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    Highlights—February 14, 2004
  • CBS Marketwatch: Let the debate begin. Treasury's cash-balance pension proposal a starting point at least. Excerpt: The Treasury's Department's proposed overhaul of cash-balance pension plans is certain to kick off a necessary debate. But whether the Treasury is taking a step in the right direction (or right distance for that matter) depends on whom you ask. ... Unfortunately, advocates for employees and employers say the Treasury's solution to ensuring fairness to older workers may be a nonstarter. The AARP's Frank Toohey, for instance, wants an even longer "hold harmless" period during which employees would have the ability to choose whether to stay in the cash-balance pension plan or the old defined-benefit plan. "The proposal will protect workers who are 60 and older, but not those 50 or 55," he says. "Those workers will be will be stuck without alternatives."

  • Business Week: Why IBM Called In The Consultants. The deal for PWCC is challenging Big Blue, but it should pay off in the long run. Excerpt: When IBM (IBM ) scooped up PriceWaterhouseCoopers Consulting in October, 2002, Big Blue bet that the $3.9 billion deal would help solve its long-standing challenge of sluggish revenue growth. The consulting business itself seemed to offer bright growth prospects, and PWCC's 30,000 whip-smart consultants were supposed to help drive sales of IBM's other products and services. ... But on Jan. 15, IBM's Business Consulting Services, which includes the PWCC consultants, stumbled. While the rest of IBM's financials for the fourth quarter were strong, revenues for the BCS group fell 2%, to $3.25 billion, compared with expected growth of 3%. The news was enough of a surprise that Merrill Lynch & Co. (MER ) analyst Steven Milunovich slashed his revenue prediction for the consulting group from 10% growth in 2004 to a 4% decline.

  • Forbes: Birth defect suit against IBM to go to trial. Excerpt: Feb 10 (Reuters) - When Heather Curtis took a factory job at IBM in 1980, the pregnant, 22-year-old was assigned to dip silicon wafers into acids and solvents as part of a process used to make computer chips. Despite complaints that fumes from the job gave her headaches and a sore throat, IBM assured Curtis her workplace was safe, according to her lawyer. Months later, Curtis gave birth to a daughter so severely deformed that she lacked knees and had a skull too small to accommodate her brain. "IBM's doctors and managers told her that there is absolutely nothing to worry about, that this was a perfectly safe place," Curtis's attorney, Steven Phillips of law firm Levy Phillips & Konigsberg LLP, said. "She believed all of the doctors." ... Fear, whose firm also represented R.J. Reynolds in tobacco litigation, said IBM will prove there was no link between chemicals and the birth defects, and would bolster that view with testimony from pediatricians and obstetricians.

  • New York Times: Executive Pay, Hiding Behind Small Print. Excerpt: Summary pay tables, required by the Securities and Exchange Commission since 1992, help investors see where their hard-earned money goes. But three areas cry out for reform by regulators: deferred compensation, supplemental executive retirement plans and executive payouts when a company undergoes a change in control. As Brian Foley, a compensation expert in White Plains, put it, "The big print giveth but the small print giveth even more." And, sometimes, there is no print at all. ... Supplemental executive retirement plans are also annoyingly opaque. Actual amounts in executives' plans are undisclosed; tables outline only what executives may receive based on years of service, salary and bonus. ... Shareholders are paying these bills. They have a right to know the costs in plain, shocking English.

  • Alliance@IBM: IBM Stockholder Proposal: Full Disclosure of Executive Officer Compensation. Excerpt: WHEREAS compensation for IBM’s executive officers is listed in the annual report, but their total compensation and related company liability is not readily discernable by some professional investors or by the average shareholder; and WHEREAS this leaves shareholders with an inadequate and incomplete picture of the company's future liabilities on behalf of those executive officers; RESOLVED that IBM's Board of Directors establish a policy and practice to provide full and transparent disclosure of all forms of compensation issued and promised to Company executive officers. This should include, but not be limited to, their salary, bonuses in all forms, loans, and their share of deferred compensation schemes such as 401k, EDSP and the IBM Savings Plan, stock options, life insurance, retirement benefits and any other perks which constitute a current or future liability for shareholders of over $2000. This disclosure shall be made in plain English and in dollar terms using industry accepted accounting principles, including the total benefits paid in the prior year, the total projected obligation, and the plan assets set aside to cover that obligation, for each of the executive officers.

  • Bloomberg: U.S. CEOs Replace Option Grants With Free Shares: Graef Crystal. Excerpt: As the bulk of U.S. companies disclose executive pay for 2003, we will find that stock-option grants have declined in size. That's the good news for those who think chief executive officers are paid too much. The bad news is that free share grants have taken up, or more than taken up, the slack.

  • Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:
    • Richard Stanger's Great News - No Money: Stunned. Author: Joe Dirt. I have always defended IBM as a great company but the e-mail today that states the 2003 "well is dry" for Perform Bonus Plan payouts was the final straw. In short, no employee will get any type of bonus for 2003 even if your PBC is a 1 and your utilization is 120%. I never had a problem cutting costs, billing extra hours (when asked), doing my part for the team, etc. It seems the team has no honor nor commitment. I never thought that I would say this but IBM Global Services is no longer a place for me to work. I always looked for the best in IBM and for the few of us who are left..this is the last straw. Run from this company as you are nothing but a cog.
    • Just a bit... Author: murph72727 The company gets $7.6B in profits, an increase of 43% over last year, and the consultants get jacksh$t? No wonder everyone I know is looking for a new job.
    • We will meet the target next year!!! See how. Author: I_want_out. I know of 10+ guys who were 110% billable. we lost vacation time for the damn project. Guess what our new approach will be: trail our ass off, milk our vacation to the last second, and make sure no to be more than 95% productive. Let us see how IBM will meet next year's target
    • Will this merger work? Not without the talent. Author: llr429. IBM has really tried to make this merger palatable, but it's still not working. [Ex: to set expectations, every meeting quickly begins with 'Are you Legacy Blue or Legacy PWC?'] PWC talent continues to leave in droves. Even a senior BCS leader recently said she couldn't keep up with the churn. Why are we leaving? 1) We came to consulting to do real client services work. Not to sell boxes or do system integration. 2) We are motivated, entrepreneurial and driven. We don't understand a culture that stifles creativity and shrugs off timelines and client satisfaction. 3) If we deliver, we expect reward: cash. Not a reprimand that 25% growth in a down economy was not good enough. 4) We want to do our job, which is working with the client -- not spend hours each week managing IBM bureaucracy. 5) We are leaders, but where's the leadership? No training, no career path, no lower levels to grow and develop (it's all outsourced), no decision tree. The partner model wasn't ideal, but now no one knows how decisions are made and no one's accountable. 5) We want to be proud of the work we do and the brand we represent. We didn't miss the horrifying change in our client surveys, re the latest Gartner 'magic quadrant' and the scary comments from our clients. In the end, IBM picked us, we didn't pick them. For many of us, it's time to move on. In 3 years, it will be interesting to see how many of 'Legacy PWC' are still around.

  • Washington Times: Hidden health cost coup. Excerpt: One of the biggest beefs that liberals have against conservatives is that the latter are reflexively pro-business. That is, whatever the business community wants, conservatives will bend over backward to give them. This is untrue for principled conservatives. But, sadly, the Bush administration and the Republican Congress keep giving liberals ample reason to believe the stereotype is fact. ... George W. Bush is not a movement conservative, as Ronald Reagan was. I doubt seriously if he even knows the names of more than a small handful of conservative intellectuals and has read any of their works. The same can be said of almost all corporate executives. But without some grounding in the intellectual tradition of the conservative movement, it is very easy to assume the conservative and the business position are one and the same.

    The worst example of subverting conservatism to aid business is the recently enacted Medicare drug benefit, which the Bush administration rammed through Congress with unprecedented pressure. This legislation will cost trillions of dollars. A key reason for the high cost is that it applies to all elderly, including those who already have drug coverage from their employers or private insurance. It would have cost a fraction as much to aid only those without drug coverage. The incredibly more expensive option was chosen exclusively to benefit big businesses. The universal option justified including large business subsidies in the legislation to keep companies from simply dropping their retiree drug coverage and dumping it all on the taxpayer. Some large companies anticipate hundreds of millions of dollars from the federal government in coming years — funds that go straight to their bottom lines because it relieves a liability they already have.

  • Kansas City Star: "Offshoring" study ordered to a vote. Excerpt: Sprint Corp. must include a proposal on its proxy statement that asks the company's board to study how sending jobs overseas will affect the company's brand name and reputation. ... The union pension fund's proposal asks Sprint's board of directors to establish “an independent committee to prepare a report evaluating the risk of damage to the company's brand name and reputation in the United States resulting from Sprint's offshoring initiative and make copies of the report available to shareholders of the company upon request.” Sprint last summer signed contracts with IBM Global Services and EDS to outsource hundreds of information technology jobs. The jobs are expected to be moved offshore. More recently the company signed a contract with IBM to outsource 1,600 Sprint customer service jobs. Though IBM has said the jobs will not be sent overseas, it is expected that eventually the jobs could be handled by call centers in India or other countries.

  • "ibmmike2006" asks "Anyone know who Jesse Greene is? It appears he was the CFO of Eastman Kodak and came over to IBM in 2003 as the Officer and Treasurer of IBM. In October 2003, he had stock valued at $150,000 and in February 2004 he had IBM stock valued at $1,146,000 million. Wow what a shrewd investor? Now being a new IBM employee, how did he exercise (buy) IBM stock for $13.36 a share on July 25, 2003 and then sell the same shares for $83.50 a share? July 25, 2003 was a $140,280 payday for this Mr Jesse Greene. When was he given IBM stock Options when it was $13.65 a share? Was the 40,000 IBM shares "Awarded" on April 3, 2003 priced at $13.65 a share?
    • "ibmaccountant" replies. Full excerpt: My recollection of Jesse Greene was the he allegedly was an expert in a very critical area of multi-national finance, Transfer Pricing. At that time, IBM and other US multi-nationals had been allegedly playing tax games in foreign countries for years by manipulating the cost of goods across borders. The hiring was probably done over a 3-Martini lunch, since at that time a long of things were happening between IBM and Kodak In light of the SEC actions at Xerox, the close executive relationships, swapping and the outsourcing between Xerox and IBM (IT versus office products services, remember?) Transfer Pricing Dynamics ought to be an interesting area of interest for the SEC and shareholders. One question that would bring down the house at the AGM would be if someone asked if IBM's transfer pricing tax matters between Japan and UK are resolved, and if so, what was the result? Did we pay anything? The press seems to be scared to ask even though the Poughkeepsie Journal report an as yet unfinished UK tax investigation over 2 years ago.

