White Collar Jobs: IBM plans to move them to India

[Timber Loftis]

Okay, losing the blue collar work is expected. But, when the white collar work goes too, well, what's left?? Does globalization mean that ALL US jobs will leave the US? What then? Just leave America as a poverty-stricken wasteland? Promises of 1 fast food sh**ty job per family? This really worries me.
__________________________________________________ _______________
July 22, 2003
I.B.M. Explores Shift of White-Collar Jobs Overseas
By STEVEN GREENHOUSE

With American corporations under increasing pressure to cut costs and build global supply networks, two senior I.B.M. officials told their corporate colleagues around the world in a recorded conference call that I.B.M. needed to accelerate its efforts to move white-collar, often high-paying, jobs overseas even though that might create a backlash among politicians and its own employees.

During the call, I.B.M's top employee relations executives said that three million service jobs were expected to shift to foreign workers by 2015 and that I.B.M. should move some of its jobs now done in the United States, including software design jobs, to India and other countries.

"Our competitors are doing it and we have to do it," Tom Lynch, I.B.M.'s director for global employee relations, said in the call. A recording was provided to The New York Times recently by the Washington Alliance of Technology Workers, a Seattle-based group seeking to unionize high-technology workers. The group said it had received the recording — which was made by I.B.M. and later placed in digital form on an internal company Web site — from an I.B.M. employee upset about the plans.

I.B.M.'s internal discussion about moving jobs overseas provides a revealing look at how companies are grappling with a growing trend that many economists call off-shoring. In decades past, millions of American manufacturing jobs moved overseas, but in recent years the movement has also shifted to the service sector, with everything from low-end call center jobs to high-paying computer chip design jobs migrating to China, India, the Philippines, Russia and other countries.

Executives at I.B.M. and many other companies argue that creating more jobs in lower cost locations overseas keeps their industries competitive, holds costs down for American consumers, helps to develop poorer nations while supporting overall employment in the United States by improving productivity and the nation's global reach.

"It's not about one shore or another shore," an I.B.M. spokeswoman, Kendra R. Collins, said. "It's about investing around the world, including the United States, to build capability and deliver value as defined by our customers."

But in recent weeks many politicians in Washington, including some in the Bush administration, have begun voicing concerns about the issue during a period when the economy is still weak and the information-technology, or I.T., sector remains mired in a long slump.

At a Congressional hearing on June 18, Bruce P. Mehlman, the Commerce Department's assistant secretary for technology policy, said, "Many observers are pessimistic about the impact of offshore I.T. service work at a time when American I.T. workers are having more difficulty finding employment, creating personal hardships and increasing demands on our safety nets."

Forrester Research, a high-technology consulting group, estimates that the number of service sector jobs newly located overseas, many of them tied to the information technology industry, will climb to 3.3 million in 2015 from about 400,000 this year. This shift of 3 million jobs represents about 2 percent of all American jobs.

"It's a very important, fundamental transition in the I.T. service industry that's taking place today," said Debashish Sinha, principal analyst for information technology services and sourcing at Gartner Inc., a consulting firm. "It is a megatrend in the I.T. services industry."

Forrester also estimated that 450,000 computer industry jobs could be transferred abroad in the next 12 years, representing 8 percent of the nation's computer jobs.

For example, Oracle, a big maker of specialized business software, plans to increase its jobs in India to 6,000 from 3,200, while Microsoft plans to double the size of its software development operation in India to 500 by late this year. Accenture, a leading consulting firm, has 4,400 workers in India, China, Russia and the Philippines.

Critics worry that such moves will end up doing more harm to the American economy than good.

"Once those jobs leave the country, they will never come back," said Phil Friedman, chief executive of Computer Generated Solutions, a 1,200-employee computer software company. "If we continue losing these jobs, our schools will stop producing the computer engineers and programmers we need for the future."

In the hourlong I.B.M. conference call, which took place in March, the company's executives were particularly worried that the trend could spur unionization efforts.

"Governments are going to find that they're fairly limited as to what they can do, so unionizing becomes an attractive option," Mr. Lynch said on the recording. "You can see some of the fairly appealing arguments they're making as to why employees need to do some things like organizing to help fight this."

