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Niarlan
Excelsior
Premium
join:2002-11-09
Manville, NJ | Ahh...so that explains it
No wonder we get such crappy tech support from all those firms, they neither train nor require skills of the support personel they hire. Makes perfect sense now...sheeshhh...
Nia | |
johnny_t
Premium
join:2004-03-21
Palo Alto, CA | Every1 Will Read
Every Tech will B reading from computers NOW
all this over-seas @#$% So every1 must self-educate
them self from now ON
--
Gamertag=Aladar | |
technick
Premium
join:2000-12-16
Loganville, GA | reply to Niarlan
Washington Post username / password.. I hate reg.
Use this username / password.. I hate signing up for these things..
user: cheetos@lunchmeat.net
pass: smartypants | |
zmike2
join:2004-02-16
92680
1 edit | reply to Niarlan
Re: Ahh...so that explains it
Call center employees: 'no skills or training' No Shit, Sherlock..... they higher Tham fore the Peppel skills not there tech skills. | |
BigDaddyChud
join:2002-11-16
Gladstone, OR
 ·Comcast
| reply to technick
Re: Washington Post username / password.. I hate r
Here ya go.. Credit Washington Post
Discussion Transcript
Outsourcing's IT Impact
Harris Miller
President, Information Technology Association of America
Tuesday, March 30, 2004; 11:00 AM
Harris Miller, who heads the influential Information Technology Association of America trade group, was online to take questions about the impact of outsourcing on the nation's technology sector. Miller, whose organization represents a number of major technology players, takes issue with the mainstream press presenting a doom-and-gloom, distorted picture of the outsourcing trend.
A new ITAA report predicts that the trend will ultimately lower inflation, create jobs and boost productivity in the United States.
washingtonpost.com technology reporter Cynthia L. Webb moderated the discussion. A transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
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Cynthia L. Webb: Good morning (and early afternoon)! We are about to get started with our Live Online discussion on outsourcing with Harris Miller of the ITAA. Thanks to all the readers who have submitted questions already. Please keep your queries coming.
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Cynthia L. Webb: Good morning, Harris. The debate about the outsourcing of jobs and its impact on the tech sector and economy overall is heating up and shaping a lot of discussion these days in Corporate America and the political arena too. Indeed, your organization has been active in the debate and today is releasing a study, which has found longterm benefits of outsourcing for the IT software and services sector, including cost savings and job creations for U.S.-based companies. This is a controversial conclusion, since there are many critics of outsourcing who think the trend costs jobs. What is the main argument you make to counter those who believe outsourcing is leading to job cuts and undercutting the tech sector?
Harris Miller: The study we are releasing today done in part by Nobel Prize winning economist Dr. Lawrence Klein dispels several myths: Myth #1: Global sourcing of IT jobs will reduce the overall number of US jobs. Fact #1: Global sourcing increased US jobs by 90,000 in 2003 and will add more than 317,000 new jobs in 2008. Myth #2: Most of the decline in the number of IT jobs since the start of the recession is due to global sourcing. Fact #2: Most of the lost IT jobs were because of the bursting of the telcom and dotcom bubbles. Only about 35,000 jobs per year were lost to global sourcing. Myth #3: There may be more jobs in the future, but they will be lower paying. Fact #3: Global sourcing will raise the buying power of American workers. Myth #4: The number of US IT workers will continue to decline because of global sourcing. Fact #4: The number of US IT workers will continue to increase.
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Cynthia L. Webb: I excerpted various coverage of the ITAA study today in my daily tech column Filter. Here's a link: »www.washingtonpost.com/wavy/arti···r30.html
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Terre Haute, IN: Do you think a major contributor to outsourcing is a lack of skilled scientists and engineers? If, so how would you suggest the educational system me modified to remedy this problem? And do you think it is possible to use outsourcing to replace unskilled jobs in high-tech industries with more skilled jobs?
Harris Miller: While our educational system is one of the top in the world, it does not stack up well on several counts. For instance, our high school students test poorly on math and science tests in relation to their counterparts in many countries that are competing with us. As another example, in many of our top schools, over half the graduate students in math and science are foreign born, indicating a lack of interest on the part of US students in getting these advanced degrees. We believe that governments at all levels need to treat global competition much more seriously and invest much more in training students at all levels in math and science. It has been almost five decades since the US government last focused on global competition in high skilled areas--namely, when the former USSR sent rockets into space and created an intense focus in this country on improving our education in math and science. We need that same focus now because our competitor countries--India, China, Korea, Taiwan, and many others--are putting substantial resources into educating their own students to compete.