  • Jim Hightower: The Corporate Abandonment of America. Excerpt: Something major is taking place in our country that corporate chieftains don't want us talking about: Jobless creep. It's no longer blue-collar families that are seeing their jobs hauled offshore to faraway havens of low-wage production. Now it's hundreds of thousands (and soon to be millions) of well-paying white-collar and high-tech jobs that are being shipped overseas by America's wage-busting CEOs – and joblessness is creeping quietly but relentlessly upward, ensnaring families that previously thought they were solidly entrenched in the upper reaches of the middle class. CEOs are paranoid about any public discussion of this explosive movement, but internally they giddily exult at the prospect of essentially abandoning our country and its middle-class in order to fatten their profits on foreign workers. IBM, which is leading the way, even has coined a corporate euphemism for moving more and more of its white-collar jobs out of the country: "Global sourcing." The rush is on. A Microsoft executive has instructed department heads in this software giant to "Think India" and to "pick something to move offshore today." This is deliberate job destruction, but it is also much more – it's an open assault on America's middle-class and on America's unifying social ethic that "we're all in this together."

  • Linda Guyer: Report from the Outsourcing Front. Full excerpt: Heard yesterday that a group of employees in Southbury were told their jobs are going overseas. All were web developers in IGS with an internal client. In Endicott, one of the employees whose job is going to Brazil called me yesterday. Not only does she have to train her replacement, she has to interview the candidates for her job, and recommend one of them. Her manager will not answer her questions about a severance package and she was in shock to learn that other employees, also web developers whose jobs are going to Brazil, were told there is no severance package. She thought she could sue IBM over this - and I had to tell her no, there is no law that requires a company to give a severance package. Other Endicott employees are being told that at the end of 60 days they will be on the bench. I am sympathetic, but if we had all voted for a union a couple of years ago, severance packages could have been negotiated and would now be contractually required. http://www.allianceibm.org.

  • Business Week: The Jobs of Tomorrow: A New Low? According to a new Bureau of Labor Statistics forecast, most of the big growth areas will be low-skill -- and low-paying. Excerpt: Americans don't just want jobs. They want interesting jobs that pay well. But according to a forecast released Feb. 11 by the federal Bureau of Labor Statistics (BLS), a large share of new jobs will be in occupations that don't require a lot of education and pay below average. The fastest growth of all will be for medical assistants, who require nothing more than "moderate on-the-job training." ... Only two of the occupations on the top-10 list of total job growth require at least a bachelor's degree (namely, post-secondary teacher and "general and operations manager"). If you didn't get any education past high school and aren't planning to, the abundance of jobs that don't require a college education is good news. Better to have a job than not. But don't expect to be well-compensated for your labors. In the Information Economy, the gap is large and growing between the earnings of people who have college degrees and those of people who stopped at high school or before. American workers with less education are being battered by two powerful forces. Computerization and automation are wiping out jobs in both manufacturing and office work. Offshoring is sending other jobs abroad.
Coverage on H1-B and L1 Visa and Outsourcing Issues
  • Washington Post: Realities Make 'Offshoring' Hard to Swallow. Excerpt: Or put another way, all those countries benefiting from "offshoring" haven't yet used much of their new income to buy American goods and services. Indeed, in a set of papers that has been used to boost public support for offshoring, the consulting firm McKinsey & Co. estimated that every dollar of service activity transferred to India generates only about 5 cents in additional U.S. exports. Finally, the standard model relied on by defenders of offshoring assumes a world of perfect competition. But as Princeton University economist William Baumol and Ralph Gomory, IBM's former research director, point out in an intriguing new book, there are now many industries in which competition is imperfect because entry by new firms is virtually impossible. That leads them, by way of some fancy mathematical footwork, to the conclusion that trade may not always be the win-win proposition economists have always said it was, particularly when it is between higher-income countries or involves higher-skilled industries.

