An interesting study on a hot subject

[Ballast]

Found via Drudge, a link here to a story on prnewswire.com.

Irony: One of the two economists responsible for the study is named Nariman Behravesh.

Interesting "factoid": 10% of all IT software and services jobs in the U.S. have disappeared since 2000, but only 2.8% of the total IT software and services jobs were lost because of offshore ITO.[/url]

[Daeven]

My take on Outsourcing.

http://www.netgods.net/~lurksalot/lurksalot.200403.html#1079969208042

[Foix]

The study's main argument appears to be that if American corporations spend less money on IT by using less-inexpensive offshore labor, that leaves them more money to invest in other business projects, thereby creating jobs and benefitting the economy. I can buy that to some extent, assuming that their extra capital is indeed being circulated domestically. The secondary argument that IT outsourcing somehow has a statistically significant impact on inflation and interest rates is a bit dubious.

The impact on U.S. jobs does vary by industry sector, with the major beneficiaries for the next five years being construction, transportation and utilities, education and health services, wholesale trade, and financial services.

Overall, this seems to be saying what we already knew: industries where the United States currently has superior training and infrastrucutre, or where the jobs require a physical presence on American soil, will grow in the future; those that don't, won't.

[HaemishM]

My anecdotal evidence suggets this study if full of shit. Thus, my perception is that outsourcing to India sucks ass for the IT sector.

So the US lost 10% of all IT jobs since 2000, but only 2.8% went overseas. Meaning the other 7.2% just vanished. That's not a good sign.

[Snowspinner]

No, but it's not necessarily a bad sign either considering that tech is where the economic downturn started.

Outsourcing is a convenient scapegoat for the real and much harder economic problems. Because it's a lot easier to blame a bunch of brown people.

[nach0king]

My anecdotal evidence

Means precisely nothing. This is why we have statisticians and political scientists; so that we don't base our findings on a whole lot of nothing centralised around one water cooler in the middle of nowhere.

[Romp]

I agree with the article Daeven posted.

You cant have your cake and eat it too.  The US wants other countries to embrace the free market and to embrace global capitalism but when that system doesnt benefit it suddenly American jobs need to be protected.

[Hanzii]

I agree with the article Daeven posted.

You cant have your cake and eat it too.  The US wants other countries to embrace the free market and to embrace global capitalism but when that system doesnt benefit it suddenly American jobs need to be protected.

The US never wanted the world to embrace free trade - they just wanted the rest of us to buy US made crap.
History is rife with examples of America restricting free trade when it served their purpose.
Capitalism isn't about free trade - it's about reaching a state where you have a monopoly and don't need to bother about free trade, competition and innovation.
Mind you, I'm not saying we're any better. EU is doing its very best (with the US) to destroy the Third Worlds sugar exports so rich farmers, like those in my country, can sell expensive sugar of a lower quality.
Loosers are the poor farmers and the consumers. Same as it ever was.

[ArtificialKid]

Outsourcing is only a symptom of the overall problem, which is that most companies have finally determined that almost anyone can handle the mjority of entry-to-mid level IT jobs given a minimum of training.   Once managers realized that IT isn't magic or, in fact, brain surgery (and universities started pumping out CompSci majors), the gravy train was over.  I guess you can scapegoat outsourcing, but the fact remains that a level one phone support job does not deserve a $70K paycheck.

[HaemishM]

I never said level one phone support deserved $70k. I do feel that customers who call level one tech support should be at least able to understand the language the person on the other end is speaking.

When I pay $500 for a goddamn Dell machine, I'd like to know that the "#1 award winning customer support" can speak English well enough to explain to me (if I were an idiot) why my cupholder is broken.

IT is a specialized field; no, it's not the mystery voodoo that most "suits" try to make it out to be so they can be lazy and not have to learn how not to click on attachments that are viruses. But it still requires training and budget. Most of the companies I know of have laid off IT workers just to saddle the remaining workers with a higher workload than they should have.

