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Outsourcing: Article

1 in 4 IT Jobs Going Offshore, Says Gartner; One Major "Offshoring Failure" in 2004 Predicted

1 in 4 IT Jobs Going Offshore, Says Gartner; One Major "Offshoring Failure" in 2004 Predicted

  • Read "Offshoring Offers Opportunities for U.S. IT Troubleshooters"
  • Read "Offshore Outsourcing: Magic Bullet or Dirty Word?"

    Roger Cox, managing VP at Gartner, has been telling silicon.com that a quarter of traditional IT jobs in Western countries will move to offshore locations such as India by 2010.

    The global trend toward "offshoring," in other words, continues to boom in Europe - as elsewhere.

    According to the latest figures from Gartner, outsourcing as a whole is outstripping the IT services market in Europe, growing by 3.1% in 2004 and predicted to rise to 8% by 2007 - "with the offshore element tipped to grow hugely," adds Cox.

    Gartner predicts almost a third of leading European businesses will include an offshore element in their IT plans by 2005.

    According to silicon.com, Cox said "The alarming nature of that headline '1 in 4' figure masks the true story."

    "That 25% is over a long period of time," Cox points out. "And if we turn back to a period of growth then you'll find those jobs could go entirely into growth."

    Gartner also claims, according to the report, that 2004 will see the first major offshoring failure that will lead to a company taking its operations back onshore. Here's how silicon.com's Andy McCue reports what Cox had to say about this:

    Cox said this won't necessarily reflect the bigger picture and has more to do with the politics of offshoring, which will see the backlash against white collar job loss continue during the year.

    "Because it is being hyped up, it has become very political, so any failure will be more visible," he said.

    Cox said offshoring has already proved itself as a mainstream IT business decision but warned against companies looking to use the model to make quick cost savings.

    "The first thing is to get that business alignment right," he said. "If companies are only looking at price and levels of service, they are going to drive it off the rails."

    McCue adds a note about the geography of offshoring: "In terms of favoured offshore locations, India still dominates, with China and Russia trying to break through as genuine alternatives for European companies. Gartner also predicts that the new countries joining the European Union in May will become popular for 'nearshore' outsourcing of some operations, although not on the sort of scale that will pose a threat to India."

  • More Stories By Jeremy Geelan

    Jeremy Geelan is Chairman & CEO of the 21st Century Internet Group, Inc. and an Executive Academy Member of the International Academy of Digital Arts & Sciences. Formerly he was President & COO at Cloud Expo, Inc. and Conference Chair of the worldwide Cloud Expo series. He appears regularly at conferences and trade shows, speaking to technology audiences across six continents. You can follow him on twitter: @jg21.

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    Most Recent Comments
    Rob Blaine 03/25/04 09:31:40 AM EST

    Oh, so now you and Paddy can''t just be honest about insults? First of all, yeah thats how I spell labour and he can take it how he wants. What was his grandfather making bombs? People dont just "get killed" for no reason and I''m not ignorant of rebel history.
    And no, I''m not Indian, but what has that got to do with anything, Two Dog? I have nothing against native americans, they''ll be out of jobs just like the rest of us.

    Two Dogs 03/24/04 09:52:16 PM EST


    I think some of these comments may be little subtle for you.
    Padriac was using what we call "irony" - that you would use the correct English spelling "labour", rather than the bastardised American "labor".

    And of course I have no idea what your ancestory is, but I would bet that it is NOT Native American. This we call "sarcasm". Ask someone what it means and then see if you can figure out what I was really saying.

    Padriac Devlin 03/24/04 03:18:00 PM EST

    Rob Blaine, you really should read some history yourself, perhaps on the Irish union movement. Many were killed, including my grandfather, for trying to set up protections for the workers, who, until that point, had been treated like slaves. And I have no idea by what you mean by "and their not above using methods we would abhored."

    And you speak of a great leveling. Wait and see what you''ll get from this form of "benevolent" capitalism - it''ll make socialism pale in comparison.

    Dan 03/24/04 12:06:04 PM EST

    Rob, glad to hear that''s not an issue. In terms of unions, they have their place, but when they are inflexible and unwilling to compromise, they can certainly become a factor in a corporations willingness to move jobs overseas. Now, I said a factor, not THE reason, as corporate greed is the ultimate reason.

    Rob Blaine 03/24/04 11:37:11 AM EST

    Dan, If I''m British or not has nothing to do with this matter. I''ve known guys like Paddy in the past and beleive me, what they want is to destroy capitalism. They say their pro labour, but what they really want is socialism for the world - the great leveler affect. And their not above using methods we would abhored. Just look at history.

    Dan 03/24/04 10:58:22 AM EST

    Rob, you sound British to me(or of British decent), perhaps living in the states. Am I correct? If so, does this explain your disdain for the irish?

    Rob Blaine 03/24/04 10:40:41 AM EST

    Big Dog,
    My comment was directed to an irishman trying to correct my spelling as he is the foriegner here. Also, you have no idea what my ancestry is.

    Big Chief Two Dogs 03/23/04 09:31:10 PM EST

    Thank you Rob Blaine for your comments.
    By your qualification to decide who is a "foreigner", I realise that you are a member of a very exclusive club - Native American IT professionals.
    The loss of "white"-collar jobs to Indians must seem rather ironic to you.

