Friday

New Offering from Off the Top: Offshore Politicians!

We've listened to the voice of ordinary Americans, we've felt their pain, and we have an answer. Millions of you are frustrated with overpaid politicians who seem more interested in helping foreigners than in helping Americans. Your politicians seem to be looking out for the interests of illegal immigrants, Arab sheikhs and oil barons, third world nations, and so forth, and it's costing you billions of dollars, lots of US jobs, and even American lives. Some of these politicians take huge bribes from foreign groups like the government of Red China or Arab sheikhs, serving as middlemen between the United States and foreign interests. And we're all sick it! We must put an end to this wasteful and corrupt practice of politicians as middlemen for foreign powers!
Now, with Off the Top's exclusive Offshore Politicians service, you can CUT OUT THE MIDDLEMEN and GET THIS CORRUPTION OFF OUR SHORES! When your state, city, or nation signs a contract for our Offshore Politicians service, we will immediately downsize the targeted politicians and replace them with low-cost offshore politicians who can directly represent the same foreign powers "in broad daylight" without the need for corrupt shenanigans and secretive deals.

Your offshore politicians will work less than a tenth of what onshore politicians demand, and will still feel filthy rich. We eliminate the wasteful and distracting election process, and instead simply appoint qualified representatives on the same relatively random basis that we use to select offshore executives for companies.

Plus, there is an added bonus! Because your offshore politicians will be scattered over the globe, communication between politicians will be hindered--not to mention the language barrier that comes from their puzzling varieties of English (though you can receive fluent English speakers for an extra fee, if you really need it). Communication barriers means less conniving among politicians, less corruption, and less tinkering with federal law. If enough states use our service, Congress may never be able to raise taxes again! This means more money in the pockets of every American!

Off the Top, Inc. proudly offers placement for offshore executives and offshore politicians. Working together, we can make the world a better place by taking a little off the top. Take a load off your company and keep a load in your vaults by taking a little "Off the Top."

OffShoreExecutive.com - New! A sister organization working closely with Off the Top to save your bottom line. Other businesses would denounce the competition, but since there is more than enough executive offshoring waiting to be done, we welcome it.

Pointless, Inc. - an example of a misguided company that resfuses to offshore their CEO.
Beam back to Jeff Lindsay's planet

The Information Technology Professionals Association of America - a group concerned about exporting of US jobs.

Zazona.com - interesting materials about the H-1B visa program and the loss of American jobs.
List of J.L.'s humor pages


Index to all of J.L.'s pages

Save Big Bucks with a Little "Off the Top"!

For years US companies have learned the benefits of exporting jobs overseas. It is now standard practice to "off-shore" positions such as technical support, customer service, manufacturing, computer programmers, and even lawyers, allowing high-paid employees to be replaced with employees who are virtually free, sometimes being paid just pennies an hour more than actual slave labor. It's a bonanza of economic prosperity for those who boldly offshore, and financial ruin for those who do things the old-fashioned way.

Now offshoring has come to the ranks of senior management, even CEOs! That's right, with Off the Top, Inc., your company can slash costs like never before. Why pay $10 million for an executive, even an honest one, when you can hire an offshore CEO for as little as $1 a day--and get somebody who knows what he's doing and does it well! No secret deals to enrich a pal on the board; no insider trading--just honest, hard-working professionals. Fire that CEO and hire a replacement from India, Pakistan, Outer Mongolia, or Burundi--just a few of the many countries who provide offshore CEOs for our exclusive service.

We know our service is not for everybody. Some CEOs really do earn their pay. But for hundreds of corporations, like all the would-be Enrons of America, executive offshoring might just be the best business decision you ever made.





Offshore Executives:Cheap as They Can Be!

Senior executives! CEOs! Make your company more lucrative than ever before by taking "a little off the top"! Off the Top, Inc. brings the financial beauty of "offshoring" to the ranks of executives! Let us show you how to save your company millions of dollars, improve Corporate performance, and gain the respect of all your employees.
No more guilt over trashing the jobs of your loyal employees: now you can save REAL MONEY by trashing your own job and getting a low-cost overseas employee who may do your job even better than you. The offshore executives we provide are bound to be hardworking and honest, because if they are not, they'll be executed. Maybe their entire family. Simple as that!

Cutting Costs by Offshoring Top Executives

JeffLindsay.com, through its partnership with Off the Top, Inc., is proud to be the first major US corporation to adopt "executive offshoring." This is bound to be the hottest new trend in business: exporting the jobs of upper management to low-cost developing nations to cut costs AND (in many cases) improve the quality of executive performance.