Statiticians would say that's "increased productivity." I say that's worker exploitation. But I'm the lazy type that thinks a 40-hour work week is quite enough, thank you, and just because you assholes pay someone salary instead of an hourly wage doesn't mean you should work them 60-hour weeks because you're too goddamn cheap to hire one more person on staff.

Yeah, it's anecdotal, but my perception of reality is what causes me to vote for who I vote for. And that WON'T be asshat motherfuckers who think outsourcing everything that isn't nailed down is good for the economy.

[Ballast]

Nice article Daeven.

Could it be that the evil conservatives hold to the long view? Are the liberals exchanging long-term possible economic gain for short-term political gain?

Totally rhetorical, given that the average voter can't see beyond next week.

[daveNYC]

And the average politician can't see beyond the next election.

[Chiastic]

Actually, Haemish, to take a page out of your book, my message to the US workforce would be this:

Evolve or die.

The simple truth is that most of the overseas phone jockeys can speak English better than most of the people who call them.  They train extensively to make sure that you can't tell the difference, including taking courses designed to obliterate their native accents.  Give them a call and see for yourself.  You'll think you're talking to someone based out of Anytown, USA.  And I dare you to find an Indian CS rep or tech support drone that's abrasive, rude and generally an asshole.  People prefer the foreign call reps to the US ones by an almost 3-to-1 margin according to our research (done by us and for us).

Our economy is bleeding off low skill, outsourceable jobs primarily because, like it or not, the asking price for a US worker is too high relative to his actual contribution in comparison to his foreign, yet equally competent and probably vastly more motivated counterpart.  And there's nothing that anybody can do about it without running a serious risk of crippling the US economy's ability to compete in an increasingly global market.

What (typically unionized) pampered US workers holding low skill jobs tend to forget is that making themselves necessary and/or desirable is their perogative, not the government's or their employer's.  I had some idiot come whining to me on Saturday about having to work 12-hour shifts four days a week and how that was over 40 hours and blahblahblah.

It was noon on a Saturday, I had been at work since 4am and was out grabbing a bite to eat and thinking that I'd be home by 6pm if I got lucky and realizing that I was pushing 80 hours for the week and had forgotten what my apartment looked like and no, I'm not getting overtime because a) I'm salaried and don't record my hours and b) if I bucked for OT pay, the guy behind me would volunteer to do it all for free and MEH.

I wanted to punch that jackoff in the face for trying to spin his stress-free, guaranteed three-day weekend, no real responsibility, fixed hours, no thought required job as some kind of intense burden.  Yeah, I get paid alot more.  No, it probably isn't worth it.

And wow, this post is a mess.  But I do feel better now.  And the brass says the internet is good-for-nothing.

[HaemishM]

Again, my experience as a consumer does not match your research. I have found that many of the call centers I've ever had to call into have been staffed by people who spoke broken, heavily-accented English with snotty attitudes. Anecdotal to be sure, but as far as my vote goes, it's what I have experienced directly.

And yes, whether you know it or not, or care, working an 80-hour work week without overtime means you are being exploited. Sure, the 48-hour a week worker was probably being an asshole, but that's HIS time he's talking about. Evolve or die works great unless you are the one unable to evolve, whether because you are a dumbfuck needing a job or someone who can't afford to go to college at a whim to improve their career potential.

I also find it extremely distasteful when companies who recieve tax breaks for building locations in regions then turn around and move jobs out of that region and to a foreign country. Then they are able to claim the outsourced jobs as an expense and get an even larger tax break. Double-dipping. It's clearly exploiting the system to the detriment of the system.

I think the people who see outsourcing as "good for the economy" are the ones who aren't looking long term at the damage the loss of those jobs do the communities that helped fund the creation and expansion of those businesses in the first place.

[daveNYC]

Evolve or die.

It was noon on a Saturday, I had been at work since 4am and was out grabbing a bite to eat and thinking that I'd be home by 6pm if I got lucky and realizing that I was pushing 80 hours for the week and had forgotten what my apartment looked like and no, I'm not getting overtime because a) I'm salaried and don't record my hours and b) if I bucked for OT pay, the guy behind me would volunteer to do it all for free and MEH.

