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    Highlights—February 8, 2004
  • US News and World Report: Big Worker Blues. Strong profits, anxious employees: What the jobless recovery looks like at IBM. Excerpt: It had been a rewarding 24-year IBM career for Craig Hench--until he got a curt note from his boss last June. The Mechanicsburg, Pa., marketing manager, who says he had received solid performance reviews over the years and was earning nearly $100,000, suddenly found himself being pressured to set more precise sales goals and file more timely status reports. The criticism, as he tells it, grew intense. Finally, he saw the writing on the wall. "A hostile relationship with the boss . . . that's how they manage people out of the business," says Hench, 46. "It's like you have leprosy when you're the target." In August, after being placed in a "performance improvement plan," Hench decided to accept a buyout. Whether he was chosen because of valid performance problems or because he was simply one of the company's more expensive employees is now part of a nationwide age-discrimination lawsuit against IBM. Either way, Hench represents millions of American workers who are struggling through the "jobless recovery." ...

    Youth movement. To satisfy Wall Street, IBM has pledged to slash costs--up to $7 billion a year--to keep its profits gushing. But aside from targeting overhead, IBM has been silent about where those savings will come from. Enter employee anxiety. The age-discrimination suit, for instance, alleges that IBM has strategically targeted older employees for termination because their health and retirement benefits are much more costly than those for younger workers. When IBM let go more than 800 employees in its semiconductor manufacturing division in the summer of 2002, for instance, several laid-off employees analyzed demographic data IBM was required to release. One finding was that 47 percent of those let go were over the age of 45, even though that age group accounted for just 40 percent of the division's overall workforce. And the probability of being laid off increased steadily with age. ...

    IBM officials refused to respond to such allegations or to speak with U.S. News on the record for this story. And the company is notoriously tight-lipped about its personnel policies. Yet IBM executives have added to worker worries by boasting about how the average age of its employees has been declining. "Half of our workforce has been with IBM for fewer than five years," wrote CEO Sam Palmisano in a pep talk posted on an internal Web site last November and obtained by U.S. News. His intent may have been to tout IBM's youthful exuberance, but many IBM-ers see other motives. "They don't want people to reach pension eligibility," insists Kathi Cooper, 53, a compliance specialist in Bethalto, Ill., who is the lead plaintiff in the pension lawsuit (and also one of few IBM employees willing to speak on the record). "They're taking money out of my pocket and giving it to younger people in the form of empty promises." If link is broken, view Adobe Acrobat version [PDF--321 KB].


  • Datamonitor: IBM: Big Mac turns down Big Blue in BPO. McDonalds has rejected IBM's offer to handle its business process outsourcing. Excerpt: IBM Global Services' attempts to extend its outsourcing reach beyond its clients' IT infrastructure, and into its back-office departments such as finance and accounting, have been met with skepticism from fast food giant McDonalds. The resistance highlights some of the major issues facing IT services companies trying to establish themselves in new outsourcing areas. Speaking at a business process outsourcing conference in New Orleans, the head of McDonalds' shared services unit, Jerry Calabrese, said it had turned down IBM to outsource its finance and accounting functions, and it had regretted employing them to benchmark its processes. He said: "IBM wanted to send 70% of our finance and accounting work offshore, and we decided that it was not worth the risk. Finance and accounting is still new to IBM, there is no proven history there yet." According to Everest Group, IBM has 31.7% of the nascent finance and accounting outsourcing market, a figure inflated by a small number of large deals such as one with BP, which it inherited through its acquisition of PwC Consulting.


  • CNET News: Shhh... Don't mention the 'O' word! Excerpt: --In a memorable episode from the English comedy series, "Fawlty Towers," the besotted hotel owner, Basil Fawlty, played by actor John Cleese, suffers a massive concussion. When a group of German tourists turns up at the inn, Fawlty explicitly warns the hired help not to reopen old wounds by making any reference to "the war." Naturally, temptation wins out and he ultimately winds up performing a syncopated goose-step through the restaurant to the mortification of his foreign guests. Like poor Fawlty, IBM these days finds itself forced to employ the oddest of circumlocutions to prop up the pretense that plans to shift thousands of high-paying programming jobs overseas are anything but. I find that awfully curious. That a global company such as IBM is trying to save money by exporting jobs to Asia and Latin America is hardly a showstopper. The only real news is the size of the number of jobs affected, expected in this case to number in the thousands. But somebody in upper management apparently believes this is a political hot potato. Ever since this story first began to leak out late last year, IBM has shucked and shimmied and done whatever else it can in order not to mention offshoring.