Because we were so impressed with the premium "Offshore Executive" service we obtained with Off the Top, Inc., JeffLindsay.com is pleased to provide a little publicity for Off the Top in the form of this Web page. (We also get 30 cents a day taken off the salary of our new offshore CEO.)

Our former overly compensated CEO, Jeff Lindsay, explains his impressive and trend-setting decision:

After years of futile cost-cutting efforts, I realized that my salary as CEO of JeffLindsay.com was more than the combined salary of all my programmers, customer service specialists, technical support staff, artists, humorists, and custodial staff, all of whom I had worked valiantly to offshore or simply downsize. But it was not enough. Then I ran into the good folks at Off the Top, Inc. during a cost-cutting/downsizing workshop in Hawaii. They were happy to help, and charged a lot less than you might expect (half the going price for outside consultants: about 25% of our revenues for the next five years). I saw that if I really wanted to cut costs and be fair about it, my own job had to be put on the chopping block of offshore placement.

But could an offshore candidate be found who would be willing to take on the stress of an executive lifestyle, make the myriad decisions demanded of my job, and achieve the same levels of success that I had? The good folks at Off the Top gave it to me straight, and I'll never forget their words:

"Sure, why not? Frankly, you haven't done much for your pathetic corporation, Mr. Lindsay. A crash dummy could have done better. But we can find someone willing to work hard, someone willing to take risks, someone who can inspire others with his stories of adventure, and someone with even better looks than you could ever hope for. And all this for just $1.50 a day!!"Ouch! The truth can really hurt, but in the end, it healed. (I'm still not convinced that a crash dummy could have done better - but to be safe, we added a couple to our board of directors.)
The leaders of Off the Top then flew me to Nepal, where I met the ideal candidate for my job, Jeferu "Shep" Linsee, a mountain climber, indigenous accountant, mystic, and local business man who raised goats and occasionally helped haul supplies up the sides of Mount Everest during the tourist season. He had more inspiring stories to tell than any overpriced motivational speaker we had ever brought in to our corporate activities. He could even speak some English. And with those dashing good looks and rugged manliness, I knew the press and the analysts on Wall Street would love him.

Training my future replacement was hard, but I knew it was the right thing for my company. My life as a CEO was over. Fortunately, I was able to find work with another local company, and while my salary is only a tiny fraction of what a typical CEO makes, I feel good knowing that "Shep" is doing better than I ever did and doing it each day for less than the cost of a hamburger with fries. And there you have the story of JeffLindsay.com, the first major US corporation to adopt Off the Top's fair, humane, and cost-effective practice of offshoring its senior executives. And now, we present some information prepared by our friends at Off the Top.

Workers asked to train foreign replacements

Workers asked to train foreign replacements

By Stephanie Armour, USA TODAY

When computer programmer Stephen Gentry learned last year that Boeing was laying him off and shipping his job overseas, he wasn't too surprised. Many of his friends had suffered the same experience.

What really stunned him was his last assignment: Managers had him train the worker from India who'd be taking his job.

"It was very callous," says Gentry, 51, of Auburn, Wash., a father of three who is still unemployed. "They asked us to make them feel at home while we trained them to take our jobs."

More cost-cutting companies are hiring workers in other countries to do jobs formerly held by U.S. employees. But in a painful twist, some employers are asking the workers they're laying off to train their foreign replacements — having them dig their own unemployment graves.
Almost one in five information technology workers has lost a job or knows someone who lost a job after training a foreign worker, according to a new survey by the Washington Alliance of Technology Workers. The study is the first to quantify how widespread the practice is.
Here's what typically happens: U.S. workers getting pink slips are told they can get another paycheck or beefed-up severance if they're willing to teach workers from India, China and other countries how to do their jobs. The foreign workers typically arrive for a few weeks or months of training. When they leave, they take U.S. jobs with them. The U.S. employees who trained them are then laid off.

Employers say they need workers to train replacements to ensure a seamless transition, but the practice is coming under fire.

In a congressional hearing in February, some lawmakers denounced the training of replacements as "unconscionable."

Seven in 10 information technology workers say they would support legislation requiring companies to inform local officials if they plan to use U.S. workers to train foreign replacements, according to the survey by the Washington Alliance of Technology Workers, known as WashTech.

"This is the global economy hitting home," says Marcus Courtney, president of WashTech, a union representing technology workers. "It raises serious moral issues. Maybe we need to look at banning this practice outright. For American workers, it's a terrible situation to be in."