The I.B.M. executives also warned that when workers from China come to the United States to learn to do technology jobs now being done here, some American employees might grow enraged about being forced to train the foreign workers who might ultimately take away their jobs.

"One of our challenges that we deal with every day is trying to balance what the business needs to do versus impact on people," Mr. Lynch said. "This is one of these areas where this challenge hits us squarely between the eyes."

Mr. Lynch warned that with the American economy in an "anemic" state, the difficulties and backlash from relocating jobs could be greater than in the past.

"The economy is certainly less robust than it was a decade ago," Mr. Lynch said, "and to move jobs in that environment is going to create more challenges for the reabsorption of the people who are displaced."

The I.B.M. executives said openly that they expected government officials to be angry about this trend.

"It's hard for me to imagine any country just sitting back and letting jobs go offshore without raising some level of concern and investigation," Mr. Lynch said.

Those concerns were pointedly raised on June 18, when the House Small Business Committee held a hearing on "The Globalization of White-Collar Jobs: Can America Lose These Jobs and Still Prosper?"

"Increased global trade was supposed to lead to better jobs and higher standards of living," said Donald A. Manzullo, an Illinois Republican who is the committee chairman. "The assumption was that while lower-skilled jobs would be done elsewhere, it would allow Americans to focus on higher-skilled, higher-paying opportunities. But what do you tell the Ph.D., or professional engineer, or architect, or accountant, or computer scientist to do next? Where do you tell them to go?"

The technology workers' alliance is highlighting I.B.M.'s outsourcing plans to help rally I.B.M. workers to the union banner.

"It's a bad thing because high-tech companies like I.B.M., Microsoft, Oracle and Sun, are making the decision to create jobs overseas strictly based on labor costs and cutting positions," said Marcus Courtney, president of the group, an affiliate of the Communications Workers of America. "It can create huge downward wage pressures on the American work force."

Mr. Mehlman, the Commerce Department official, said companies were moving more service jobs overseas because trade barriers were falling, because India, Russia and many other countries have technology expertise, and because high-speed digital connections and other new technologies made it far easier to communicate from afar.

Another important reason for moving jobs abroad is lower wages.

"You can get crackerjack Java programmers in India right out of college for $5,000 a year versus $60,000 here," said Stephanie Moore, vice president for outsourcing at Forrester Research. "The technology is such, why be in New York City when you can be 9,000 miles away with far less expense?"

Company executives say this strategy is a vital way to build a global company and to serve customers around the world.

General Electric has thousands of workers in India in call center, research and development efforts and in information technology. Peter Stack, a G.E. spokesman, said, "The outsourcing presence in India definitely gives us a competitive advantage in the businesses that use it. Those businesses are some of our growth businesses, and I would say that they're businesses where our overall employment is increasing and our jobs in the United States."

David Samson, an Oracle spokesman said the expansion of operations in India was "additive" and was not resulting in any jobs losses in the United States.

"Our aim here is not cost-driven," he said. "It's to build a 24/7 follow-the-sun model for development and support. When a software engineer goes to bed at night in the U.S., his or her colleague in India picks up development when they get into work. They're able to continually develop products."

[The Hunter of Jahanna]

Americas fat lazy overpaid workers have been their own undoing. Why pay a worker $15 to $20 an hour when you can move your whole operation over seas and get better workers at half the price?? I work in the restaurant industry and it has been my experience that foreighn workers work twice as hard as american workers. Where I live it is the spanish people you want in your kitchen. They show up on time, every day and just work. Most of them want to work 6 days a week. My last job had 20 people working in the kitchen. Only 5 of them werent spanish. Out of us americans only 4 of us worked there for any length of time. The 5th spot kept getting filled with a culinary school grad who just couldnt hack it. In the 2 years I was there we went through 6 of them. My new job is as a manager at a travel plaza on the NYS Thruway. We have 70 employees working for us. Out of that 70 we have about 10 spanish people. Thoes 10 work harder and make more an hour than the other 60 americans we have working there. All I hear all day from the americans is "My back hurts, I want my 5 min break, When can I go on my half, the garbage is too much of a mess for me to clean up,Its too busy and I cant keep up, some one help me do XYZ". Its just one complaint after another. Conversely the spanish people never complain and always get their work done. Our night crew is made up of 4 to 6 people , most of them spanish and they get the whole travel plaza cleaned,restocked and ready for the next day. You never catch any of them sitting in the break room or hideing out in the stock room. If my american workers worked like my spanish workers I wouldnt need to have 70 employees.