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Cynthia L. Webb: The ITAA will officially release the results of its study later today. Here is a link to the ITAA's Web site: »www.itaa.org/
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Cynthia L. Webb: The ITAA's new study on outsourcing found that double the number of jobs are created versus displaced due to outsourcing. The Wall Street Journal today noted as a follow-up to that finding, however that the study focused narrowly on the outsourcing of computer services jobs, but did not address the impact of the outsourcing of call center or manufacturing jobs. Why did these sectors get left out, since they are a big piece of the IT sector as well? And any plans for a follow-up study that addresses this?
Harris Miller: Neither the US government data analysts nor ITAA classifies call center jobs as IT jobs. They do not require any technical skills or training, as do software engineering or computer programming jobs. Therefore, it made no sense to classify them as IT jobs for our study. As for the impact on the economy of manufacturing jobs moving overseas, that is a study I will leave to organizations that consist primarily of manufacturers. ITAA represents IT companies, and much of the recent concern about global sourcing has to do with IT jobs moving overseas, so that is where we asked the economists to focus their research.
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Bolton, MA: This is the beginning of a well-funded corporate trade association blitz. I invite you to visit the towns of metro-west Boston, the 128-495 high tech corridor. Thousands of manufacturing, engineering, quality and other professional jobs are gone. Office buildings and technology parks, once the home of Agilent, HP, Nortel, Motorola, Stratus, etc. and the contract manufacturers who supported them, are vacant because the jobs went to Ireland, Mexico, India, China, and former USSR republics. The "official" unemployment rate of 5.9% is WRONG because thousands of highly educated professionals who are working in survival jobs for close to minimum wage are counted as employed. Offshoring works only when an equal number of more of high-quality positions are created; the only jobs being created are in government. U.S. Department of Labor reported ZERO new jobs in February in the public sector.
Cynthia L. Webb: Harris, there are a lot of questions and opinions that readers have submitted along these lines. How do you respond?
Harris Miller: No one is denying that US employment is lower than it was three years ago and that unemployment is higher. According to government data, approximately 2.8 million manufacturing jobs have been lost over the past four years, while 500,000 services jobs (including IT jobs) have been created, for a net loss of 2.3 million jobs. What the study shows is that in the IT sector, at least, most of the lost jobs have been because of several factors: the bursting of the telcom bubble; the bursting of the dotcom bubble; the US and global recessions; and the moving of IT jobs offshore. The study indicates 104,000 IT jobs have moved offshore, approximately 35,000 per year. Obviously, for workers who have lost those jobs, we must focus on getting them back to work which is why, for instance, the study, and ITAA, recommend further government assistance for training and educating and retooling for those workers.
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Denver, Colorado: Even if offshoring does create some new jobs: Given the labor cost differential, what incentive is there to create those new jobs in the United States? (And why should we trust that these jobs won't be offshored also?)
Harris Miller: Relative hourly wages are not the sole determinant of whether IT and other jobs move offshore. When companies decide whether to send work offshore, they have to look at the TCO--total cost of offshoring. And when they do, they often decide that sending work offshore makes no sense. The study indicates that only about 2% of IT jobs have moved offshore and projects that only 6% will have moved offshore by 2008, far from the tsunami that one might believe by reading the headlines. What are the elements of TCO: they include challenges in communicating with employees in a different culture and sometimes different language; knowledge of lack thereof of the customer needs; training costs; need for guaranteed quality of service. When businesses are making real decisions about moving work offshore, they do not look at simple charts that show workers in the US make X dollars an hour and workers in another country make less and therefore all jobs should move offshore.
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Columbia, MD: If everyone agrees that the nation needs to refocus on job training and education, why aren't outsourcing proponents amenable to collecting data on jobs and skills outsourced overseas?
Don't we need to study the economic impact on those who are negatively affected by the loss of jobs overseas?
The government does not collect this data (hence the proliferation of Lou Dobbs of CNN's list of outsourcing companies).
Shouldn't we at least understand the cost of offshore outsourcing to the same level of detail as the benefits?
Harris Miller: I would love to have more government data on jobs and skills outsourced overseas. One of the reasons ITAA had to pay for this study is that such government data do not exist in the format that makes analysis possible. Our study does determine that approximately 104,000 IT jobs have been sent offshore over the past four years, approximately 35,000 per year. The analysis also indicates that an estimated 272,000 additional IT jobs will move offshore over the next five years, approximately 50,000 per year. And that the US will create an additional 244,000 IT jobs in the US over that same period, again, approximately 50,000 each year.
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Amsterdam the Netherlands: Why do CIO's always think that outsourcing contracts are easier to manage then there own department?