Transferring knowledge

Some employers say they're hiring workers in other countries — a trend known as "offshoring" — because they can pay lower wages, providing a much-needed competitive advantage. They say U.S. workers aren't forced to train replacements (known as "knowledge transfer"), but are given the choice whether to participate.

At WatchMark-Comnitel, a telecommunications software company in Bellevue, Wash., 17 employees in quality assurance were laid off in 2003, and replacements in India were hired. Sixteen U.S. workers helped train their replacements. Company officials say no workers were forced to do the training, but those who did got extra incentives.

"It was a voluntary choice they had to participate," says WatchMark-Comnitel spokeswoman Sherry Toly.

"Separation packages were offered whether they participated or not. We've been very happy (with the offshoring), and we feel we have a better product. Lower costs have transferred to an improved product."

But workers such as Myra Bronstein aren't convinced.

On a Friday in 2003, the former WatchMark software tester was part of a team of workers summoned to a meeting. There, she says, managers handed out letters explaining that the testing staff was being laid off. Managers then told the group that their replacements would be workers in India, she says. The workers were flying in and would be in the office Monday. She says she was instructed to train them.

Bronstein felt trapped. She says she believes that if she refused, she would have probably been fired without severance and would have been ineligible for unemployment benefits. If she quit, she says, she wouldn't have received severance or been eligible for unemployment.

The next week, she and the other employees facing layoffs were introduced to the workers who were taking their jobs. The workers from India, she says, would be earning a sixteenth of what she had been paid.

"I was staring hard at my shoes and trying not to cry. It was hideously awkward. I felt forced," says Bronstein, 48, of Mercer Island, Wash. She is still unemployed. "It was very deflating and dehumanizing to train your replacement. I felt sucker-punched. It was as if they handed us a shovel and said, 'Here, dig your own grave.' "

Is issue overblown?

While some economists and policymakers say there's no question that training replacements is difficult, they also say attention to the issue is overblown. Because this is an election year, they say unions are focusing on the issue as public sentiment turns against the loss of U.S. jobs overseas.

"Training your replacements is a pretty crappy thing to have to do. But it helps personalize the issue. It makes people empathize," says Bruce Bartlett, a senior fellow at the Dallas-based National Center for Policy Analysis. He says fears about job loss are "grossly overblown. It's always easy to blame foreigners."

Starting March 24, the AFL-CIO took workers who've felt the impact of unemployment on a "Show Us the Jobs" tour from St. Louis to Washington. The workers arrived last week in Washington to meet with members of Congress. Several of the 51 riders on the tour are jobless workers who say they had to train their own replacements.

Pat Fluno, 54, one of the bus riders, is a computer programmer in Orlando. Slightly more than a year ago, she was told workers from India would be taking the job she held with a German conglomerate. She says she was given a bonus to do the training and severance.

"It's insult to injury," Fluno says. "It's abuse. I think it's disgusting. I'm not pro-Bush or pro-Kerry. I just want the candidates to hear what's happening."
She says the training took about two months.

Employees forced to train their replacements say the practice is a stark illustration of how the hiring of foreign workers is plundering U.S. jobs. In the next 15 years, American employers will move about 3.3 million white-collar jobs and $136 billion in wages abroad, according to Forrester Research. That's up from $4 billion in wages in 2000.

In 1998, Darrell Rathburn says, he was asked to train his replacements at a high-tech company, but the software developer says he quit voluntarily after training them.

"Their salaries were about a third of ours," says Rathburn, of Columbus, Ohio. "They returned to India, and my project was given to them. There are so many people out of work who are very qualified. This is not right. This is not fair."

Hurting morale and image

While some say they feel bitter toward the foreign workers who are getting their jobs, a number of workers who've trained their replacements save most of their antagonism for their former employers. Thirty percent of employers said offshoring has hurt morale at their companies in the USA, according to a March survey by benefits consultants Hewitt Associates. Eleven percent say it has had a negative impact on brand image.


Scott Kirwin, a computer consultant in Wilmington, Del., was a contract worker for J.P. Morgan Chase for about three years when he was told he was being let go. He says the contract was ended so that Indian workers could replace him. He was asked to train the replacements, he says, in order to keep getting a paycheck.

"You feel like you're the guy wearing the red shirt on Star Trek," says Kirwin, referring to characters who often died on the TV show. He helped train his replacements in 2002. "It's a very unpleasant situation. It's unfair. These people appeared, and they'd sit and shadow us and watch what we do."

Kirwin has taken action, setting up the IT Professionals Association of America, which is aimed at raising awareness about offshoring and job issues. Web site visitors (www.itpaa.org) can order a T-shirt that reads, "My job went to India and all I got was a stupid pink slip."
J.P. Morgan Chase declined comment.