  • Fortune: Think Globally, Save Your Job Locally, By Anne Fisher. Excerpt: We've all seen the bleak statistics: U.S. companies have sent well over a half-million tech jobs overseas in the past couple of years. What the numbers don't show is the bitter frustration of skilled and experienced techies whose livelihoods are vanishing—vividly expressed in hundreds of e-mails that followed a bit of advice to a college student signed Windy City (Jan. 12), who asked whether, in an increasingly global economy, it might not make sense to get some international work experience. I said it would, on the grounds that the global economy is not just a buzz phrase anymore. (Hmm, it seems all those consumer goods we've gotten so cheap for so long suddenly come with a downside. Who'd have guessed?) If you think jobs are fleeing this country now, just wait awhile. So far, according to the best industry estimates, only about 5% of U.S. IT jobs have been shipped to India, New Zealand, and Eastern Europe. But by 2007 at least 23% will have gone. Not a techie? Don't get cocky. IT folks may just be the canary in the coal mine. Notes a reader named Hans: "There is almost no limit on the technology that can take jobs overseas. Anyone in any field who has ever thought, 'Gee, I could just as easily do this job from home,' or who has smiled at the thought of working from a laptop on a beach should understand that his or her replacement 'could just as easily do this job' from Bangalore." Gulp. ... "A 1988 MIT grad with more than a dozen issued patents and 15 years of experience at Oracle and Siebel hasn't worked in over two years."

  • CNN Lou Dobbs Tonight: Interview With Ed Gillespie: Congress Looks to End Outsourcing. Excerpt: Tonight: DOBBS: American companies shipping hundreds of thousands of jobs overseas. We call it exporting America. The White House calls it good for America. Congress wants it stopped. The White House on the defensive tonight over jobs, Iraqi weapons of mass destruction, and the president's military service. My guest tonight is the chairman of the Republican National Committee, Ed Gillespie. ... Tonight, the White House is on the defensive, even before the Democratic Party has settled on a presidential nominee. Despite a firestorm of criticism, the administration today maintained its claim that the outsourcing of American jobs to cheap overseas labor market is good for the economy. As for lawmakers on Capitol Hill, both Democratic and Republican, they blasted the White House. And one Republican lawmaker tonight is calling for the president's chief economic adviser to resign. ... GILLESPIE: Well, Lou, I haven't seen this report. I have seen the news accounts of it. And all I know is this, that, if we're going to create jobs in this economy, the president's six-point plan for job creation is the way to do it. He's vigorously out there every day working to make sure every American who wants a job can find a job. And his policies are the ones that are going to continue to foster economic recovery in this country. And raising taxes and increasing regulation and allowing for these lawsuits that drive up costs of goods and services and close down doctor's offices and to engage in the kinds of policies or to support the kind of policies that the Democrats propose are going to result in more job loss, not more job creation. I guarantee it.

  • Journal News (Westchester County, NY): Proposed law targets offshoring. Excerpt: Two state lawmakers from Westchester County are introducing legislation that would prohibit companies from receiving state aid if they send jobs out of New York. Corporations that outsource work to other parts of the country or overseas would be barred from economic development aid for five years. "It sends a very strong message to companies that are exporting jobs to foreign countries that if you're going to outsource, you're not going to be permitted to receive state aid," said Sen. Nicholas A. Spano, R-Yonkers, who is sponsoring the bill with Assemblyman Richard Brodsky, D-Greenburgh. The lawmakers — both up for re-election this year — are tackling a topic that's been in the news regularly as prominent U.S. companies such as IBM Corp., General Electric and Intel announce plans to trim costs by moving jobs to countries where labor is cheaper. Forrester Research predicts that $136 billion in wages will move overseas in the next 15 years. New York joins 14 other states, including New Jersey and Vermont, that have introduced legislation that seeks to staunch the flow of jobs overseas, said Ralph Montefusco, a former IBM employee and a union organizer with the Alliance@IBM/CWA Local 1701.

  • Sify News (India): Outsourcing is win-win for India and US: Bush advisors. Excerpt: US President George W Bush has been told by his key Economic Advisors that outsourcing of services to India and other countries in which they have a comparative advantage is a win-win for both exporter and importer and that export and import of services is as logical as the export and import of goods. N Gregory Mankiw, Chairman of Bushs Council of Economic Advisers, told a press conference here that the Council in a report to Bush made it clear that it makes no difference whether outsourcing in India, for example, is in comparatively low-skilled jobs or high-skilled jobs, say radiology.

  • Economic Times (India): Outsourcing to add 22 mn US jobs. Excerpt: Based on the research that the McKinsey institute had carried out, Ms Farrell said conservatively, for every dollar invested in the offshore space, $0.58 was directly saved. This could be either redistributed to investors or customers. But she added that there were indirect benefits to the US, in terms of the import of US goods and services into India by Indian service providers, and so there was some transfer of profit back to the parent in the US. She pointed out that the Bureau of Labour Statistics was predicting a job gain of 22m in the US by ’10, against a job loss of 2m due to offshoring. ... Daniel Grisworld, associate director, Centre for Trade Policy Studies, Cato Institute said, “People don’t understand what a great opportunity offshoring is for US companies. Apart from huge savings, it allows US companies to concentrate on their core competencies and the people (in the US) can move on to higher paying, more creative, more value generating jobs.” He added that the election rhetoric in the US was always worse than its final result.

