Is the outsourcing story overhyped?

The outsourcing of technical jobs out of the USA is Public Enemy #1, according to the press and many of my fellow engineers.

But in the 1980s, they said that all of our jobs would move to Japan. Japan was on a bid to take over the world. But I haven't heard that story since 1990. Of course, that was the year Japan fell into a recession. It still hasn't recovered to this day.

In the early 1990s, people heard the sucking sound of NAFTA taking jobs out of the USA. NAFTA passed, but the economy recovered, and the sucking sound was conveniently ignored.

During the dot-com boom, we kept hearing that the growth of dot-coms and the genius of Alan Greenspan in the Federal Reserve would prevent recessions.

Could the outsourcing story that everyone's talking about be just as overhyped as these other stories? Doesn't it seem awfully convenient that companies would wait until a recession to outsource? Are today's calls for protectionism any better than those of previous recessions? After all, the Smoot-Hawley Tariff Act of 1930 actually exacerbated the Great Depression by sparking a trade war that shut down international commerce. Is protectionism really a good thing? If protectionists had always had their way in the automotive market, we'd still be driving Chevrolet Vegas with warping engines, exploding Ford Pintos, and 20-foot-long land yachts with fuel uneconomy measured in gallons per mile.

For that matter, does the world owe anyone a living just because they live in a certain nation? I think not. I'll place blame in another post.

Jason Hsu, AG4DG usenet AAAATTTT jasonhsu.com

Reply to
Jason Hsu
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Earthlink just announced (1/6/04) the are outsourcing 1300 jobs (40% of its workforce) to India, the Philippines and Jamaica. This is in addition to

1300 jobs that were oursourced last year. Currently 70% of it's work force is overseas.
Reply to
Grinder

You're joking of course. First of all, NAFTA has resulted in the loss of tens of thousand US jobs, and is now becoming an issue in the democratic primary fight. Second, the US economy began a decline around 1991 and has continously spiraled down ever since. Today, the US production economy is totally decimated, and unemployment stands at record highs.

You needn't pay much heed to the pronouncements from the goverment as echoed by the media, unless you consider coporate profits of the giant comporations to be a true reflection of the US economy. (Then too, I give you credit for being smarter than that.)

You have to look at factors like:

- Statistics on long term unemployment (measured in jobs and lost income) - Small business failures - Failures of long established businesses - Personal debt statistics - Individual personal income to Housing cost ratio - Individual personal income to Cost-of-living ratio - Individual personal imcome to children's college cost ratio

Very few US citizens benefit from the fact that XYZ's corporate profit soared when XYZ eliminated all new product development and farmed out production to Hindustan or Outer Mongolia where they can use child labor at 18-cents/day. Actually, most US citizens don't really care about such practices, YET, because they haven't yet made the connection.

However, when you personally lose your job, watch your retirement investments shrink down to nothing, have to dip into your savings to pay your kid's college tuition, and begin to get registered mail from your mortgage holder -- That's the day when you suddenly will realize that the US economy remains in piss-poor condition, and appears to be declining still.

We all know what the problem is: Corporate ownership cashed out on their development investments by selling their trade secrets to the rest of the world, farmed out their jobs to countries having cheap labor as a result of living in the third world and accepting third world pay scale, and WORST having our government sell us out by allowing both the above practices plus permitting free trade in face of a playing field that is anything but level!

So, what does the US do now? We Americans now find us in a position equivalent to that of a stage magician who not only gave away the secrets of his best tricks, but also encouraged others to produce his apparatus and perform his act. The question is then, where does this leave him other than being out of work, and what should he do now to earn a living?

He was cetainly a good and generous guy to do all this, however, when others master his illusion and his performance style through duplication and imitation, he will eventually become scorned. Maybe even resented...or hated...because that now we outsiders can duplicate everything he accomplished, we find that he wasn't really that great at all. "We could have done it all by ourselves"...but didn't!

I suspect that anyone not terminally braid dead can see the analogy.

Enough words already...Where should the US go from here? Obviously a continued denial of the problem is not working...and the pit of recession is now approaching becoming a depression. What should President Bush and the Congress do now to turn the country around?