Cynthia L. Webb: A good question. As a tech trade group, you must provide feedback to a lot of tech executives on outsourcing. What pointers has ITAA given about the management of sending work abroad? I know there are a rash of new MBA programs, for example, that address this.
Harris Miller: I do not think it is true that CIO's always think that outsourcing (which is a more generic term than offshoring) IT work is easier to manage than in-house resources. We at ITAA meet with CIO's from a wide range of corporate and government customers regularly, and we find mixed results. Some are strong outsourcing advocates generally, believing that IT firms have the most up to date technology, training, resources, etc., and should be handling the IT functions. But we also find many that continue to believe that their internal management of the IT function works best. Most seem to be in the middle, believing that some functions need to be kept in house for various reasons, while others, especially in "back office" areas, should be outsourced. IT companies have to work hard to convince those skeptical CIO's that they can do the job just as well if not better than their in house resources.
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Herndon, VA: Let's inject a little reality into the discussion here--lagging science and math education in this country isn't the reason why computer scientists are being laid off. High-paying white collar jobs are going overseas because companies want programmers and system architects who are willing to work for five bucks an hour. What do you say to the college students who see what is happening and are fleeing from computer science like the plague?
Harris Miller: ITAA is disappointed in the drop off in computer science majors in traditional four year colleges and universities that have occurred over the past 2-3 years, though we have seen strong enrollments for computer related degrees and training in community colleges and proprietary educational institutions. As you know, during this country's last recession, starting in the late 1980's and running into the early 1990's, we saw a similar downturn in computer science BS degrees, which contributed to making the IT job market so very tight in the late 1990's when the boom was underway. I urge young people to continue to pursue IT degrees. Our study clearly shows that the number of IT jobs in this country will continue to increase. Other studies done by demographers at Harvard and the ETS show that there will be a wave of baby boomer retirements in the IT field starting later in this decade that will open more job opportunities also.
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Roseville, CA: Mr. Miller: If you are so certain that offshoring jobs is so "good for America" then this will be easy: Simply tell us what industry or industries are ramping up right now that will replace tech as an innovative American job creation engine and or very soon will be looking for people to fill jobs at least equivalent in terms of salary and benefits to those jobs leaving our country. Be very specific - do not insult us with vague economic jargon. If you cannot point to specific verifiable data such as company names, numbers of open positions, associated salary levels, etc. explain why you are unable to do so. Again, this should be easy if your argument is accurate and by "good for America" you don't really mean "good only for American CEOs."
Harris Miller: Our study does not indicate which particular companies will be adding employment, but it does indicate which industry sectors will be growing and breaks that down by states. You will be able to get a copy from our website after 1:30 PM today, www.itaa.org.
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Cynthia L. Webb: As president of the ITAA, you must rub elbows with a lot with powerful tech leaders and politicians alike. How big of an impact do you think the public debate on outsourcing will have on shaping the presidential race? Just today in fact, the Bush administration gave outsourcing a nod. Treasury Secretary John Snow in Cincinnati said that outsourcing is an aspect of trade and that trade makes the economy stronger.
Harris Miller: There is no doubt that the slow creation of jobs during this recovery is a hot political topic. I find politicians on both sides of the political aisle bemoaning the "jobless recovery." And I also find that it is easier to blame factors such as "offshoring"--where you can point your finger at someone or some country--than to blame general economic notions such as "business cycle" or "telcom bust." It is hard for a television station to show a picture of an economic cycle. It is easy to show a picture of a Filipino or Indian or Irish IT worker. So I expect that unless we see a quick, dramatic drop in unemployment--which no one is projecting--that the offshoring issue will be a major topic between the parties right through November and beyond.
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Tallahassee, FL: Your answer to the question of off-shoring the new jobs seems a little weak: while companies certainly don't go solely on hourly wages in making that decision, it is not true that other countries are weaker than us in other areas. India, for instance, uses English as Lingua Franca. India's educational system is also very good, and there are already many facilities in India with the technology to do the work. In a world in which the same quality of IT worker can be found in the US or India, but where India maintains a currency advantage, why would a company choose the US over India?
Harris Miller: If your logic were accurate--and hourly labor costs are the only factor in determining where IT work is done--then we would have 50 or 75 or 90% of IT work done outside the US. Yet the study shows only 2% has moved offshore the last three years and only an additional 4-5% will move offshore the next five. The reasons it is only 2%, as I said, is that offshoring decisions are much more complex than just looking up hourly wage rates on a chart. I do not mean to minimize the reality of the competition from abroad. I have been talking about this global challenge since I first came to ITAA nine years ago--though few would listen. But neither is it helpful to be simplistic or fatalistic and think that all of the US IT industry is going to slide into the Pacific Rim because their hourly labor rates are lower.