  • iSeries Network: SEC Moves Forward in Probe of IBM. Excerpt: February 04, 2004 — IBM may be laying off folks in the Software Group, but odds are good that there’s no staff reduction in the legal department. On June 2, IBM announced that it was under investigation by the Securities and Exchange Commission (SEC) for possible accounting irregularities in the recognition of revenue from a retail customer. According to IBM's press release, the SEC alleges that IBM helped retail customer Dollar General to misstate its financial results for a specific transaction in the fourth quarter of 2000, in which IBM paid Dollar General $11 million for used equipment as part of a sale of replacement equipment.


  • FastCompany: Offshore Storm: The Global Razor's Edge. IBM may send 4,730 white-collar jobs to India and China. Another 14 million could follow.


  • U.S. Department of the Treasury Office of Public Affairs: Preserving Cash Balance Plans for Workers: Treasury Proposes Legislation to Protect Defined Benefit Plans and Ensure Fair Treatment of Older Workers in Cash Balance Conversions.


  • Wall Street Journal, by Ellen Schultz: Pension Rules Proposed. Measure Aims to Protect Older Workers if Concerns Shift to Cash-Balance Plan. Excerpt: "The administration's cash-balance proposal was a real disappointment," said Rep. Bernard Sanders (I.,Vt). "The proposal would do nothing to protect workers who have already seen their pensions cut by as much as 50% as a result of age discriminatory cash-balance pension schemes and would give the green light to hundreds of large corporations to implement cash-balance plans that would be age discriminatory under current law."

    Employer groups applauded the proposal, but say it doesn't do enough to protect employers who have already adopted the plans. "The proposal leaves many employers that previously converted to [cash-balance type plans] in a continued state of suspended animation about the legitimacy of their plans, particularly in light of recent litigation," said James Klein, president of the American Benefits Council, an employer lobbying group. If the proposal were enacted, it could help employers in efforts to overturn the findings of three appeals courts -- most recently in a case against Xerox Corp. -- which concluded that companies with cash-balance plans underpaid departing workers, and the decision of a federal district court, which said that International Business Machines Corp. discriminated against older workers when it adopted a cash-balance plan. If link is broken, view Adobe Acrobat version [PDF--58 KB].


  • Dow Jones Newswire: White House Proposes New Cash Balance Pension Rules. Excerpt: The White House is proposing new rules for how companies can convert traditional pension plans into "cash balance" pension plans without running afoul of age discrimination laws. ... Some older workers at International Business Machines Corp. (IBM) strongly objected to cash-balance conversions in 1999, attracting a great deal of publicity to the issue. These longtime workers claimed the conversion would slash pension benefits by between 20% and 50%. The Treasury Department issued regulations in December 2002 that critics said didn't contain sufficient protections for older workers. The new Treasury Department proposal is a three-part plan that affects new cash-balance pension conversions; it's part of the Bush administration's fiscal year 2005 budget plan, released Monday. ... Rep. George Miller, D-Calif. and a leading critic of the cash-balance conversions, said the Bush administration dropped its original cash balance plan due to objections from some lawmakers and the public. Miller said his initial review of the new plan leaves "a lot of unanswered questions and possibly dangerous loopholes." "The pension proposal contains no protections for workers in companies that have already converted to cash balance pension plans," Miller said in a statement. He added it may allow employers "to play games by using dubious interest rate assumptions" in their new pension plans. He said the proposal doesn't guarantee all workers who would be harmed by cash-balance conversion will stay in the company's traditional pension plan until they retire.


  • Dow Jones Newswire: Budget Plan On Cash-Balance Pensions Stirs Controversy. Excerpt: In the oft-sleepy world of retirement benefits, cash-balance pension plans have stirred some incendiary fights. That's not likely to change, despite a federal budget proposal intended to end the controversy. The Treasury Department on Monday proposed rules as part of the budget package aimed at ending disputes over whether cash-balance pensions violate age-discrimination rules. But opponents in the debate over the pensions - hybrid plans that combine elements of tradition plans with 401(k) -- have already squared off over the Treasury proposal.