    Rob Blaine 03/23/04 10:00:17 AM EST

    What people like jay_sdk and padriac really are for is radical socialism and Americans dont want any part of that. My dad was a steelworker who lost everything after 35 years of working and the unions did nothing to stop it. they were to busy getting rich themselves. And that''s what happened in those communist countries like Russia and China...the rich got everything though it was suposed to be for the workers. Maybe Bill is right and were getting to worried over nothing much. By the way, I don''t need a foreigner telling me how to spell.

    Bill 03/22/04 10:49:05 PM EST

    Whilst I agree with most of the readers'' concerns, I can''t help thinking back over the 25 years I have been a programmer and all the previous predictions of the end to my career.

    Twenty years go it was genuinely believed that software would soon be generated from the design documentation.

    Fifteen years ago, when packaged software started really making its mark, it was believed that there would be just a few companies hiring programmers to develop packages and all other programmers would have to look for some other vocation.

    Then there were the CASE tools and forward engineering products that were going to replace the need to manually develop software. And so the list goes on.

    Over the past 25 years I have heard many chicken littles telling me that my sky is falling. The latest chicken little may well be telling the truth of course, and there is no doubt that, one day, there will no longer be a requirement for software developers at all.

    However, I can''t believe, seeing all our users are so damned finnicky, that they will all of a sudden start to tolerate using software that has not been developed to suit their every whim and fancy - and try detailing these in a design spec to send overseas! The users who aren''t so finnicky already use packaged software anyway.

    I can''t say to anybody that the sky is not falling as one day it probably will. However, I don''t believe that day will come until we have the technology to develop systems that easily satisy our users - and that certainly isn''t now.

    We should definitely all prepare ourselves for massive rewrites and maybe someone could develop a mechanism by which user whims, subtleties and fancies can easily be captured and documented.

    Best wishes

    jay_sdk 03/22/04 06:56:51 PM EST

    While estimates of the number of jobs moved to China run around 700,000, China lost 25 million manufacturing jobs. While a number of Indians gain salaries unheard of before, the recipient are mainly the educated priviliged and India''s poverty and illiteracy rates remain frighteningly Developing World. While after NAFTA thousands of factories/maquiladoras "blossomed" in Northern Mexico with abusive labor standards, after a decade these are moving abroad leaving social devastation in its wake. The move of IT jobs is nothing new but is a symptom of capitalist globalization. This "race to the bottom" inevitably leads to greater poverty and the concentration of wealth in the hands of a few at the cost of everybody and everything else, socially and environmentally.

    We need a re-direction, a correction against rampaging free-trade neo-liberal capitalism: a government and a people that doesn''t provide a sufficient counter-weight and works for social justice, leaves a brutal society where only the strong and priviliged survive and the weak and disenfranchised are trampled. Such a government can only be achieved once the middle class (or whatever remains of it) realizes that they have more in common with the working poor, than they have with the privileged they aspire to and identify with...

    Padriac Devlin 03/22/04 02:00:28 PM EST

    To Rob Blaine,
    I don''t know why but you seem angry. Being angry is fine - but please don''t direct it at me personally. I am a naturalized citizen, and I love America. All I am saying is what will have to happen eventually is for all workers from all countries to unite and protect their common interests.

    Also, for an American, you have an interesting way of spelling "labor."

    Rob Blaine 03/22/04 12:13:18 PM EST

    Mr. Pepperdine,
    I dont'' think I said something insulting to Mr. Devlin - but I honestly dont know how a non-american CAN understand what were going thru. Plus, I just dont think unions solve all problems. They often are used by socialist leaning types who realy want to destroy capitalism. And thru history, the some Irish have been big in labour unions. I wonder Mr. Devlins motives is all.

    Padriac Devlin 03/22/04 11:43:28 AM EST

    Glopez, I agree with your analysis - but there is an answer - world unions. This may take years to implement, and the hostility encountered will be great (as it was in the past) - but it is the only way to protect all workers. If we''re all to be treated as replaceable, expendable resources, we must band together to prevent it.

    glopez 03/22/04 10:45:11 AM EST

    I am an IT worker (software developer) who has been lucky enough find fairly stable work in the industry (even post dot bomb). Even though I enjoy software development temendously, the outsourcing trend has me thinking about changing careers altogether.

    Belows I have restated view points expressed by various posters along with some of my own.

    The problems of outsourcing computer programming jobs to forign nations stem from the following conditions:

    1.) All industries (aside from subsitence farming) are subject to globalization. The IT industry is the latest such industry to fall prey to this economic trend (it follows other industries such as textiles and automotive).

    2.) Corporations who wish to remain competitive within their own industries cannot ignore the pressures of globabalization.

    3.) Technology continues to facilitate globalization.

    4.) The leaders of the governments of industrialized nations facilitate globalization by creating pro globalization policies (NAFTA and other free trade agreements).

    5.) Globalization allows corporations to avoid hiring union labor to increase their margins. As long as coporations can find pools of non union labor, they will continue business as usual.

    6.) Computer programming is no longer as complex as it once was. There exist a plethora of tools, resources and frameworks that make the task of writing "very complex" applications quicker and easier. (IDEs create code from UML diagrams, easy to learn scripting languages like Perl and Cold Fusion).

