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An Independent Study on Offshoring IT?

michael posted more than 10 years ago | from the where-do-you-want-to-go-today dept.

Businesses 642

vsprintf writes "What are the real effects of offshoring on the U.S. technology sector? Pick your economist on the subject. The Bush administration's Gregory Mankiw says it's all good, and exporting jobs is just a new way to do trade. In Congressional testimony, Ralph Gomory says a little bit is okay, but too much is bad, while Herman Daly says it's just plain bad. The ITAA's paid mouthpiece, Harris Miller, says it must be good because IT workers in India wear Nike tennis shoes. At last, it appears the IEEE-USA has persuaded Congress to pay for an independent study to determine how offshoring really affects U.S. IT."

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Nike shoes (4, Interesting)

mrchaotica (681592) | more than 10 years ago | (#10167216)

So IT workers in India are wearing shoes made in Indonesia. How is this good for the US economy, again?

Re:Nike shoes (3, Interesting)

ceeam (39911) | more than 10 years ago | (#10167223)

US gets the money (Since IT companies and shoe companies are US-based financially).

Re:Nike shoes (4, Insightful)

Senjutsu (614542) | more than 10 years ago | (#10167233)

And this is good for anyone who isn't an exec at Nike, or significant shareholder therein, how exactly?

Re:Nike shoes (3, Insightful)

ashwinds (743227) | more than 10 years ago | (#10167246)

and it should be - why ? Someone buys shoes somewhere with money they have earned - earning money for someone making the shoe and I should benefit?

Re:Nike shoes (4, Insightful)

Senjutsu (614542) | more than 10 years ago | (#10167262)

There's an argument there, but it's irrelevant here. The claim here is that IT outsourcing is beneficial to the US as a whole, because the IT engineers in Bangalore wear Nike tenis shoes.

If this is at all true, then clearly there must be some way in which Indians purchasing shoes made in Indonesia is beneficial to the average US citizen. The question is, outside of the vanishlingly small minority of the population who are either Nike execs or large Nike shareholders, how does the US (taken here to mean the majority of citizens thereof) benefit?

Re:Nike shoes (0)

Anonymous Coward | more than 10 years ago | (#10167294)

It's called taxes. If you make a six-figure income, in most states the government will take 40-50% of it. If you work hard at avoiding taxes (residing in a favorable state, using loopholes, etc.) you can generally get it down to around 25%, but it's still nothing to be sneezed at.

I personally think federal income taxes should be increased. But it is dumb to say that the average Joe in the US gets no benefit if some rich honcho makes a few billion bucks from some folks in India.

Re:Nike shoes (1)

Tim C (15259) | more than 10 years ago | (#10167418)

Sure they benefit, but not as much as by having a job themselves.

Re:Nike shoes (3, Insightful)

jrumney (197329) | more than 10 years ago | (#10167460)

If you make a six-figure income, in most states the government will take 40-50% of it.

If you declare a six figure income, the government will take 40-50% of it. But most people earning that sort of money can afford the services of an accountant who can give them advice on how to make six figures look like five.

Re:Nike shoes (5, Insightful)

jsebrech (525647) | more than 10 years ago | (#10167480)

It's called taxes. If you make a six-figure income, in most states the government will take 40-50% of it. If you work hard at avoiding taxes (residing in a favorable state, using loopholes, etc.) you can generally get it down to around 25%, but it's still nothing to be sneezed at.

For a low range in the six figures this is true, but as you progress towards the richer and then the wealthy, the actual percentage of assets paid in taxes drops dramatically. And let's face it, the people making money from off-shoring aren't in the low range of 6 figures. This is because most of the money the federal government gets from the rich and the wealthy comes from capital gains tax (the sale of shares) or dividends tax. The bush tax cuts have dramatically reduced [turbotax.com] these. Also, you have to actually sell your shares or get dividends for this to kick in. If, like Bill Gates, you keep your fortune in paper, then you are not taxed at all.

Also, lately there has been a wave of corporate off-shoring (also known as inversion), where you reincorporate in a tax shelter (like the tax-free bermuda), so that you pay dramatically less taxes. It's part of the reason why 60 percent of US corporations didn't pay any taxes between 1996 and 2000 (microsoft being one of those 60 percent).

But it is dumb to say that the average Joe in the US gets no benefit if some rich honcho makes a few billion bucks from some folks in India.

Objectively true, some of that money does flow back to regular people. But more is lost by off-shoring than comes back in corporate profits, since only a percentage of the profits gets spent or reinvested inside the US.

Re:Nike shoes (0)

Anonymous Coward | more than 10 years ago | (#10167300)

Well said. The truth is outsourcing benefits nobody except the overpaid higher-ups of a company. This so-called "independent study" of offshoring will no doubt be funded by the people who want to see outsourcing continue.

Re:Nike shoes (3, Insightful)

ashwinds (743227) | more than 10 years ago | (#10167333)

Social Responsibility Vs Entrepreneurial Spirit - always a delicate balance. I guess in a round about way the average citizen benefits because more profits => more corporate tax => more benefits/facilities/amenities/ less personal tax. But I know that it doesnt make sense to someone who has just lost their paying job. As an Indian, I would like to point out a couple of things: 1. Dont worry too much about outsourcing - its America which holds the strings of that puppet show - the Govt. can step in any time to level the playing field - it could be taxes, could be subsidies for local operators - anything which would make it not as viable to outsource. 2. Worry a lot about out-shoring - thats when (1) happens and corporate greed will find workarounds by not outsourcing but operating right out of cheaper countries. Now Free Enterprise is what makes America great - its a paradox US will have to deal with. As usual the truth is a shade of gray somewhere in between.