So what are you going to do if/when they expect you to evolve to beyond 80 hours a week?  I hope they are paying you a metric fuckton of money.

[Snowspinner]

Again, my experience as a consumer does not match your research. I have found that many of the call centers I've ever had to call into have been staffed by people who spoke broken, heavily-accented English with snotty attitudes. Anecdotal to be sure, but as far as my vote goes, it's what I have experienced directly.

Yes, but, again, that's what statistics are for - to tell if your experience is abnormal.

Also, it's possible that call centers are the one thing that's been heavily outsourced, and that all 2.8% of the outsourced tech jobs were call centers.

[Chiastic]

I dunno Haemish, if I'm being abused by anyone, it's the people under me, not my bosses, that are to blame this time around.

My big problem right now is that I got put in charge of something, had the brass sign off on my projections for time, money and people, and now I'm being expected to deliver on my cute little promises (not to mention that I feel sorta obligated to, ya know, do what I said I was going to do).  And we're behind schedule, mostly because my "team" has decided to split into three groups and declare all-out war on each other.  So yeah, I've had a spectacular couple of weeks.

Which is neither here nor there, that last post should be taken out back and shot.

Now, to try to redeem myself and actually talk about outsourcing.  The problem there is that you're walking a fine line.  Outsourcing is a good thing.  In the end, it will enable the US economy to shift a large chunk of the workforce to vastly more profitable areas.   It's also utterly inevitable.  It's going to happen for reasons too numerous to even begin to list.  The line that we have to walk is that we need to decide how fast we're going to allow those jobs to bleed out of the economy.  If we choke off the bleeding completely, it's going to be an economic disaster as American businesses lose the ability to effectively compete in the global market with their foreign counterparts (and the wave of neo-isolationist economic policy that's sure to follow such a downturn will make things even worse).  If we let it bleed as fast as it will, it will be an economic disaster as millions of Americans with no other skills find themselves jobless and screwed.

And that's the crux of the whole business.  No matter how much the Left tells you that putting a stop to it is the answer, they're still full of shit.  No matter how much the Right tells you that it's a great thing and we don't have to do anything in response to it, they're still full of shit, too.

More than anything, the inevitable intrusion of cheap foreign labor markets into the proverbial fortress of American blue-collar existence is a social issue disguised as an economic one.  And there isn't a politician in this country with the balls to admit it.

Here's why:

First and foremost, the displaced workers in question here need to be re-trained.  That's going to cost us.  It's also the "well duh" easy part.

The hard part is that, essentially, college needs to be made obsolete.  And that's going to take a massive reform of the primary education system.  In the future (and to a large extent even now), a public education system that's designed to pump qualified blue-collar workers into a high-tech economy that no longer has a place for them is about as useful as a copy of the Earth and Beyond source code.

The university system is great, but the barriers to entry are too high for too many people to achieve the kind of ubiquity of valuable skillsets that we're going to need in a "post-industrial" US economy.  As much as it pains me to say it, we could well end up having to convert our education system to a more "European" model in order to teach people desirable skills on the State's tab without breaking the bank.

Pushing that degree of reform through is not going to be easy (even I instinctually loathe European education systems.  They strike me as being so... communist in approach), which is why our fearless leaders refuse to approach the issue with even a modicum of intellectual honesty.  But pleasant sound-byte solutions aren't going to help anything.

Evolve or die.

[koboshi]

And that's the crux of the whole business.  No matter how much the Left tells you that putting a stop to it is the answer, they're still full of shit.  No matter how much the Right tells you that it's a great thing and we don't have to do anything in response to it, they're still full of shit, too.

I just want everyone to read that again.

[personman]

At the end of the day, any outsourced jobs takes money and puts it into another country's economy.  When we provide economic incentives to corporations (this rhymes with "welfare" when the recipient is an individual) for them to do business in our country we're doubly depriving our country of treasure.  Because those countries tend to be more protectionist and socialistic that money barely dribbles back.

