500K tech jobs to leave NYC and head overseas.

The BBQ Pit
21

This is a very hot topic for me personally, right now. My company is trying to relocate as much of our IT work as practical, plus some other functions, to San Jose, Mumbai and Manila. The people there are lower cost. This is a fact of life. And some of them aren’t as good, in fact, this is probably generally, although not universally true. Mostly a matter of experience, though. After some time they will be on a technical parity with their American counterparts. Where they do suffer is in the areas Dangerosa mentioned, since they are not generally co-located with the people who have the most business expertise. The supply of foreign techies will increase with time, as well, so expect the wages to be further driven down. And if IT can be outsourced, why not other Engineering functions? So, if it’s very difficult to get a decent US wage for this, then how will this affect American demand for top IT/Engineering schools? US companies will balk at continuing to pay good wages. Not everyone can be Bill Gates or start a company. In an increasing technical world, will it be in our national interest to have fewer and fewer hard core technical folks? Sure, some will continue on the tech path because it’s in their blood, and some will get rich from it, but many will choose alternate fields where there is the possibility of good pay and career growth.

When Manufacturing jobs became more and more scarce in the USA, politicians said not too worry, because those are bad jobs and the “new economy” will be service related (IT/Financial). Now the IT side is starting to slide, and we’ve already moved our accounting, human resources and all support functions overseas (I currently work for a Fortune 50 company). They’ve also managed to offshore a lot of their income to minimize paying US taxes (or taxes in Europe, and other high tax areas). So who is going to buy the (premium) products that big US corporations produce?

This may just be the levelling of the Global playing field, and in some ways this is good. Does an American or Brit deserve, by birthright, a higher salary than someone from another country? Not inherently, IMO, but they do currently bear higher costs of living and it’s in the economy’s best interest for this transition to be as painless for the participants as possible. I should also note that because of the quasi-union nature of our European affiliates, it’s the US based staff that will bear the brunt of cutbacks.

It will be an interesting world when corporations start outsourcing CEOs to India, Indonesia, Central America, China and the Philippines. Of course that will never happen, because only America (and sometimes Canada and Europe) can produce Fortune 500 CEOs, so they’re worth every million that they’re paid.

22

I never said that I didn’t feel there was a similar mechanism between states. It’s not as much of an issue, but similar drivers are at work, albeit on a smaller scale. Don’t think that states don’t fight fiercely for industry, it is just that the playing field is kept closer to level.

I personally don’t want to take away your ‘right to buy cheap imports’ as it’s spelled out in the 101st amendment. I want the reason certain goods are cheaper to be known and accounted for. I’m not talking about draconian import laws, but common sense regulations that recognize and adjust unfair advantages.

Have you ever heard of Huawei? If not yet, you will. Huawei is the Chinese Cisco. They reverse engineer Cisco designs and sell certain lines at a loss to capture market share. Neither practice is strictly legal domestically – so should Cisco have to source cheaper assemblies in an effort to compete, or should they be afforded some protection? Care to guess which option they are stuck with?

In your world, the Cisco suppliers who are displaced deserve it and should all be more like you. I’m telling you that you have grossly oversimplified your world.

23

While one can hardly blame the individual companies trying to stay afloat, widespread (and successful - that’s a big if) outsourcing of development to foreign countries has the potential to turn around and bite the US IT sector, hard.

I’m pretty sure that most people who’ve taken part in IT development projects will agree that perhaps one in ten developers, designers etc. have that special mindset that sets them apart, that makes one of them more valuable than 10 merely competent people. The sad fact is that there’s no way of spotting the talent except by setting a lot of people to work and looking at the results. On the other side of the coin, talented people need years of experience to put them into the expert category.

Here’s the problem: If you set a lot of people to work on the other side of the globe, that’s where the talent will rise to the surface and future experts will realize their potential. Not here. And when the talented people in India or wherever decide that they’d rather be Indian millionaires than help Americans become billionaires, they’ll start forming their own companies, harvesting the talented people that gathered experience working for US companies.