Re:Nike shoes (-1, Redundant)

Anonymous Coward | more than 10 years ago | (#10167356)

I think US citizen benefit of it throught taxes Nike (and others) pays.

Re:Nike shoes (1)

jsebrech (525647) | more than 10 years ago | (#10167500)

Those taxes are only a percentage of the money made, 34 percent to be exact, and so the corporate profits would have to be three times the income paid for the off-shored jobs in order for it to equalise the loss to people of nike off-shoring jobs. Do you honestly believe that is the case?

Re:Nike shoes (1, Insightful)

Anonymous Coward | more than 10 years ago | (#10167268)

at the base of it, the benefit is that the hard currency ends up in the us. the benefit comes the same way any well-performing company helps the national economy. the company rents office space, does its banking - essentially runs its business - in the united states. not to mention the fact that the execs and stockholders have more cash to spend (ronnie ray-guns' trickle-down theory).

there's also the fact that industry prices go down in general, allowing joe sixpack to buy more stuff and live the good life. (nike is an exception as they don't sell shoes so much as 'swoosh' symbols)

Re:Nike shoes (1)

KontinMonet (737319) | more than 10 years ago | (#10167283)

Really, ten or twenty execs spending has such an enormous trickle down effect? I don't think so...

Re:Nike shoes (5, Funny)

1u3hr (530656) | more than 10 years ago | (#10167335)

Really, ten or twenty execs spending has such an enormous trickle down effect? I don't think so..

You're forgetting the basketball players and other sports-models paid millions to promote them. Thus there will be a cashflow into the US gold jewellery, steroids, cocaine, and call-girl industries.

How's that? (3, Insightful)

melted (227442) | more than 10 years ago | (#10167281)

Corporations don't pay any taxes these days. If this poorly made garbage never enters the US, no US tax will be paid on it.

The fallacy (4, Insightful)

hopethishelps (782331) | more than 10 years ago | (#10167360)

US gets the money

The big fallacy in all the economists' arguments for offshoring is right here: "US GDP increases, so that must be good for the US."

But what's really happening is this: incomes of a few CEOs go up from (say) $1M to $2M, while incomes of 10 times as many engineers go down from (say) $100k to $20k. That's a gain in money terms, but it's very bad for 90% of the people affected. So, it's bad for the USA.

Re:The fallacy (1)

jcr (53032) | more than 10 years ago | (#10167371)

You're leaving out the benefit to the hundreds of thousands of shareholders.

-jcr

Re:The fallacy (0)

Anonymous Coward | more than 10 years ago | (#10167404)

You're leaving out the benefit to the hundreds of thousands of shareholders.

There isn't much. Generally the CEO and henchmen take most of the gains.

Maybe the stock goes up a dime - so somebody holding 1000 shares gains $100 - but how many people do you know who make $20,000/year in the stock market? Most people who invest in stocks have a total portfolio of $50k or less, with usually not more than 100 or 200 shares of any one stock.

Re:Nike shoes (0)

Anonymous Coward | more than 10 years ago | (#10167239)

software is cheaper and shoes are cheaper. duh.

Re:Nike shoes (1)

MemoryDragon (544441) | more than 10 years ago | (#10167308)

Shoes have not become cheaper, since Nike has shifted the production dreadmills in Asia. In fact the whole "beauty" of outsourcing is, that you can reduce costs but can keep the same price over here. That of course only works as long as people over here can pay the price, which of course can only work, as long as people over here have jobs which are well paid.

Blame the In-Jinns! (0)

Anonymous Coward | more than 10 years ago | (#10167248)

It's all we have left!!!

Re:Nike shoes (2, Interesting)

Gentlewhisper (759800) | more than 10 years ago | (#10167271)

" So IT workers in India are wearing shoes made in Indonesia. How is this good for the US economy, again?"

Ah, the ironies' of globalisation!

But Nike is an American company, no?

The buyer in India spend money on the Nike shoes, Nike pays the labourers in Indonesia, and pockets the difference.

Some share traded on the American stock market incrases in value, and Americans are happy.

Re:Nike shoes (2, Insightful)

beavis07 (811089) | more than 10 years ago | (#10167309)

You wanted globalisation America, this is what you get. it's not all wine and roses you know... It's all good fun when the only people suffering are foreigners you dont have to see, but as soon as it hurts a few jobs in the local economy everyone is up in arms about it... Does that not perhaps strike any of you as selfish at all? Reap what you sew america... reap what you sew...

Re:Nike shoes (1)

antifoidulus (807088) | more than 10 years ago | (#10167478)

Um, guess what, not everyone in the US wanted globalisation, esp. the kind that you are talking about. It's quite obvious that you have a vendetta and like to group people accordingly.

Re:Nike shoes (1)

Bilibala (122348) | more than 10 years ago | (#10167456)

If this is to make any sense, then IT workers will benefit by eventually selling shoes..

first (1)

count_sporkula (446625) | more than 10 years ago | (#10167218)

post :)

and it's spelt 'Labour' thankyou.

Re:first (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#10167226)

You FAIL IT!
and have nothing worth saying on the subject
how sad are you

Re:first (1)

count_sporkula (446625) | more than 10 years ago | (#10167242)

gosh darn it!

FP! (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#10167219)

FP

The race for the bottom (5, Insightful)

Anonymous Coward | more than 10 years ago | (#10167225)

The only people who will benefit from outsourcing are corporate execs and stockholders.

The rest of us will be left with nothing to do and it won't matter if goods and services are cheaper if you don't have a wage to pay for them.