I personally have no clue, now that the horse is out of the barn. Then too, this is why our national leaders get the big bucks. Perhaps it's time for them to start earning their keep.

Harry C.

Reply to
Harry Conover

Exporting tech jobs to India? Alan Reynolds

January 4, 2004

Those afflicted with an irrational phobia about international trade used to confine their raving to manufactured goods, not services. But the United States is now said to be exporting high-paying service jobs to India, particularly in information technology.

Worrying about U.S. companies importing services from India is a classic example of the journalistic inclination to ignore the forest and focus on a few twigs. The United States is by far the world's biggest exporter of services, just as the United States is by far the leading exporter of goods.

The United States accounted for 18.1 percent of worldwide service exports in

2001, according to the WTO, up from 17 percent in 1990. India accounts for only 1.4 percent of world service exports. India is in 21st place among world exporters of services and in 30th place for goods. India is running a trade deficit of about $8 billion, and that country's imports rose 20 percent in 2003. China ranks fifth among world exporters of goods (although China accounts for 11 percent of U.S. imported goods), and it has a small and dwindling trade surplus. China's imports rose 40 percent in 2003. Hong Kong is a significant exporter of services, but it has a trade deficit with the United States.

The United States had a $64.8 billion trade BEG ITAL) surplus in services in

2002, despite economic stagnation in Europe and Japan. Services accounted for 30 percent of all U.S. exports and 43 percent ($3.1 billion) of U.S. exports to India.

Worrying about job changes among computer professionals is yet another example of the journalistic inclination to totally ignore any facts about the big picture and instead generalize from small and local anecdotes.

The Bureau of Labor Statistics categorizes these allegedly vanishing jobs among "computer and mathematical science occupations" -- i.e., computer programmers, software engineers, systems analysts, support specialists, network administrators, etc. These jobs exploded with the tech boom, rising

11.9 percent in 2000 alone, but such panicky hoarding of computer geeks was no more sustainable than 5,000 on NASDAQ. Even in 2002, however, employment in these computer-related occupations was nonetheless higher than in 1999, and so were salaries.

In 1999, there were 2,620,080 jobs in these computer-related professions at an average wage of $26.41. In 2002, there were 2,772,620 such jobs at $29.63 an hour ($61,630 a year). Figures on that specific job group are not available for 2003, but professional business service payrolls were up 2.3 percent by November, when compared with the year 2000, and jobs in information industries were up 4.9 percent. Jobs in the subgroup of "computer systems design and related services" are down slightly from last year but have risen steadily for the past three months.

The notion that service jobs are being lost to India is paradoxical because similar complaints about China or Japan invariably involved disparaging U.S. service jobs as "McJobs" -- inferior to working with a sewing machine or wrench. In the case of India, however, even the most menial computer service chores -- such as tech support and handling health insurance claims -- are now being glorified as "high-wage" jobs.

Past stories about "exporting jobs" also assumed those jobs had moved to countries with trade surpluses, such as Japan and Germany. But India has a sizable trade deficit, and it even had a deficit in services until 2002. This is not to suggest, however, that previous stories about trade surpluses being a sign of economic strength made sense. On the contrary, from 1990 to

2001, employment grew by 1.2 percent a year in the United States, but by only 0.3 percent in Japan and 0.1 percent in Germany.

Trade phobia has lost any sense of direction. The United States is now said to lose jobs to countries with trade deficits as well as to countries with trade surpluses, and to lose jobs in services as well as manufacturing. Some even suggest the United States will lose most service jobs to India and most manufacturing jobs to China. But without jobs, how could Americans keep buying all those imports?

A New York Times report claimed India is attracting a lot of direct investment from multinational corporations. Yet Morgan Stanley reports: "Private corporate investment (in India) is estimated to have declined to

4.7 percent of GDP in 2003 from 9.6 percent in 1996. ... In April to September 2003, FDI investments have declined by 63 percent compared to the same period last year."