  • American Benefits Council: Treasury’s hybrid pension plan proposal offers some good news, some cause for concern. Excerpt: "The Treasury Department proposal on hybrid pension plans is, itself, a hybrid of good and bad news," said American Benefits Council President James A. Klein today. "On the positive side, the Administration is to be commended for validating that these important retirement plans are not inherently age discriminatory, as some have falsely charged. We are gratified that the Administration recognizes the importance of hybrid plan issues and are hopeful its proposal will help speed the process towards resolution of the controversy surrounding these retirement plans which provide enormous value to participants," Klein said. "On the other hand, the proposal leaves many employers that previously converted to a hybrid design in a continued state of suspended animation about the legitimacy of their plans, particularly in light of recent litigation," Klein continued. (Editor's note: According to the their Web site, the American Benefits Council "initiates and champions legislation and regulations favorable to our members' needs and interests, and influences policy development within Congress and the White House and executive branch agencies." They also "fend off policy proposals that add burdens, liabilities and costs for the employer plan sponsor community.")


  • Forbes: U.S. pension bill on ice as parties haggle. Excerpt: A key Senate Republican warned on Tuesday that Democrats risked forfeiting billions in pension relief for U.S. companies if they continued to block negotiations on a final version of the legislation.


  • Los Angeles Times opinion: Veto This Pension 'Reform'. Excerpt: The pension "reform" bill that passed the Senate 86 to 9 in late January was pushed by a potent combination, big business and organized labor. That powerful lobbying combination now hopes to harness election-year politics to stymie a threatened White House veto. But President Bush should stick with the warnings of three Cabinet secretaries who fear that the bill would further swell a huge funding deficit in the retirement system.


  • U.S. Department of the Treasury Office of Public Affairs: The President’s Savings Proposals: Tax-Free Savings and Retirement Security Opportunities for all Americans. Excerpt: “Americans want a secure future: simplifying savings will help them reach that goal,” stated Treasury Assistant Secretary for Tax Policy Pam Olson. “The savings options proposed today will give all Americans the opportunity and flexibility they need to save for their retirement security and other needs. The proposals make saving simple for everyone and for every purpose. They stress the importance of getting off the spending couch and into the savings gym.”


  • Urban Institute: Key Thoughts on RSAs and LSAs. Excerpt: In his FY2005 budget, released Monday, President Bush proposes a set of new tax-preferred saving accounts (which were first presented in last year's budget). Under the Administration's proposal, two new types of individual accounts—called Lifetime Saving Accounts (LSAs) and Retirement Saving Accounts (RSAs)—would be created. This note provides information to help assess these proposals. ... Over time, the proposal would be tantamount to a complete exemption of tax on capital income for all but the wealthiest Americans (meaning that proportionately more and more of the tax burden will be borne by wage earners). ... Much of the revenue loss associated with the proposals would accrue to high-income households. Such households are likely to respond mostly by shifting existing assets into the tax-preferred accounts over time, rather than by undertaking new saving.


  • Dodge City Daily Globe: Bush retirement savings plans amount to fiscal gimmickry. Excerpt: In the years ahead, the United States faces a serious retirement savings crisis, and the Bush administration's plan to deal with this problem will make it worse instead of better. Currently, only about 5 percent of people contribute the maximum amount allowable to IRAs and 401(k)s. The other 95 percent either can't afford to put away that much or have no retirement savings at all. Among households of those 55 to 59 years old, the median amount held in IRAs and 401(k)s is only $10,400, and in 2001, 92 percent of the working poor and 77 percent of small-business employees lacked any employer-sponsored pension. Rather than helping these modest-income Americans save for their retirement, our current system of relying only on tax deductibility to encourage savings exacerbates the problem by giving all the incentives to upper-income taxpayers. If you are in the 35 percent tax bracket, you receive 35 cents for every dollar you save; if you are in the 15 percent bracket you only get 15 cents; and if you are one of the 33 million American workers who do not make enough money to owe income tax, you get nothing. No wonder only 2 percent of tax expenditures for retirement savings go to the bottom 40 percent of taxpayers.