Meanwhile the Indians etc. will be undercut by the Chinese and they'll be undercut by someone else.

Where does it end?

Re:The race for the bottom (3, Funny)

halowolf (692775) | more than 10 years ago | (#10167244)

Where does it end?

It all ends when the world abolishes money and robots perform all our manual labor! In the end we should all be better off :)

Re:The race for the bottom (0)

Anonymous Coward | more than 10 years ago | (#10167396)

That's incredibly naive thinking.

Even in this kind of technological Utopia (or more likely Distopia), the 'haves' (those who own and control the robots) will call the shots and the 'have nots' will suffer as ever.

No amount of technology is going to change that.

Re:The race for the bottom (2, Insightful)

Gentlewhisper (759800) | more than 10 years ago | (#10167481)

"Even in this kind of technological Utopia (or more likely Distopia), the 'haves' (those who own and control the robots) will call the shots and the 'have nots' will suffer as ever."

But the have nots will always outnumber the haves by a huge margin right?

When too few people have too much, it is time for a riovolution!

Re:The race for the bottom (2, Insightful)

grap (111522) | more than 10 years ago | (#10167253)

This is the start of the falling of today's economic system, call it capitalistic, call if corporate-centric (opposed to human-being-centric) or call it the "american" way of seeing capitalism...

Re:The race for the bottom (1)

foobsr (693224) | more than 10 years ago | (#10167452)

This is the start of the falling of today's economic system, ...

Not much of a surprise - not built to meet the challenges encountered today. Although, too plain clear for many to see.

CC.

Re:The race for the bottom (0)

Anonymous Coward | more than 10 years ago | (#10167256)

The only people who will benefit from outsourcing are corporate execs and stockholders.

... and anyone who has a 401K, and anyone who has insurance...

The rest of us will be left with nothing to do and it won't matter if goods and services are cheaper if you don't have a wage to pay for them.

Yes, it'd be better if companies just wait to go out of business rather than try to remain competitive.

Re: The race for the bottom (1, Insightful)

Black Parrot (19622) | more than 10 years ago | (#10167332)


> Yes, it'd be better if companies just wait to go out of business rather than try to remain competitive.

It's a Tragedy of the Commons problem. If one company outsources, it's business savvy; if they all do, it's economic collapse.

Notice that consumerism accounts for ~2/3 of the US economy. When consumers don't have any money, that prop of corporate megabucks will fall.

Of course, the USA has surely been living an unsustainable dream for the past century or so. Maybe all this is just the first phase of reality catching up with us.

Roger, you should change your password (1)

Roger Keith Barrett (712843) | more than 10 years ago | (#10167407)

... and anyone who has a 401K, and anyone who has insurance...

The percentage of people holding EITHER went down massively over the past 3 years... your argument makes no sense.

Re:Roger, you should change your password (0)

Anonymous Coward | more than 10 years ago | (#10167492)

your argument makes no sense.

OK, I'll dumb it down for you.

If you pay money on car insurance, health insurance, or home owner/renter's insurance, they invest that money in the stock market. (I don't know too many people who DON'T have at least one of these.)

The same thing happens when you put $$ into your 401K. Instead of sitting on the money you pay in, they invest it in the stock market.

You'll learn all about that stuff when you get to high school.

Re:The race for the bottom (0)

Anonymous Coward | more than 10 years ago | (#10167286)

Its not between indians, americans or indonesians or whoever, Its actualy between the workforce (WE) against the corporate(THEM). Probably america is getting hit today. But am sure we(indians) will get hit tomorrow.

check this...
http://www.financialexpress.com/fe_full_story.php? content_id=50746 [financialexpress.com]

http://www.tata.com/tata_engg/media/20030929.htm [tata.com]

Re:The race for the bottom (2, Informative)

Anonymous Coward | more than 10 years ago | (#10167297)

It also greatly befenits us, the programmers in these countries. I make 1000USD monthly by working part-time and when I finish the university I will probably get 5000USD+. All these in a situations where the minimum wage in our country is 75 USD and the average is 150 USD.

An other idea would be (this just a personal opinion): most probably the lowest quality (e.g. untalented) workers will be fired first, so what we see is a bunch of people who demand money for their very few merits.

Re:The race for the bottom (0)

Anonymous Coward | more than 10 years ago | (#10167401)

You're turn will come - you won't think it's quite so dandy then.

Re:The race for the bottom (1)

krist0 (313699) | more than 10 years ago | (#10167423)

the people who have spent their time in uni with no real world experience demanding 5000+, well, those days (thankfully) are gone too. Experience AND education are whats gold.

That and having rich parents with connections, but I guess everyones name isn't Bush

Re:The race for the bottom (0)

Anonymous Coward | more than 10 years ago | (#10167310)

The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? One the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.

The weapons with which the bourgeoisie felled feudalism to the ground are now turned against the bourgeoisie itself.

--Karl Marx, June 24, 1872

Who says history doesn't repeat itself?

Re:The race for the bottom (0)

Anonymous Coward | more than 10 years ago | (#10167311)

Where does it end?

Not in my pocket anyway.

Re:The race for the bottom (3, Insightful)

jcr (53032) | more than 10 years ago | (#10167379)

The only people who will benefit from outsourcing are corporate execs and stockholders.

Do you have a retirement plan? If so, then you're a shareholder.

Get over your zero-sum marxist mind set. The more people working, the more wealth is created. The USA is the economic powerhouse that it is, because there are basically no trade barriers from coast to coast, for some 200 million people.

As international trade barriers fall, wealth everywhere increases.

