Outsourcing & Jobs Report

i put the welfare of the people above the welfare of business - there used to be a fine line but that line has been sold to the corporate world.

On this we agree. I too believe that fine line has been crossed. It really seems like business is getting all the breaks these days and the worker is getting screwed.

An (long) example: My wife, after years as a tech writer in the semiconductor industry got laid off. Oh well it happens. When she got a new job, it was with a small company that contracts for writing work with a huge computer company in our area. A few years back this company had outsourced all its writing. This meant it fired all its workers, who then had to reform into small consulting companies and bid for contracts for the work they used to do in-house. (At least they kept the work on-shore....)

The interesting part of this is how my wife explains how horribly inefficient the process is because they are an outside contractor. They are left out of the loop on many important issues that had they been included could have been caught early and fixed. This causes a lot of rework, which of course is billed to the hiring company.

So by outsourcing the process is far less efficient, plus now you have the overhead of another corporate structure as well as profit built in for the owners of the consulting company. So where does the savings for the big computer company come from? You got it, the workers. My wife makes a little over half of what she used to make and has minimal benefits.

To me outsourcing is a false economy in this case. I think the big company would have been better off keeping their writers in-house and involved. I'm sure they're saving money, but I wonder if it's worth it.
 
Quote from Mecro:

I have some Indian friends who are still in college. Of course, they major in engineering or CS. Their job prospects are pretty pathetic at the moment. They are actually quite made at their home country.
More...

I mean mad at their home country. D'oh

Shreddog:

Great story. That is exactly what I am talking about when I say outsourcing is not cheaper in most of the outsourced jobs.
 
Despite my argumnets from above I agree that in many cases outsourcing is not as effecient and does not save costs. For example. My dad used to work for a manufacturing company as a controller. The compnay is global and has manufactuing operations around the globe. The majority of the stuff that came to his place was manufactured in China and then it was assembled here in the states. He did a study on the cost effectiveness of using the China plant compared to a plant in the US. After counting for the rework that was required as well as the pieces that needed to be discarded due to extremely poor manufacture quality he found that for an equilivant amount of dollars the company could get better quality work done by american workers in the US. The only advantage the China plant had was that if they needed to shut down for a period of time or needed to cancel an order they did not have to pay the Chinese whereas they would have to pay the US workers. After forwarding this to the higher ups he was basically black balled in the company and later laid off. We both figured that some big wig invested alot of money in the China operation and did not want rain on his "wise" move.

There is a place for outsourcing if it actually adds value but in many cases I do not think that the value added is really significant.
 
Sat Mar 6, 2004 08:26 AM ET

By Jonathan Nicholson
WASHINGTON (Reuters) - The average spell of joblessness was more than five months in February, the highest in two decades, raising the prospect it may be a factor in driving workers from the U.S. labor force.

The February jobs report from the Labor Department was a disappointment for markets, which had expected much greater payroll growth than the 21,000 jobs created. The unemployment rate, however, held steady, at 5.6 percent.

The details of the report, however, again showed that once a worker loses his job, it takes some time to get a new one. In February, the average length of joblessness rose to 20.3 weeks, the longest since January 1984, when it was 20.4 weeks. According to Labor Department data going back to 1948, the longest spell was 20.8 weeks in 1983.

The number of workers out of a job for 27 or more weeks fell slightly but was still high, at 1.871 million in February.

Lawrence Mishel, president of the liberal-leaning Economic Policy Institute, said the length of unemployment showed the labor market is still tough. The last time it was so high, he said, joblessness was close to 8 percent.

Mishel said the difficulty in finding jobs has likely led some long-time job seekers to simply "bail out," and become discouraged. Individuals who don't seek work because they are discouraged about the prospects of finding a job are not counted as part of work force.

"I think there is a connection," he said.

Democrats and labor unions on Friday renewed their calls to revive a lapsed program that provided extended eligibility for unemployment benefits for workers who have used up their regular benefits.

"With more than 760,000 jobless workers who have exhausted their unemployment benefits, there's no excuse for President Bush and the Republicans to reject calls to extend the emergency unemployment program," said AFL-CIO President John Sweeney in a statement.

Treasury Department spokeswoman Brookly McLaughlin said Bush had worked with Congress previously to extend benefits and he will "continue to work with Congress on the issue."

"The most important thing we can do is create more jobs and this administration is committed to strengthening the environment for job creation," McLaughlin said.

© Reuters 2004. All Rights Reserved.
 