  • AFL-CIO News for Working Families: Bush Administration: Ship More U.S. Jobs Overseas. Excerpt: With some 15 million U.S. workers unemployed, underemployed or too discouraged to continue hunting for work, the Bush administration now is backing moves to outsource more U.S. jobs. “Outsourcing is just a new way of doing international trade,” said N. Gregory Mankiw, chairman of President George W. Bush’s Council of Economic Advisers (CEA), when releasing the CEA’s annual economic report to Congress. “More things are tradable than were tradable in the past. And that’s a good thing.” ... In the Feb. 9 report, the CEA predicts the economy will generate 3.9 million new jobs this year­­—a claim that would mean an average 325,000 new jobs each month. Last spring, the CEA said the president’s “Jobs and Growth” millionaire tax cut plan would create 306,000 jobs monthly starting in July. Yet today, the Bush administration is more than 1.8 million jobs short of that prediction. “This administration has been projecting that jobs are around the corner for the last three years,” says Economic Policy Institute (EPI) President Lawrence Mishel. “Now it’s claiming that the economy will be able to generate 325,000 jobs a month, which would be more than the total number of jobs created during the entire last half of 2003, which was the worst year for job growth in many years.” In fact, the economy has lost a net 2.9 million private-sector jobs and 2.8 million manufacturing jobs since Bush took office. Meanwhile, the number of long-term jobless workers has been roughly 2 million for months, and for much of that time, long-term unemployment has been at its highest rate since 1983. “Bush is behaving like a gambler on a losing streak—it’s double or nothing, with all the chips on the same losing squares,” says economist and University of Texas public policy professor James Galbraith.

  • Computerworld: U.S. lawmakers: L-1 visa program needs changes. But the head of the ITAA said the program 'is not broken in any fundamental way'. Excerpt: Two laid-off U.S. workers testified before a U.S. House of Representatives committee yesterday that they were fired by IT companies and replaced with cheaper labor brought to the U.S. under a worker visa program designed to fill jobs needing special skills. Patricia Fluno, a programmer from Orlando, said she and about 14 other employees of Siemens Information and Communications Networks Inc. were laid off in mid-2002 and forced to train their replacements from India. "We lost our jobs, and we had to train our replacements so there would be little interruption to Siemens," Fluno told the House International Relations Committee. "This was the most humiliating experience of my life." ... The L-1 visa program is making it easy for U.S. companies to move jobs overseas, lawmakers argued. "America is in danger of losing that level of prosperity which allows us to work as an agent for positive change in the rest of the world," said committee Chairman Henry Hyde (R-Ill.). "... Are we being lax in the offshoring of American jobs, often facilitated by 'in-shore' training first given to L visa holders right here in the United States, so they can take new skills -- and American jobs -- home with them?" ... Lantos accused some U.S. companies of using the L-1 visa to drastically lower wages. "What we are dealing with is high-tech indentured servitude," Lantos said. "We are dealing not only with a loophole of gigantic proportions, but also a scandal of gigantic proportions. It's up to the Congress to rectify the situation, and I fully anticipate we shall."

  • New York Times: Indians Fearing Repercussions of U.S. Technology Outsourcing. Excerpt: The rising political reaction in the United States to the loss of some American jobs to workers overseas is creating a whiplash effect among India's leading technology companies. "The dramatic buildup of opposition before the U.S. elections is disturbing," Jaithirth Rao, the chairman of a leading software and call center company, MphasiS BFL Ltd., said in an interview at the three-day annual meeting of Nasscom, India's software industry trade association.

  • Chicago Tribune: India feels backlash on jobs. Excerpt: The escalating debate over white-collar U.S. jobs moving to India is alive and well--in India. The growing election-year backlash against outsourcing drew standing-room-only crowds last week at an international conference put on by the country's leading technology trade association. "When the Dilbert cartoon introduces an Indian character called Asok, you can see what the impact has been," said Arun Kumar, managing director of Hughes Software Systems, as he introduced a program on how Indian companies might respond. ... Consider Bangalore, a city of 6 million in southern India. It has been the country's Silicon Valley since companies such as Texas Instruments Inc. and Motorola put electronics plants there in the late 1980s. There's no vacancy this month at the Leela Palace, a 254-room, five-star luxury hotel completed 2 1/2 years ago. There are no rooms anywhere in town. Hundreds of buses ferry thousands of young technology workers to and from their jobs. Mahatma Gandhi Road, with its neon signs and shopping malls, looks like a small but no less crowded version of New York's Times Square. As you enter the Leela, a welcome sign announces job interviews for Siemens and Infineon Technologies AG, along with a reception for new Dell Inc. employees. Intel's Indian operation is across the street. Despite the opulence, poverty is overwhelming and always nearby. On the other side of a wall enclosing the lush pool and gardens at the Leela lies a barren field where poor neighborhood kids play cricket. Cows and goats sift through a smoldering pile of garbage scavenging for food.

  • TechsUnite.org: Survey Reflects U.S. Tech worker Angst. Excerpt: Five years ago, a college degree in computer science or electronic engineering seemed to bestow upon the holder an inside track toward the American dream. But a study released Wednesday shows that for a large percentage of technology workers, that dream has either dimmed or has vanished altogether. The study, released at a WashTech news conference Wednesday at Carpenter's Hall in Seattle, shows that tech workers are clearly worried about the future of the industry in the United States. Chief concerns are declining wages, disappearing benefits and the threat of offshore outsourcing, Some of the findings: about 25 percent of respondents said their company had moved work offshore, and one in five said they had either been forced to train a foreign replacement worker or knew someone who had.