    6.) Aside from anecdotal evidence to the contrary, software that is produced in foreign sweat shops is of the same quality as can be produced here in the US. (Microsoft aren''t exactly bug free)

    7.) Consumers of IT products have very little brand loyalty. We are all looking for the next best thing.

    Outsourcing of programming jobs to foreign nations will continue to increase. This will reduce the number of programming jobs in the US. There will be more competition for those jobs. Many former programmers will be displaced and will have to find work in other industries. The flood of programming talent in relation to the number of programming jobs will exert downward pressure on salaries and benefits for programmers.

    What can be done to reverse the trend:
    1.) Nothing really.

    fletch 03/22/04 08:45:32 AM EST

    Read this here 1st. If you are a straight coder(consultant) move up the food chain right now. You can bury your head in the sand but anything that is straight coding is going out. Blue-collar folks tried to pretend it wasn''t happening e.g. Steel etc but it''s a snowball rolling downhill.

    Paul Crofts 03/21/04 01:07:05 AM EST

    Like all IT professionals this is a topic very close to my heart. I offer two opinions.

    1. I put a lot of the blame on the boom time contractors. These contractors bounced from job to job, contract to contract fleshing out impressive CVs. However, in my experience, many of these expensive contractors turned out to be very poor value for money. Good on paper but not in practice. This makes managers question whether you really do get what you pay for. I'm convinced they started business looking eslewhere for resources.

    2. It is interesting to read that there is a tide of discontent building on the sub-contintent from the workers there that they are not getting paid the same as their western counterparts. It is quite probable that wages will rise as their economies grow closing the gap. Perhaps not as much to stem the flow of outsourcing but enought to slow it down to the point where equilibrium is reached.

    Lawrence B. Ebert 03/20/04 09:45:14 PM EST

    IEEE-USA has been putting out some discussion of offshoring. Of relevance to proposed training remedies, note that even though there was a decline of 37,000 EE jobs from the second quarter to the fourth quarter of 2003 (from 386,000 to 349,000), there was an actual decline in EE unemployment over that period, apparently because the missing people went into other areas or simply stopped looking (not everybody can wait for training). Thus, we ended up with fewer technical jobs and permanently lost some already trained workers. This event will have some impact on the plans of people contemplating a technical career. But what to do? According to the BLS forecasts issued in February, seven of the 10 occupations with the greatest growth through 2012 will be in low-wage, service fields requiring little education: retail salespeople, customer service representatives, food-service workers, cashiers, janitors, waiters and nursing aides and orderlies.
    Many of these jobs pay less than $18,000 a year. Craig Barrett has already previewed lower expectations for us. [From the San Jose Mercury News: He [Barrett] was then asked, "Aren't we talking about an entire generation of lowered expectations in the United States for what an individual entering the job market will be facing?"
    "It's tough to come to another conclusion than that," said Barrett. "If you see this increased competition for jobs, the immediate response to competition is lower prices, and that's lower wage rates."]

    [As a minor point, the earlier post about BLS coding is important because because BLS revamped its occupational classifications and reporting conventions after 2002, making some comparisons, especially in the IT area, tricky.]

    Jim 03/20/04 02:43:19 PM EST

    Well Put, Bill!

    I've been in IT for 15 years, and was a kid in the 70s when only Americans made cars. When Toyota and Honda showed up and started beating Detroit at its own game, there were plenty of articles in the press that Japan was going to "Buy America", and we were all going to be working for a Japanese conglomorate one day.

    Guess what? It didn't exactly happen.

    What did happen is a lot of Americans lost their jobs, unemployment rose to over 10%, and the auto industry was changed forever. But would you say that cars are better made and cheaper nowadays than they were in the 70s? I sure would. Plus, Detroit was forced to compete with lots of overseas firms, resulting in more competition and a better product choice for consumers. And know what? Our economy survived, and even thrived despite this new challenge.

    And Japan? They're doing ok too (despite their recent economic woes) -- and now THEY'RE facing competition from "cheap" labor like Kia in Korea. Japan build some of its cars here, GM builds lots of its cars overseas... it's global and complicated, but has not necessarily resulted in fewer jobs for Americans, or a weaker long-term economy.

    My point is a whole lot of things are going to change over the next decade or so in IT, and overseas competition will be just one of them.

    Honestly, some of the posts here come close to predicting the end of Western Civilization as we know it. My advice to all of us (myself included) is to stay focused, and stay nimble. The opportunities will present themselves. What will those opportunities be? Beats me. But be honest, how many of you in the biz in 1995 predicted the vast changes Java and the Internet would bring?

    In the meantime, our economy is likely to take a hit, and some of us (myself included) may loose our jobs for a time. Unfortunately, that's nothing new for America or Americans. But the world of IT in America isn't ending -- it's just changing.

    Bill 03/20/04 01:30:25 AM EST

    I''ve been a software developer for over 25 years and have seen a lot of alleged threats to myself and fellow employees in this industry. The threat of outsourcing overseas is again FUD raising its ugly head.

    There are three things we must remember:

    1. These things always look much worse than they actually are - in order to sell newspapers and TV advertising.

    2. Management is always looking for cheaper ways to do the IT work. As management are generally IT illiterate and they tend to listen to consultants trying to profit from the latest fad, the fads always end up as magnificent failures causing a net increase in employment for us local IT people.