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Princeton, NJ: What about the indirect transference of knowledge skills, intellectual property, intelligence and so on when a U.S. company outsources their work? Aren't we leveling the competitive field when in fact, we should be trying to stay ahead in one way or another. Doesn't that make the hurdle that much higher for a U.S. company that attempts to have a competitive advantage over others via a proprietary good or service?
Harris Miller: The reality is we live in a global economy, and companies that operate globally must protect their IP wherever they operate. I know there were people in Japan who objected when the Japanese car companies decided to open factories in the US expressing the same concern about giving too much knowledge away to their American competitors. But, in retrospect, those doomsayers have been proved wrong many times over. Foreign Direct Investment in the US has almost doubled over the past few years. Those non-US companies that choose to operate here need to protect their IP, too. Clearly, when a company chooses to operate globally, one of the first elements they look at are the IP laws of the country in which they will be operating. Countries like China continue to come up short, for instance.
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Cynthia L. Webb: Harris, outsourcing sparks a lot of heated, emotional reaction (as a number of the reader questions convey). Despite your study and its findings that show outsourcing will be a benefit to the economy overall, the practice of outsourcing still makes quite a strong psychological impact on tech workers (many of whom have stories of getting a pink slip due to a position lost to outsourcing). How do your organization and the tech sector overall work to overcome this disparity? There still appears to be an overwhelming sense that jobs are being lost and that the tech sector is in danger because of the trend.
Harris Miller: Educating people with facts is the answer. I hear from unemployed tech workers every day expressing their understandable frustration. The typical IT worker has never experienced a recession, the last one occurring over a decade ago, and impacting IT workers almost none at all. In the late 1990's, IT workers just out of school were getting unbelievable signing bonuses, including free cars. So they ask, how can those halcyon days of 1997-2000 have turned so disastrous so quickly for the 5-6% of us who are unemployed? Again, the answer is a combination of factors, one of which is more global competition. But the study clearly demonstrates that global competition is already creating and will continue to create more jobs. I know it probably will not make people feel much better, but I urge them to read Gregg Easterbrook's recent book The Progress Paradox: How Life Gets Better While People Feel Worse, in which he tries to explain the frustration people feel.
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Cynthia L. Webb: Readers, thanks for all of your questions today. Harris Miller has agreed to stay on for about 10 minutes past the hour to take some additional questions.
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Washington, D.C.: Good Morning:
Thank you for taking my question.
Do you feel this outsourcing debate is nothing more than a politicized event in an elections year?
If you look during the Clinton years, outsourcing was occurring in all sectors, including those traditionally shielded from competition. With the way in which we communicate being so efficient, outsourcing provides a cheaper, more efficient way of doing business. And this ultimately leads to lower prices for the consumer. I feel all these arguments against outsourcing do not really know the history surrounding this not-so-new 'phenomenon'.
Harris Miller: I only partially agree with your conclusion. Yes, the issue of global competition has been heavily politicized because it is an election year and both parties know that voters actual employment situation and how they feel about their future can be, in many cases, the single most important issue in deciding which candidate they support. And, yes, IT work has been globally sourced for many years. In fact, for many years, it was globally sourced TO the US, which many other countries resented. And even today, the US runs a substantial surplus with the rest of the world in IT software and services, which means we create more jobs selling to them, than they create by selling to us. But having said that, the frustration and fear that many unemployed workers and even some employed workers and even some companies feel about the growing global challenge is real. The amount of IT work going offshore is small--2%--but it is not negligible. In addition, certain media types have hyped the issue also.
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Los Angeles: For years we in the middle- and upper-middle class yawned with lower-wage jobs were shipped off to China and other third-world countries. We happily went along shopping at the likes of Wal-Mart because prices were cheap. Now, OUR jobs are being shipped off and people are finally starting to wake up. The fact is greed is the driving force behind outsourcing. I am not a left-wing liberal by any means but people need to dismiss the propaganda put forth by the right-wing "Free Traders" who say that shipping jobs overseas is good for this country. It isn't. It's good for senior management and a hand full of investors. As for me, I'm willing to pay a tad more for toilet paper and take a tad less in investment returns rather than exploit people in India and China and fatten the wallet of some VP.
Cynthia L. Webb: Harris, you must get a lot of reaction along these lines. Your thoughts?