  • National Education Association (NEA): Pensions And Politics. Some lawmakers want to put your retirement security at risk. Don't let them do it. Excerpt: John Jensen, who began teaching in 1967 in Omaha, Nebraska, at a salary of $5,700, is now a millionaire—of sorts. Because he worked in a system with a guaranteed pension plan, Jensen, who retired last year, knows he'll get a monthly retirement check every month for life. The former president of the National Council on Teacher Retirement—and a man well-versed in the intricacies of retirement finances—Jensen recently sat down to calculate how much his pension is worth. "I figure that to buy an annuity that could guarantee the payments I now get for my lifetime would cost at least $1 million," he says. Even if you're not knocking on the door of retirement, it's worth reflecting on the value of your pension—and fighting to preserve it—because many policy makers are pushing changes that would put your retirement security at risk. ... Ultimately, protecting your pension will depend upon influencing—or replacing—those who call the shots. "It's very important that we have policy makers who understand and support our issues, so our members will be able to enjoy their well-earned retirement and not suffer undue hardships," said Weaver. Retirement security for NEA members will rest, in part, on "who is in the White House and in the state houses."


  • New York Times: Companies Limit Health Coverage of Many Retirees. Excerpt: Employers have unleashed a new wave of cutbacks in company-paid health benefits for retirees, with a growing number of companies saying that retirees can retain coverage only if they are willing to bear the full cost themselves. ... Experts expect that the trend, driven by the fast-rising cost of health care, will continue, despite the billions of dollars that the government will distribute to companies that maintain retiree health coverage when the new Medicare drug benefit begins in two years. In contrast to pension financing, companies are not obligated to set aside funds to pay for retirees' health benefits, and the health plans can usually be changed or terminated at the company's choosing, with no appeal available to the retirees.


  • Dayton Daily News: Proposals from Bush a boon for lobbyists. Excerpt: With polls showing health care is the biggest domestic issue for people living paycheck to paycheck, President Bush offered a number of proposals in his State of the Union address that would help wealthier Americans save on taxes. The next day, lobbyists met with his party's legislators to celebrate their rollback of corporate responsibilities and plot the future. The main proposals were tax credits for buying health insurance, tax deductions for the premiums on high-deductible health savings accounts and association health plans, which allow small businesses to band together and buy insurance as a larger group. Each of them would be good ideas if they weren't targeted so heavily toward the wealthy class. All three arrangements would attract healthier customers, leaving less healthy customers in other plans. That undermines the point of insurance, which is to pool large groups of people together to share the risk of whatever is being insured. ... But by attracting healthy people to different plans and leaving the unhealthy to shift for themselves, the Bush proposals are equivalent to making people look for new homeowners insurance when the stove is in flames.


  • Washington Post: If You Depend on a 401(k), Now Is Time to Start Worrying About Retirement. Excerpt: If the 401(k) retirement-savings system ever wants a mascot and a slogan, it need look no further than Mad magazine's Alfred E. Neuman and his signature line, "What, me worry?" "The most notable finding" in the survey, which covered 3,500 employees of large companies, "was the disconnect between what people are feeling today and what they expect the future to look like," said Lori Lucas, an expert with Hewitt on the behavior of retirement plan participants.


  • US Treasury Department Press Release, courtesy of Benefits Link: The President’s Savings Proposals: Tax-Free Savings and Retirement Security Opportunities for all Americans.


  • Workforce Management: Everything You Thought You Knew About Recognition Is Wrong. Excerpt: In Bob Nelson's opinion, formal recognition programs are an anachronism. He says that the $27 billion-plus incentive industry, with its focus on moving merchandise, hasn't helped matters. Nelson suggests a more informal, collaborative approach.


  • Los Angeles Times: Wal-Mart's Costs Can't Always Be Measured. Excerpt: Wal-Mart freely, even boastfully, acknowledges that as many as 40% of its employees get their health coverage elsewhere, such as from the employers of spouses or parents or from programs like MediCal and Medicare. This is community-mindedness the Wal-Mart way: Stick the other guy with the responsibility for your own workforce. Wal-Mart ruthlessly prices its health coverage to discourage employees from placing their own spouses and children on its plans, but it's not above pushing its own workers on other companies. Then it argues smugly that its competitors are only whining because they don't know to cut costs as efficiently as it does.