    There is absolutely no doubt that India is a great leader in IT, and they have a huge number of excellent IT people. There is also absolutely no doubt that the success of most IT projects is inversely proportional to the distance between the user and the developer. Overseas outsourcing will result in excellent software that does not meet the requirements. Local IT people will be paid handsomely to fix it.

    I would like to point out a few other things:

    1) The IT industry is not a charity set up for local IT people. Local IT people must be ready to compete and the incompetent ones will be driven out of the industry.

    2) If a country does not use the best people for the job, no matter where those people live, then that country''s IT systems will start to become very costly and sub-standard. The taxpayer will then be required to foot the bill. The choice is simply whether to pay a bit now or a lot later.

    Just as with outsourcing, there will be many managers who will make career-ending decisions for themselves by going ahead with overseas outsourcing. There will also be a few managers who will do well out of it. Needless to say, there will be many, many consultants who will greatly profit by it.

    We will find, just as we have found with all the previous attempts to reduce IT costs that:

    a) Nothing beats having competent people and close relationships, at all levels, between the customer and IT provider.

    b) Over all we will certainly lose some jobs overseas. However we will all certainly be provided with many opportunities to rewrite or fix well-written but unuseable software. We just need to be patient so that management can again learn, and consultants profit, by management''s mistakes.

    c) By the end of next year we will all have the great pleasure of saying "I told you so". Needless to say, management will continue not to listen to us.

    Best wishes

    Michael Ford 03/20/04 12:15:18 AM EST

    I work for a company that has outsourced, I manage an outsourced project, here are the pros and cons as I see them.

    Cost per line of code about 5 to 1 I would guess.
    Your employees no longer feel apart of the company, there going to be gone as soon as somthing better shows up, because there not stupid, we all realize we being seen as swapable units.

    Mistakes in design, it''s a long way to india and 12 hours difference, this creates major problems.

    Bottom Line: get use to it, it won''t go away, adjust or be found in the unemployment line. We can''t create 5000 lines of code for the same price, but we can insure that the 5000 line create are good.

    I see that in the long run large scale projects will offshore, that a given, for an offshore project to really succeed it must be well designed and very very well speced out. with out that it will fail to some degree.

    I also don''t see small projects going that way in the long run, it''s not a money maker.

    American 03/19/04 11:48:31 PM EST

    To James White:

    You said, "There is nothing in "America" (read "Western World") that is better any more."

    Well, there is still something better in most of the Western World. It''s called stability, democracy, liberty, and freedom. It has fostered innovation, creative, free thinking, and has changed to world. We founded a civilization based on those principals. Unfortunately we have given away the fruit of that civilization without requiring that those who receive it value the same principals. This is a war; an economic war. Our politicians are loosing it and its time we elected some new politicians who can understand that they have a war on their hands and that, if they loose the war, they will loose that incredibly rare and precious civilization to barbarians, totalitarians, and the disorganized rabble.

    Mike Brown 03/19/04 08:39:36 PM EST

    1st thought:
    By allowing this, aren''t we destroying the incentive for American kids to get a college education (i.e. destroying our future)?

    2nd thought:
    Would this phenomenon exist if the exchange rates between countries weren?t so disproportional? It seems to me, American while collar workers are never, in the long run, going to be price competitive. In this "global economy," those willing to work in the least desirable nations will get the business.

    3rd thought:
    It looks like it might be a more stable existence living in a self-sufficient "U.S. economy" (as we used to have) than this new "global economy." A more more modest existence, maybe, but more stable. Are we not large enough to be self sufficient and have our own competitive market forces operate internally? We were in the past.

    4th thought:
    The US has been unique among civilizations in that it has had a middle class. That may go away. And I don?t think a depression is out of the question.

    5th thought:
    I would recommend this good article from a college professor warning against placing blind faith in outsourcing:

    Randy Kulzer 03/19/04 07:59:04 PM EST

    With all due respect, and NOT to start a flame war, but I believe that Kris Walker is incorrect. Not everyone who has been laid off because their job was outsourced was not a "CORE" person or was "ones those who do not add value and just surving on others work". The bottom line, literally, is that it does not matter how good you are, you can (and eventually will) be replaced by someone who is cheaper than you. And, anytime you outsource work, you lose intellectual property because you can''t stop people from learning.

    RK 03/19/04 07:18:40 PM EST

    I agree with James White, world outside West is no longer less educated, we are posed with naturally bound shift. The only way out of this it through sacrifice, changing the luxurious life style to reality, and working honestly. In doing so, our administration certainly needs to help communities/citizens by making the cost of living and education more afordable. Last but not least, parents need to be more responsible, and take effort in bringing pride generation, not some high school drop-outs. US new generation lacks serious education and disciple, and takes many things for granted.

    Rob Blaine 03/19/04 05:40:08 PM EST

    To Mr. Devlin,

    This is a very emotional topic and I understand the sediments. There are have been a number of very thoughtful posts and Mr. Devlin's point seems more like a "hey lets fight back" cry rather than a "lets abuse Americans". I'm sure that if you re-read his post you'll see my point.

    Kirk Pepperdine
    Enterprise Editor, JDJ

    Charles 03/19/04 05:02:38 PM EST

    You brought up education.

    It seems that our education system (K-12) is entrenched in its own form of protectionism. Considering that early educational development is a major contributor individual success as an adult, does our educational system overemphasize liberal arts credit and forgo the opportunity to train the students in subjects that will make them more valuable, more competitive? Time-is-money?