-jcr

Re:The race for the bottom (1, Interesting)

Anonymous Coward | more than 10 years ago | (#10167435)

So the gravy train will just keep on rolling for evern huh?

Inifinite resources and profit/exploitattion opportunites!

Get over your Corporate America brainwashing!

First Post (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#10167228)

First Post :-)

Mankiw is such a hypocrite (4, Interesting)

Anonymous Coward | more than 10 years ago | (#10167229)

He basically wrote all these economic books and once he was hired by the Bush administration, he contradicts his writings.

Gregory Mankiw? (1, Funny)

Anonymous Coward | more than 10 years ago | (#10167249)

If it's the same Mankiw whose book was (and still is) used to torture and brainwash countless undergrads then I'm not surprised he said that.

Re:Gregory Mankiw? (1)

canon006 (651202) | more than 10 years ago | (#10167316)

My economics professor last semster warned us about Mankiw's book. He was so dissatisfied with the book that he is/was in the process of writing his own text book to directly compete with or, hopefully, replace Mankiw's book.

Re:Gregory Mankiw? (0)

Anonymous Coward | more than 10 years ago | (#10167378)

Oh, hit your prof with a clue stick - there are literally dozens of books that are better than Mankiw's. Point is, undergrads won't see them as long as Mankiw's publisher gives teaching profs and grads free pizza and ice cream to lure in selecting his crapload for the next semester. Been there, seen that.

I'm confused (1, Insightful)

Reene (808293) | more than 10 years ago | (#10167252)

Didn't Bush just promise thousands of new jobs for the American working class if he were re-elected? How can he promise this while his administration is supporting the outsourcing of jobs to other countries?

Either I'm missing something (I hope I am) or this is the most blatant bit of double-speak I've seen in awhile. The sick part is he'll probably still be re-elected anyway. Le sigh.

Re:I'm confused (1)

TheWingThing (686802) | more than 10 years ago | (#10167275)

I'm not sure if Bush wants to protect American jobs by preventing outsourcing, but this article [worldnetdaily.com] says the Republican party outsources their call centers for fundraising, and this article [worldnetdaily.com] denies it. I don't know whose version to trust.

Re:I'm confused (3, Insightful)

Anonymous Coward | more than 10 years ago | (#10167278)

Somehow Clinton made millions upon millions of jobs.. many of them very well-paying tech jobs. But at the same time, he was a major proponent of globalization and the governmental practices that encourage outsourcing.

Though maybe Clinton is unique in being able to accomplish this... he always seems to be able to get away with breaking the rules. :-)

Re:I'm confused (1, Funny)

Martigan80 (305400) | more than 10 years ago | (#10167298)

American working class

Obviously you must be thinking about a different bush! Our current presendent does not consider IT workers part of the working class, they are IT workers.

Watch President Bush school us on stupid things such as Sovereignty [about.com]

Re:I'm confused (2, Insightful)

xtal (49134) | more than 10 years ago | (#10167346)

Didn't Bush just promise thousands of new jobs for the American working class if he were re-elected? How can he promise this while his administration is supporting the outsourcing of jobs to other countries?


I'm sure he did promise jobs.. what the government here does is promise jobs too. Except the jobs that ended were high paying middle class jobs, and the jobs that are arriving are $8-12/hr callcenter positions.

Now, I don't know about you, but I don't know too many little kids that go around saying they want to work in a callcenter when they grow up. Erosion of the middle class isn't a good thing.

Re:I'm confused (1)

dasunt (249686) | more than 10 years ago | (#10167447)

I'm sure he did promise jobs.. what the government here does is promise jobs too. Except the jobs that ended were high paying middle class jobs, and the jobs that are arriving are $8-12/hr callcenter positions.

By counting call center support jobs as "tech" jobs, North Dakota can state it has a booming tech industry.

Oddly enough, there is a huge problem with college graduates leaving the state.

PS: Election issues this year seem to be concentrating on a heterosexual-only marriage amendment to the state constitution. System sure is working out here.

Re:I'm confused (1)

LiquidCoooled (634315) | more than 10 years ago | (#10167395)

If Schwarzenegger became president in the future, would that mean the US government supports outsourcing?

Re:I'm confused (3, Insightful)

Roger Keith Barrett (712843) | more than 10 years ago | (#10167417)

If he did it was for public consumption only. If you go over his record you will find plenty of "for public consumption only" statements that are directly contradicted in policy decisions.

Bush's REAL consitutancy is the corporate class. Look at his decisions over the past 3 1/2 years and almost ALL of them directly benifit the corporate class. The rest of them benift pals in the radical religious right.

Re:I'm confused (0)

Anonymous Coward | more than 10 years ago | (#10167433)

Didn't Bush just promise thousands of new jobs for the American working class if he were re-elected?

Yes. He's gonna conscript you all to the military, or send you to prison*.


*Where corporations will buy your labor at less than third world prices!

Re:I'm confused (1)

Gentlewhisper (759800) | more than 10 years ago | (#10167496)

"How can he promise this while his administration is supporting the outsourcing of jobs to other countries?"

Well, a big govt needs to have a big secret service and plenty of FBI agents too!

After all who is going to arrest all those mp3 downloaders?!!

*ducks*

De-skilling (4, Interesting)

KontinMonet (737319) | more than 10 years ago | (#10167265)

There's been discussion before on this subject which affects us here in the UK too.

I maintain the major problem is gradual de-skilling. If potential software engineers simply see that their future jobs are likely to go offshore, they will not go into the profession. Software is still a somewhat apprentice based profession in that you usually require some coding skills before becoming team leaders or designers and then development managers and CIOs or CTOs.

