The Four Hundred

If the volume of reader feedback on "Rant: Offshoring in the Offing" is any guide, it is safe to say that the practice of offshoring IT jobs is not a popular one and that many people are concerned with it. My thanks to all of you who took the time to write me on the issue. We reprinted a lot of the e-mails received last week, and here are some more. We will print more comments as they come in. Because the sensitive nature of the topic, last names and company names have been omitted.

It is with interest that I read your article about offshoring. I am replying to clear some misconceptions about your article, and to offer additional comments.

As a WashTech member, I think you do shed a negative light on the organization, and the goals of the organization. WashTech is not a traditional "union," but more of an information outlet. WashTech has not organized collective bargaining agreements, and I do not think it is the intention of WashTech to do so. Given the excess of technology workers worldwide, and the goals of corporate America to go to the cheapest source of technology labor, unions may have only temporary power in terms of bargaining, given the current move toward free trade agreements. I see WashTech as more of a political arm, bringing to light the problems of H1-Bs, L-1s, and offshore outsourcing (and I think that they are doing a pretty good job of it).

Your article misses an important point: If technology labor (primarily Western nationals) loses their jobs permanently, there will be a major market that is just going to disappear for the technology companies to sell their goods and services. Hewlett-Packard (Carly Fiorina) has reported low PC sales, and I attribute this not only to the weak economy but also to the biggest consumers in the market (technology professionals) balking at purchasing HP products. As an unemployed engineer who used to be a strong supporter of purchasing HP products and services, I now will no longer consider purchasing any HP product or service, due to the irresponsible actions of Carly Fiorina and the higher execs of HP on the H1-B, L-1, and overseas offshoring issue. The same with Microsoft and others that have diligently pushed this trend. So doing this (offshoring) may help in the short term, but, in the long term, companies like HP will only suffer.

I personally see H1-B, L-1, and offshoring of IT talent as part of a larger problem here in the United States, and that is offshoring of both technology and manufacturing capacity, which used to exist here in the United States. Offshoring of manufacturing has been going on for a long time, and consumers seem to approve of this (until these very same consumers lose their jobs as a result of offshoring). But the loss of engineering and IT jobs here in the U.S. due to offshoring may be the straw that broke the camel's back in terms of political action that is desperately needed.

Also, given that the loss of manufacturing jobs involved people who were generally unskilled (and little educated) workers who had little political clout, the loss of engineering and IT jobs here in the U.S. due to outsourcing overseas involves a highly educated worker who is willing to politically organize, even if this means the loss of a job. And given that IT workers and engineers did tend to be Republicans, this does spell real trouble for the Republican party in 2004. Given that George W. Bush's administration is having some significant problems in Iraq now (and that Iraq may turn into another Somalia), overseas outsourcing may be the issue that tips the scales against the Republicans in the presidential election. And if unemployment of technology workers continues into the 2004 election year, with the Republicans taking no control of the issue, I would not be surprised if the Democrats put up a candidate and platform that is protectionist in nature in 2004 to woo the votes of the unemployed and to reverse this H1-B, L-1, and offshoring trend.

Timothy Prickett Morgan responds: My problem with WashTech is exactly what Henry says. The organization is the only thing that even vaguely resembles a trade union for IT workers, and it doesn't have enough breadth or depth to cover the millions of workers in the field, and doesn't do collective bargaining. It's really an organization that covers the Seattle universe of Microsoft, to put it bluntly. This issue is far larger than Microsoft.

If we need a union of IT workers--and I am of the opinion that business should be smart enough to avoid such a situation by moving very carefully right now--then let's do it right, organize everybody, including the programmers in India, China, and elsewhere, and represent everybody in the craft and do real collective bargaining.

Raising issues is something that I do for a living, and I agree that WashTech does a fine job of that. But raising issues is not enough to cause action in most cases. Making noise is a necessary, but insufficient, function. People have to come together and act together to take on the multinational corporations, which will do only what is in their own best interests, and the politicians who are in their pockets. It's that simple. So, you wanna be union president, or do I have to be? Let's find someone who would be good at the job.