    Don"t get me wrong, I know that lib-arts helps to develop writing skills etc., but we would be better served if we focused on engineering & science related coursework.

    Same for the the increasinly expensive Undergrad. In todays competitive markets, shouldn"t students have the right to focus on coursework that matters?

    humbled 03/19/04 04:50:38 PM EST

    I do agree with much of what cafeface wrote. I also believe that our feeling hardship in the face of losing the disposable income necessary to afford a 4 bedroom home with three bathrooms, three expensive cars with a garage for each, 170 channels of cable television (on the flat plasma) and enough entertainment expenses that others can live on makes some feel a bit testy. But I have notice that this is a dream for many. And some feel it is a necessity. The following may sound like some sort of class envy but I think it is more of a simple observation. People with larger amounts of money are able to isolate themselves from downturns in the economy. And since they are also the ones that are able to make the decisions that affect an entire labor force they are also compelled to view the labor force as a fluid market. Thus the bottom line cost cutting seams to hurt the labor force more than the management and shareholder force. For every $1 saved on 100 laborers may funnel up to a $100 profit to a 1 CEO or big shareholder. Large corporate interests are to make money at all cost with the least amount of risk. The higher up the ladder you are the more isolated you become. If a person who makes $500,000 a year loses half of their earning enduring a hard time they still can rely upon $250,000. I know that if my salary were cut in half, I would live in poverty. I have no isolation and the amount I can save to try to isolate myself from hardship keeps me living with just the simple necessities. But I would hate to lose the simple stuff because someone else?s bottom line meant a 120-foot yacht instead of the 200 foot one.

    And for all of those that post and say that everyone should start their own businesses. If everyone did that and then you would have a lot more competition and thus lower your own bottom line.
    The bottom line for the worker is that no matter what happens someone will always get the shaft if someone is getting the gold.

    Padriac Devlin 03/19/04 04:45:27 PM EST

    I thought you Americans were supposed to be fighters! Come on now, and don''t give in so easily! Don''t make me wish I''d never left Ireland!

    Bob Smith 03/19/04 04:10:21 PM EST

    I agree with a lot of what was said on this forum. I think that yeah its unfair that people in other countries work so hard for such little money. I can see the point where yes life should be easier globally for everyone but I am not everyone. I think that what we are talking about is initiatives that hurt Americans, and that hurt our progression as a Nation.
    I went to school for a very long time to learn a trade that I thought would pay me a decent wage and get me closer to being the upper class. The sad part is that even schools are trying to promise high paying carriers so they charge a fortune for classes that are worthless. I might as well be a manager at Mcdonalds, and now I owe over 20k in student loans with no real wage to compensate. So to make up for lost wages, I have to get involved in real estate and stocks just to make a decent salary. I was making more before graduation, and am now lucky to have a job. Which brings me to another point when this was lobbied for it was because there were not enough qualified Americans to fill the job force. What I find funny is that after graduation I was one of those ?under qualified? people that was looking for a job for a good three months. I did however turn down some positions because they wanted to pay me less than what I was getting on unemployment. Which I thought was an even bigger joke than not having a job at all.

    Whut whut 03/19/04 04:08:00 PM EST


    I think if used properly, outsourcing can be a huge boon to small business. Monkeywork like QA and basic IT tasks can be outsourced and small businesses can use those savings to hire more high-levle developers.

    Of course, the flip side is the big corporations shedding thousands of jobs and shipping them overseas. Those jobs are never coming back, folks. And no amount of protectionist policy will help that. Protectionism will make American corporations uncompetitive in the international marketplace--thus they will probably have to lay off even MORE Americans.

    The solution? I''m not sure what it is. Personally I''m trying to find a way to retire early--because I really don''t think there''s a future in working for a living anymore. At least in the US.

    hold on on there... 03/19/04 04:05:54 PM EST

    Ok, hold on there cafeface. There is nothing wrong with americans spending money on non-ncessities if they are living within their means. With that said, there are very few american made choices left in stores. So your premise that we are buying ourselves out of jobs is blaming the wrong folks, blame the retailers who refuse to buy american made because it costs a little more. Did they ask any of us if we''d pay a little more for american made before they stocked the shelves full of goods from china, etc? No, they did not. Capatilism and democracy are not one in the same, although we''ve brainwashed ourselves to think so.

    cafeface 03/19/04 02:05:27 PM EST

    Offshoring is nothing new. Like the old story, "When they came for the [gypsies, Jews, homosexuals], I said nothing because I wasn''t [one pf them]...", our concern in the matter depends on whose ox is being gored. What about American steel 30 years ago, autos over the past couple decades, consumer electronics, clothing, you name it. When was the last time you bought a shirt made in the US. We make almost nothing because it''s made cheaper overseas, and we don''t give a moment''s thought to the loss of American jobs when we buy a foreign-made item.

    Meanwhile, we live in luxury; a small fraction of our income is spent on real necessities. So our economy has become based on disposable income and self-indugence. Entertainment, from sports to porn, drugs (yes, including that beer), so much convenience food it''s killing us. We consume natural resources as if at the Second Coming we''ll be damned for anything left. What''s the ratio of lawyers to engineers in this country? The rest of the world? Maybe we can sustain an economy based on suing each other, entertaining each other, advertising each other.