If you are pulling away base support in the profession, then de-skilling will gradually move up the ladder. More jobs,more high-powered jobs will move offshore until wage parity ensues. By then, it's too late, corporates will have followed the skill base. An industry responsible for (a rough guess) 15% of Western economies will have moved elsewhere.

And you can't compare the software industry to manufacturing. Software is not manufactured and, so far as I can see, will not be manufactured for at last 25-30 years. But guess which countries will reap the benefit of writing the code manufacturing software?

THE SKY IS FALLING!!!!! (1, Funny)

Anonymous Coward | more than 10 years ago | (#10167287)

Blame In-Jinns! Boycott software! Nuke 'em! Do SOMETHING, damnit!!!

Re:THE SKY IS FALLING!!!!! (1)

KontinMonet (737319) | more than 10 years ago | (#10167408)

What In-Jinns? The outsourcing to which I was referring was to Poland and the Ukraine...

Wrong Location.. (1, Funny)

Anonymous Coward | more than 10 years ago | (#10167280)

It's obviously bad. They should be outsourced to Australia, so I can have a cool new job... althought admittedly most of the jobs are helpdesk and programming so on 2nd thoughts...

Re:Wrong Location.. (1)

Gentlewhisper (759800) | more than 10 years ago | (#10167506)

"...most of the jobs are helpdesk and programming so on 2nd thoughts..."

Well, I won't be so picky!

It is pretty hard to find jobs in SA you know?!

Easy answer (4, Interesting)

MemoryDragon (544441) | more than 10 years ago | (#10167295)

I dont live in the US, but the effects are clearly visible (in Europe less, because the outsourcing is since May within the EU, so basically there is not too much outsourcing)

a moderate outsourcing is good for everyone, it opens new markets because it helps to develop. Massively outsourcing, produces huge trade deficits and basically only shifts money.

What currently happens is following development, currently everybody thinks that companies can produce cheaply and sell expensive here. That only works as long as people have money. The long term trend goes towards crash of the monetary system in the west, or at least in the US, with trade deficits which are enourmous. The classical example of this was Argentina in the nineties, basically a classical example of a country which did not produce anything inshore but imported everything. The crash was imminent, and came around 2000-2001.

What currently happens is that some people thing a patent system which basically acts as a highway robbers tool might help. This might delay things but only for a certain period of time. Once the production is gone entirely, the research also will follow and with it the so called IP holders (which shift overtime, since patents run out), unless the current patent system crumbels under its own weight, because of the massive abuse which is currently happening before.

So what would be the solution. Simple, try to keep certain core industries and research in the country, and do moderate outsourcing which opens the doors for the wealth of everybody. But for heavens sake, keep some industries and research in the country or at least in the monetary zone.

Re:Easy answer (2, Insightful)

KontinMonet (737319) | more than 10 years ago | (#10167336)

Simple, try to keep certain core industries and research in the country, and do moderate outsourcing which opens the doors for the wealth of everybody. But for heavens sake, keep some industries and research in the country or at least in the monetary zone.

Not so simple, I suspect. Who do you stop from outsourcing? Specific industries or govt. departments only? By amount? Since the bulk of IT growth in the last couple of years in the UK has been from govt. IT contracts, I can't see the govt. deciding to pay extra by preventing companies from outsourcing. Restricting by amount would simply be worked around by splitting projects.

Another problem with outsourcing is that it does not send a positive signal to new recruits. Later, if and when an IT boom starts, wage inflation then rockets because there's not enough 'spare' resource left. Companies are then forced to outsource from a resource and cost point of view. The initial costs of setting up outsourcing can be high, so once the cost benefits accrue, companies will not eagerly drop the process.

But don't ask me what the solution might be. Perhaps this report might give us some answers.

Good for business, bad for the people. (1)

blanks (108019) | more than 10 years ago | (#10167319)

Im sure all the studies are taking into consideration how its a good thing for the corporations and few business's that are able to take advantage of the available workers over seas, but is it good for the people (in america)? Anyone who has a job in the US that are in the know about jobs being moved over seas, would say no, in fact the very idea of saying, "moving jobs over seas is good for the econemy" is the same thing as saying we dont care who does our work, as long as its cheap. When it comes right down to it, if it comes down to your company saving a buck and you having a job in most situations, what do you think will happen?

Re:Good for business, bad for the people. (1)

Roger Keith Barrett (712843) | more than 10 years ago | (#10167489)

According the the Bush admin. (and a massive number of the so-called "top economists") if the economy is good for the big corporations then the economy is good for EVERYONE.

This kind of thinking is crap. It might have been true 20 or 30 years ago, but it isn't true anymore. Just because money is flowing into a corporate entity doesn't mean its automatically going ANYWHERE, let alone to citizens and workers that desprately need it to survive.

I wonder if they are considering the worst part (3, Interesting)

eric76 (679787) | more than 10 years ago | (#10167323)

One common thread to anything done by the U.S. government is that big business is preferable over small business is preferable over independent contractors.

After all, how often does the federal government do anything to protect small businesses or individuals from being destroyed by large businesses?

They are more likely to protect the big businesses from being mistreated by small businesses.

For example, the whole patent system is nothing but protection of big business from small businesses and individuals.

When it comes time for important contracts, who gets the contracts, the big business or the small business? From what I see, it doesn't matter at all if the small business has much greater expertise in the matter.

So if the big business can make money by moving some activities overseas, everything is just fine with Congress.

As long as the big corporations and those corporations with friends in Congress make tons of money, nothing else matters.