Meanwhile, the entry-level jobs that should be the incubators for the next generation of US experts simply aren’t there. And with the talent pool growing smaller, the level of expertise gets harder to maintain.

It could get really ugly. Waverly’s example is bad enough, now imagine what happens when Huawei’s engineers get tired of being copycats and realize that they’re not burdened down with a huge legacy of installations to support, that they can roam more freely. Whoah.

There’s not a lot one can do to prevent it - apparently the idea that a company somehow has a reponsibility to the surrounding community has fallen on hard times.

24

In this case, that’s exactly right. I cannot fairly compete, thanks to the disparity in the cost of living.

If I am British, and work for a British company serving British customers - and I lose my job to someone working on the other side of the planet - I have been screwed. If on the other hand I keep my job, how on earth can the foreigner claim likewise? If the boot were on the other foot I certainly wouldn’t consider myself denied a rightful opportunity if an Indian company serving Indian customers decided to retain it’s Indian IT staff.

25

And no.

You’ve not been screwed, due to one important consideration - you are not owed a job, and that “British company” is either a plc with international owners (who owe you nothing) or a limited with private owners (who owe you nothing).

I don’t know how to tell you this, but you’ve picked as a career probably the most easily exportable industry going. You can complain all you like, but at the end of the day I can hire 5 equally experienced programmers for the same cost as hiring you - or less. Even if individually they’re only 50% as productive, I still get a 250% increase in productivity.

Complaining that this is unfair and that you’re being screwed is about as efficient as the miners going on strike because coal mining in Britain was too expensive compared to global imports.

Feel free to complain about it - but it’ll do you no good whatsoever. If you like though, you could actually benefit from this situation as Spiny Norman has already pointed out, perhaps unintentionally. As people outsource more of the coding, you increase the need for team leaders and analysts. Take courses on Prince, SSADM, needs analysis and other skills that you can use to run projects, and get yourself a promotion.

26

OK, I read the GD thread. Interesting. No, I do not favor protectionism. I simply fear for my own economic health. (yes, it is selfish)
But dammit, I still want to hit these guys with a whiffle ball bat!!!

27

And so we now dress up old fashioned protectionism in terms of “fairness.” Whatever that means - as far as I can tell it means nothing more than forcing the cost up to the point where the whingers can artificially compete. Rather the manner in which the US absues dumping regulations.

As I discussed in a GD thread, simple minded comparisions btw wage rates in China and the US or Europe do not cut the mustard.

Indian or Chinese programmers may indeed by orders of magnitude cheaper than developed world programmers, but productivity – as implied by some comments here-- is not the same. More labor time and more labor period is needed to achieve similar results, so clearly you need lower prices to compete on.

I might add that most of this commentary presumes a zero sum game, if it’s taken job losses in a particular sector or company equal a reduction of overall employment. Rather clearly that has not been the case, and rising incomes -despite frequent claims to the contrary one need only look at long term evolution of Asian incomes ex-Japan. Rising incomes means markets to sell services to etc. The developed world and esp. the US and GB has in the past decade experience historically low unemployment and extremely decent growth. Now in a downturn suddenly a little pain is felt in a previously bloated and overpaid sector and we get whinging about inability to compete.

The same old story as auto workers and other sectors that got fat and uncompetitive. I have no sympathy. AS Gary points out, one can move to other aspects of the business, take advantage of the very issues in re QC and productivity – or one can throw up “fair trade” protectionist barriers.

28

>> In this case, that’s exactly right. I cannot fairly compete, thanks to the disparity in the cost of living.

You got that backwards. If new Yorkers were paid Chinese wages, rent in New York would be equivalent to rent in China. Supply and demand, and all that. As China develops and wages go up, the cost of living will go up also. Just look what happened to Japan between 1950 and 1980.

