[lbo-talk] IT, Other White Collar Jobs Floating To Cheaper Locales

Dwayne Monroe idoru345 at yahoo.com
Tue Jul 1 12:41:40 PDT 2003


Doug wrote:

I'd be careful about extrapolating too much from this - what we're hearing now sounds a lot like what we were hearing 10 years ago, just as the U.S. economy was about to add over 20 million jobs. I don't think we're on the verge of a strong recovery like that of the 1990s, but I also doubt we'll see a solvency- and stability-threatening mass exodus either.

****************

I would like to believe this, if for no other reason than the financial well being of my colleagues and myself. But my own observations indicate that a hollowing-out is underway.

For example, just last week, a senior manager for the IT consulting firm I work for sent out a 'state of the team' email. Among bits of feel-good cheerleading about how well we're doing in spite of the general stagnation there was an interesting paragraph about the need for outsourcing.

Apparently, the firm lost out on a contract worth 500K because all of the competing bids were from companies using offshore programmers. No matter how many times the numbers on our end were moved downwards to make us more attractive, the competitors were able to go lower to an insane depth.

What it came down to, in the end, was the fact that the labor cost of a firm using coders in Bangalore, India was tens of times lower than a domestic firm. So, they could reduce the cost by hundreds of thousands of dollars for the client.

The pressure to match this sort of competition is tremendous upon middle management, who, after all, are in their seats because they can produce the numbers the owners like. If they can preserve the desired profitability, but lower their labor costs dramatically you know they'll do it.

Clairvoyance is not required to foresee a time, not long off, when the highly skilled, well paid programmers at the firm are seen, not as a revenue source, but as an expense relative to the much cheaper offshore alternatives. Layoffs will follow as night follows day.

This is the result of nations like India having top-notch technical schools and universities, but insufficient domestic demand and infrastructure to absorb their tech labor pool. The American market is a good target for this low-wage/high skill group.

Which means that skilled, well paid American programmers (along with others whose jobs can be distributed remotely via the Internet) will find themselves unable to find work in the numbers, and at the level to which they've grown accustomed.

The standard neo-liberal response to complaints about this is that workers need to retool and 'go with the global economy flow' (you'll read this sort of comment from the more smug posters at Slashdot.org).

But what I'm thinking about is the loss of millions of high wage jobs that can buy houses and cars and all the other 'good life' artifacts that keep a good section of this economy spinning its wheels.

If a good chunk of the manufacturing jobs are lost, followed by a good chunk of the white collar and technical positions, how can it not have a profoundly depressive effect upon the US economy as a whole?

I don't want to sound like an alarmist but the trend seems clearly visible from where I sit.

DRM

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