we look at what is good for the country,
Reed said.
Reed said Americans were very impressed with what India had
accomplished in general and Bangalore in particular. We feel that if we
can work together and create a new model, the economies of both the
countries will grow, Reed said.
Washington state is also looking at creating a state-to-state
relationship between Karnataka and Washington. We can form a
sister-state relationship which would enable government as well as
business officials to travel between these two states. Individual MoUs
between companies can also be facilitated this way, he added.
Reed is heading a 16-member trade delegation to explore possibilities
of doing business with Indian firms. This is the first US trade mission
to visit India after 9/11.
The CEOs of the ports of Seattle and Tacoma, who are part of the
business delegation, have shown interest in improving the
infrastructure of Indian ports. Says John Okamoto, chief administrative
officer, Port of Seattle, We have started a new initiative which would
channel knowledge management and transfer of technology to other ports,
he said.
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