Harris Miller: Again, I urge those involved in this discussion to read the report when it is issued this afternoon. The starting premise of many of those asking this type of question is that global sourcing is a win/lose proposition--the foreign country and a few "fat cats," win, while everyone else loses. The data show otherwise. That global sourcing is a win/win. Global sourcing creates more jobs in the US. With better wages. It brings down costs for consumers. It increases our GDP significantly. That does not mean than we can ignore global competition. We must break down existing trade barriers so our companies can export more to the 96% of the world that lives outside the US. We must reform our global tax laws to be competitive. We must offer more training, educating, and retooling to displaced workers. We must focus more resources on IT R&D.
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Corrales, NM: This is a comment:
During the dot-com boom, my 20-person company faced a catastrophe: 5 of my programmers, including my VP of technology quit to join the dot-com offerings. Fortunately, we had an off-shore operation in India helping us in our R&D and I was able to bring 6 of them into the US immediately to offer continuity in support to our clients. I could not possibly create and run a parallel organization in the US but I can at India's affordable rates.
As a small software company the only way we can produce state-of-the-art application packages is by using off-shore developers. US development would be unaffordable to us. But our main development staff remains in the US - just the tedious coding and documentation is assigned to India. I don't think of off-shore as "losing jobs," I look at them as a reason for our existence - our 20 person office in the US would be out of business without them!
Thanks
Cynthia L. Webb: Thanks for your sharing your experience, Corrales, NM.
Harris Miller: We are hearing more stories like this all the time. It is a myth that only large firms have a global sourcing model. This contributor is a perfect example of the win/win I just discussed in my previous answer.
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New York, NY: Having worked steadily for 10 years in the IT field, and seeing the "facts" put forth here, I have to wonder if the information being used considers only full-time salaried employees in the IT industry. This I think skews the data significantly, considering that, a large portion of IT workers have been contract workers and consultants who have been severely displaced within the past 3 years.
Harris Miller: The study looks at IT workers generally, regardless of whether they are employees or contractors and whether they work for IT companies or non-IT companies.
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Herndon, VA: When your study says outsourcing will create jobs, what kind of jobs are you referring to?
Harris Miller: The study being released this afternoon details the sectors and also gives a breakdown by state.
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Jacksonville, Florida: I would like to know if outsourced IT is a modern form of trade goods, then why do we allow our trading partners to maintain high tariffs and market barriers to our goods and services? Trade should be a two way street yet your organization has not to my knowledge addressed this issue.
Harris Miller: We should not allow barriers to continue. The US must be as aggressive as possible in promoting trade agreements that force countries to eliminate both tariff and non-tariff barriers. We also must move aggressively against countries that violate agreements, which is why I am pleased the Administration just filed a complaint against China for a discriminatory taxation system on computer chips. China is being difficult in other areas involving IT, too, and I have made numerous representations to the Chinese government on these issues and have encouraged the US government to do the same. I am hoping the so-called Doha Round of negotiations will get restarted this summer, because the US IT software and services industry has a lot to gain in that round.
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Washington, D.C.: Just after the Tech Bust, there was a backlash against H1-B work visas, the permits that allow foreign tech workers to live and work in the U.S. It was thought that reducing the number of H1-B visas would increase the number of jobs available to U.S. workers. The reverse has happened though, as companies have simply moved the job to the employee through outsourcing rather than moving the employee to the job through H1-B status. Do you anticipate there will be an increase in H1-B visas in the years ahead, or does the current arrangement where employees live and spend in their home countries through outsourcing work better for everyone?
Harris Miller: The future of the H-1B program remains uncertain. As you know, the usage of the H-1B program dropped dramatically in 2002 and 2003 as the economy slowed. This year, the annual ceiling for admissions was lowered to 65,000, and that cap was reached already, so no more H-1Bs can be admitted to the US until the next federal fiscal year begins October 1. This is hurting companies currently recruiting for computer scientists and engineers on college campuses that may be foreign born because they cannot offer them a job right now. My educated guess, however, is that in a global economy, we will continue to have some work done outside the US by nationals of that country and also continue to admit some highly skilled foreign workers.
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Cynthia L. Webb: Thanks for taking the time to talk about this important issue today, Harris. We'd love to have you online again soon to talk about outsourcing again. There were many more questions than time to address all queries, which suggests that there is a lot of interest in this topic and room for more discussion. Thanks again and readers, thanks for your participation.
Harris Miller: I appreciate the opportunity to participate, and thanks to all your readers for submitting their thoughtful questions.
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Cynthia L. Webb: We are out of time for today. Thanks, readers, for your participation. Please join me online this Friday at 11 a.m. for another outsourcing discussion. Have a great day! | |
dougdonovan
join:2003-12-30
Phoenix, AZ | reply to Niarlan
Re: Ahh...so that explains it
i guess that if ya don't know it by now, good luck. | |
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