Soon the U.S. economy will reckon with your insight. Recent tax cuts have been shoved through Congress, with the hope of stimulating the economy, and historically this was a nice trick to jump-start demand, create jobs, and increase revenues in both the public and the private sectors, but short-sighted politics and economists created our looming economic disaster.

Tax cuts won't work this time, because the structure in place today is different. Tax cuts will mildly influence the U.S. economy, but reality dictates that putting money in consumers' pockets today will only aid the Chinese and Asian economies. That's where Americans spend their dollars!

Free trade is a recipe for equalizing the world economies and living standards for all participants. That doesn't mean the U.S. stays where it is and everyone else improves; it means the U.S. standard falls to a new "world standard."

The way to create jobs and stimulate the U.S. economy is to reduce importing of goods, which reduces the exportation of jobs.

For several years I have been wondering how long it will take before companies realize that sending work offshore is counterproductive. Offshore software development issues:

Thank you for your thoughtful article on offshoring and how it will affect not only the workers who are losing their jobs but also the entire American economy. However, there is a huge area that you did not discuss, and that is how the offshoring infrastructure was built and who paid for it.

American businesses have been investing hundreds of millions of dollars, if not over a billion, in the 1990s, setting up training centers in India. Meanwhile, they've spent zero dollars training U.S. employees. There was an article in the Seattle Post-Intelligencer last spring, talking about how the University of Washington has such a glut of applicants because students are choosing to continue their education, rather than look for jobs in such a poor work environment. The university's masters in computer science program had over 1,000 applicants but room for only 25 students! This is one of our top-tier schools, and it has room for 25 students! Meanwhile, the Indian Institute of Technology is graduating hundreds of thousands of students each year, and there are many other technical institutes of lesser stature graduating hundreds of thousands more students. And these schools are almost wholly subsidized by American businesses, and have been for over a decade.

One of the last things Bill Clinton did in office, in the summer of 2000, was travel to India to announce that the World Bank (read "U.S. taxpayers") would spend millions of dollars to put in high-speed broad-band Internet connections to India, so they could take our jobs. (He didn't say "take our jobs"; my memory is that it was something like, "be the back office of the global economy.")

But in addition to the millions paid by U.S. taxpayers, hundreds of millions were invested by WorldCom investors, who lost their retirement funds and life savings, putting in the infrastructure to India, and then went bankrupt, so the U.S. investors have nothing, but it went bankrupt after the wires and connections were laid. In other words, "Thanks for the bucks, suckers!" The connections are up and running just fine, thank you! It's just the U.S. investors who got shafted, and the Indian economy that got the jobs.

I get so irritated whenever I read these articles that make it sound like it's a thunderstorm, or a tide-like wave action, just a force of nature. It's not. It's a deliberate, long-term policy to plunder the U.S. economy, destroy the American middle class, and wipe out a hundred years of labor organizing, and the time-line is still in effect. We have not yet seen the end of this.

It looks like our industry will shortly be following the textile industry, except the big sucking sound will be from overseas instead of Mexico. There will come a time when there are not enough Americans with money to buy all these products and services produced elsewhere. Because of the greed so rampant today, I am sure the economy will crash before anything will be done about it. I am already trying to do my small part (and probably a not-nice part, in response to foreign workers). If I call for service or help, I will not speak with anyone I can't understand; I ask for the their supervisor and so on, until I find someone who at least speaks English I can understand. I don't understand how a country can survive if it produces nothing! Thanks for letting me let off steam!

I agree very much with what you said in the recent article on offshoring. You stated the situation and the issue very concisely. I was laid off from a "hands on" IT manager's position due to my old company's economic situation about two years ago, before September 11, 2001. However, I watched jobs I applied for being taken by people whose names I couldn't pronounce.

I also watched as manufacturing industries with open IT positions suddenly changed plans and sent their IT work overseas. I went for seven months aggressively pursuing IT positions (even ones without AS/400s) before landing a programmer's position in another city with a 10 percent lower starting salary and nearly exhausting my 401k. Workers' compensation is not enough to support a family of five. In South Carolina, workers' comp doesn't pay if you have a part-time job flipping hamburgers.