Lobbying for protection

Union members have been lobbying for legislative protections, from more restrictions on visas to guarantees that workers who quit instead of training foreign replacements will still get unemployment.

A bill introduced in Olympia, Wash., would have required employers to give employees advance notice before asking them to train foreign replacements. The bill didn't pass this year, but the sponsor, state Rep. Zack Hudgins, says he plans to bring it back.

"It's a terrible thing to ask someone to train their replacement and ship the job overseas," Hudgins, a Democrat, says. "This is way beyond election-year politics. It's a shift in our economy. It's not a partisan issue."

Many feel powerless. In 2003, Kevin Flanagan was laid off from Bank of America after training foreign workers. He shot and killed himself in the parking lot in Concord, Calif.

His death galvanized other information technology workers, who have staged protests against outsourcing. Members of Congress opposed to the practice also have used his case as a call to action.

"We were very saddened by the death of our associate," says Bank of America spokeswoman Mary Waller.

"Our thoughts and prayers went out to the family and co-workers. ... We determine the best way to transition processes so services are maintained."

When transitions occur, the company says it gives employees help finding work or assistance with finding another in-house position if possible.

The bank also has training opportunities. Bank officials say the positions that have been moved overseas are less than one-half of 1% of their total workforce of more than 180,000 employees.
But now, around the one-year anniversary of Flanagan's death, his father, Tom, still copes with the loss.

"Kevin losing his job with Bank of America was the defining event in his decision to end his life. Certainly there were other issues, demons, with which he was unable to cope," Flanagan says.
"Outsourcing isn't new, (but) now white-collar jobs are being lost.
"Why? Money, of course."

Teaching overseas workers how to appear American

By Angie Wong

On the first day of class in a new office building in Mumbai, India, Brinda Surendar, an "American accent and culture trainer" who teaches overseas workers how to speak and behave like Americans, shows potential Indian customer service employees an episode of the TV show "Friends."

The show is meant to offer an example of how Americans live and behave for students who have never been to America but who have to learn about the culture to work as telephone customer service representatives in India.

Surendar received her undergraduate degree in English from SUNY Albany two years ago and teaches her students, mostly in their early twenties and many of who hold graduate degrees, American Culture 101. Her class is aimed at helping the students secure jobs at leading outsourcing companies like India's TransWorks, which has a roster of U.S. clients that include the top five banks on the Fortune 500. The company, with headquarters in Bangalore and Mumbai, expects to triple its workforce by May 2005 to meet the growth in outsourcing.
To get these highly desirable jobs, candidates must not only be fluent in English, they must also be fluent in how Americans speak and act.

At a time when job security weighs heavily on the minds of many Americans, and when many workers are outraged about service jobs being shipped abroad to low wage workforces in Asia and throughout the developing world, it is ironic that some Americans are making a living teaching Indian replacement workers how to appear more American.

According to CNN's "Moneyline," 2 million American jobs have been lost to outsourcing to countries like India since 2001. Unlike outsourcing in the 1980s, which mostly involved manufacturing, a large sector of today's lost jobs are customer service positions that demand person-to-person contact because the workers have to interact directly with phone clients.
Companies like TransWorks, which handle technical phone support and telemarketing services for such companies as Microsoft and Citibank, are popping up all over India's version of Silicon Valley. They are creating hot new real estate areas like the new Prestige Blue Chip Park in Bangalore.

The demand has created a hiring frenzy, but finding employees who can speak and understand the way Americans talk is difficult. Many American training centers have opened in response.
Surendar, for example, runs a 14-day training course at TransWorks in Mumbai to teach potential telephone customer service employees how to erase the singsong quality of Indians speaking English. She also familiarizes them with American foods, pop culture and current events. She says the training days are filled with voice exercises, history textbook memorizations and culture tests. In order to keep her students attentive after a nine-hour day, she screens videos like "Bruce Almighty," "Charlie's Angels" and "Something about Mary" as examples of American life.

Surendar recognizes her students' reluctance to use American slang and phrases. "You have to remember, I'm asking highly skilled professionals to role play Jim Carrey, and some of them feel like fools," Surendar says.

She says the most difficult part of the process is getting students to retrain their mouth muscles. "American phrases are big and drawn out, whereas Indian speakers are used to speaking quick, closed-mouthed," she says, "My students are not used to opening their mouths so much."
After the intensive training course, potential employees cram for the job-placement test, which includes reading a passage filled with rolling R's (a sound Indians have trouble pronouncing) and knowing every abbreviation for each state in America and the most recent sport scores of the Oakland A's baseball team.

