Read lots of articles recently about all of the jobs being outsourced from the U.S. to Asian nations.
Is the same thing occuring in other advanced nations? Sorry, I’m U.S.-centric, but at least I’m asking about Britain, Germany, Australia, NZ, SA, etc.
What will be the impact on those of us who have outsourced ourselves to this fair island?
What will be the impact on the job market for those of us who plan to return home one day and actually have to go to work?
Outsourcing is a new fancy name, but the phenomenon has been around for decades.
Seen from a European perspective, in the 60s, textile and toy manufacturing moved out of Europe to countries like - yes - Taiwan.
Now those jobs have left this island and moved to China, Cambodia, Vietnam.
European jobs in more sophisticated - but not high tech - sectors are now moving east to the former communist countries of Central and Eastern Europe. Not just because of the lower wages - if that were so important, everything in the shops would be Made in Burkina Faso - but because those countries have new middle classes and are important markets as well.
Yes, outsourcing means lesser jobs for us in Western countries, at least in manufacturing and technology sectors, but in services and media there should be no more problems than there used to be.
It’s harder to outsource from Europe. It is happening, but the regulatory and union environment is making it a much more painful process. Take Germany for example, they have a sort of ‘social compact’ way of doing business where you have a hard time firing people, and they use dodgy accounting methods to smooth earnings between periods, etc. Labor, creditors and other stakeholders all get seats on the board. It makes it a fundamentally different animal when looking at “increasing shareholder value”. Things are a lot more transparent in the United States and companies are extremeley free to hire and fire and outsource (when compared to countries like Gemany and France).
Another factor is language. It is easy for an English-speaking nation like the U.S., New Zealand, or Taiwan 
to outsource to India, or for a Chinese-speaking nation like the U.S. or Taiwan to outsource to China, or even for a Spanish-speaking nation like the U.S. to outsource to Mexico, but try to find passable speakers of Norwegian or Australian anywhere else in the world and it’s slim pickings.
There was an article in the WSJ a few months ago, though, about companies in Norway (or perhaps Finland, I forget which) placing ads trying to recruit unemployed recent college grads to go live in India for a few years, on all-expenses-paid packages plus some tax-free cash, to provide cheap labor for the companies. I presume the companies would pay less than they’d have to in Norway, and the grads would earn/save more than they were likely to in Norway. I don’t know how successful their efforts were proving.
As far as impact on future job prospects, the IT industry is gone from the U.S., and accounting is following. Stock analysts are being offshored to India also. I’ve written this before: IMHO any job which doesn’t require physical presence or significant infrastructure is at risk. However, speaking a second (third, … nth) language, at least those languages used by major labor-supplying nations, will be an asset, as will experience dealing with or managing foreign workers. Tomas, were I you, I wouldn’t worry – I think companies will be throwing huge wads of steaming cash at you to work for them.
That’s all good and well, but what about the stupid and unskilled people? What are they gonna do? For generations they were guaranteed easy backbreaking jobs in the factories, and now they got nothin’. What they gonna do? Huh? Huh? Huh? HUH? Answer me!
Not everybody can work in the media and arts and entertainment sector. Millions upon millions of people are way too IQ deficient to handle such work. Remember: nearly half of the people in our country are of below average intelligence.
McDonald’s, of course. And if McDonald’s somehow figures out how to outsource the serving of a crappy hamburger to India (which is highly unlikely; because of religious reasons, most Indians don’t eat beef), then we’ve still got Taco Bell and Burger King.
[quote=“MaPoDurian”]
As far as impact on future job prospects, the IT industry is gone from the U.S., and accounting is following. Stock analysts are being offshored to India also. I’ve written this before: IMHO any job which doesn’t require physical presence or significant infrastructure is at risk. However, speaking a second (third, … nth) language, at least those languages used by major labor-supplying nations, will be an asset, as will experience dealing with or managing foreign workers. Tomas, were I you, I wouldn’t worry – I think companies will be throwing huge wads of steaming cash at you to work for them.[/quote]
Yes, but not all outsourcing works out. Call center and accounting work are things that depend a great deal on “soft skills” that would be difficult for an Indian or other foreigner who’s never travelled outside of India to acquire. We’ve already heard about some of the language problems encountered when sending call centers to India. More importantly, Indians often don’t understand the style or level of service that would be expected in a western country. It’s hard to train them to give the same level of service found in the US because they have never received such service themselves. It’s completely, er, foreign to them.