  • Workday Minnesota: As tech jobs go offshore, Teamsters devise new strategies. Excerpt: As U.S. white-collar and high-tech employers continue to export jobs overseas--to India, Russia, China and elsewhere--unions are scrambling for new ways to organize those workers, and to aid them. But as Minneapolis-based Teamsters Local 4 changed its charter to create a new way to help the information technology (IT) workers, and as other unions, including Seattle-based WashTech and Alliance@IBM, of Endicott, N.Y.--both CWA locals--fight to organize those workers, they face a huge battle. ... Information technology firms justify moving the jobs overseas by saying they must cut costs, especially given declining investment due to the high-tech bust and the recession. ...

    IBM will ship 4,730 information-technology white-collar jobs overseas from plants all over the U.S. The average IBM IT worker who will lose his or her job is an engineer making $75,000-$100,000 year. A replacement may make a fifth as much. Linda Guyer, president of Alliance@IBM, estimates the firm could ship one-fourth of its 160,000 U.S. jobs overseas by 2005, a figure she gathered via phone calls by IBM employees. The job export problem may worsen. The Fisher Center for Urban Economics at the University of California at Berkeley calculates that "as many as 14 million service workers, or 11 percent of the nation's total jobs, are vulnerable to offshoring," the magazine Fast Company reports. The center's economists call this "a ferocious new wave of outsourcing of white-collar jobs." ...

    The unions aren't the only ones who realize the potential of enlisting the IT workers. So does one job exporter: IBM. In a conference call last March involving its human resources people, obtained by WashTech and Alliance@IBM, the company's Director of Global Employee Relations, Tom Lynch, was blunt. "Those of us who track union campaigns realize unions rarely have success in saying you need to unionize to get more money," Lynch said. "Issues like dignity and justice and fairness, those sort of gut issues, tend to raise or strike an emotional chord... Being told that it's not that your job is going away, but that it's moving and you're going to be put out of work as a result of that certainly raises those kind of dignity issues."

  • Reuters:BearingPoint opens center in India, to hire 2,000. Excerpt: BearingPoint Inc. said on Wednesday it has opened a software development center in India that will grow to as many as 3,000 employees, joining its technology services peers to take advantage of India's modestly-paid engineers. ... International Business Machines Corp. is estimated to have more than 5,000 people in India and is still expanding. Computer Sciences Corp. said in June it planned to double its staff to about 1,600 by April. Perot Systems Corp. has 3,000 employees, or 23 percent of its workforce, in India, mostly processing information and developing software for other companies.

  • Computerworld: HP sets up India call center. The Bangalore center will offer after-sales support for consumer products sold in the U.S. Excerpt: The center, which will have a 600-person staff by June, will initially offer voice-based support in English, according to Krishnamurthy Purushottam, director of the new center. "Down the line, we plan to also offer e-mail or chat-based support," Purushottam said. ... HP currently supports English-speaking buyers of its consumer products in the U.S. through about 4,000 staff members provided by partners based in the U.S., Canada, Mexico and India. For the past two years, HP has outsourced voice-based, e-mail and chat support for consumer products sold in the U.S. to five companies in India. Indian partners currently handle about two-thirds of the volume of English-speaking support requests from users of HP's consumer products in the U.S. and employ about 2,500 people for this work, Garde said.

  • Wired News: H-1B Training Program to Be Axed. Excerpt: Facing a drop in funding and a tough job market for technology professionals, the Department of Labor is poised to kill a program that trains Americans to fill positions held by foreign guest workers. The department created the H-1B Training Program in the late 1990s as a way for Americans to learn skills in high demand by employers. The funding came from fees employers of foreign workers paid to get H-1B visas, which allowed the foreigners to take technical jobs that went unfilled during the dot-com boom. The Labor Department used those fees and other funding to pay $328 million in scholarships and grants to community groups to develop training programs for U.S. citizens and permanent residents. But the flow of funds could soon come to a halt. In its budget proposal for fiscal 2005, the Bush administration is seeking to eliminate H-1B training grants. The grants, the budget proposal states, "have not been proven successful in raising the skills of U.S. workers in specialty occupations."

  • Rep. Bernie Sanders: We can do it: A Macromedia Flash animation about outsourcing of jobs.

  • Business Week: Outsourcing: Who's Safe Anymore? The federal budget deficit will limit help to displaced workers. Excerpt: The American economic recovery is more than two years old. But jobs and worker incomes have yet to rebound. If this recovery had followed the typical pattern of past recoveries, by now the economy would have created more than 8 million additional private-sector payroll jobs. According to Stephen S. Roach of Morgan Stanley, employment is even 2.4 million jobs lower than the level predicted by the economy's performance during the 1991-92 economic upturn, until now America's worst jobless recovery. And slack labor demand has depressed wage and salary growth. Since the beginning of the recovery two years ago, payouts are down 1% in real terms -- in a typical rebound, they would be up by nearly 8%. The difference translates into about $350 billion of missing income for America's workforce. What's going on?

