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Reader Feedback and Insights If feedback from readers is any guide, it is safe to say that the practice of offshoring IT jobs is not a popular one, and is one that many people are concerned with. My thanks to all of you who took the time to write to me about the issue. You, collectively, fleshed out the issue a lot more than I did in my story. We have reprinted a lot of the e-mails I received and will print more comments as they come in. Because of the sensitive nature of the topic, we have omitted last names and company names. 
--Timothy Prickett Morgan I agree with you one hundred percent. I have forwarded your article to as many people as I can, so maybe we all will wake up and smell the coffee. Just imagine building a car in our country that is, for example, about $20,000 and we can not sell it here because people, little by little, are losing jobs. We can't sell it overseas because of low wages; they can't afford to buy it. Companies are making profits because they are producing goods in low-wage countries and selling in Western markets. If Western markets dry up (which they will, at the current rate of hi-tech-job losses), there is no profit to make. It bothered me to read in the news that the last shop that was making shirts in the United States was closed down a while back. Keep up the good work. --MB I agree with your article. I'm not in favor of offshoring, as I am seeing it happen at my company. I work for a very large corporation and have seen lots of jobs (not people) go to Northern Ireland. The newest rumor is that we are finding another country in addition to Northern Ireland. I'm in an IT department where I think my job is safe, but I don't have a crystal ball. --Jerry As a U.K. IT person imported to the USA--by marriage to a U.S. citizen, not by H-1B--I read your article on offshoring with interest. I'm particularly interested in the H-1B angle. I'd always thought that in practice H-1B doesn't deprive U.S. citizens of jobs. In my experience, trying H-1B a few years ago, most companies won't touch it unless they absolutely have to. If you (the employer) have the choice of recruiting a U.S. citizen right now or waiting 60 to 90 days and paying between $2,000 and $5,000 in legal and INS fees for an H-1B application, which may be declined anyway, why would you go the H-1B route, unless you had no choice? I'm not sure that "foreigners will accept a lower salary" explains it. The cost, delay, and hassle of processing an H-1B, including the risk that it will be declined and the fact that most H-1Bs expire after two or three years, seems to cancel out any lower-salary benefit. I've just been reading congressional testimony, which gives all kinds of viewpoints [see testimony from the House of Representatives and the Senate]. Thanks for a very good e-mail newsletter. --Daniel What a great article on offshoring. It's very articulate and states what we've all suspected--plus much, much more. There are two points I'd like to add to your article. First, I take issue with the one to one "people ratio" comparison that your article implies. In my 17 years of IT and midrange experience, whenever I've worked side by side with an H1B visa or illegal immigrant (yes, there have been those, too), in 99 percent of the cases the person tended to accomplish only half of what a good English-speaking, American-born person could. Why? Many times it was due to the language barrier. They just didn't get what needed to be done. They certainly didn't pick up on nuances of the user demands, and also did not have the business savvy necessary to design and analyze. And their technical skills, at least on the AS/400, were substandard. Many times they only had one or two years of technical training but were being billed at the same rate that a much more experienced person would be billed for. And that's another thing: They aren't always cheaper! Not when they are working here in the states on a contract basis! Recently I worked for a very large financial company that used an offshore firm that charged $25 an hour. But the work was very substandard--misunderstandings, miscoding--and the only testing took place here in Dallas and had to be sent back many times due to problems. And they had to have a contractor here as a liaison, who was paid $80 an hour, so what did that $25 buy them? As a CEO, yes, the bottom-line head count and dollars-per-hour charges may be lower, but I would challenge companies to take an honest look at the entire cost of a project done offshore and with homegrown people. On the other hand, as more and more "offshore" or "immigrants" become more business savvy, their English gets better, and they get more experience, I will admit we'll see that margin get less and less. I've been friends with an H1B visa guy over here for about five years and his "Americanization" is pretty amazing. I'd rate him right up there with the best now. Still, I say he's the exception. Second, I know of three incidents in which offshore companies were supplying money under the table to chief information officers or CEOs to keep their contract. Could I prove it? No. Did I have a good idea this was accurate? Yes. Indian companies do not have the same ethical rules that most of our companies play by. They see "secret finders' fees" as a part of doing business, and in their economy, who can blame them? Their government certainly isn't going to slap their hand for bringing in American dollars. This has definitely had an impact in skewing the judgment of the people making the offshore decisions. My guess is that this is bigger than we'd like to think. It's too temping and too untraceable for these untaxable dollars to make their way into decision-makers' pockets. Right before the Sept. 11 incident, I was between contracts for six weeks (wondering if I'd get another one), and I wrote to my congressman about my views on the H1B visa and illegal IT worker situation. I got what had to be a form letter, stating that this bill passed because of the IT worker shortage in, was it 1998? I wrote back and complained that things had changed since 1998 and the issue needed to be revisited. Little did I know how much more they would change after Sept 11. But I never wrote back. Your point about the long-term effects of people in this country who won't have dollars to spent in this economy is a great one, and one that I haven't fully articulated. When I now write to my congressman (because your article has inspired me to do so), I will take the liberty of pointing out the long-term effects of just that. (For what good it will do.) Again, great article, and keep up the good work. --Peggy I've been in the IT industry since 1984. I've been a programmer, a network administrator, and an IT manager, and am currently working on a help desk. It seems to me that anything that can be done cheaper (by corporations) will be done cheaper, no matter what the social consequences. This is because there will always be a competitor taking advantage of the cost savings. This will force