I’ve read of some outsourcing of accounting coming to the mainland. More and more mainlanders are taking American and British exams for public accountancy certifications. They may do quite well on the exams, but they don’t understand a lot of the things that aren’t in the rule books. They don’t know how much bullshitting they can get away with. In China, anything on the books is fair game for manipulation; in the states, our bean counters take proud in their highly sophisticated bullshitting skills, and they know just where and how they can get away with it. 
Although many jobs can and should be outsourced, many companies are discovering that there are many cultural barriers that will prevent them from outsourcing as much as they’d like.
What, you mean putting you on hold for 20 minutes, not answering the question, putting you on hold for another 10 minutes passing you on to someone else who can’t answer the question, putting you on hold again and then cutting you off? Wait… that’s Australian service - maybe you guys have it better? Yeah, I can see training all that into them would be hard 
I saw a documentary on the training of Indian call centre workers a while ago - fascinating stuff. Depending on the country they were given, they had these intense sessions learning about the culture of the place and identifying landmarks - I remember the ones bound for American call centres were taught solemnly “Americans will speak in sports metaphors” and the Australian ones were taught to differentiate Bondi Beach from the Gold Coast, and ridiculous slang phrases that I’ve never heard anyone use (And excuse me while I back at MaPoDurian 
)
I agree though, I think it’d be tough to properly provide customer service from around the planet, though given that you can get people answering the phones in India who are all university educated or better for a fraction of the cost, companies may find it worthwhile to keep trying.
And yeah, there are still plenty of ‘face to face’ jobs for the unskilled, at least for now…
[quote=“daasgrrl”]I saw a documentary on the training of Indian call centre workers a while ago - fascinating stuff. Depending on the country they were given, they had these intense sessions learning about the culture of the place and identifying landmarks - I remember the ones bound for American call centres were taught solemnly “Americans will speak in sports metaphors” and the Australian ones were taught to differentiate Bondi Beach from the Gold Coast, and ridiculous slang phrases that I’ve never heard anyone use (And excuse me while I back at MaPoDurian )
[/quote]
I imagine some companies outsource these call centers without understanding that they will have to organize very intensive training of the kind you describe. I’m sure it’s still worth their money, though. I read an article about this in either the Economist or the SCMP recently. There are quite a few consultancies in India that specialize in helping foreign companies do just this sort of thing. These consultants are really nothing more than good English teachers with a knack for business.
I am all for outsourcing to places like India. It keeps prices down for the consumer and it transfers not just technical skills like programming, but also a lot of the soft skills that will help India to continue opening its economy. If Indian call center workers learn more about standards of service found in developed economies, then they’ll have a better idea of what they shoud aim for in their own country. In this respect, the Indians will probably be a step ahead of the Chinese since they have better English skills. I don’t believe in having any trade barriers, so I see no problem with allowing the free flow of services across borders, either. It all benefits the consumer in the end. It is impossible for the government to protect or favor one industry without hurting another interest group in society. In my opinion, pandering to one industrial lobby at the expense of all consumers is nothing more than corruption. Government policy should focus on the one interest group to which all members of society belong. The one thing that a steelworker, an accountant, a call center worker and an IT specialist all have in common is that they are all consumers. Allowing companies to do whatever they need to do (save destroying the environement or dodging their taxes) to compete, and thus keep consumer prices down, benefits the greatest number of people in the economy.
They’ll go to Taiwan and teach English. 
Here’s the wonderful thing about outsourcing, it works both ways. By some estimates the jobs created by foreign investment have added 2 million more jobs than those that were outsourced. Indian companies are setting up operations in the US, as are German, Australian, French, and Chinese, etc. There are foreign owned factories all over the US, just as their are US owned factories all over the world.
Trade works for the betterment of people. When countries figure this out and implement the right policies to facilitate it, the country will excel financially. The problem is the majority of countries screw up things like property rights, ineffective judiciary, out of control executive branch, and just plain bueracratic hassle.
What does this mean for you and me? It means that learning a 2nd language is a benefit. It means that lifelong education isn’t a choice, but a necessity. If a person chooses not to change what they are doing and learn new things, than all I can say is, “Fuck them.” If you refuse to change then you will go the way of the Dodo and I say good riddance. I have no time for self pity and victim complexes.
CYA
Okami
I would have to agree. I don’t mind helping people who want to help themselves. That’s called charity. I do mind transfer payments to people who feel they are entitled to part of the sweat of my brow because they aren’t motivated enough to adapt (or begin the process of adapting) to changing circumstances. Unfortunately, most social welfare programs fall into the second category … and its what gives politicians power through whipping up socio-economic warfare. I know way too many people who genuinely feel that I’m greedy for having an extra measure of motivation to change my circumstances. They are not motivated to get off the couch, and thus feel resentment towards people like me who are.