Last month I wrote my two senators, my congressman, and Senator Minority Leader Tom Daschle concerning the outsourcing of American IT work overseas. I stated they (our representative form of government) are losing tax dollars, tax payers, and voters. They are increasing the dependence on a welfare state. And at the same time, they are talking about the lousy job market and the lousy economy. I have had no response from any of my elected officials. It is almost as if they are blinded on one side about the issues and what is causing them. They speak job creations, but cast their congressional vote to jobs overseas. I cannot believe our government representatives are not doing their best to protect American jobs, taxpayers, and voters.

Thank you again for your voice. Maybe before the next national election, this issue (IT workers) along with outsourcing offshore in general will become a political topic at a national level. It is for this voter.

I have first-hand experience both as a "victim" of the offshore craze and as an employee of two separate India-owned companies whose bread-and-butter is playing the offshore card.

I moved to the U.K. (from the U.S.) and worked as head of technology for the EMEA [Europe, Middle East, and Africa] portion of an India-owned IT provider. I did it because I wanted to learn about my competition (from a "can I continue to get an IT job in the U.S." perspective) from the inside out. What I saw was both sobering and a bit depressing. Sobering because I finally realized the scale and energy of the India-based IT labor sector. It is huge and growing; it is one of the few areas of job growth in that country, and they are funneling prodigious amounts of people down the IT education path.

My experience was depressing because I witnessed large-scale deception in the form of "we have such-and-such kinds of people" or "we have this quality level rating" or "we have this kind of business experience," etc. Basically, the culture I witnessed was based on a say-anything-to-get-the-business approach that prospects and clients were often not in a position to personally verify. Add to that the individual employment environment, which allows the Indian firms to fire people with no notice, no unemployment benefits, no Social Security, and no other safety-net costs (thus allowing for an uneven playing field in terms of labor costs).

With such unpleasant and sudden unemployment stalking most of the Indian IT workers I talked to, they have developed the survival tactic of always saying they understand just about anything you ask them, even when they haven't a clue. They will simply return to their cubes and continue to work away on a dead-end solution, without raising a flag for help. Fear drives them and prevents them for asking for help or admitting they don't know something. Needless to say, this damages communication.

Lastly, as a victim, I currently work for a small consulting firm in Colorado. Our primary client (a large financial services firm with "American" in its company name) took the decision to outsource all development and maintenance. To do this, the outsourcing firms loaded up on H1-B workers, brought them over by the plane loads, and proceeded to replace hundreds of IT workers. Now that the H1-Bs are up to speed, they will happily send them back to India, secure in the knowledge that they have now learned their tasks and can do the business. This is, of course, an abuse of the H1-B system, but, hey, it's just business.

Basically, the large financial and other global players don't care about good old America. They will follow the money wherever it travels around the globe. What, no IT workers to use your credit card and investment services? Who cares; they now have Indian workers who need (want) the same credit card and investment services. Visa works just as well for an Indian IT worker as it does for a U.S.-based one. The banks get their fees and can chase the money regardless where it flows. The only loyalty the financial services firms have is to themselves.

Well said. Offshore development is about nothing more than money. One can only ponder what will happen to this latest trend when the half-million-plus offshore software engineers start looking to better their local quality of life. Will the industry look to replace them with cheaper, unseasoned labor from another country? After all, this is capitalism, isn't it? What does the future hold for technologists? Will future development be outsourced to various indigenous groups in the most remote locations of the globe? One can only wonder.

While there are countless questions about the current outsourcing trend in the technology sector, not enough is said about the bigger economic impact. As corporations move to reduce costs (improve profit margins) by moving development overseas, the impact felt by the local economy is compounded. After all, a software engineer in Bangalore, India, will not be purchasing a car at the local Ford dealership. He certainly won't be assuming a mortgage in the U.S., in pursuit of that lifetime dream of owning a home (then again, maybe he'll be buying a seasonal vacation home). Last, but certainly not least, he won't be buying merchandise at local (U.S.) supermarkets or retailers to sustain his day-to-day needs.