The original idea of outsourcing did make sense.  We put labor closest to the same sources of raw wealth extracted from the crust of the physical world, to create intermediate and final goods here in our borders that created the greatest margin of wealth which then multiplied within our economy.

Outsourcing knowledge jobs turns that completely around.  All we're doing now is subsidizing another country's increase in quality of living by deflating our own.

Do the number of jobs and their treasure matter?  Well let's put it in perspective.  In the 1980s the US lent Chrysler a billion dollars (worth substantially more in today's dollars) to save 140,000 jobs.  This was deemed a matter of National Security by then president Reagan.

We are now transferring the equivalent of a Chrysler overseas every other month.  Our treasure leaves this country three different ways now, and as these countries have very different views on giving away their treasure we don't see it come back in any meaningful way.

On one level I don't mind.  As the family genealogist I understand exactly how this dynamic works.  But on all other levels I do mind because I'd rather my descendents stay in this country, and I very much want my children to continue enjoying excellent quality of life.

[Chiastic]

At the end of the day, any outsourced jobs takes money and puts it into another country's economy.

Vastly over-simplify issues much?  You should run for office.

Outsourcing is when a business imports certain necessary expenses from foreign markets where said expenses are less, well, expensive.  The practice has two consequences:

1) The business saves money.

2) The people whose positions were outsourced lose their jobs.

Does this suck money out of our economy?  Yes, if and only if the laid-off workers drop out of the workforce or are forced into taking new jobs that pay less (and will never pay more) than their old ones.  If, however, the workers are able to parlay their free-agency into better jobs than the ones they lost, then their former employer walks away from the whole outsourcing thing with more money than before and so do its former employees.  Now riddle me this, Batman:  How is that scenario a drain on the economy?

Granted, the favorable outcome is not currently particularly likely, but rather than making a straw man out of the whole theory with that fact, burning it to the ground and then patting ourselves on the back for a job well done, what we ought to be doing is asking ourselves why we aren't getting that favorable outcome.  And then really work to address the issues that little inquiry brings to light.

Protectionism is just a band-aid that won't hold forever.  In my humble opinion, of course.

[HaemishM]

Does this suck money out of our economy?  Yes, if and only if the laid-off workers drop out of the workforce or are forced into taking new jobs that pay less (and will never pay more) than their old ones.  If, however, the workers are able to parlay their free-agency into better jobs than the ones they lost, then their former employer walks away from the whole outsourcing thing with more money than before and so do its former employees.  Now riddle me this, Batman:  How is that scenario a drain on the economy?

If, however, the displaced workers cannot find even the jobs that pay less, we are triply fucked. Which is exactly what is happening. The jobs that are getting outsourced are not being replaced with better paying jobs in this country; they are just disappearing. So now, the outsourced workers lose their jobs, can't find lesser paying jobs because of the job market flooded with over-qualified candidates, and there are no better paying jobs without retraining, which they can't afford.

You are right in that we do need some subsidized retraining. I'd even agree with you about our education system, because I think we're all aware that high school does fuckall to really prepare a kid for living and working in the "real world." And college is even worse, an expensive insular frat house where academic theory takes precedence over experience. Theory works great for the 2% of people who can actually apply it; the other 98% of fuckwits needs some hands-on experience.

My biggest problem with outsourcing is that businesses are damaging their communities in the long-term for short-term profits. And they are receiving federal money, local and federal tax breaks and all sorts of incentives without any real incentive to put that money back into the community. I'm all for bills or tax law rewrites that remove subsidies, bidding power and government business from corporations that outsource a significant portion of their workforce.

If you want to be a global corporation, your corporation shouldn't receive all of the benefits of one country's citizenship.

[Snowspinner]

Haemish, you need data over a much longer period of time than we have to make any of those conclusions.

It's entirely possible that the lack of job growth is due to, well, the lack of job growth, and that if the economy were to turn around, the outsourced jobs would be replaced with new American jobs.