At the risk of being called a model #348G17 (aka Fred Smith), I’ll post this article about US Ex-Im Bank financing.
[quote]CORRECTED: House Members to Offer Anti-Offshore Jobs Bill
Wed Mar 3,11:24 AM ET Add U.S. National - Reuters to My Yahoo!
By David Zielenziger
NEW YORK (Reuters) - About 50 U.S. House of Representatives members plan to introduce a bill on Wednesday that would deny U.S. companies federal financing and loan guarantees if they shift U.S. jobs overseas.
The proposed Defending American Jobs Act was written by Rep. Bernard Sanders, Independent of Vermont, and will be co-sponsored by about 50 other representatives, including Republicans Ron Paul of Texas and Virgil Goode of Virginia.
Warren Gunnels, Sanders’ legislative aide, said it’s the first national attempt to deal with the issue of “offshoring,” or sending U.S. manufacturing and service jobs to lower-cost venues abroad.
The Defending American Jobs Act would target corporate assistance offered by agencies like the U.S. Export-Import Bank, a 70-year-old unit that provides trade financing and other help to U.S. companies that conduct business abroad.
Sanders singled out Motorola Inc., for receiving $190 million in Ex-Im Bank assistance to build its China operation while firing 42,900 workers in the United States, and General Electric Co. for receiving $2.5 billion to finance China expansion while firing 260,000 U.S. workers. He did not say when the layoffs took place or when the Ex-Im Bank loans were made.
A GE spokesman said the company’s U.S. employment had remained around 160,000 for the past decade and added that exports of products like jet engines and turbines had kept American workers employed. He didn’t comment on the proposal.
A Motorola spokesman said the company employed about 88,000 worldwide and derived about 45 percent of sales outside the country. He declined to comment on the bill.
Ex-Im Bank spokesman Phil Cogan said the bank had never financed foreign expansion by Motorola, GE or any other company. “We finance exports, not foreign expansion by U.S. companies,” he said.
The bill would require a loan applicant to specify the number of employees in the United States and abroad as well as a general wage scale. If the number of non-U.S. workers increases while U.S. worker numbers fall, the loan would be canceled.
“If the companies don’t create jobs in the U.S., we don’t believe the Ex-Im Bank should be in existence,” Gunnels said.
To date, lawmakers in about 20 states have proposed laws that would ban state contracts from being awarded to non-U.S. companies. In January, President Bush (news - web sites) signed the Omnibus Appropriations Act, which has a provision that bars some government agencies from hiring non-U.S. companies.
The American Electronics Association reports that U.S. technology employment fell 4 percent last year to below 6 million, the lowest level since 1999. Part of the loss has been attributed to companies shifting high-cost development to lower-cost centers abroad, especially in Asia.
Among the directors of the Ex-Im Bank is former Sen. Max Cleland, a Georgia Democrat defeated in 2002. Cleland is campaigning for Sen. John Kerry (news - web sites) of Massachusetts, who has recently raised job losses as part of his presidential run. [/quote]
What do you all think? I’d be in favour of dismantling the Ex-Im Bank rather than discriminate against firms that outsource if those were the only two choices. Do other developed countries have government agencies like the US Ex-Im Bank? Mod, should this thread move over to the new business forum? Being new, it’s still lacking penetrating commentary and analysis from people like me. 
Or would this be better in the IP forum?
[quote=“Jive Turkey”]Yes, but not all outsourcing works out. Call center and accounting work are things that depend a great deal on “soft skills” that would be difficult for an Indian or other foreigner who’s never travelled outside of India to acquire.
I’ve read of some outsourcing of accounting coming to the mainland. More and more mainlanders are taking American and British exams for public accountancy certifications. They may do quite well on the exams, but they don’t understand a lot of the things that aren’t in the rule books.[/quote]
But you’re missing one key piece – companies don’t offshore 100% of their operations, just the bottom 90%. For accounting, the reports are still looked over by a few high-level people at the U.S. home offices to verify that the statements comply. It’s just the other 90% of the work that is getting moved to India and China.
Existing senior accountants will still get hired in the U.S. to do final touchup on the work, to prepare high-level strategies, and so on. It’s the lower-level people and the new college grads who are going to end up flipping burgers – just as former software engineers are working at Home Despot stocking shelves, while project managers and system architects are taking classes on how to manage remote projects in India (and being taught “sensitivity” to Indian culture). But even the higher-level jobs will start to evaporate as the lower-level Indian workers become more skilled at the higher-level work.