    NO ONE KNOWS FOR SURE, but a growing number of observers point to American companies' outsourcing and offshoring strategies as the force altering the usual links between economic recovery and employment growth. Rough estimates suggest that the U.S. has lost 400,000 to 500,000 information-technology-processing jobs to outsourcing over the last few years. It's a small number in an economy that employs around 130 million workers, but outsourcing is moving quickly up the wage-skill chain from call-center employees to software engineers, medical specialists, lawyers, and financial analysts. Observers may disagree about outsourcing's role in the current cyclical recovery, but outsourcing will clearly be a powerful source of structural change in labor market dynamics over the next decade. Forrester Research Inc. estimates that about 3.3 million American jobs in business services alone will be shifted overseas during this period. The actual number of American jobs, including high-wage, high-skill jobs, in jeopardy is likely to be considerably higher.

  • Seattle Times: Bush Report: Sending Jobs Overseas Helps U.S. Excerpt: In an evening appearance at George Mason University in Fairfax, Va., Sen. John Edwards of North Carolina said it would come as a "news bulletin" to the American people that the outsourcing of jobs overseas is good for the country. "These people," he said of the Bush administration, "what planet do they live on? They are so out of touch." Last year's Economic Report of the President predicted that 1.7 million jobs would be created in 2003. Instead, the nation lost 53,000 jobs. In Bush's three years in office, 2.2 million jobs have disappeared. Since the Great Depression, it has never taken this long for the economy to begin creating jobs after emerging from a recession. After the last recession ended in 1991, it took 14 months for employment to begin expanding. Current problems with the economy have gone on nearly twice as long, 26 months.

  • ZDNet: Offshoring is all good? Tell that to ZDNet's readers, Mr. Bush. (Editor's note: You'll need to scroll about half way down the page to see this commentary). Excerpt: "In 1998, I left my job as an electrician to get a degree in computer science in order to better myself, my family and to make more money," Tonn said. "I still have not been able to enter the industry in a professional capacity. I am currently unemployed and have been looking for work for five months now. At 44, I'm really wondering if I have made a big mistake." In his letter, Tonn goes on to describe how he feels cheated by the country that he and his father swore to protect: "My father is a WWII veteran. He protected this country, was given a free education, and had a career of more than 20 years. He helped his kids and has a good retirement. His actions gave himself and his family a better life. His own country helped to do this. I served in the Air Force during Desert Storm. It helped pay for a little college but not much. I was told that veterans have job preference in this country. My question to whomever wants to hear it is, 'If the people who fight and defend this country are going to be systematically swept under the corporate rug for cost-cutting measures, what is there left to fight for?' My father and my generation have honored our country by giving the best years of our lives to it, and to have other countries reap these benefits cuts very deep. Another factor is that U.S. workers aren't offered first refusal on these jobs. These large corporations have undermined the American people. So I will be in the street begging for money while the Indian, Iraqi, and Singapore people that I gave my job to put a nickel in my cup."

  • Fast Company: Offshore Storm: The Global Razor's Edge. IBM may send 4,730 white-collar jobs to India and China. Another 14 million could follow. Excerpt: So, welcome to your future. Researchers at the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, estimate that as many as 14 million ser-vice workers, or 11% of the nation's total jobs, are vulnerable to offshoring. Intel is opening a glittering new $41 million campus in Bangalore to house 1,000 workers. Morgan Stanley Dean Witter has announced plans to ship some equity research overseas. "A ferocious new wave of outsourcing of white-collar jobs," the Fisher Center folks call it.

  • New Kerala News (India): Anti-outsourcing bill killed in Colorado Senate. Excerpt: An anti-outsourcing bill pending before a state legislature failed to move ahead when a Colorado Senate panel killed it. The measure, SB 170, would have restrained movement of jobs overseas and required companies to keep workers assigned to state contracts in the US. It collapsed after lawmakers on the Senate State Veterans and Military Affairs Committee voted four-three to postpone action on the measure indefinitely. Republicans opposed the bill, while Democrats supported it. Business interests also fought the measure, said Rocky Mountain News, published from Denver, the state capital.

  • Diversity in Engineering: Managing the Workforce of the Future (2002) by Nicholas Donofrio, Senior Vice President, Technology and Manufacturing, IBM. Excerpt: My passion is for engineers and scientists, the people who generate real wealth in the world. I think we need more of them. The need for technical talent is clearly a critical issue in my industry, the information technology industry. Yes, we are going through a bit of an up-and-down in the economy and, yes, this will be a very difficult recruiting year for young women and young men on college campuses around the world. But we will get over that. What’s scary, though, is the long-term trend in the information technology industry toward huge shortages of engineers and scientists. Predictions are that there will be a shortage of perhaps two million, globally, within five years. If they are right, the debate over H-1B visas will be silenced because there will be no one to come here to solve our problems. Clearly, the solution to our problems is to generate more engineers and more scientists, to encourage people to focus on careers that can literally generate more real wealth in the world.