Of course, there is a bigger issue that everyone ignores.

When we export jobs, we are exporting vital expertise. After those who used to do the work are no longer up to date, we lose the ability to do the work ourselves. We're not there with software development and it will take a while, but it is forseeable that at some point we won't have the expertise we need to handle emergencies.

So what happens when China declares war against us 40 or 50 years from now? What do we do after they cut off our access to the exepertise we will need to win the war?

Include all the manufacturing that we no longer have the capability of doing without a long lead-time, and we're going to be in serious trouble.

Our chances of prevailing against China will be about like Poland's chances against Germany in the early days of World War II.

It looks to me like we're well on our way to losing the next WOrld War.

Re:I wonder if they are considering the worst part (2, Funny)

Alioth (221270) | more than 10 years ago | (#10167372)

I'm sure in 50 years time we'll still have enough nuclear weapons to turn all the important bits of China into glass if they should try anything.

Re:I wonder if they are considering the worst part (2, Insightful)

Roger Keith Barrett (712843) | more than 10 years ago | (#10167453)

As long as the big corporations and those corporations with friends in Congress make tons of money, nothing else matters.

And you just hit upon the cause of 95% of the problems in the U.S. today.

The U.S. essentially has a ruling class. Elections won't change a thing because the U.S. Corps. have bought off both sides.

The only way to fix it is to throw the Corporate influence out of government... good luck trying to do it.

Re:I wonder if they are considering the worst part (1)

vrai (521708) | more than 10 years ago | (#10167495)

This isn't just a problem with the US (though it is particulary advanced there). All the large Anglo countries suffer from the same problem, as do most of the EU member states. People have been bribed with welfare and 'tax breaks', blinded by manipulation of the media and outright lied to by their leaders - the result? A populace who actually take comfort in the fact that they have no control of their leaders and so no control over their own lives. I have no pity for people so willing to be exploited.

hypocritical (5, Insightful)

JanneM (7445) | more than 10 years ago | (#10167324)

Well, first you persuade other countries to open up their economies to your imports, claiming this will enable them to step up on the ladder towards geater societal wealth and towards a more skill-based economy.

Then, when they actually do, and start reaping some rewards from it, you start acting like it's the second coming of antichrist.

So what do you suggest? Stop outsourcing, stop manufacturing abroad? Are you also then prepared to accept the trade retaliations from the rest of the world? Some people applauded your steel tariffs as something good. Of course, the US ended up losing a lot more money - and more jobs - total than it saved in that particular sector by postponing an inevitable restructuring.

Re:hypocritical (0)

Anonymous Coward | more than 10 years ago | (#10167425)

Well, first
you persuade other countries to open up their economies to your imports, claiming this will enable them to step up on the ladder towards geater societal wealth and towards a more skill-based economy.

Then, when they actually do, and start reaping some rewards from it, you start acting like it's the second coming of antichrist.


But you are making the mistake that the United States is monolithic, when in fact it is composed of 300 million people, dwarfing any individual European country.

That's 300 million different opinions, so of course there is going to be conflict and inconsistencies and different points of view.

Outsource "IT"? Obvious Answer.... (2, Insightful)

JiffyJeff (693994) | more than 10 years ago | (#10167340)

Outsourcing "IT" is like outsourcing "engineering."
If the question or design is simple then it is simply begs for a commodity-based result -- an answer or drawing. This is not to say that the people working on these problems are simple, it's just an issue of language, culture, and time-zone barriers.

America and the UK have proven themselves to be at the forefront of technology -- constantly improving on older developments; driving in directions yet unforseen. This happens daily, and in every sector of the market -- it is continual. Sure, some of our problems can be outsourced because they are simple to convey. However, much of our software and systems are more dynamic than we often admit. These "little" changes and enhancements are what I believe will be the demarcation point between offshore and traditional IT environments.

I don't think many jobs will be lost to foreign markets, because they will remain needed here. However, I think more jobs will be created in these offshored markets because of increased demand.

Pay for an independent study...? (3, Interesting)

jimicus (737525) | more than 10 years ago | (#10167343)

From the summary:

...Congress to pay for an independent study...

Call me naive, but surely there's no such thing as an independent study? After all, someone's paying for it and usually the someone who's paying for it has already got an opinion. I've yet to see an "independent study" which didn't favour the organisation paying for it.

Re:Pay for an independent study...? (0, Troll)

qbzzt (11136) | more than 10 years ago | (#10167431)

Hi,

Call me naive, but surely there's no such thing as an independent study?

What? Are you saying that politicians aren't interested in fair and unbalanced reports? What are you going to say next? That the political system (any political system) tends to favor one set of interests over another?

If we can't trust the politicians to be honest, who can we trust (I know, the answer is "almost everybody else will be better").

Bye,
ORi

Economists look at half the picture (2, Interesting)

Anonymous Coward | more than 10 years ago | (#10167344)

If you look at whole countries, free trade, in services as well as goods, is a good thing. Even if one country is less efficient at doing everything, it still pays for it to trade. This is such an important theory, that economists have come up with a name for it: the theory of comparative advantage.

However, economics, and particularly the classicial sort of economics, is not very good at sorting out what happens to the distribution of income within each economy. And, as several posters have pointed out, the people who have seemed to do most well out of free trade in the past have been the owners of capital (shareholders).