    We''ve been able to live in luxury because, until recently, we''ve had the advantages of natural resources (either in the US, or in some place we take it by force or intimidation), skilled workers and creative engineers and scientists, and high productivity. We had a world economy with minimal coupling (physicists and some engineers will understand), so the equilibration time was long compared to time for innovation. Now the world economy is much more efficient, tightly coupled. Its affordable, even advantageous to buy imported goods. If we don''t manufacture with greater productivity, where''s our competitive edge?

    Our advantage used to be our technical superiority, but that requires a long and continuing investment in basic science and research and development and in education (we do want our people to be doing this so we own it, right?). Over the past decades, that investment has diminished drastically, both by government and by industry. The lion''s share of government investment goes to the military, and while it makes jobs, it does provide products we want to sell (also dismally low productivity inherent in economy of scale), and to health sciences that, while they may improve our quality of life (or just attempt to mitigate the damage we do to ourselves), don''t pay back the investment in economic gains. Our investment in education is disgraceful, but even more important, our cultural values are such that a large fraction of graduate students (over half in my physics department, three-quarters in the nuclear physics specialty) are foreign, simply because Americans are not willing to put in the hard work while deferring a high salary.

    The most shameful is the lack of investment in long-term research and development by corporations, but we drove them to that. This past decade it became fashionable to get rich in the stock market. The demands of investors (you and me and our pension plans and insurance companies) for faster and faster growth pushed management to focus on the next quarterly report rather than the value of the company in five or ten years. So all those brilliant MBA''s resorted to creative bookkeeping and the most drastic cost cutting. This congress and administration made it worse by making dividends tax-free (come on management, don''t invest those pennies of profit for the future, I want to spend them today). So the seed corn was distributed with the stock option cash-ins and quarterly dividends. What do we do now that there''s no crop sown for tomorrow?

    The world ecomony is equibrating, and one by one we are in competition with others in the world that will do our jobs for less. We cannot disconnect from the world economy because we are addicted to cheap imports. You say you want protection; how about the other shmucks that have lost, are losing, will lose their jobs to workers overseas? Are you willing to pay the prices for the goods they produce here?

    !invest 03/19/04 01:50:22 PM EST

    General question ? In terms of gross revenues and # of workers, what are the top American-owned technology offshoring providers in India?

    Accenture, EDS, IBM, GE, TPI, GBR, D&T, Cognizant, Infosys. Did I miss any? Point being that if you have any stock in these companies, sell it in protest.

    Kris Walker 03/19/04 01:18:54 PM EST

    In respond to Randy, companies here are not stupid to loose that explicit and tacit knowledge. They are talking care of those "CORE" employees in every office. I am sorry to say this but most of the affected are the ones those who do not add value and just surving on others work.

    Randy Kulzer 03/19/04 01:03:32 PM EST

    As an IT professional who job is constantly at risk, I see the problem from another perspective. That is, the loss of intellectual property. Once something is outsources/off-shored, for either new development or maintenance of an existing product, the learning acquired by the employees of the outsourcing company can, and I predict will, come back repackaged and as a competitvie product at a lower cost. So, for a perceived short term cost saving, the company is actually being "sold down the river."

    Everything that I''ve read as part of my ongoing graduate education points out that knowledge comes in two forms: tacit and explicit. Explicit knowledge is knowledge that is easily codified (i.e., written down). The problem with explicit knowledge is, because it''s easily codified, it''s also easy to steal. Thus, explicit knowledge only provides competititve advantage to a company so long as no one else knows about it.

    The intersting thing to note is that explicit knowledge comes from tacit knowledge. Tacit knowledge is something developed "internally" by a person and is very subjective in nature. One writer said that up to 80% of a compnay''s competitive intellectual property is based on tacit knowledge (which means that it''s walking around in the heads of the very people whose jobs are being outsourced!). So, how can a company stay competitive is it''s firing the very people who give the company it''s compettiive edge!

    A final point is based on Maslow''s Hierarchy of Needs. This theory, although not scientifically proven, states that there are seven levels that build on one another before the individual becomes "self-actualizing" (i.e., able to perform using all their abilities). The lowest two levels deal with phsiological and safety needs (food, shelter, etc.). So, how can a company expect it''s employees to work at maximum potential when it is threatening the very foundation of thise very same employees?

    The Great Swindle 03/19/04 12:33:12 PM EST

    I feel deceived!

    I always thought capitalism and free trade was meant to make us rich, not the others.

    I always thought this shareholder value thing was just a pretext to give lots of money to employees. How dare those manager types buy cheaper work elsewhere.

    I always thought those dark skinned people living in huts all over the world weren''t even able to read and write, much less to learn a programming language. They must be cheating, lying and stealing, otherwise this wouldn''t be possible!

    Isn''t this all a kind of terrorism? Shouldn''t we have sent troops to India instead of Iraq, to fight their weapons of mass job destruction? At least in this case we really do know that they exist, do we not?

    Sam K 03/19/04 12:31:21 PM EST

    Yes, some one pointed that I am not a guy from US. Yes, he is correct. I came to this country and settled here. Also I am gaving direct employment to 35 US citizens.

    My point is days are gone where you get paid for 5 hr job of coming to office, discussing sports and se#, chating with friends, browsing internet and go home with fat salary.