While some companies are setting up their own centers, AFAIK most of these places are operating on contract. NetSol didn’t set up its own call center; they hired an Indian company which does contract phone support, and that company hired workers and trained them. NetSol just pays the monthly bills and doesn’t worry its pretty head over such things as training.
India is pretty xenophobic, not to mention bureaucratic as all hell. Boeing and Microsoft set up their own engineering centers, probably because their size (and intellectual-property protection concerns) made it worth doing, but most of the companies over there are Indian-owned. Indian techies who made the odd million or ten in Silly Valley during the 1990s returned to India and set up their own companies.
While there may be some business consultants floating around, I doubt very much that any are of the “oh, I used to teach Engrish in a Taiwanese kindy before I moved to Bangalore to make a billion rupees” variety.
[quote=“MaPoDurian”]
While there may be some business consultants floating around, I doubt very much that any are of the “oh, I used to teach Engrish in a Taiwanese kindy before I moved to Bangalore to make a billion rupees” variety.[/quote]Who said anything about Taiwan kindy teachers? Some consultants just floating around? Who do you think prepares these workers to handle calls from half way around the world?
[quote=“Jive Turkey”][quote=“MaPoDurian”]
While there may be some business consultants floating around, I doubt very much that any are of the “oh, I used to teach Engrish in a Taiwanese kindy before I moved to Bangalore to make a billion rupees” variety.[/quote]Who said anything about Taiwan kindy teachers? Some consultants just floating around? Who do you think prepares these workers to handle calls from half way around the world?[/quote]
Sorry, from the way you wrote it, I took it to mean that you felt pretty much anyone “with a knack for business” could set up over there. India isn’t that open.
Some are saying that it is not India but China that will be the problem in the future. Or the solution?
[Outsourcing is an incredibly complicated and frankly, still-evolving area of study. But if you really want to understand more about the outsourcing of American jobs (using a simplistic framework to be sure), it may make more sense to focus on China as opposed to, or at least along with, India, the current focus of attention on the issue.
Indeed, while many companies have moved engineering, call centers and other operations to India in search of cheaper labor, three to four times that many jobs have moved to China in the last 15 years as both American and Chinese companies look to that huge labor pool to produce toys, shoes and other goods for export to America and the world.
Like India, China has the allure of cheaper labor, but it also has begun to use its monetary policy to try to stimulate additional outsourcing and keep already outsourced jobs in China. Put another way, by keeping the yuan (their currency) at an “unnaturally” low rate to the dollar, Chinese goods are that much cheaper for American companies and consumers to buy.
So, for example, a dollar may be able to buy five umbrellas instead of three when exchanged for a weaker yuan, and as a result American consumers and companies might buy more Chinese umbrellas then they otherwise would, and hence more jobs making umbrellas stay in China rather than the United States or elsewhere.
This seemingly effective use of monetary policy by a second- or third-world nation marks perhaps an even more important event in the international battle over globalization and outsourcing.
Indeed, as the outsourcing debate continues, the next president may have to move beyond talk of job retraining programs and closing tax loopholes to prevent jobs from flowing overseas. He may also have to offer a more effective currency strategy in a world in which some second- and third-world countries have figured out how to aggressively manage their currencies without becoming another inflation-wracked Argentina.
The jury’s still out on whether China’s monetary policy will work over the long term. There’s certainly more to the outsourcing debate than anyone could fairly review here, including the benefits of trade. But, make no mistake, in the very near term, expect the outsourcing debate and the presidential debate to return to China with new and potentially even more complicated issues on the table.]
Article in BusinessWeek about it today:
news.yahoo.com/news?tmpl=story2& … &printer=1
[quote=“BW”]No low-wage worker in Shanghai, New Delhi, or Dublin will ever take Mark Ryan’s job. No software will ever do what he does, either. That’s because Ryan, 48, manages people – specifically, 100 technicians who serve half a million customers of Verizon Communications Inc. (NYSE:VZ - News) out of an office in Santa Fe Springs, Calif. A telephone lineman before moving up the corporate ladder, Ryan is earning a master’s degree at Verizon’s expense in organizational management, where he’s studying topics like conflict resolution.
That’s heady stuff for a guy who used to climb poles. “The technical side of the business is important,” says Ryan, “but managing people and rewarding and recognizing the people who do an outstanding job is how we are going to succeed.”