And BTW, a lot of people here do not seem to realize that there is a lot of foreign investment in the USA. That “American” company you work for may actyually be owned in whole or in part by foreign money. Make life difficult for them and they may have no choice but to fold and go elsewhere. More restrictions on the movement of capital and investment decisions only result in a flight of capital. Those who advocate protectionist policies should first find an example of a country where protectionicst policies have had a beneficial effect over a long period of time. They won’t find one.

Protectionists are selfish. They want to perpetuate a situation of privilege with respect to workers in other countries. It cannot work and it will not work.

BTW, nobody stops you from buying American products if you like. Just don’t force your choice upon others. And I wonder if there is such a thing as an American products any more. Some Japanese cars are made in America while some American cars have so mauch Japanese content that it’s difficult to say what it is. And those companies may be owned by stockholders in the USA, Europe or Asia. Like it or not we live in a global economy and the only road to success is to compete globally.

29

Perhaps you are addressing someone or something else, but in my case I object to the term protectionism. I do not want the workers of any country to be allowed to compete unfairly – I merely wish it to be applied both ways.

The labor costs are a bit of a red herring. China, Malaysia, India, and other economies do indeed have low labor rates, but some of the businesses they have targeted for growth aren’t highly labor intensive, and don’t carry a huge variable labor cost as part of the overhead.

There are dozens of other reasons that these economies can offer certain goods more cheaply than the break-even point of domestic companies. I’ve done analysis, and I’ve seen products offered lowered than raw material costs. Such predatory pricing to gain market share is not legal in the US. It rarely comes up, because long term un-profitability doesn’t sit well with Wallstreet, but once you venture offshore you will find the ‘long-purse’ strategy in use.

Many offshore concerns have little R&D overhead to carry. R&D is part of the long term strategy of most domestic companies, but offshore you can ‘outsource’ R&D very inexpensively by doing things that would violate the Intellectual Property laws of N. America and Europe.

Are you saying that you are OK with these practices? Do you actually think the playing field is level enough? There is supposed to be a minimum commitment to fair trade demonstrated before your imports are granted widespread access. I question the US’s Most Favored Nation status for several countries.

30

sailor, I don’t want to appear over-critical of you. I enjoy your contribution to technical discussions – but here you are once again about 179 degrees off.

Rent in NY, or anywhere for that matter, is not strictly a reflection of local wages. NY has an infrastructure non-existent in most of China, a higher standard of living, a higher rate of taxation, the businesses there are privately held, and the US itself supports freedoms that come at a monetary cost.

If you want New Yorkers to live on Chinese wages, they can do it, but they don’t get to do it in the New York that you and I know.

31

Competing unfairly seems to be largely defined as competing on cost. As in the case of dumping legislation, defining “fairly” seems to be the protectionist’s game for it is an inherently subject and rubbery concept.

Indeed they are, but that’s the one that I see here… the bits about whinging on about how cheap the labor is. Insofar as labor is but one part of the cost structure and insofar as its one of the few points of competition for developing countries…

And?

Well, sure there is some predatory pricing in the markets. And there is already a framework for addressing. Dumping. One files the complaint. Of course it is terribly abused, but that’s the politics.

Well that’s what the whole TRIPS efforts are all about. I frankly think NAM IP is getting to the point of being too restrictive myself, despite my biotech background.

Yeah, actually I do think the playing field is level enough for most sectors, or actually tilted towards developed nations in the aggregate.

32

And once China develops the same standard of living the costs will rise to US level or higher, like happened in Japan. What I don’t get is the attitude that the USA is the yardstick of the world. The Chinese can afford to do the work for less because they spend less? Good for them? Whay are Americans entitled to spend more? Why are Americans entitled to a higher standard of living? I just don’t get it. If a Chinese guy will scratch my back for half what an American is asking, why should I not choose the Chinese guy? He also has a family, kids that need schooling etc. I just don’t get the sense of entitlement and I have no sympathy for those who feel entitled to protection from foreign competitiom In my book everybody is entitled to make an honest living.

