Ted Re.,..If you want to call it atonement, be my guest.......but there definitely is a squaring of accounts that needs to be done.<<
Dumbing down our colleges isn't going to be the answer though. Look at this article in Businessweek this wk.
http://www.businessweek.com/magazine/content/03_05/b3818001.htm<
The New Global Job Shift
The next round of globalization is sending upscale jobs offshore. They include basic research, chip design, engineering--even financial analysis. Can America lose these jobs and still prosper? Who wins? Who loses?
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Cover Image: Is Your Job Next?
Graphic: A World of Outsourcing
Graphic: Going Abroad
Graphic: Globalization Goes White Collar
The New Cold War at Boeing
The Way, Way Back Office
For India's Tech Grads, There's No Place Like Home
Online Extra: The Good Life in a Bombay Call Center
Online Extra: Perilous Currents in the Offshore Shift
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The sense of resignation inside Bank of America (BAC ) is clear from the e-mail dispatch. "The handwriting is on the wall," writes a veteran information-technology specialist who says he has been warned not to talk to the press. Three years ago, the Charlotte (N.C.)-based bank needed IT talent so badly it had to outbid rivals. But last fall, his entire 15-engineer team was told their jobs "wouldn't last through September." In the past year, BofA has slashed 3,700 of its 25,000 tech and back-office jobs. An additional 1,000 will go by March.
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Corporate downsizings, of course, are part of the ebb and flow of business. These layoffs, though, aren't just happening because demand has dried up. Ex-BofA managers and contractors say one-third of those jobs are headed to India, where work that costs $100 an hour in the U.S. gets done for $20. Many former BofA workers are returning to college to learn new software skills. Some are getting real estate licenses. BofA acknowledges it will outsource up to 1,100 jobs to Indian companies this year, but it insists not all India-bound jobs are leading to layoffs.
Cut to India. In dazzling new technology parks rising on the dusty outskirts of the major cities, no one's talking about job losses. Inside Infosys Technologies Ltd.'s (INFY ) impeccably landscaped 22-hectare campus in Bangalore, 250 engineers develop IT applications for BofA. Elsewhere, Infosys staffers process home loans for Greenpoint Mortgage of Novato, Calif. Near Bangalore's airport, at the offices of Wipro Ltd., five radiologists interpret 30 CT scans a day for Massachusetts General Hospital. Not far away, 26-year-old engineer Dharin Shah talks excitedly about his $10,000-a-year job designing third-generation mobile-phone chips, as sun pours through a skylight at the Texas Instrument Inc. (TXN ) research center. Five years ago, an engineer like Shah would have made a beeline for Silicon Valley. Now, he says, "the sky is the limit here."
About 1,600 km north, on an old flour mill site outside New Delhi, all four floors of Wipro Spectramind Ltd.'s sandstone-and-glass building are buzzing at midnight with 2,500 young college-educated men and women. They are processing claims for a major U.S. insurance company and providing help-desk support for a big U.S. Internet service provider--all at a cost up to 60% lower than in the U.S. Seven Wipro Spectramind staff with PhDs in molecular biology sift through scientific research for Western pharmaceutical companies. Behind glass-framed doors, Wipro voice coaches drill staff on how to speak American English. U.S. customers like a familiar accent on the other end of the line.
Cut again to Manila, Shanghai, Budapest, or San José, Costa Rica. These cities--and dozens more across the developing world--have become the new back offices for Corporate America, Japan Inc., and Europe GmbH. Never heard of Balazs Zimay? He's a Budapest architect--and just might help design your future dream house. The name SGV & Co. probably means nothing to you. But this Manila firm's accountants may crunch the numbers the next time Ernst & Young International audits your company. Even Bulgaria, Romania, and South Africa, which have a lot of educated people but remain economic backwaters, are tapping the global market for services.
It's globalization's next wave--and one of the biggest trends reshaping the global economy. The first wave started two decades ago with the exodus of jobs making shoes, cheap electronics, and toys to developing countries. After that, simple service work, like processing credit-card receipts, and mind-numbing digital toil, like writing software code, began fleeing high-cost countries.
Now, all kinds of knowledge work can be done almost anywhere. "You will see an explosion of work going overseas," says Forrester Research Inc. analyst John C. McCarthy. He goes so far as to predict at least 3.3 million white-collar jobs and $136 billion in wages will shift from the U.S. to low-cost countries by 2015. Europe is joining the trend, too. British banks like HSBC Securities Inc. (HBC ) have huge back offices in China and India; French companies are using call centers in Mauritius; and German multinationals from Siemens (SI ) to roller-bearings maker INA-Schaeffler are hiring in Russia, the Baltics, and Eastern Europe.
The driving forces are digitization, the Internet, and high-speed data networks that girdle the globe. These days, tasks such as drawing up detailed architectural blueprints, slicing and dicing a company's financial disclosures, or designing a revolutionary microprocessor can easily be performed overseas. That's why Intel Inc. (INTC ) and Texas Instruments Inc. are furiously hiring Indian and Chinese engineers, many with graduate degrees, to design chip circuits. Dutch consumer-electronics giant Philips (PHG ) has shifted research and development on most televisions, cell phones, and audio products to Shanghai. In a recent PowerPoint presentation, Microsoft Corp. (MSFT ) Senior Vice-President Brian Valentine--the No. 2 exec in the company's Windows unit--urged managers to "pick something to move offshore today." In India, said the briefing, you can get "quality work at 50% to 60% of the cost. That's two heads for the price of one."