[antryg]

I live in an area that is very hard hit by the loss of jobs in the IT sector. I really love the quote that an Indian java programmer will work for $5000 a year compared to $60000 for an American. I know that even when things were good that the job offers for java programmers here was $25000 and that now java programmers are working at jobs that pay $15000 in retail/food service or are unemployed. I bet most of them would rather make that same money programming rather than selling. Sure, it is still more than what they are saying an Indian will work for, but the flat out lies about what Americans expect is disturbing.

If we want to outsource jobs then let's make it mandatory that 20% of all jobs going out of the country should come from the board of directors and upper management. Let's see how dedicated they will be to this type of program when they will be voting that 20% of them will lose their jobs.

[Moiraine]

Timber, I am wondering why you didn't see it coming. Are 'white collar' people that different from 'blue collar' people from the viewpoint of a CEO ?

Look, I don't have the figures for the U.S., but in France, the part of salaries in the PIB has been steadily decreasing since 1980, from 69 % in 1980 to 59 % in 2000. This, IMO, means two things. First, it means that the country's profits go less and less into the pockets of the working people. And this also means that taking care of what its working people need or want is less and less in important factor in a company's management. Wasn't it in the 80s that the horrible term 'human resources' was invented ? My computer is a resource and so am I. The main thing about a resource is that it is disposable ...

We white collar people were all so sad that others were losing their jobs, but those people should be pragmatic and understand that it is foolish to try to oppose the rules of a sound economy, shouldn't they ? And of course, that couldn't happen to us highly skilled people, since we are partners really, not resources, yes ? Of course. Remember Martin Niemöller's famous saying ("In Germany they came first for the Communists and I didn't speak up because I wasn't a Communist. Then they came for the Jews and I didn't speak up because I wasn't a Jew. Then they came for the trade unionists and I didn't speak up because I wasn't a trade unionist. Then they came for the Catholics and I didn't speak up because I was a Protestant. Then they came for me--and by that time no one was left to speak up.") ...

The sentence "Our competitors are doing it and we have to do it" is especially tasty. Tell me, who started doing it first, pray ?

I do believe that since economy is getting globalized, so should workers of all countries discuss together about what they, we, want the world to be.

[Sir Kenyth]

Originally posted by antryg: If we want to outsource jobs then let's make it mandatory that 20% of all jobs going out of the country should come from the board of directors and upper management. Let's see how dedicated they will be to this type of program when they will be voting that 20% of them will lose their jobs.

[img]graemlins/biglaugh.gif[/img] That's a hoot! I can see them popping heart pills and fanning themselves already!

I've said it before, and I'll say it again. What we need to do is get unions organized again! You need the power of organized labor to fight stuff like this! Off-shoring is the fat cats new method of getting around fair labor laws. I think it's all a crock of @#$%! You can't even boycott effectively anymore! Everything is made at least partially overseas! That's if you're lucky enough to even find something telling you where it's made! These economic infidelities are going to drive the American worker into the ground! It's starting to already. How in the hell can you compete with foreign workers and their minute wages? Our cost of living here is too high! I am completely disgusted and sickened by this whole turn of events! [img]graemlins/1puke.gif[/img]

[Timber Loftis]

Actually, the solution lies with the WTO. At the expense of labor, as we see here, the WTO has put "free trade" on a pedestal as a golden cow to worship.

This is a problem. No "government", international or otherwise, can be based on ONLY laissez-faire economics. We tried that in the USA -- and found ourselves hiring 8 year old children to clamber around textile machines cleaning them and getting their arms ripped off.