  • Financial Times (May 2, 2001): Skills shortage puts job market out of balance. Excerpt: The IT skills shortage affects all industries, not just IT itself. It has now become clear to even the least technology-minded companies that e-business - stretching from the supply chain to customer service and beyond to external partners - can deliver impressive cost-savings and revenue opportunities. Thus, businesses around the world are expected to invest more than $5,000bn over the next four years to develop and run e-businesses, according to IDC, the US-based IT market analysts. But it says companies are facing difficulties in finding and keeping talent. ...

    "I worry about the whole growth of the industry being curtailed," says Nicholas Donofrio, senior vice president for technology and manufacturing at IBM. "I am very optimistic about the future. But it won't happen if we can't fill all the shortages we are facing." Just how severe is the IT skills shortage? Mr Donofrio calls it "chronic". Peter Radley, chairman of the UK operation of Alcatel, the French telecoms group, is "concerned about the shortage of the right skills". At Cisco, the US networking equipment company, Mike Couzens, head of corporate communications and training for Europe, calls it a "major problem". Microsoft started raising the alarm three years ago, says Bernard Vergnes, chairman of European operations at the US software giant. "The problem is still around. It is still difficult to find people with the right IT skills." In the US, Meta Group, the IT market analysts, estimates that some 850,000 IT staff positions are unfilled - more than double the figure of two years ago. As a result, IT salaries - including sign-on bonuses and other incentives - are rising by between 8 and 15 per cent a year, says Maria Schafer, head of Meta's executive services division.
Now on the Alliance@IBM Site:
  • Poughkeepsie Journal: Bill targets firms that move jobs out of N.Y. Legislation would withhold fiscal aid. Excerpt: A bill that would bar companies that move jobs out of New York state from getting taxpayer-funded development incentives is drawing support. The bill grapples with the hot issue of disappearing jobs, one that has long been a concern in the state and is now part of a national debate reaching into the presidential race. Two Westchester County legislators -- one a Democrat, the other a Republican -- introduced identical bills in both houses. They define ''outsourcing" as moving jobs out of the state and ban most forms of incentives from going to any company that sends jobs overseas or even out of state. The topic hits home in the mid-Hudson, where top employer IBM Corp. has confirmed at least one phasing out of local jobs in which the work is going to India.
WashTech logoNow on the WashTech site:
  • Support Consumers and Workers in the Global Economy—Washington Voters Need to Act Today. Excerpt: WashTech is lobbying for three bills in the state legislature that would help stem the tide of exporting jobs. All three bills need to be voted out of the House of Representatives by February 17th or they cannot get moved into the Senate for consideration. We need you to write and call your legislator today and ask that they support the following bills and ask Speaker Chopp to move them to the floor of the house for a vote. ... If the state legislature can vote to spend $80 million on tax breaks for the same high-tech companies that are exporting jobs, then the legislature can surely vote for bills that protect Washington's working families who pay the taxes against the unfair abuses of the global economy.

  • Tech Workers Galvanize Around Offshore Outsourcing. Excerpt: The purpose of the survey was to quantitatively measure the opinions of U.S. technology workers on a variety of issues, including free trade, future information technology (IT) job demand, legislative action, party affiliation and voting behavior. The results challenge conventional wisdom about “independent” IT workers who cannot be galvanized around any one set of issues to seek political change. In fact, IT workers appear to be an emerging political constituency that is increasingly looking for political action to address its economic concerns.

  • Uncertain Futures: The Real Impact of the High-Tech Boom and Bust on Seattle's IT Workers. Excerpt: This groundbreaking report indicates dramatic social changes have occurred in Seattle as a result of the downturn in the local IT industry. The report – Uncertain Futures: The Real Impact of the High-Tech Boom and Bust on Seattle’s IT Workers – raises important questions about the long-term health of Seattle’s economy and educational system as median incomes and education rates have declined among non-union IT workers in the last six years.

  • The State of the IT Industry in Puget Sound. Excerpt: The Evans/McDonough Company and the Worker Center, AFL-CIO, on behalf of WashTech, conducted two separate surveys of Seattle-area Information-Technology workers and employers. The purpose of this project was to evaluate the current state of IT worker training from the perspectives of both groups, and probe into some of the issues workers and employers face in the industry. Specific interest was paid to future industry demand, requirements and expectations for training, and the experiences of both groups in the industry.

  • High-Tech Employee Rights Guide. Excerpt: If you work in Washington's high-tech industry, you need to check out this guide. It contains important information regarding employment trends, answers your questions about your rights, unemployment insurance, and where to get the latest in training. You will be asked to register to access the full Employment Guide.

  • Disparities Within The Digital World. Excerpt: A report on wages and working conditions in the Seattle-area IT sector. How much should you be making? In an effort to help you answer that question, we have created a comparison of salary information from four recent wage information sources: Milliman and Robertson, Salary.com, WashTech, WSA, and the Washington State Employment Security.

  • 2000 Salary Survey. Excerpt: WashTech members know that many high-tech workers often wonder "How much do other people make that do my job?" Many employers have unwritten corporate policies that forbid you to talk with your co-workers about compensation. These policies are in violation of federal labor law; most high-tech workers don't know that they have the right to freely discuss pay with co-workers.
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