But fear not, corporate America, there are unending opportunities for expansion in overseas markets for Wal-Mart, Home Depot, Ford, and General Motors. After all, this will be necessary to offset the increasing losses in the domestic front caused by the exportation of U.S. jobs!

Please withhold my name and e-mail address, as I "cling" to life in a U.S. company deeply entrenched and committed to the offshore trend.

Your article pretty much hit the nail on the head. Our society is no longer driven by capitalistic rule, but by the rule of greed, a sure course to disaster.

To get the politicians' attention, they have to feel the pain of inaction. That's pretty straightforward to outline. Loss of good paying jobs equals lower tax revenues to the government through both lower consumer spending and lower taxable wages. Any attempt by the government to continue to increase taxes on the lower and middle classes will further erode purchasing power, further reducing tax revenues. The only remaining sources for taxes are corporations, which are already evading their fair share contribution to the tax pot and will find more creative ways to evade it as the need arises.

They avoided the bullet the last time because foreign automakers knew it was cheaper to produce at the source of demand than to export so many lost U.S. auto-industry jobs migrated to foreign-run plants built in the U.S. No such thing will happen with technology. Once those jobs are lost, they won't be coming back.

In short, the pol's revenue stream is drying up and along with it their ability to prop up the sagging economy these poor policies are eroding. They are facilitating the creation of a society striated into clearly defined "haves" and "have-nots." That's a recipe for civil revolt, violence, and the overturning of the government, which will mean the end of their gravy train as they know it, too. The signs of that are already becoming evident with the furor over immigration, taxes, bankrupt state governments, and the moribund economy. If their own self-preservation isn't reason enough for them to act, I don't know what is.

I enjoy your articles very much, and find in you a person who likes to observe, think, and write. Congratulations! Being out of work right now, I have some time to write, and I found your article suitable to write about. It's a subject that I have had in mind for a long time.

Unfortunately for the people working in America, offshoring seem to be unavoidable. Even the maligned H1-B program is better for the American workers than offshoring: at least with the H1-B program the money stays here and is spent here, in America, helping the wheels of this economy to keep moving.

Offshoring is a different story, but, as much as we maligned it, I think it is unavoidable. And it's going to make things more difficult to everybody. But it's going to happen, like it or not. It's just another industrial revolution, but with a twist: Instead of being replaced by machines, we are being replaced by people able to live for a lot of less money than we make in the USA.

I think we can try to learn from history. Although I am not a historian, I know that the result was good (or was it?): We can enjoy a huge variety of goods at very reasonable prices. In the 19th century people had to learn new skills when they were replaced by machines, but eventually they got new and different jobs and were able to enjoy cheaper goods made with the machines that replaced them.

The delay. The assumption is that everybody will be able to find a job, although of a different nature. For instance, when the blue-collar jobs disappeared, many of those jobs were replaced by the tourism and service industries. However, what happens in the meantime? The adjustments of the economy do not happen instantly, and for any family, being out of work even for a few months can be catastrophic. The delay in the adjustment of the economy is a problem that capitalistic doctrines never deal with.

The uncertainty. Let's assume that we accept the fact that our programming jobs will be taken off from us, and we will have to reskill ourselves to take new and different jobs. What would those new, different jobs be? The problem is, we don't know. We can guess, we can bet on it, but we really don't know. Centuries ago, workers didn't know they would be replaced, and they would have been better by starting to study nursing, accounting, another language, or so on. And they didn't know, because, in the first place, they didn't understand what was going on, and because nobody knew, for instance, that new service economies would flourish from the Industrial Revolution. Our case is a bit different because at least we know a change is coming again (that we want to recognize it or not is a different story). But, unfortunately, we know change is coming, but we really don't know how we are going to deal with it (or do we?).

How will the IT economy will look in the future? What skills will we have to learn to survive? Our survival depends on our vision and imagination to foresee the next changes. It's not easy, but we will have to do it. And, again, we will survive, as the generations before us did.

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