The solution? Simple. The WTO mantra is "our mandate is free trade and free trade only." Either the WTO needs to be able to consider other things than free trade, or other international "agencies" need to be created, with the same enforcement power as the WTO, to regulate these other concerns.

Labor and the environment are the 2 big holes in the WTO most often cited. Well, why not health? I'll tell you why: the side agreement on Sanitary and Phyto-sanitary Measures (SPS Agreement) ALLOWS for tariffs and trade restrictions where scientifically-sound HEALTH concerns are at issue. The SPS agreement was created by "ballooning" and better-defining one paragraph in Article XX of the WTO/GATT agreement (entitled: EXCEPTIONS).

So, why not have side agreements on labor and the environment?? Thus, a nation could fairly tarriff imports from another nation to make up for the difference in pay -- it IS after all an unfair advantage in production costs, just as it is an unfair cost advantage to build you belching facility in some country that does not care if you spill methyl-ethyl-death everywhere. Allowing these to be reasonable factors in pricing and, consequently, the placing of industrial centers, only encourages a "race to the bottom" that we first world nations have prohibited at home.

Look, USA workers may be lazy and fat, but bitching about that DOES NOT SOLVE THE PROBLEM. Even if USA workers were quite industrious, like me (points to feet on desk ), there would still be one very simple issue causing the problem to linger: life COSTS MORE here, thus wages must be higher here. So, the lazy USA worker is a side issue, related but not the same. Oh, and we're fat because of an increased standard of living and a decreased food cost (relative to other goods) -- it's inevitable. Look at the wealthy women as opposed to the poor women in Rennaissance paintings and statues. I hate fat, and I work to avoid it, but there is a reasonable explanation for why the USA population is the way it is.

[Rokenn]

My company is 'experimenting' with this right now, they just sent a software dev project over to India. The CEO's that are doing this kind of tomfoolery need to sit and think a moment that if they keep sending all the work overseas there will be no one here that can afford to buy their overpriced goods due to lack of work.

[Rokenn]

Originally posted by Timber Loftis:Look, USA workers may be lazy and fat, but bitching about that DOES NOT SOLVE THE PROBLEM. Even if USA workers were quite industrious, like me (points to feet on desk ), there would still be one very simple issue causing the problem to linger: life COSTS MORE here, thus wages must be higher here. So, the lazy USA worker is a side issue, related but not the same. Oh, and we're fat because of an increased standard of living and a decreased food cost (relative to other goods) -- it's inevitable. Look at the wealthy women as opposed to the poor women in Rennaissance paintings and statues. I hate fat, and I work to avoid it, but there is a reasonable explanation for why the USA population is the way it is.

My understanding is that the myth of the lazy american worker is just that, a myth. Hasn't worker productivity increased nearly every year for the last decade?

Here are a couple of articles I googled up on it:
In U.S., Work Intensity Helps Boost Productivity
http://www.commondreams.org/views02/0511-07.htm

US worker productivity jumps
http://www.catiaworld.com/lang1/mem/...n/0000006e.htm

U.S. productivity jumps
http://money.cnn.com/2001/11/07/economy/economy/

[Sir Kenyth]

Good post Timber! I agree wholeheartedly! I still think proper workers unions for all careers would be a great tool in this age of "Free Trade" though.

[pritchke]

Another policy that I heard Bush wants to implement is for Americans to buy drugs from Canada (I don't think I dreamed it up). I believe this could be another policy mistake that will affect your economy. Sure it is a way to provide cheaper drugs to citizens but I don't think it is the best way to go about it for Americans. The reasons is drugs in Canada are cheep compared to buying them to the south because our government places a cap on what pharmaceutical companies can charge. They still make nice profits but not the killings that they make in America. I believe this policy will also reflect poorly on the American economy if it passes with more job cuts, and all profits will be flowing north. It will be a boon for Canada so I should not complain but if I were the leader of the country I would like to offer affordable prices without severely damaging that sector of the economy in my own country.

It was a recent article I read but I currently can not find it.

[ 07-24-2003, 03:34 PM: Message edited by: pritchke ]