the entire sector to take advantage of the cost savings, or risk not being able to compete. I base this on what has happened in the past to other industries. "Buy American" campaigns, legislation, and unions have generally failed to stop the offshoring in other industries (mining, timber, manufacturing, agriculture). I don't think they'll work in the IT industry. What should we do about this problem? I'm not sure we should do anything to stop jobs moving offshore. (Maybe we should, I truly am not sure.) I think IT people should move to areas where offshore movement isn't as likely. Here are a few. Hardware support. This is difficult to do from overseas because of the "hands on" factor. Profit centers. In my current job, customers pay for my support. My company is unlikely to move my job because it might cost revenue. Cost centers are more likely to be viewed as places to cut budgets, which makes offshore options look better. Areas where English is necessary. My current job requires fluent English. Although English is becoming the world standard, it is still difficult to find people who have a great command of the language outside of Western Europe and North America. Another not-so-mature industry. The IT industry is becoming mature. When an industry becomes mature, more people get into it and wages generally go down. Usually in emerging industries the supply is low and the demand is high. This drives up wages. Unfortunately, I haven't been able to identify an emerging industry that I think will really take off. The healthcare field, although not a new industry, may hold promise. All of these areas are subject to offshoring or elimination in the future, but they should be safe for the next two to 10 years. I think that unless America can keep coming up with new industries and technologies that create high-paying jobs to replace the ones going overseas, U.S. wages will continue to decrease. When this happens, Americans won't be able to buy the expensive goods they're used to. This will lead to deflation and further pressure to build goods cheaper. Where will it stop? Who can say? The best that can happen is that we can maintain our standard of living (or increase it). The worst is that we have a class struggle and a revolution. What will happen, I'm sure, is somewhere in between these extremes. About the H1-B visa issue (at least within IT), it'll take care of itself. The jobs will be moving to where the workers are. Companies won't need to bring workers here. This seems like a pessimistic view, but it's based on the precedent set by other industries. Thanks. --Herbert I agree with a lot of the points in your article about offshoring. However, you failed to raise one very important topic. As more and more IT jobs are taken offshore, and American IT workers have to take jobs in different careers or fields that do not pay very well, the American tax basis will also decrease. The federal income tax and Social Security taxes are collected based on the amount of money you make in your job. If American companies are going to take millions of IT jobs offshore, there will be a very serious erosion in the amount of taxes that are collected. I guess that doesn't matter to most of the older people in this country who are already collecting Social Security or are about to. But to many Americans who have more than 20 years before they can collect, the money will all be exhausted. If you ask me, this whole IT offshoring thing is probably going to cause a huge problem for the American economy. There is also a huge security risk when moving financial data offshore and into the hands of countries that are very unstable and are often just minutes away from being in a war. I really find it amusing about the affection for cheap labor offshore. Take, for example, the Dodge pickup. It is now manufactured in Mexico with cheap labor. However, if you price the Dodge pickup, as compared with the Chevy or Ford pickup, you will find that it costs about the same. So I guess I am wondering where the benefit to the American economy is. We lose American manufacturing jobs to Mexico in hopes of building the same truck for a lower price. However, when you go to buy the same truck that is now built in Mexico, the cost is the same. Where is the benefit to the American citizen in moving this labor offshore? We lose American jobs and still end up paying the same price, or more, for something made outside of this country. I think all the corporations in the United States are getting rich by exploiting foreign labor at the price of American jobs and the American economy. The people at the top are getting richer, and the people in the middle and bottom are getting squeezed into sacrificing the lifestyle they have enjoyed. Thanks! --VM I am writing about your excellent article on offshoring. I cannot agree with you more. Offshoring, in my opinion, is bolstering the economies of the countries we are offshoring to, at the expense of the USA's economy and workforce. I do not have a problem with selling goods that are made in this country to overseas markets. I do, however, have a large issue with laying off IT workers (or any other type of worker, for that matter; this phenomenon is not just IT-related) and sending the jobs out of the country. Doing this, especially after Sept. 11, weakens our economy and will make the USA more dependent on foreign countries. This is not what we should be doing. Having the USA dependent on so many foreign countries is a recipe for disaster. These countries could hold us hostage, in economic terms, not just in people terms. We should be finding out why there is a shortage of IT workers in the states and rectify that problem internally, and not throw a Band-Aid over the issue by offshoring the problem. I am all for growing other countries' economies, but certainly not at the expense of the U.S. economy. You make an excellent point in quoting Henry Ford. If I don't have high wages, I certainly cannot spend my money on goods and services the same way I would if I did have high wages. It's like a domino effect. Eventually, the U.S. economy will be a wreck, or certainly nothing compared to what it is now, if offshoring continues, and, again, I am not restricting it to IT workers. Two things have to happen. The government needs to make it less attractive for companies to offshore in the first place. And we need to see why offshoring is so good. Is it because there are more people available? Is it because the skill level is higher outside the U.S.? I have a feeling the problem mostly has to do with the education system in America. We need to get back to the basics and teach this stuff. It is certainly teachable, as can be demonstrated by the plethora of available talent overseas. Thank you. --Doug We value your feedback and insights on the OS/400 market. Feel free to send a letter to the editor. We will consider your letter a candidate for the reader feedback column for this newsletter, but we will contact you before we make your e-mail public.
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