"I didn't even know who the A's were until someone told me," says Anne Cooke, an American linguist and independent trainer based in Los Angeles. She has been training Indians how to speak and be more American for companies like General Electric and Dell since the early 1990s. After living in Paris, Madrid and Tokyo, Cooke started an accent correction business.
According to Cooke, some call centers will filter the service representative voices to sound lower than they actually are through the headsets to help "disguise their ethnic pitch."

Indians "tend to speak English at a really high pitch and they tend to snip off the end of words, which, when they speak, appears like they are being short-tempered with you, even when they don't mean to be," Cooke says. She teaches Indian executives to lower their voice and relax their speech to sound more "authoritative and confident" when dealing with Westerners.

"A slower, lower voice is a great way to combat a testy phone client who wants to vent," Cooke tells her students when dealing with clients who just want to take out their anger over the phone.

They are also taught to be more assertive. "My students think I'm teaching them to be rude," Cooke says. "I believe I'm teaching them to be more direct." Employees are encouraged to practice the American language and mannerisms outside the workplace to make them second nature.

It's especially disconcerting to learn that Indians disapprove of the way Americans speak, Cooke says. One of Cooke's students told her that his father would throw him out of the house if he talked to him in the fashion he was being taught in her class.
Cooke says Americans tend to compound words and "hiccup phrases" like "t'was," as in it was, and "jeet," as in did you eat.

Not only do they need to perfect their American speech, they also need to perfect their American attitudes. One of the biggest challenges Indian customer service reps have is showing sympathy to customers. "Many Indians come off sounding very robotic" when speaking English, Cooke says. "I teach them to add a sigh or an 'Oh, I understand your situation' to offer customers an ear of sympathy, which makes the whole customer service experience much more enjoyable."

TransWorks also has British clients who outsource telephone customer service jobs to India. "We have dedicated a selection of our employees to support our U.K. clients," says Abhay Chauhan, assistant vice president of business development at TransWorks. "They are trained to speak with British accents." Many Indians applying to work for a British company via TransWorks believe they already understand British culture and speak with a British accent because they had a connection with the English when the British occupied India. "They think they speak with a British accent, but they don't," says Cooke. "We have accent trainers for that, too."

(((aw2148@columbia.edu)))

Outsourcing: training your replacement

Economists say eventually more jobs to be created for U.S. workers


By Andrea Mitchell
Chief foreign affairs correspondent
NBC News
Updated: 7:59 p.m. ET March 5, 2004


In Mayfield, Ohio, a Cleveland suburb in a critical election battleground state, Ed Lucas has run out of unemployment benefits and most of his savings.

Until last April, he was earning $80,000 a year working for an engineering firm, running computer systems for British Petroleum.

But he says BP found a computer manager in India willing to do the job for less than $10,000 a year.


Ed’s final assignment was training his Indian replacement: “It was just like somebody actually put their hand in my chest and ripped my heart out. It was just the worst feeling anybody could have.”

Ohio has lost 227,000 jobs in the last three years, many of them high-tech jobs outsourced to low-wage countries.

That information is red meat for Democrats, who rallied Friday at the U.S. Capitol. “We will not allow these jobs to go overseas!” said Senate Minority Leader Tom Daschle, D-S.D.

But economists say outsourcing cuts costs, boosts profits and eventually helps companies hire more workers in the United States.

“It does create more jobs in the long run. They are different jobs. They will be more skilled jobs, but there is no question that it will create more jobs in the long run,” said Catherine Mann, senior fellow at The Institute for International Economics.

Outsourcing also helps consumers. A recent study found that computers cost one-third less in the 1990s because high-tech parts were produced more cheaply overseas.

Outsourcing is a growing trend. The concrete slabs for a public library in Salt Lake City were outsourced to a Mexican contractor 2,400 miles away. The prefab panels were shipped on 140 flatbed trucks, and the library still saved more than a million dollars.

But there is no way to measure the cost on people like Ed Lucas, who’s now learning how to tend bar while he waits for the economy to produce those new jobs.

Go East, Young Hi-Tech Worker

Go East, Young Hi-Tech Worker

Considering India as Land of Opportunity for Westerners
By Siddarth Srivastava, Pacific News Service

NEW DELHI - August 24, 2004 - During the dot.com boom a few years ago, India mourned the loss of its best and brightest to the West. Now, Indian headhunters are talking of foreigners -- Americans, Europeans, Japanese, Filipinos and just about any other citizen of the world-- coming to India looking for employment.