But without data over a period of time, any conclusions about the effects of outsourcing on the American job market are simply speculation.

[HaemishM]

Politician to Worker displaced by Outsourcing: "We are going to appoint a committee to study the long-term effects of outsourcing on job growth. I imagine we'll have that study in about 5-6 years or so."

Worker Displaced by Outsourcing to Politician: "Ok, while you are studying that, could I get some money to retrain me in a new field, or at the very least, money to tide me over until I can find a job?"

Politican: "FUCK YOU, WELFARE IS FOR LOSERS."

Worker: /sounds of death from starvation

Politican: "Starvation and poverty is a problem in this country, we'll appoint a committee to study that."

[nach0king]

Audience: Your hyperbole is growing tiresome.

[nach0king]

My biggest problem with outsourcing is that businesses are damaging their communities in the long-term for short-term profits. And they are receiving federal money, local and federal tax breaks and all sorts of incentives without any real incentive to put that money back into the community. I'm all for bills or tax law rewrites that remove subsidies, bidding power and government business from corporations that outsource a significant portion of their workforce.

That much, I fully agree with. It would be interesting to find out if the special interests/corporations who benefit most from pork barrel politics are the same ones who are so quick to close and outsource.

[Snowspinner]

Haemish, nothing is on your side in this argument. Statistics are against outsourcing actually being a big concern. There are plenty of alternative explanations for unemployment, or for whether or not jobs are being replaced.

You're talking out of your ass, on anecdotal evidence, not merely ignoring facts, but actively going against them.

Give up?

[HaemishM]

No.

EDIT: And to have more than a one-word reply, on the economy, I will not be voting for the current administration partly because they favor outsourcing being unchecked, and consider it a good thing for the economy.

In all the statistics you've talked about, do any of them talk about how many of these corporations doing outsourcing are also receiving corporate subsidies from the government? Do any of them mention the tax breaks these companies are getting for "offshoring" or outsourcing? Do they take either of those factors into the equation? I'm going to guess Probably not, considering those are probably beyond the bounds of statistics, which can be made to say anything you want them to say.

[Snowspinner]

Haemish - the statistics say there ISN'T AN OUTSOURCING PROBLEM. It's not an issue what subsidies the corporations are recieving, because there's negligible outsourcing going on in the first place. You might as well ask how many companies are getting tax breaks for hiring moon rats. For that matter, why isn't the Bush administration cracking down on the hiring of moon rats?

It's a made-up issue, designed to rile people into voting Democrat.

[Bstaz]

"negligible outsourcing going on in the first place."


well for the company I work for...    

if by negligible  you mean  6,000 new jobs in the last 6 months or 2% of the total company's employees have been hired ourside the United States while all domestic sites have lost employees and a Speach by our COO telling us that  domestic (US) hiring will be flat while hiring in "developing markets" will be aggresive then yeah there isn't an oursource problem at all.

These are hard real numbers, anyone doing "research" is going to be full of crap. Show me a US company that has released employement numbers by country over time. You think the researchers just asked nicely and got the truth?

[Snowspinner]

Outsourcing, in the sense being used, is not just international hiring - it's moving domestic jobs overseas.

As for the jobs figures... looked at the March numbers yet?

[HaemishM]

Yes. Manufacturing jobs totally flat, while the overall economy gained 308,000 jobs.

Only 1.7 million more to go.

[daveNYC]

200k of the jobs were in the service industry.  Which as far as I know, can be anything from stock broker to fry guy.

We have the best job statistics in the world, but they still don't tell us much.

[Snowspinner]

And the fact that manufacturing jobs is flat is relevent how? The job landscape changes over time - some sectors increase, others decrease. Manufacturing has been going overseas for a while. That or the "Made in Taiwan" stickers on much of the stuff I own are just lies.

[Foix]

While not necessarily relevant to the discussion at hand, in the interests of general anti-corrupt-corporate-bastard hatred, I submit: The GAO reports that 60% of American corporations paid no federal taxes for fiscal years 1996 to 2000.

[Ballast]

That goddamned Clinton again...