Offshoring the Economy

[unixronin]

A sobering article in Fast Company magazine says that as many as 14 million jobs in the US could be offshored.  It's not just IT any more.  It's accountants, customer service reps, medical transcriptionists.

"More than just outsourcing IT or anyone's job, we're outsourcing the American middle class," says Bronstein.

I find myself increasingly thinking it's time to abandon both this career and this country, and find some other way to make a living, somewhere else.  I just don't know what.  I still don't know if I could handle the schooling to become a pharmacist.  I'm seriously considering retail; I'm told Home Despot pays $16 an hour.  Our friends wolfspaw and stoda already abandoned IT to become massage therapists.  And frankly, I seriously think that the US economy is going to crash as a result of offshoring -- the ultimate manifestation of the shortsighted Wall Street quest for short-term profit.

A partial list of Fast Company's "at risk" jobs:

• Extreme risk:  Accountant, industrial engineer, production control specialist, quality assurance engineer, helpdesk specialist, telemarketer
• High or moderate risk:  Automotive engineer, computer systems analyst, database administrator, software developer, customer-service representative, CAD technician, paralegal/legal assistant, medical transcriptionist, copy editor, journalist, film editor, insurance agent, lab technician, human resources specialist
• Low risk:  Aircraft mechanic, artist, carpenter, civil engineer, headhunter, interior designer

We're not just offshoring jobs:  We're offshoring our economy.

Comments

[ilcylic.livejournal.com]

the ultimate manifestation of the shortsighted Wall Street quest for short-term profit.

I think you're being excessively bitter about this due to your lack of employment.

That said, it is not neccesarily due entirely to wall street descisions, nor is it neccesarily short-sighted. To claim that outsourcing IT work is per se shortsighted and only due to profit considerations (something, BTW, surely you can't complain about. It's the duty of the suits to make companies profitable, so profit is not itself a nasty goal. I realize you're probably not saying that, but I hear so much of this line of whining that I feel compelled to correct it.) is remarkably euro/amero-centric. After Appropriate Training (tm), East Indians, Pakistanis, Malaysians, etc all make perfectly serviceable engineers. If their economic positions allow them to provide equally valuable services for a lower price, isn't it hubristic to insist that people buy the higher priced product? (i.e.: your services)

The real culprit is government intervention and regulation. If the cost of living here were lower, say, due to lower TAX BURDEN (*grumble grumble*) you could afford to offer your services for a lower rate. If housing were less expensive, due to reduced government regulation regarding its construction, you could once again lower your rate. If the mere act of hiring an employee weren't so bloody tied down with government regulation, more companies would create more positions, and could afford to pay you relatively more simply for the convenience of having you in the office, without so much bureaucratic overhead.

-Ogre

[unixronin.livejournal.com]

Oh, profit is not in itself a bad goal, no, any more than property is theft. But if this trend continues, companies that do business in the US are going to find their US markets in serious trouble and suffering from a shortage of people who have any money to buy their products with. If it's a choice between a new LCD monitor, a new plasma TV, loan payments on a new Chrysler Crossfire, or having food on the table and clothes on the kids, most people are going to pick the food and clothes. Offshoring 14 million jobs, if it gets to that point, is going to have a pretty damned major impact on the economy.

I don't think the government's entirely at fault for the cost of labor in the US, either. We have a far higher standard of living than, say, India, but that standard of living costs money. Even India's starting to lose jobs now to China. If India can't compete with China, we sure as hell can't. (And I find it interesting that Indian workers are being told they're replacing people who are moving on to better, higher-paying jobs, not that the people they're replacing are being tossed out on their asses to save a buck.)

That said, at the end of the day, there's a lot of argument that offshoring isn't the dramatic cost saving companies seem to think it is, either. Oh, sure, it saves them money, but not the 70% to 80% many offshoring companies keep claiming, because they don't consider the infrastructure costs of offshoring -- or problems such as the one my first wife, now a senior technical writer for Tibco, is discovering: Indian technical writers and engineers who are, according to the org chart, supposed to be reporting to her or working with her are not doing the things she tells them need to be done, because they consider it demeaning and beneath them to have a woman tell them what to do. They'll quite calmly lie to her and tell her that a document she told them to update has been updated, when she has the latest version of that document open on her screen and can see perfectly clearly that the changes she told them to make have not been made.