Outsourcing Blues: Training My Overseas Replacement

By Body Taing, Pacific News Service

A young assemblyline worker in Silicon Valley tells of the arrival of Chinese workers at his company, and the reaction of a workforce fearful, resentful and in some cases apathetic about impending layoffs.

SAN JOSE, Calif. - July 9, 2004 - The other day I showed a guy from China how to do my job -- so he could take it home with him.I'm lucky. I still have a job in Silicon Valley manufacturing, for now. In the past couple years I've competed against college graduates to keep jobs like this. But now it's not just college students who want this work. Degrees don't mean a thing if your job is moving to another country.Welcome to the real Silicon Valley, the mother of all outsourcing.


America's Boom Industry: Outsourcing

"Don't worry; they'll get better jobs in the service sector." During the last three decades of the 20th century, this was the mantra of most government and business leaders when corporations transferred auto or apparel jobs to Mexico or China. That line doesn't work anymore, since U.S. companies have started shifting a wide range of service jobs as well -- from high-skill computer programming to entry-level call center jobs -- to India and other lower-wage nations. This breaching of the final frontier of American jobs has caused understandable anxiety and has become a hot-button issue in the presidential election campaign.
The trend toward foreign "outsourcing" of service jobs is an extension of a longstanding practice of cutting costs by subcontracting parts of business operations to nonunion shops within the United States. The practice has gone global, in part because of technological changes. Massive amounts of information can now be transmitted across the world at low cost, making geographic distances less important. International financial institutions and trade agreements have also facilitated the trend by promoting investment liberalization and privatization of public services, creating new opportunities for U.S. corporations in overseas markets.
Forrester Research estimates that about 40 percent of Fortune 1,000 firms have already outsourced some work and that at least another 3 million service jobs will leave the United States by 2015, led by information technology work. A study by the University of California, Berkeley estimates that 14 million U.S. jobs (11 percent of the total work force) are vulnerable to being outsourced.
Although the number of jobs lost so far is small relative to the total work force, these layoffs have a huge impact on the affected communities, and the potential for white-collar jobs to be offshored is deeply unsettling for many American workers. In addition to job cuts, service workers must now also contend with the enhanced power of highly mobile, increasingly unregulated global corporations to bargain down U.S. wages and working conditions by threatening to move jobs elsewhere.
According to McKinsey and Company, a consulting firm that helps businesses develop offshore operations, U.S. companies make up about 70 percent of the global outsourcing market. Their top destination in the developing world is currently India, where domestic subcontractors perform a range of services for the U.S. market. At the low-skill end, Indian workers earn $1 or less per hour to handle customer service calls for firms like Earthlink and Travelocity. Among the higher-skill workers are Indian computer programmers, who earn about one-tenth the pay of their U.S. counterparts to write code for multinational corporations like Citigroup. Given a lack of other economic opportunities, Indian workers are often eager to secure new jobs catering to the U.S. market. However, there is also a nagging fear that these jobs may evaporate as soon as companies can find lower costs elsewhere. China, of course, looms on the horizon. It is already the second-biggest developing-country draw for service work, offering rock-bottom wages and an official ban on basic union rights. Though it lacks India's English-speaking advantage, this may not be the case forever, as Beijing is heavily promoting English-language education. Mexico's experience in competing with China over manufacturing jobs could foreshadow events to come. Although employment in Mexico's border export zone more than doubled after the implementation of the North American Free Trade Agreement (NAFTA) in 1994, the country has in recent years lost several hundred thousand of these jobs, partly in economic flight to lower-wage China. India has even lost some foreign manufacturing jobs to China.
Public pressure has galvanized U.S. state and federal legislators to introduce a flurry of bills to curb outsourcing, primarily by requiring that government contract work not be performed overseas. However, there is stiff resistance from the corporate lobby, such as the new Coalition for Economic Growth and American Jobs, which represents some 200 trade groups, including the U.S. Chamber of Commerce and the Information Technology Association of America. These and other pro-outsourcing groups argue that the practice is good for U.S. workers, because it lowers the cost of services for U.S. consumers and enhances the overall competitiveness of U.S. companies. Another common claim is that recent job losses are due to productivity gains, not outsourcing. However, because workers are facing a "jobless" recovery and see few personal benefits from enhanced productivity, these arguments convince very few.
One reflection of public opinion is that concerns about U.S. trade policy have spread up the income ladder. Lower- and middle-class workers have been consistently skeptical of U.S. trade policies, but a February 2004 University of Maryland poll showed that even among Americans earning over $100,000 a year, support for actively promoting more "free trade" has dropped from 57 percent in 1999 to 28 percent in 2004.