  • Cincinnati Post: GOP prescription drug plan: What Bush did not tell you. Excerpt: Last month, President Bush signed into law Republican-sponsored legislation that adds a prescription drug benefit to Medicare and invests billions of dollars in an effort t Chao pushes her intense ideological agenda even in the smallest gestures. For example, she appointed anti-union Labor Department officials to the board of the department's Labor Hall of Fame, which pays tribute to famous American labor leaders like Mother Jones, Eugene Debs and John L. Lewis. Last year, Chao's appointees chose chocolate magnate Milton Hershey, whose managers organized a "loyal workers club" in 1937 to beat "with clubs, pipes, blackjacks and fists" 200 sit-down strikers defending the desire of a majority of workers to form a union, according to labor historian Donald Kennedy. o lure the elderly away from the government program and into private health insurance plans. Recently, in his State of the Union address, President Bush said the new measure "kept a basic commitment to our seniors." By approving the legislation, the president may have fulfilled a commitment or two, but not to the nation's elderly. Here are some key details omitted from President Bush's speech (with apologies to Harper's)...


  • Atlanta Journal-Constitution: Home Depot teams with AARP to attract older employees.


  • In These Times, courtesy of New York News Day: The Secretary of Labor Is the Enemy of Labor. Excerpt: By law, Labor Secretary Elaine Chao is required "to foster, promote, and develop the welfare of the wage earners of the United States." Given her record, American workers might want to make a symbolic citizens' arrest of the secretary for breaking the law. ... Chao bragged to a conservative think tank that she had cut her department's budget more than any other cabinet secretary. She slashed funds for enforcing federal laws governing the workplace (including safety and labor standards), practically eliminating the department of international affairs - which fights against child labor and for higher labor standards in countries around the world. She removed labor representatives from trade and workplace safety advisory committees. Her Occupational Safety and Health Administration has withdrawn roughly two dozen planned regulations, including a rule that would have required employers to pay for workers' personal protective equipment - leaving low-income and immigrant workers especially vulnerable. ... Chao pushes her intense ideological agenda even in the smallest gestures. For example, she appointed anti-union Labor Department officials to the board of the department's Labor Hall of Fame, which pays tribute to famous American labor leaders like Mother Jones, Eugene Debs and John L. Lewis. Last year, Chao's appointees chose chocolate magnate Milton Hershey, whose managers organized a "loyal workers club" in 1937 to beat "with clubs, pipes, blackjacks and fists" 200 sit-down strikers defending the desire of a majority of workers to form a union, according to labor historian Donald Kennedy.
Coverage on H1-B and L1 Visa and Outsourcing Issues
  • Bill Bulkeley of the Wall St Journal is requesting help. Full excerpt: Hi: I'm a reporter for the Wall Street Journal. I've been writing about IBM's offshoring activities. I'm currently working on an article about the impact on U.S. employment when IBM gets an outsourcing contract. To do that, I'm trying to talk to people who used to work for companies that outsourced IT or business-processes to IBM. Some of them lost their jobs despite IBM initially saying they would be retained. Others were asked to take big pay cuts and quit.

    If you know of any workers touched by IBM outsourcing plans I'd like to talk to them -- I'll keep their names confidential if they prefer. Among the outsourcing contracts IBM has that might be relevant are ATT (not wireless) Fluor, Qwest, American Express and JP Morgan Chase. Let me know if you've heard anything or can suggest any people I could call or e-mail. -- Bill

    Bill Bulkeley
    Wall Street Journal
    10 Post Office Sq. Suite 715
    Boston, MA 02109
    617-654-6704
    cell 617-320-2528
    e-mail: Bill.Bulkeley@wsj.com

  • TechsUnite: Washington Could Be First State to Ban Offshoring. Lawmakers Debate Price vs. Cost to the State. Excerpt: Two proposals now being considered before the Washington state House Commerce and Labor Committee would ban all state business from being sent offshore. If passed into law, they would be the first of their kind in the United States. The controversial measures face an uphill battle against legislative opponents in both the House and Senate and powerful pro-business interests in the state. But they also have a powerful ally: Committee Chair Steve Conway. "I'm going continue to repeat this because I know if I repeat it enough, people start thinking," the House Democrat from Tacoma says. "The offshoring of American work, to my mind, is an economic virus impacting our country." ... Rep. Zack Hudgins, D-Tukwilla, one of two prime sponsors of the bills, said his intent in proposing the measures is to ensure that state work remains available to qualified workers within the United States, if not Washington state. "I don't think we should use our tax dollars to create jobs in other places," said Hudgins. “Skilled domestic workers can perform the work. Tax dollars should be used to create jobs locally, where wages paid are allowed to circulate throughout the local economy.” ...