33

These line by line dissectionist parsings never fail to piss me off. [ul][]No, I don’t offer a formal definition of fairness, but I do give several examples of unfair practices, explaining two in detail. Maybe I’m not completely literate, because I thought I had communicated clearly.[]”And?” This is an explanation for why labor costs, taken in isolation, are a red herring. A point I think you just agreed to.[]Yeah, talk to Eastman Kodak about how well their suit against Fuji went. For small to midsize companies, I’ll refer them to you for an explanation as to how they fund such a suit and survive while it is being fought.[]As you state, international IP laws do not yet exist.Don’t get me wrong, emerging economies deserve a chance to grow, but there are several huge sectors that face unfair competition. I don’t think they will be comforted by the thought that, in the aggregate, you feel things are slanted the other way.[/ul]

34

Bah, who wants to be tied to the lowest common denominator?
Compete against the top 10% in your industry and you will always have a job and very good pay. There is no way I’d want my income tied to the other 90% especially the bottom half of that group.
I agree with Gary. Take some Project Mgmt courses, or something. Move to where you can compete for the available jobs. New York isn’t the only place that needs tech workers. Living in smaller cities may pay less, but he cost of living is lower as well.

35

I was almost a member of a union as an IT professional. At the University of Minnesota IT professionals were unionized - with clerical staff! I was offered the job and didn’t take it. I’d have worked for less money. The benefits were good, and there was all that job security.

I recently ended up in training (10 years later) with UofM IT Staffers. Their benefits have been slashed and there is no job security. But they still pay their union dues.

36

Waverly, you wanna cite about the subsidized housing and other subsidized stuff in China? methinks you’re about 25 years out of date.

When it comes to software, there are no raw material costs. It’s a lot cheaper to do some stuff offshore. It’s more efficient to do some stuff 12 hours off.

Christ almighty, I don’t remember the same uproar when Amex and others first started shifting back office processing centers to ireland. But somehow China and India are different.

37

Great Jebus, sailor, are you pointing to Japan as an example of a proponent of fair trade. I suppose they are right up there with Hong Kong and Taiwan. If you want the US to compete using these tactics, I can’t say I’d be for it, but I agree that the hemorrhaging would be stopped.

Let me share my opinion on analogies. They do not prove a point on your own, they merely illustrate a point you must go on to prove on it’s own merit. You like old Chinese guys scratching your back, I’ll opt for shiatsu – but in either case your analogy does not take into account any dynamic other than wages. Have you read the preceding posts?

I hope you aren’t accusing me of demanding unfair advantage. I think I’ve quite explained this.

38

Waverly, calm down. Nobody is trying to piss you off and a line by line analysis is a pretty good way to cover all your points.

It seems to me your definition of “fair” its that which benefits you. Do you think it is “fair” that a lazy American can make a higher salary than an industrious Chinese person who has worked and still works ten times as hard? Because I do not think that is fair.

39

China guy, you live near Shanghai, correct? Drive about an hour toward Wuxi and let me know if the factories include campus style dormitories.

Here’s a quote from a source something less than 25 years old: “Also, within Chinese society, there is an expectation that the enterprise will take care of employees through housing and other social benefits, which must have a strong loyalty effect.”

40

Two words…Japenese cars. They made cars affordable for the everyman and now the Japanese have a very good standard of living. When it comes to buying a product or service we all want affordability. Developing nations are a great resource to the west, until they are developed.
I understand it is hard for people to compete with those earning less in the developing world. But what you struggle to get by on (yet could live for a month there) they also struggle to get by on what they earn in that same month. At the end of the day it comes down to the profit driven company and the consumer.
We can’t agree with capitalism and want the best for the smallest price and disagree with sending work offshore at the same time.
We either want cheap or loyalty to our own. We can’t have both.