Even Wall Street jobs paying $80,000 and up are getting easier to transfer. Brokerages like Lehman Brothers Inc. (LEH ) and Bear, Stearns & Co. (BSC ), for example, are starting to use Indian financial analysts for number-crunching work. "A basic business tenet is that things go to the areas where there is the best cost of production," says Ann Livermore, head of services at Hewlett-Packard Co. (HPQ ), which has 3,300 software engineers in India. "Now you're going to see the same trends in services that happened in manufacturing."
The rise of a globally integrated knowledge economy is a blessing for developing nations. What it means for the U.S. skilled labor force is less clear. At the least, many white-collar workers may be headed for a tough readjustment. The unprecedented hiring binge in Asia, Eastern Europe, and Latin America comes at a time when companies from Wall Street to Silicon Valley are downsizing at home. In Silicon Valley, employment in the IT sector is down by 20% since early 2001, according to the nonprofit group Joint Venture Silicon Valley.
Should the West panic? It's too early to tell. Obviously, the bursting of the tech bubble and Wall Street's woes are chiefly behind the layoffs. Also, any impact of offshore hiring is hard to measure, since so far a tiny portion of U.S. white-collar work has jumped overseas. For security and practical reasons, corporations are likely to keep crucial R&D and the bulk of back-office operations close to home. Many jobs can't go anywhere because they require face-to-face contact with customers. Americans will continue to deliver medical care, negotiate deals, audit local companies, and wage legal battles. Talented, innovative people will adjust as they always have.<
The more we dumb down our colleges, the more business will shift to overseas jobs, where talent is cheaper and getting better. A huge problem is that while shifting production overseas has a lot of related costs, shipping, tariffs etc.; IT doesn't have many penalties, as it is much cheaper to transfer technology over the internet, than it is to ship product. Plus, you have security concerns with shipping, so it will be likely a lot of production jobs will come back home, whereas the new job shift will be in the IT jobs. And now you want to burden our college grads by giving the overseas push another reason to go overseas. Here is another concerning Seattle.
http://www.businessweek.com/magazine/content/03_05/b3818010.htm
FEBRUARY 3, 2003
COVER STORY
Back to Main Story
The New Cold War at Boeing
Printer-Friendly Version
E-Mail This Story
Cover Image: Is Your Job Next?
Graphic: A World of Outsourcing
Graphic: Going Abroad
Graphic: Globalization Goes White Collar
The Way, Way Back Office
For India's Tech Grads, There's No Place Like Home
Online Extra: The Good Life in a Bombay Call Center
Online Extra: Perilous Currents in the Offshore Shift
• Find More Stories Like This
You've heard about those companies that hire cheap overseas professionals to do their accounting, software programming, and architectural work, and you want to jump on the bandwagon. Not so fast. Your U.S. staff might just balk. There may be no better example of that than Boeing Co. (BA )
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Nearly 12 years ago, as the Soviet Union collapsed, Boeing started recruiting out-of-work Russian aerospace engineers to collaborate on space and commercial-airplane projects. At first, their numbers were small. But the Russians did good work for as little as $5,400 a year. Boeing began to view its Russian staff as the vanguard of a new push into the European market, and in 1998 it opened its Moscow Design Center, which a year ago boasted nearly 700 engineers. From the day the center opened, engineers at Boeing's Seattle hub had voiced concerns. Last year, those fears boiled over.
Boeing's 22,000 engineers in Seattle, represented by the Society of Professional Engineering Employees in Aerospace (SPEEA), threatened to walk out in December, when their contract expired, if the Russian venture wasn't cut back. Partly as a result, Boeing reduced its corps of Moscow engineers to about 350, though the company won't be precise. "The underlying fear is that we're giving away our technology and our competitive advantage, and we're losing jobs," says Dave Landress, a test engineer and union rep. The union has good reason for concern: Struggling to reduce costs to cope with the sharp falloff in orders from the ailing airline industry, Boeing has laid off 5,000 engineers since 2001.
Still, Boeing has refused to yield entirely to the union's demands. It declined, for instance, to adopt tough new job-security language. The best the union could muster: a nonbinding letter acknowledging the concerns of both sides. And Boeing still plans to shift jobs to Russia in the future, company insiders say.
The strategy is to integrate the cheaper Russian engineers into the design process for everything Boeing makes. The Russian staff--spread over seven cities--already works on everything from redesigning jet-wing parts to designing components for the International Space Station. Boeing's other goal is to develop a 24-hour global workforce, made possible by a satellite link from Russia to Boeing's Seattle offices.
It's not just lower pay that makes Russia so attractive. The company hopes a local presence will help to win Russian orders. It hasn't so far: Last summer, Aeroflot weighed the pros and cons of the Boeing 737 vs. the Airbus A320 and picked Airbus, which opened its own Russian design center last year and plans to hire 50 engineers. Still, given the savings, Boeing is likely to keep shifting work to Russia, which is sure to keep some engineers sleepless in Seattle.
By Stanley Holmes in Seattle, with Simon Ostrovsky in Moscow<<
Just remember, the next time you suggest that Michigan should suffer for the sins of the south 200 yrs ago, it may also be your ox which is getting gored. In this new IT enhanced world, dumbing down our system to diversify can hurt the chances of our grads, as businesses want excellence, and it isn't just us midwesterners. The grads having excellence will get a job no matter what. It is that big area of mediocre which is going to suffer, and it doesn't help if the college you graduated from is known more for its diversity than its excellence. . |