    Conway asked Yates if she believed her agency should have alerted lawmakers before sending what Yates called "mission critical" IT development work offshore. "(W)hat's disturbing so many (state legislators) is the departments are using, kind of, a blank check approach to this kind of offshoring work without actually discussing this with the legislature," said Conway. "Hence, we read about it in the newspapers." Conway said one of his concerns about unchecked offshore outsourcing activity by state agencies was the security of sensitive information, such as corrections records. Yates said the Corrections Department would be glad to discuss its offshoring activities with "any legislators that are interested." Yates noted that in 1999, no one even considered offshore outsourcing, so the contract the Corrections Department entered with IBM Global Services contained no provisions against it.


  • CNET News: Guest-worker visas come under fire. L-1 visas and other guest-worker visas have been misused by companies to harm U.S. workers, witnesses told a congressional panel on Wednesday. Excerpt: The hearing of the House Committee on International Relations focused on concerns that the L-1 visa program is fraught with fraud and abuse. L-1 visas allow companies to temporarily bring in employees from other countries for managerial or executive work, or for work that entails specialized knowledge. There is no annual cap on L-1 visas, nor is there a required pay rate. The number of L-1 visas issued by the U.S. government has tripled during the past 20 years, to about 113,000 in 2002, according to Hyde's office. ... According to Hyde's office, a State Department memo from 1996 presents documentation indicating that, at that time, "ninety percent of the L petitions investigated by the American Consulate in Guangzhou proved to be fraudulent." ... Patricia Fluno, also a technology professional, said she lost her job at a Siemens unit in Florida to a worker on an L-1 visa. Fluno said Siemens replaced her and other U.S. employees with lower-paid employees of India-based Tata Consultancy Services. Fluno also said she was directed to train her replacement. "This was the most humiliating experience of my life," she said. ...

    Michael Gildea, the AFL-CIO's executive director of the department for professional employees, said guest-worker visas are fueling the shift of highly skilled work overseas. In particular, he said several India-based companies are using visas to gain knowledge in the United States. "Once the team of temporary workers has the knowledge and technical skills--sometimes after being trained by U.S. workers--as much of the work that is technically feasible to offshore is then carted back to India," Gildea said in written testimony to the committee. Gildea's point echoes an argument made by Ron Hira, a public policy professor at the Rochester Institute of Technology. According to Hira, as well as to publicly available information, Indian information technology companies with operations in the United States are some of the biggest applicants for H-1B visas and are heavy users of L-1 visas.


  • Salon.com: From programming to delivering pizza. Sure, there are jobs to be found in the so-called economic recovery. You want extra cheese with that, sir? Excerpt: Valerie Chau, 46, earned $70,000 a year as a Java programmer before she was laid off in November 2001. Since then, she's been unable to find a new coding job, and her unemployment ran out at the end of 2003. "I am one of the many middle-aged people who has just been thrown out. No one will hire you," says the mother of three boys, ages 9, 13 and 15. ... Chau isn't the only one. Chad Pratt, 42, a software engineer who just a few years ago made $89,000 a year, moved back in with his mother in Syracuse, N.Y., when his last programming job ended in October 2002. While he continues to send out his résumé, he's taken a part-time gig washing dishes at a pizza joint for $5.15 an hour. "I may get to deliver pizzas," he wrote in an e-mail. "That would be a big step up." ... Mark, who made between $47 and $55 an hour as a contract programmer back in Arizona, applied for between 300 and 400 jobs after his last contract expired in April 2001. He got just four interviews, and in the last one his interviewer was a foreign worker in the United States on an H1-B visa. He didn't get the job. ... She's tried attending government-sponsored retraining, but found that she's much more educated than the counselors who are there to supposedly help her get a fresh start. "The retraining is only for the uneducated. I don't want them to say, 'You could go work at Wal-Mart, or you could be a help-desk clerk.' I don't need training for that."