I've also read articles asserting that while many of the Indian developers that work has been offshored to are perfectly competent coders, they wouldn't know innovation if it leapt up and bit them in the ass (and at least one friend who's had to work with offshored coders and said they couldn't even write decent code). If you can get away with paying your coders only 20% as much, but it takes three times as long to get the project finished (and you're paying your remaining US staff their full salaries over that triple time period too), have you really saved money?


The gripping hand is this: In feudal days, it was understood that just as the serfs and men-at-arms of a lord had fealty to their lord, so their lord had fealty to them. It was his responsibility to keep them fed and protected. The same relationship should exist between a company and its employees -- as employees depend on the company for their jobs, so the company depends on its workers for their knowledge, their skills, and their experience. You can buy skills, and you can transfer knowledge, but you can't offshore experience. It doesn't come à la carte. When you lay off your skilled employees, their experience is gone and you can't buy it back.

[ilcylic.livejournal.com]

If the economy falls that much, workers here will become cheaper to hire.

If offshore workers really are not that efficient to hire, and noone here can buy the goods being produced, the situation will self correct.

What you say about experience is true.

-Ogre

[unixronin.livejournal.com]

If the economy falls that much, workers here will become cheaper to hire.

But enough to compete?

Well, time will tell, I guess.

[ilcylic.livejournal.com]

Somebody has to buy the products. There has to be a middle class to support wealthy business owners. But the more the government intervenes, the longer things will take to self correct.

-Ogre

[unixronin.livejournal.com]

yeah. Government, I have increasingly come to see over the past thirty years, is not even a poor solution; it's the problem. "That government is best which governs least," indeed. Or, as I saw stated once on a bumper sticker:
"If more government is the answer, it must have been a really stupid question."

[jilara.livejournal.com]

We techies are getting a lot cheaper. "Increased productivity" = longer hours, same pay. Our wages at my work have been frozen for 4 years, and if folks hire, it's at less, not more, money. My former boss from the early '90's has taken a $10K a year cut every time he's been rehired after being laid off. Since this has happened 4 times in as many years, he's making $40K a year less than before. My former officemate is making 2/3 of what he was making at his job in 2001, now as a contractor with no benefits. Believe me, it's sorting out.

A coworker lit into a striker outside Safeway (they're protesting having to pay for part of their health benefits) and said "Most of us not only have taken pay cuts to stay employed, we're paying for part of our health benefits, so what's with you? Wake up and smell the coffee!"

[ilcylic.livejournal.com]

So stop doing it. It obviously bothers you, so get all of your people together and organize. Like unixronin said, you can't offshore experience, so if you were to unionize for better hours, or better pay (but probably not both) either you'd get it, or you'd lose your job. Which is more important you you? Work or Sanity?

Yeah, I had an interesting conversation with the strikers outside of a Ralph's one day after I ahd moved here. I asked what they were protesting, and they said they were striking for health benefits. I asked if they were striking to get them, and they said they were striking because they had been asked to pay for them. I pointed out that in New Mexico, noone at a grocery store had any hope of ever having health benefits, let alone being spoiled enough to complain about having to contribute to them. And that even as a programmer, I didn't have them. The guy looks sort of uncomfortable.

-Ogre

[jilara.livejournal.com]

Actually, it's Cadence now, with the offshore problems, but Tibco had its own set of global issues. ;-)
But yes, all of the above, and overseas people who are engineers but don't know coding as well as I do. I have to do part of their work for them, because I understand our proprietary code better than they do. I'm also not the right caste. They ask for information from management, who doesn't know anything, and refuse to talk to mere engineers (or writers) at the end of the food chain because we aren't on the correct level of the org chart. (I really enjoyed when they blew off the VP, not knowing who he was, because he was backing my attempts to gain information from them for one of his projects. They've been much more humble since they were called on the carpet for that one!)

[jilara.livejournal.com]

I'm excessively bitter, and I've been employed in tech all through this. But I've watched it devastate the local economy and the lives of friends who have lost houses, etc. I've also watched them lay off employees in San Jose and replace them with 3 others in another country. And I hate being part of that "increased productivity" because I know what it really means. Some of our engineers are looking like walking ghosts, lately, due to overwork. It's not like they get paid extra for 60-hour weeks, because "salaried exempt" means "we own your ass". Let's face it, it's the rape-and-pillage Victorian economy of robber barons, all over again.
But some economists are realizing that the final product of offshoring might be having to raise taxes on the middle class, because they're exporting the tax base, too. And how do you make it up, when you're not getting enough money, because the wage-earners aren't bringing in the bucks like they used to? And the rich CEOs and corporations, who have government in their court, will always find ways to avoid paying it out of *their* pockets.
Besides, I have my reservations about qualifications of those offshore engineers. I have had surreal conversations with our India engineers, where I am patiently explaining to them that Tcl isn't the same as UNIX, and they're not Getting It.