I think we all forget one important point. Don't forget that China was one of a few counties that repudiated its debt back in mid 1940s. We all forget that China is a developing third world country, that solely relies on foreign debt and capital for GDP growth. And the debt and capital infusion decisions made by Western banks and corporation are based on the forecasts of the future GDP growth. We have a feedback loop developing here, which under certain circumstances can lead to assets bubble. The signs of the baby-bubble are already in the air in China: IPOs are red hot at ridiculous prices. Now imagine that the economic growth will slow down sooner or later. The capital will be flowing out of the country with a nasty sucking sound. At this point we will have an ultimate test of the Chinese communist-ruled capitalism. Will the government try to stop outflow of capital? If they will, the system will collapse, and a lot of companies will be left with fixed assets in a country that has restrictive rules on capital flow. I wonder how many would still like to outsource? The scenario may seem far fetched at this point, but it keeps happening in emerging countries over and over again.

There are risks in doing business in foreign countries (especially the ones ruled by communists), we keep forgetting it, and we keep paying the price. Remember Mexico, Taiwan, Russia, Argentina? I wonder who is next?
 
Quote from Burtakus:

I am curently working on a masters in engineering and about 80%-90% of my class mates are either Asian or middle eastern. The simple fact is that your average American youth wants all the nice toys now but is unwilling to put forth the effort to get a higher education and work for the toys. Therfore the foerigners are getting more qualified for the high paying technical jobs while Americans are pushing themselves into flipping burgers. Also, if the foreigners will work for less than Americans and have a better technical education and background who the hell are you going to hire? Face it Amercans are lazy in the education area when compared to foreigners. As a prime example, a local high school in my town is known as one of the top public high schools in America. In Texas, the top 10% of a high school class is guaranteed admission to any state funded school. I have heard numerous complaints from American parents about thier kids not being able to go the a good college because all of the Asians are in the top 10% of the class at the high school and it is not fair to their children. What the parents do not understand is that it is not the Asians causing the problem, it is the parents and kids who do not work hard enough to get into the top 10%. It is much easier to blame the Asians for their kids not graduating in the tpo 10% than to admit that the Asians just out worked you.

Another example, I used to, for a very brief time, work as an acount exuctive for a FX trading firm. I was required to cold call people from a list of potential investors. The only requirement was that they make more than 200k a year. We were provided with a list of people who met this qualification to call. I would say that about half of the lists were comprised of Asians of middle easterners. That trend will only increase in the future for the reasons explained above.
More...

Lot of great posts in this thread, but Burtakus has some of the best. I think you make some great points. US students are spoiled, unmotivated and have been poorly incentivized. Unfortunately, these trends take time to change and you lose a generation or two in the process.

I think this outsourcing is not the real problem but rather is a symptom of growing lack of competitiveness in the US. No amount of throwing money at a failed educational system will change it. The Dem's seem to think the idea is to repeal the laws of economics. Maybe we could go back to a farm-based economy. We were pretty good at that.

Four or five years ago compoanies could not find enough workers here. They were enticing programmers to leave hgih school. It's dangerous to make serious policy changes on the basis of a couple of years' data.

The jobs report is not without flaws. The household survey, which counts home-based entreprenours, shows a different picture. Even then, the unemployment rate is below the average of the 90's, a period of pretty full employment. It suffers only by comparison to the boom years, and by the fact that a fairly robust recovery has not yet generated the job growth it normally does.

Bottom line, there are a few things policy makers can do, perhaps tighten the H1 visa process, but most of their ideas will only make things worse for the majority of Americans. I think a national debate over trade issues however would be a good thing. Certainly it would represent a step up from most political campaigns.
 
Quote from AAAintheBeltway:

.... No amount of throwing money at a failed educational system will change it. ....
More...

A red herring: there is no "failed education system." If there was, there would be no way that I could find native born american citizens for some of our jobs - which are working on very advanced technology.

The fact of the matter is that the US educational system is very comeptitive. The other fact is that US citizens are not willing to shoulder huge debts to become indentured servants to some large corporation that offers nothing in return for their huge investment (debt) in training. If they cant make money working for these entities then they will end up being their direct competitors, talking away market share in small but lucrative niches.
 
Quote from CalTrader:

A red herring: there is no "failed education system." If there was, there would be no way that I could find native born american citizens for some of our jobs - which are working on very advanced technology.

The fact of the matter is that the US educational system is very comeptitive. The other fact is that US citizens are not willing to shoulder huge debts to become indentured servants to some large corporation that offers nothing in return for their huge investment (debt) in training. If they cant make money working for these entities then they will end up being their direct competitors, talking away market share in small but lucrative niches.
More...

I'm not saying it isn't possible to get a good education in the US. But all data seem to indicate that our students badly lag most of the rest of the world in important areas of achievement, despite incredible sums being spent on education. The only solution we get from the education establishment is "Send more money." We wouldn't accept that as shareholders in a company and we shouldn't accept it as taxpayers.
 
You must log in or register to reply here.
Back
Top