In practice, it's an empirical question. To use a baking analogy, you have to weigh up the bigger pie that free trade produces against the fact that a sizeable section of society is getting slighly less *proportionately*. If the pie grows enough, it doesn't matter, but that's not guaranteed to happen.

hmm.. (5, Interesting)

manavendra (688020) | more than 10 years ago | (#10167373)

I just think there is an ever-growing paranoia in the developed countries about software job offshoring. Hasn't such offshoring of other jobs happened in the past, like say, manufacturing? Aren't most cars and other white goods manufactured in Japan and China? What happened to the workers in that industry some of who would obviously have lost jobs?

More to the issue, I'm not sure what decides the level of outsourcing - "some", "moderate" or "massive". Even when offshoring wasn't happening, a lot of companies prefered "outsourcing" - subcontracting their IT needs and business to specialist companies who had the skills and knowledge to fulfill them, leaving the parent organization free from the usual worries of delivery, quality, acceptance etc. So if the same happens now, it's bad? Because there is growing fear of losing jobs? Surely, the involved professionals would be smart enough to know that economics drives a business, not preferences!

Further, if the products of US-based companies are used/consumed by people elsewhere, from the (less) money earned from US companies, surely the profits are going back to USA. So the article gave an example of Nike. I'm sure more parallels can be drawn without stretching the imagination too far!

Finally, if the cost of building a product, be it software, is relatively less (and so is the cost of maintaining it), then the cost of direct users/consumers would be much lesser. Say, if the Air-traffic control systems cost less to build and operate, it would lead to less fees towards airlines, which means they can cut costs further and offer cheaper tickets.

And contrary to what another poster mentioned, yes, the corporates may follow the skills, but why would they distance themselves from consumers? They have nothing to gain there, if there is a growing resentment against their products/services. And if they decide to not pursue offshoring, they stand to lose considerable market share simply due to the cost-benefits offered by the competitors. So, from their perspective, its a downward spiral.

Outsourcing is happening. Live with it. Some jobs are going elsewhere. Sure. Are those the best jobs? Surely, it gives the professionals in the developed world better jobs (creative as compared to monotonous, boring, trivial).

Maybe this brouhaha is there because IT professionals have a bigger mouthpiece, and a cheaper and far easier means of voicing their concerns.

Re:hmm.. (1)

KontinMonet (737319) | more than 10 years ago | (#10167428)

Software development is not the same as manufacturing. Copying and production of software onto CDs is the same as manufacturing. New ideas, design and prototyping for new cars, routers, trainers (which have similar aspects to software development) are not outsourced. Why is software development treated so differently?

On the other hand, accountancy could easily be outsourced but I don't see this happening much, because they run the show generally...

Re:hmm.. (3, Interesting)

Anonymous Coward | more than 10 years ago | (#10167497)

Mod down; the US didn't outsource manufacturing to Japan, rather Japan through better skills (political, financial, technical etc) took over these jobs.

Japan does not manufacture for the US, Japan manufactures for Japan and sells to the US. That is a major difference.

It is good, but for none of the reasons stated (3, Interesting)

ahfoo (223186) | more than 10 years ago | (#10167377)

It's good because it is symptomatic of the real underlying issue which is that jobs of any sort are no longer necessary in the most advanced economies.
Think about it, on balance the really enormous social result of the various industrial revolutions that took place in and around the nineteenth century was the end of slavery. Slavery ended because it could, not because it should. This is true with so many things that are attributed to good will and heroic characters. That's all mythology.
This struck me the other day when someone was talking in a wide-eyed manner about all the things that would have to be done manually without industrial and agriculural machinery. The person kept using the pronoun "you" saying "you would have to do this by hand and you would have to do that by hand." I spoke up and said, no actually a slave would most likely have done most of the things you're referring to before the age of machinery.
So, if machinery and centralized power ended slavery, then IT probably will end work as we know it and this offshoring issue is really symptomatic of a huge evolution in society that is just beginning. And, of course, in the beginning the resistance will be enormous and it will still be here hundreds of years from now. In evidence I would introduce, among others, the confederate flag issue in the American South.

qualifications (1, Funny)

Anonymous Coward | more than 10 years ago | (#10167393)

mix a general lack of decent economic understanding with personal emotions to bake 1 standard slashdot outsourcing post (serves up to 10)

There is an entire world out there (5, Insightful)

QuickFox (311231) | more than 10 years ago | (#10167398)

As it is today, people in poor countries see their young children starve to death, or die from lack of medicine, just so people in rich countries don't have to suffer the discomfort of looking for a new job. Outsourcing is part of a re-shuffling of wealth that may be uncomfortable for a while, but in the long run economies around the world will become more similar, so we won't see the extreme cruelties and conflicts of desperation that we see today.

Oh but we will (4, Insightful)

MacFury (659201) | more than 10 years ago | (#10167504)

so we won't see the extreme cruelties and conflicts of desperation that we see today.

Problem...not everyone can live like the US...if they do...then we all die. There aren't enough resources to go around. 6 billion plus people all can't drive cadilacs. Not that we shouldn't raise the standard of living...but we need population control before that becomes a universal option.

Some people live in the desert and complain that there's no rain

A basic fallacy... (2, Interesting)

jkrise (535370) | more than 10 years ago | (#10167409)

in such a kind of study is this. Is it possible in the long run that just the US makes money (pieces of paper, no more) while the rest of the world suffers? Is it possible for a single 20 metre tall wave to stay like that in a calm sea around?

An action or transaction that results in monetary gain for the US cannot be construed as 'good'. Hardly anything innovative happens in the US that is of importance for the rest of the world. In fact the US has lagged behind in things like cellphones and bandwidth. And within the US, the patents system seems so messed up, true innovators can hardly be expected to stay motivated.