Sab Maglione, 44, is more vulnerable. The computer programmer from Somerville, N.J., was hired by an insurance company as an independent contractor in 2000 for good money but soon found himself training the representatives of Tata Consulting who would eventually move his work to India. His next contract in New York City paid half as much – but even that soon ended when he found himself out of work the day after Christmas last year. Maglione, who has an associate’s degree in computer science, is studying hard and remains optimistic about getting a job but says he’s been stymied by the “barrelful” of recent experience in the latest programming languages prospective employers demand. “If you don’t have it, they say, 'Let’s outsource it.”’
Ryan the happy manager and Maglione the worried programmer exemplify two powerful crosscurrents in the American job market. Changes in the economy in recent years have made some people more valuable and secure than ever, while pushing others – even those with skills that were recently regarded as highly valuable – to the margins.
What makes the difference? New research by economists at Massachusetts Institute of Technology (news - web sites) and Harvard University concludes that the key factor is whether a job can be “routinized,” or broken down into repeatable steps that vary little from day to day. Such a job is easier to replace with a clever piece of software or to hand over to a lower-paid worker outside the U.S. By comparison, the jobs that will pay well in the future will be ones that are hard to reduce to a recipe. These attractive jobs – from factory floor management to sales to teaching to the professions – require flexibility, creativity, and lifelong learning. They generally also require subtle and frequent interactions with other people, often face to face.
…
At the same time, some jobs that are highly compensated today could soon be routinized. Powerful computers, advanced software, and speedy communications have vastly increased the vulnerability of routine work. Well-paid legal researchers, tax preparers, and accountants, for example, are seeing their jobs outsourced abroad. The jobs require intelligence and technical knowledge, of course, but because the procedures are highly standardized, they can be done at a distance by well-educated workers willing to do the job for far less. Likewise, stock traders could eventually be replaced by automated trading systems. Computer programming is a routine job that used to pay well because few people could do it. Now, part of the work has been taken over by clever software, and part has been exported to lower-wage nations connected by fiber-optic networks.
…
To be sure, automation and globalization will be tough on those people who prefer comfortable, routine jobs, or who lack the education to tackle challenging new tasks. Some of those people will find work as barbers, truck drivers, hospital orderlies, or waiters. While those jobs will be protected by the fact that they can’t be done in a foreign country or by software, wages will be depressed because so many people will be competing for the slots.
[/quote]
There’s more at the link.
I don’t find anything particularly new or interesting in what they have written, and in fact, I think they’re sugarcoating some things. For but one example, why would there be any need for a “factory floor manager” in the U.S. if the factory jobs have all been “routinized” and moved to Mexico or China? Also, some of their buzzwords (“lifelong learning”) are straight out of failed jobs programs pushed by left-leaning CEOs who have outsourced companies to the point of destruction – like Phil Condit, former CEO of Boeing, who offshored the single most critical piece of the 7E7 Dreamliner; his goal was to reduce 7E7 production to a bolt-together-the-parts manufacturing process that would last three days – yes, that’s right, three days. Most Boeing workers whom I know expect that Boeing will cease to exist in the not-too-distant future, at least as a civilian airliner company, because Phil gave away every single piece of the commercial airliner manufacturing business to “suppliers”.
It’s hard enough to manage a factory floor when you’re standing on it and you speak the language of the people who are manning it.
The only jobs that are secure in the United States are the jobs that require you to be physically there to do them: waiter, barber, auto mechanic, salesperson, teacher . . . . It has nothing to do with “flexibility, creativity, lifelong learning.”
Once all the knowhow slips past the borders of the U.S., it’s only a matter of time before the technicians start their own companies and sell their goods and services back to the U.S., competing with their former employers. The Indian or Chinese bosses of those companies are going to take about two seconds to decide between keeping on hotshot, highly paid ‘people manager’ Dan Ryan back in the U.S. or paying some 10K-per-year-PhD-in-management local from Delhi University to manage things on site for him.
Apparently in the cosmology of economic theory it all works out okay for U.S. workers in the end but I’m still trying to figure out how.
In the meantime, I’m over here, not taking any chances that the ‘economic experts’ have slightly miscalculated the economic future.
And presumably your customers will also be waiters, barbers, auto mechanics, salespersons, teachers? An economy can’t function purely on ‘service’ to people also make their living from ‘service’. Somebody has to produce something eventually or there is no wealth creation.
Service is just another name for wealth distribution. Eventually the wealth gets redistributed in the direction of those most able to hold onto it, and the ‘have nots’ will be left with absolutely nothing if they have no means of generating new wealth. All they have is the sweat of their bodies, and if they can’t compete with someone fresh out of the paddy fields then what hope do they have of affording a decent haircut?