Bush, Kerry polices towards outsourcing
As they vie for votes in layoff-ridden swing states, both presidential candidates are offering solutions to the prevailing American angst about trade and outsourcing. Railing against "Benedict Arnold" companies, Sen. John Kerry has vowed to eliminate government incentives for outsourcing. For example, he would place conditions on most government contracts to require that the work be performed in the United States. He would also eliminate a tax break that currently allows U.S. businesses to defer tax payments on income earned abroad, and he proposes to use the resulting revenue to lower the overall corporate tax rate from 35 to 33.25 percent. Similarly, Kerry would offer incentives to encourage transnational corporations to repatriate earnings and would then channel these revenues into an employer tax credit for new hires. Regarding trade, Kerry has vowed to include stronger labor and environmental protections in future trade pacts and to review all existing agreements.
The Bush administration has delivered mixed messages regarding outsourcing. Two prominent officials have publicly endorsed the practice -- Treasury Secretary John Snow and Gregory Mankiw, chairman of the Council of Economic Advisers. Both have argued that foreign outsourcing of service jobs is good for the American economy, because it helps companies become more efficient. Meanwhile, President Bush has sought to distance himself from such statements and instead to focus public attention on his administration's new "21 st Century" jobs plan. Bush argues that the real driving forces behind outsourcing are "frivolous" lawsuits, excessive regulation, and high taxes. He also claims that NAFTA and other trade agreements have been good for U.S. workers, and he promises that by breaking down even more trade barriers his policies will boost export-related jobs. "The best product on any shelf anywhere in the world says, 'Made in the USA'," Bush told an audience of women entrepreneurs in Cleveland.
But the Bush administration's jobs plan ignores the historical record and thus misdiagnoses the problem. Government figures show that U.S. employment for American multinational corporations grew only 25 percent between 1982 and 2001, while employment at their overseas affiliates increased 47 percent. (These figures likely underestimate foreign expansion, because they do not include information on employment through subcontractors, data the U.S. government does not require businesses to report). This period of rapid overseas expansion has coincided with increased trade and investment liberalization and a declining corporate tax burden. U.S. employers are leaders in outsourcing, even though their share of the national tax bill is considerably lower than the average for employers in other industrial nations.
Bush's claim that companies are fleeing "Big Government" is also dubious. McKinsey and Company claims that U.S. corporations have led the outsourcing trend not to escape burdensome regulations, but because the relatively unregulated U.S. labor market facilitates sending jobs abroad. McKinsey, a pro-outsourcing consulting firm, points out that compared to most European counterparts, the United States has "liberal employment and labor laws that allow companies greater flexibility in reassigning tasks and eliminating jobs."
Kerry's early jobs plan is encouraging, but it addresses only one side of the issue. His proposal to end taxpayer subsidies for outsourcing, whether through government contracting or tax breaks, is long overdue. Citizens should not have to pay higher taxes to subsidize the evaporation of their jobs. To ensure effectiveness, any reforms must be carefully crafted to prevent potential loopholes. More effort will also be needed to address the threat posed by existing international agreements to domestic legislation that requires public contract work to be performed in the United States. For example, under World Trade Organization rules, the Government Procurement Agreement bans governments from favoring domestic firms in procurement contracts. Although only 25 countries have signed the agreement thus far, plans are under way to expand its scope and incorporate similar rules in other trade pacts.
Kerry's primary focus on domestic measures will have only a modest impact on the jobs issue, because these policies cannot make up for the extreme gap in labor costs, which is the primary driving force behind outsourcing. McKinsey estimates that global pay gaps result in a net cost savings for outsourcers of at least 45-55 percent (after accounting for higher infrastructure and other costs). If this is true, figures in a 2003 University of California, Berkeley study suggest that companies could save around $300 billion a year if they outsourced all of the estimated 14 million U.S. service jobs considered feasible to transfer overseas.
Kerry's promises to change U.S. trade policy are also a step in the right direction. If there were effective international mechanisms to strengthen labor rights enforcement, developing-country workers would have a better chance of obtaining fair wages. Research commissioned by the AFL-CIO indicates that labor rights violations in China artificially depress wages by 47-86 percent and that if the country were to respect basic internationally recognized labor rights, wages would likely increase 90 to 595 percent. However, the goal of strengthening labor rights protections should be pursued as part of a broader strategy to uplift conditions generally in poorer countries. Without overall economic improvements, developing-country governments will continue to face strong pressure to attract foreign investment by offering lax labor rights enforcement, thereby undermining efforts to maintain high standards in the richer countries.
Toward a New Foreign Policy