The United States has always imported and exported services as well as goods. So what? Even if we ignore this country's huge and growing dominance of world service exports, it would still be delusional to speak of importing services as equivalent to exporting jobs. The notion that "exports create jobs" (every commerce secretary's favorite slogan) is neither more nor less true than the idea that imports create jobs. Work is involved in all creation and marketing of goods, services and financial assets. Work is also involved with the extra investment resulting from a net inflow of foreign capital, otherwise known as a "current account deficit." Growth of employment is related to growth of the economy, not to imports or exports or the gap between them.

If the United States was really losing more jobs than it was gaining, then employment would be falling. But employment is rising. There were 138.6 million civilians with jobs in November, up from 136.5 million a year earlier. The number of U.S. jobs doubled in fewer than 40 years. If the rapidly expanding number of jobs were inferior to the ones that preceded them, then incomes would be falling. But incomes, too, are rising. Real hourly compensation kept rising even in the recent recession and is now up more than 26 percent since 1980. Real disposable income (which excludes stock market gains) rose at a brisk 3.9 percent annual rate cent from April to November.

The media blitz about imported goods or services resulting in the best jobs being relocated to some variable list of countries -- first Japan and Germany, now India and China -- has never been anything more than unadulterated hogwash.

©2003 Creators Syndicate
Reply to
tbx135

Tell that to all the people out of work at aol because aol uses tecs in india to answere customer queries. Tell that to all the aol users who call for help with their aol and get indians answereing the phone who can not be understood with their version of the English language.

Reply to
bushbadee

Also, imagine now all of the information that you have given to various and sundry services on the internet being used in those foreign countries. Pleasant dreams...

Reply to
indago

AFAICS, the jobs outsourced are those that are not popular with the locals, like programming, data entry etc.

I am yet to see managerial posts to go that way.

Most companies I have seen have only locals managing administration, Marketing and the like and find Indians, Chinese and others only in the programing sections.

So why such a hue and cry about those jobs that are not favored by the locals?

Reply to
Ardent

Bush, AOL isn't a "high tech" employer. The "help desk" isn't. Let them go to India! AOL is dead, and it's about time people realized this. Jees, what a *scam* it was for *AOL*, of all companies, to *BUY* Time-Warner! ...the scam of all times!

Tell the AOL users to get a real ISP! I've been telling them that for years! AOL has *always* sucked. Indeed the Indians at the "helpless desk" may be an improvement.

It's time AOL died an ugly death. They have never valued the customer, past his credit card. All bad things must come to an end.

Reply to
Keith R. Williams

"Keith the fact remains that a lot of Americans are being ;put out of work. They are now going to Canadians, at least they are more understandable.

Reply to
bushbadee

I have to agree with Keith here, AOL has been a crappy ISP and the help desk is well known for it's "Customer NO Service". I don't think it matters if they move their operations to the donkey show in Jaurez, they still are a joke. Remember that Superbowl commercial with the busy signal? Back then they way oversold their product. Then purchased Compuserve, who ran the commercial. For many years they built up their base with "newbies without a clue". It was an easy way to get online, I suppose. And I guess that's why they stay there. It's time for people to wake up and toss em' out. They didn't become known as AOHell for nothing! ..... Ross

Reply to
Ross Mac

Have you been to India? You will be surprised to hear American at campuses - much more in the South where most of the Sw companies are located, like in Bangalore or Madras.

Reply to
Ardent

Admittedly, I found that some of the Indian customer service folks spoke better english than the IT folks did in Silicon Valley.....Who would have thought?..Ross

Reply to
Ross Mac

tHAT MAY well be. But they do not speak the ENglish we speak here.

60 minutes did a segment on it today and showed a bunch of teachers teaching English One was trying to ape different american accents and he still came out as an Indian with the inflections in his voice. I find it difficult to understand the best of them and I also object when they start the conversation with a lie and tell me their name is bill or bob.

Reply to
bushbadee

I saw that too Bushdabee....They should just use their real names...Bill & Bob is a hard sell with an Indian accent... Have a great one...Ross

Reply to
Ross Mac

Boston, Denver, Chicago and Houston

Would you say the English spoken in these places are same.

If Dialects are taken as languages we will have dozens of languages here. ;-)

Reply to
Ardent

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