Money, like blood, needs to circulate. If it accumulates in just one place, it can lead to a heart attack.

-

Re:A basic fallacy... (0)

Anonymous Coward | more than 10 years ago | (#10167448)

Hardly anything innovative happens in the US that is of importance for the rest of the world.

Um, okay, yeah.

What type of computer are you typing this on? Who designed the CPU? Who invents the lithography processes used in chip manufacture?

Re:A basic fallacy... (0)

Anonymous Coward | more than 10 years ago | (#10167459)

Some Indian hardware engineers who graduated out of the IITs maybe? Most current research on Intel chips happens at the Bangalore branch - just the patents get filed in the US.

Globalization only works... (4, Interesting)

little1973 (467075) | more than 10 years ago | (#10167410)

...if the three points below are realized.

1. Free trade of goods. Almost done. Shipping goods from country A to country B is cheap (even if some tariffs are applied).

2. Free movement of workforce. Countries all over the world have a limitation on this. You just can't go to work in an other country. Even in the EU it is not easy (lot of paperwork) to do so. Also, language and cultural differences make a person reluctant to move.

3. Free trade of knowledge. Patents and copyrights restrict the sharing of knowlegde. They should be eliminated entirely.

Big businesses want point 1 to be realized, but do not want point 2 and 3. Until point 2 and 3 become true, outsourcing is most probably bad for everyone.

Re:Globalization only works... (3, Interesting)

Roger Keith Barrett (712843) | more than 10 years ago | (#10167444)

In effect, what has happened is that there has been a split in the American economy. There are big differences between what a corp. or big company can do as compared to a regular joe.

As a regular guy I don't have the same choices. I can't decide to send my dry cleaning to Indonesia because it's cheaper. I only have local choices to buy things like milk and gas and those prices are all similiar and regionally based. And, as you mentioned, I don't have global choice as to where I can live and work... I am limited by laws that protect the jobs of citizens (present in all countries but no longer enforced in the USA... face it). Then you have the corps that DO have all these choices... especially when it comes to labor and raw materials.

So the economy is split. You essentially have a lower and an upper class.

Re:Globalization only works... (2, Insightful)

Dusabre (176445) | more than 10 years ago | (#10167467)

Don't agree with you on points 2 and 3.

2. Movement of employees - First off, it's very easy in the EU. There's almost no additional paperwork as compared to hiring a national. There are some problems with recognition of qualifications and social security but these can generally be sorted out. Companies REALLY want freedom of movement because it allows cheap laborers to move to domestic factories and qualified management to move abroad to run new factories/outlets.

3. Patents and copyright - patents are open and share knowledge. All the information necessary to replicate the technology or process must be included in the patent. When it expires or you buy a license, you can use the knowledge. One of the key aspects of patents is that you give up obscurity and secrecy for exclusive rights, the patent system was set up to encourage innovation and the spread of knowledge. Patents can be abused (for instance stupid extension for a different application after original expiry) but they're not inherently bad. Without patents, companies would keep their inventions secret and the invention might never enter the public domain.

Same applies to copyright - to gain it, you have to create a work. Once its created, its in the open.

Re:Globalization only works... (1)

Roger Keith Barrett (712843) | more than 10 years ago | (#10167475)

You might be correct when you talk about movement of workers WITHIN the EU, but you are totally wrong when it comes to workers from outside of it. The door is especially shut when it comes to anyone from the U.S.

I have tried to work in the EU... believe me it's damn near impossible. They protect the jobs from their member countries FIRST which is logical. Every country has these laws, but thanks to dominance of our friend the American Corporation they are basically no longer enforced here. With "friends" like this who needs a big enemy like China or the USSR? The enemy is within.

Nike shoes? Digital watches! (1)

shad0w47 (261033) | more than 10 years ago | (#10167432)

because IT workers in India wear Nike tennis shoes
I thought digital watches made us happy??

Not just IEEE (1)

redbeard_ak (542964) | more than 10 years ago | (#10167439)

Other IT organizations have also been lobbying this for awhile.

I sat with other Washtech [washtech.org] members and tried to beat it in Jay Insley's head (democrat from Boeing, err Everet) that outsourcing was an area of concern, as well as H-1 and L-1 visas.

He tried to tell us that India would buy enough Boeing airplanes (he's head of some India Caucus or something other) and that H-1 visas were needed to help get unique talent like 7' tall Chinese basketball players.

After an hour of listening to us, something must have sunk in, because on NPR he did say he was pushing for a study.

Not the only congresscritter we lobbied, but one I personally shock the hand of.

But whichever effort finally broke the camel's back, I'm glad. Now if enough geeks get busy [techsunite.org] calling their reps and putting pressure, the study might come to something.

Otherwise, it's just a study. For those of us that already know that the job market is different [washtech.org] ,a study won't do much but let us know we're not the only ones in this mess. Myself, I now have a higher skilled admin job than I had before, but at less pay. Myself, I don't mind the competition as long as they would get paid as well as I do. Hard to compete with people paid less than half I do.

*Their* jobs and companies (0)

Anonymous Coward | more than 10 years ago | (#10167484)

It's the employer's right to do with his property whatever he pleases. How would you like it if there was a law that prevented you from using Linux because it is bad for the economy? (assuming that a study said so)

I am SO tired of fascist and/or communist wankers telling us we should keep entrepreneurs on a tight leesh because what's theirs is actually "ours" (where the "we" is loosey defined)!

It's their business, so it's their choice to offshore it, keep it local or whatever else they choose, much in the same way you can decide to go to McDonald's or to a fancy restaurant, regardless of what other people think it's good for you...
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