The overall goal of U.S. policy on outsourcing should be to attack the factors that make workers -- in the U.S. as well as around the world -- vulnerable to exploitation by increasingly mobile and unregulated global corporations. The approach needs to recognize that raising standards overseas is vital to retaining stable and substantial jobs at home. This requires a multifaceted response encompassing changes in domestic tax, procurement and labor laws as well as in multilateral trade, finance and aid policies.
On the domestic side, a first step should be to reform tax and procurement policies at all levels of government to ensure that they support good jobs in the United States. Additional subsidies that enhance the incentives for corporations to shift jobs overseas should also be eliminated. These include risk insurance and loan guarantees provided by the Overseas Private Investment Corporation as well as technical assistance and other supports offered by the U.S. Trade and Development Agency. Moreover, the U.S. government should ensure that U.S. authorities, as well as their counterparts around the world, have the right to use tax and procurement policies as instruments to support social goals without being undermined by international trade agreements.
The domestic policy response should also involve labor law reforms that reduce current obstacles to union organizing and that beef up rules related to laying off workers. Most European countries require that corporations guarantee higher severance pay based on years of service, which substantially raises the cost of moving jobs. Many European countries also oblige companies that are planning to close an operation to consult with unions and sometimes to negotiate over the decision. By contrast, under U.S. law, unions may only bargain over the effects of a closure. Thus, although European countries also experience outsourcing-related job loss, the practice is not as advanced as in the United States.
However, domestic measures, while significant, do not address the biggest incentive for outsourcing -- extreme wage gaps. Tackling this problem will require a long-term commitment to supporting sustainable economic activity in poor countries and should focus on the factors that make workers around the world vulnerable to exploitation by global companies.
One of these factors is lax enforcement of internationally recognized labor rights, which artificially depresses wages. U.S. policymakers must learn from the failure of NAFTA's weak labor rights mechanism and should develop a better model. The Hemispheric Social Alliance has proposed involving the International Labor Organization in monitoring compliance and investigating complaints related to rights violations. If necessary, assistance would be provided to help countries achieve compliance. Only if this approach was unsuccessful would sanctions be applied, and if the perpetrator was a specific company, the punishments would be targeted at the company rather than at the host government.
Any labor rights initiative, however, should be integrated within a broader strategy toward poorer nations. Other factors that make workers vulnerable are high unemployment and poverty. Although national governments are not without responsibility for these problems, international financial institutions and trade agreements have played an exacerbating role. For example, the World Bank, the International Monetary Fund and the World Trade Organization all threaten the livelihoods of tens of millions of farmers by pressuring poor-country governments to eliminate tariffs and agricultural subsidies. Likewise, privatization supported by these international financial institutions has often resulted in mass layoffs and weakened social services. These multilateral agencies should instead join governments in promoting "global green deal" policies that stimulate stable and substantial employment while protecting the environment.
Regarding trade, Washington should withdraw its support for rules -- such as in Chapter 11 of NAFTA -- that grant excessive protection to U.S. investors against public interest laws and other host government actions that diminish profits. Such trade rules undermine democracy and encourage U.S. firms to shift jobs overseas.
To enhance this new and broader strategy toward poorer nations, the U.S. government should advocate for stronger international mechanisms to transfer resources from richer to poorer countries. Where appropriate, this would include debt reduction or cancellation. Washington could also promote the adoption of international taxes on both foreign exchange transactions and arms sales to generate revenues for development purposes. The U.S. must also revamp its development aid policies to emphasize anti-poverty measures, healthy communities and a clean environment rather than handouts to U.S. corporations like Halliburton and Bechtel.
In short, a comprehensive response to corporate outsourcing requires a sea change in the outlook of both the U.S. public and its politicians toward America's role in the world. Just as Americans are less secure when much of the world is plagued by extreme poverty, inequality and instability, worker exploitation overseas translates into exploited workers and less secure jobs at home. The electoral debate over outsourcing offers an opportunity to create a new policy approach that combines solidarity with self-interest in a whole-scale effort to benefit the entire world.

Will Work for Ramen - The Truth about Tech Jobs..

Will Work for Ramen - The Truth about Tech Jobs..

American CEOs say the high tech economy is booming, yet at the same time they're offshoring tens of thousands of IT jobs. Confused??? So are we! This short, funny animated film dares to tell the truth about America's struggling tech economy - and the skilled workers who are paying the price. [Read Full Story]