    As end customers are demanding more for less we are forced to reduce our costs either by improving the productivity or by reducing the cost to produce. And another method also I tried is by reducing the profit to bare minimum to run the company here.

    We are not running the business to do charity work for people in this country but to make some decent $ as well as provide good services/products to the consumers around the world at a reasonable cost.

    Speaking of good English alone does not provide jobs. Be sincere and think aloud if you are worth the $ you are making for the services you are providing to the company.

    I may be biased in some of my opinions from a company owner point of view, but I am sure that you will be more biased if you invest few hard earned $ of your money in my company.

    time will decide...so wait..

    Padriac Devlin 03/19/04 11:56:41 AM EST

    Some of us didn''t vote for big business and its bedfellows! I agree, we need to take back the country for the people. And unions aren''t perfect, sure and they can become as corrupt as anything else, being a human endeavor. But they are a needed counterweight! Otherwise, as a writer above suggested, most of us will end up serfs.

    Charles 03/19/04 11:56:35 AM EST

    I am not disputing that technology offshoring is a threat to American workers but I also think that the lack of complete information is aiding US business to "help drive down salaries". Big time!
    Couple of questions.
    - What about the rate of salary inflation in India. Don?t you think that they want some of the same luxury items that Americans enjoy? Why has India?s Tata Consulting opened an office in China?
    - What about information security. Is a US company really going to trust a foreign company who?s government is even more corrupt in ours? And China?. Intel was totally blown off by the Chinese Gov over a patent infringement, even though the WTO got involved.
    According to the Forrester study, which everyone cites over and again, ?3.3 million jobs are to be offshored by 2015?. Yet the according to the Bureau of Labor Statistics (the most widely accepted labor statistics database in the world), the United States only has 2.7 million workers total in the Computer and Mathematical Science Standard Occupational Category. Something doesn?t add up.
    Rather then restate someone else?s research, I invite the journalists to clarify exactly who they are talking about, using the Standard Occupational Categories defined by the Bureau of Labor Statistics. Even within our own Computer and Mathematical Science occupation, are the journalists talking about factory type programming, legacy programming or strategic custom programming? Are the journalists also including tele-sales/support occupations as well as administrative/back office functions, which have also been thrown into the tech-offshoring figures? Clarification of these issues can only help US workers adapt to the offshoring threat by allowing us to take advantage of training and continuing education avenues. So rather then throw meaningless percentages around, why don?t you try to help us by giving us a more complete picture. Then the most resourceful and productive workforce in the world can do something about it.

    Jeff Stratford 03/19/04 11:50:12 AM EST

    We get what we deserve or ask for.
    We have been in a political climate that has favorved Big Business. We voted for it and now we get what we asked for.

    If you don''t like this trend then I suggest we vote on it in the elections, invest in our educational infrastructure, change our values and support unions. Unions don''t have to be the big corrupt and bloated entities of the past, but they do server a need.

    Padraic Devlin 03/19/04 11:45:08 AM EST

    I''m a naturalized American citizen who is also an IT professional, and although you may not want to hear this, what you need in this country - and throughout the world - are strong unions. They are truly the only way to prevent exploitation of ALLl people.

    Dan Clamage 03/19/04 11:40:53 AM EST

    What''s being over-hyped is the benefits of offshoring, not the legitimate concerns of US programmers.
    I have heard of plenty of incidents where the offshore company outright lies about the skill level and expertise of its programmers. Like billing Jr level programmers as if they were Sr programmers. Heck, I''ve seen enough of that with the H1B visa programmers over here (and not just limited to Indian programmers either). The skill levels of a significant number of foreign workers here are overrated. They figure they''ll ramp up "On the Job". Hey, US firms, you can do that more cheaply by hiring college grads! But they don''t realize that''s what''s really going on.
    I''ve also heard of a few isolated incidents of overseas companies outright stealing the IP of a US company. Since US copyright laws don''t apply overseas, there''s really very little a US company can do to protect its IP overseas; carefully worded contracts to the contrary.
    The playing field is far from level. US workers have higher levels of healthcare, which costs money. We have a modern infrastructure, which costs money. We shell out plenty in taxes, partly so we can go into backward countries and rescue its suffering citizens from insane, murdering dictators. I don''t see too many other countries giving a fart about genocidal maniacs, even in their own backyards. Start paying for your own defense, and your taxes will skyrocket.
    Our employers shell out plenty in payroll taxes. US companies have environmental and workplace regulations to deal with. Congress could do plenty to relieve employers and employees of some excessive burdens, which would make a US programmer more economically feasible.
    Attempting to legislate away outsourcing would be a huge mistake. Rather, let''s fix what''s broken here.
    I can sympathize with Indian programmers working lots of unpaid overtime in crummy offices. Guess what, US workers do it too. I know programmers working 60-80 hours or more of unpaid OT. Because they are afraid they''ll lose their jobs if they don''t.
    Wait til the cost of living in these overseas countries skyrockets, because the workers there will start demanding better working conditions, cleaner air and water, indoor plumbing, better pay, free healthcare insurance, unemployment insurance, etc.