  • Computerworld: Amex on the defensive about offshore plans. The financial services firm may move up to 70% of its development work offshore, sources say. Excerpt: Despite a denial by American Express Co., sources familiar with the company's IT planning insist that it has an internally stated goal to shift a major portion of its software development to offshore locations. The sources said that New York-based Amex plans to move as much as 70% of development work offshore. That shift is an ongoing business objective, they said. An Amex spokesman this week dismissed the 70% figure and denied that the financial services company is making any fundamental shift in the amount of development work it sends offshore. But one former Amex IT worker, who said he left the company because he disagreed with the offshore policy, hotly disputed that. "They tell [the media] one thing and tell us another. I've seen it. I was there," the former employee said. "I was the guy training these [offshore-worker] greenhorns. They're asking me to transfer my skills to someone making $4 an hour."


  • India Times InfoTech: IBM outsourcing CEO's job! :-) Excerpt: Website describes just such a scenario. In an imaginary Monday morning memo, the IBM board tells the CEO how they have found out just the man to replace him in keeping with his own philosophy of "outsourcing" jobs that can be performed more inexpensively elsewhere. The memo goes on to say how this US-educated Indian (name held back) is just the right man to lead the company to greater prosperity. And does he come cheap! He will take only a $1 million dollar a year in salary with ridiculously low stock options. Best of all, he will continue to live in India and is quite content to remain there, prefering to be in touch with other IBM sites via e-mail and telephone. No corporate jet or country club membership for him either as he considers these unneccessary. In short, the ideal man for the job. And of course the CEO is expected to train him personally as well as ask the senior management to look for their own lower-cost replacements in India or wherever else in the world they can find them.


  • Links to many other articles about offshore outsourcing are available at Your Job is Going to India.
Now on the Alliance@IBM Site:
  • Catholic Agency for Overseas Development (CAFOD): IBM, Dell and HP under fire over 'Sweatshop' computer factories. Excerpt: A new CAFOD report, Clean Up Your Computer, exposes the dire working conditions in computer production in the developing world. CAFOD has proof that electronic workers in Mexico, Thailand and China suffer harassment, discrimination and intolerable working conditions. The workers produce parts that end up in the computers of companies such as Hewlett Packard, Dell and IBM. ... CAFOD saw interview lists used by recruitment agencies supplying workers for an IBM production line. Reasons for rejection included: “Homosexual, more than two tattoos, father is a lawyer, has brought labour claims, worked for a union, pregnancy, does not agree with IBM policies.” ... Once employed, workers face long shifts on low pay in illegal short-term contracts that lack holidays, health, pension, and employment benefits. One worker at an IBM factory said she was even refused time off when her father died. One of the main problems is that workers face blacklisting if they complain. Days after three Guadalajara workers spoke to CAFOD about their treatment, they were fired.


  • Reuters: Job Cuts Top 100,000 in January. Excerpt: Planned job cuts in January were 26 percent higher than in December as U.S. jobs moved to countries like India, China and the Philippines, and as mergers made some jobs redundant, according to a report on Tuesday. ... Challenger said one of the main factors for the job cuts in January was an increase of employers eliminating jobs in the United States and shifting to service providers in India, China and the Philippines among other countries.


  • Endicott Interconnect Employees' Page: A Yahoo group was created for EIT Union menbers, called EITUnionYes. Click this link to sign-up: EITUnionYes.


  • Alliance@IBM expects continued job cuts at IBM, over the coming months. Please send any information to endicottalliance@stny.rr.com
WashTech logoNow on the WashTech site:
  • Tell '60 Minutes' to Cover Both Sides of the Offshoring Story. Excerpt: On January 11, 2004, The CBS News show 60 Minutes ran a segment called “Out of India”, reported by Morley Safer. In case you missed it, the transcript can be found here. This segment was not objective in its coverage of this important issue. It did not report how outsourcing has negative effects on the US economy and American workers, nor did it say how the entire IT industry is being devastated by this unethical practice. Instead, It showed outsourcing as boon for American business. It may be a great for American companies but American workers and their families pay the price. Help us tell CBS News they need to do their homework before airing such a one-sided piece.
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