BTW, what makes housing expensive is supply-and-demand. If we didn't have idiots in Silicon Valley willing to pay anything for Bay Area real estate because of low mortage rates (fueled the same way as the tech bubble, valuewise), it would cost the same as a house in Fresno (less than half). And of course, a lot of that is location, location, location. You can buy Tara on 60 acres in Tennessee for the price of a San Jose tract house. (Conversely, commercial real estate here goes begging. Over half the buildings in the vicinity of my work have been for rent for 2 years, now, because the economy sucks so badly.)

[ilcylic.livejournal.com]

Well, they could quit working those hours. They could quit working for those people who they feel value them too little. That's essentially the balance, isn't it? "I work this job because I feel that the value I recieve for doing so offsets the effort I put into it."

I also work a 60 hour a week job (that is sometimes an 80 hour a week job) that pays me several 10's of thousands of dollars less than my .com boom job did, and I'm living in San Diego now instead of Albuquerque, so the reduced salary goes away even faster. But I consider what they are paying me to be enough to keep me coming to the job, since the other job options are less appealing (nothing, or Burger King, or other "jobs which do not deal with computers that I like").

Computer people got spoiled during the boom. There's no reason that we should have been making as much money as we were, except for the fact that there were not enough of us, so prices went up. Now there are too few jobs and too many hackers. Companies should hire more hackers and pay all of them less, instead of overworking the ones they have, except lots of programming companies are located where cost of living expenses are high, so you have to pay people a reasonable wage, and lots of hackers still think they can get stupid money for dealing with computers.

And housing costs are high in the Bay area due to supply and demand. But that's due primarily to a lack of surface area in which to put houses. Eventually, in low rent parts of the world, you get down to where housing costs what houses really cost. The houses in SF aren't intrinsically worth more due to construction, but mostly due to location. There are lower cost methods of building housing that you can't use, because the government won't let you. So in places where land is cheap (say, Albuquerque) the percentage cost of a house is much higher than it should be due to government intervention in the construction methods.

And I didn't say that all housing costs were government induced, just that they were unneccesarily made higher.

-Ogre

[jilara.livejournal.com]

Yeah, that's the problem. Everyone is "addicted to eating and paying their mortgage," as I've heard folks say.

I know that's why I keep at it. That and being able to help out underemployed friends who had trouble keeping a roof over their heads. I'm plotting my exit to my next career, for when I pay off some stuff, a few years down the road. 25+ years in this field, constantly pulling other people's chestnuts out of the fire, is finally getting to me. (My problem is I still care. I still need to believe in what I do, which is bad for my ulcer.) I've been up and down with tech, and mostly underpaid, but that same factor has kept me employed, ironically. But it's an ultimately abusive line of work, and it seems like it's getting more and more that way.

I had the common sense to ditch the high-paying wretched.com job that was making me crazy, at the height of the boom, and go back to nuts-and-bolts tech, down in the firmware where I started. "But you're giving up all this money" people said. Yeah, but at what cost? Sanity? Those guys were bottom-line slavedrivers. But it made me aware of how corporate types think...

[unixronin.livejournal.com]

Well, they could quit working those hours. They could quit working for those people who they feel value them too little. That's essentially the balance, isn't it? "I work this job because I feel that the value I recieve for doing so offsets the effort I put into it."

Unfortunately, too often these days it's more a case of "I put up with this shit because I have nowhere else to go, it's this or flipping burgers." I know quite a few people who'd tell their current employers to FOAD at the drop of a hat if they had another job to go to, because they're being treated so badly.

And, realistically, when you consider the hours that people were being asked to work AND carry a pager for off-hours calls, I don't think a lot of those boom salaries were that unreasonable. I don't think the bubble was so much one of computer geeks as a whole getting overinflated salaries, as one of "entrepreneurs" touting overinflated business offerings with no grounding in reality, and stupid venture capitalists lining up to throw dumpster-loads of money at them on the mere promise that some day there would be a business plan and maybe even a product.