    AnIndianProgrammer 03/19/04 11:35:43 AM EST

    Great point Another Nick! IT professionals work harder and are more stressed than most other professions and yet we make lesser money than them. I''m seriously considering opening a restaurant or something, I''ll save more in an year, than I can save in my whole life being in IT. Even auto mechanics make 60$ an hour. Maybe its time to take a crash course on being an auto mechanic. A fellow programmer of mine got laid off and opened a small deli and makes 5 times more every month than he made earlier as a programmer. Entrepreneurship has its rewards!!

    Another Nick 03/19/04 11:16:54 AM EST

    Yes, its true that off-shoring is scary but the fundamental reason why it is scary is because we IT people no longer feel we have the "edge" over our fellow Americans. Face it. None of us likes to think that a truck driver or a nurse deserves to be making the same kind of money we make. But the truth is they also make money in the same range we do (and they do some grunt work for it). We can''t stand it that a mortgage banker or real estate agent or flower shop owner or deli owner makes 4/5/6/50 times what we make. I have an uncle who made 20 million in one year as a stock broker. My cousin makes 220K every year from each of his two delis. My neighbor made more than 400K in one newspaper store! One of my friends owns 8 burger kings and is raking it in like crazy. And all this irritates the heck out of me. You are not really upset that some poor shmoe in some third world country makes $15K per year. You are really upset that you can''t call yourself "wealthy" or "upper-middle class" anymore. There is a lot of money in the US and none of the jobs with the real money can be offshored. We work in a sector that just never was wealthy. If you really thought you were intelligent, as most of us IT people do, you would have become a IP lawyer.

    Jason Bell 03/19/04 11:02:56 AM EST

    Did we not want a global economy? Did we not hail the internet as bridging the gap between the nations.

    One thing that is noticable is the budgets on IT related projects got slashed after the dot bomb. Business insisted on the all singing all dancing but couldn''t afford to do it on its own doorstep.

    India is a good supplier, if it wasn't then it wouldn't get the business. And it's not just in IT; call centres, accountancy and secreterial all got a touch at the same time. Don''t think this will go away, the time will come when India will move from being the supplier to being the consumer. Who will be calling the shots then?

    You'll see that the independant consultants are on the rise. The ones who will succeed are the ones who can operate as a small mobile intelligent unit (to quote Fripp), be ready, willing and committed. The price structure may have changed but with a little thought anyone in the world can get the work, it's just you have to work a little harder for it than you did the last time.

    MWM 03/19/04 10:54:29 AM EST

    First off, I''m a U.S. citizen, born and raised here.

    I think the U.S. will eventually go through a severe recession, or maybe even a depression unless new technologies comes along where we can truly dominate. IT is no longer that technology. Other fields will be experiencing the offshore drive soon like accounting, finance, lower to middle management, etc.

    The recession/depression will come about as middle class Americans can no longer afford to buy goods and services at the rate required to sustain the economy. There might still be a middle class, but a relatively poor middle class compared to the one we have now.

    The recession/depression will provide a natural correction to the high cost of living here in the U.S. which is probably long overdue. Should I really be paying an "electrician" $200 to install a chandelier when it takes no more than an hour to complete the job. I would do it myself, but I''d have to buy a serious ladder to reach the second floor. Overall, I''ve seen reports which indicate that the actual average savings for an Indian IT worker are about 40%. I''m not sure that the recession will drive down the cost of everything in the U.S. by 40%, but that''s what it would take for an approximate parity.

    RIAK 03/19/04 10:49:22 AM EST

    I''ve seen a few comments on CMM...I''m hoping that those considering offshoring really question foreign companies about their CMM specifics. March CIO magazine, available online, has a decent article about the VERY common tactic of these offshore companies (and, to be fair, some US companies) of making CMM claims despite not truly being CMM level 5, or only a part of the company meeting CMM requirements, etc...see the article for details.

    Unrelated, it is easy for management/board/other-stakeholders who profit from these short term cost reductions (if that is really what they are) to rationalize when part of what they are doing is
    -taking advantage of less-developed nations and their workers
    -taking advantage of bad economic conditions in U.S.
    -sometimes running the IT equivalent of Nike Shoe manufacturing sweat shops overseas (with the possible exception of underage/child workers)
    all at the expense of the American workers who have provided them with what they have now.

    The third bullet is from personal experience...offshoring effort for a certain company in a certain non-US country has people working insane hours in unheated, packed rooms in winter conditions....so that this upstanding, respected company can save some $/hr. I bet this is not an isolated example.

    Birth Control 03/19/04 10:48:29 AM EST

    If you believe that the standard of living needs to be the same for everyone in the world, like the Indian Programmer, then perhaps counties that have billions of people and do not the resources to support them should curtail their growth rate. If you can not afford to have 5 children or even 1 child then do the responsible thing and don''t have them. The rest of the world does not owe you anything and when there are too many people and too few jobs that brings down everyones standard of living.

    Dan 03/19/04 10:08:58 AM EST

    Sam K is obviosly someone in league with european off-shoring cares only of his self-interests. What really concerns me is the kind of jobs that will replace the lost IT jobs. Service jobs? Retail jobs? They pay little. Therefore, many middle class americans will be pushed into the lower middle class or lower, and the gap between rich and poor in this country will widen. The only way this will work is if the cost of living in this country somehow drops. And we all know that will never happen! Also, does anyone else smell security risk all over this? My goodness, how much control do american companies really think they have of their data in foreign countries?? They are blinded by the savings. Penny wise and pound foolish.