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Highlights—June 19, 2004
- Washington Post: Probe
Finds IBM Altered Document. Treasury Inspector General Investigating Paper on Pensions.
Excerpt: International Business Machines Corp. lobbyists, possibly with the aid of
Treasury Department officials, illegally altered an internal Treasury document during
a debate on pension policy last fall, the Treasury's acting inspector general has concluded.
... Schindel indicated that some participants in the case might face prosecution. "That
issue is something we're still vetting with the U.S. attorney's office," he said.
The document in question was a list of "talking points" in opposition to
an amendment that Rep. Bernard Sanders (I-Vt.) offered last year to bar the Treasury
from working on any regulations contrary to an Illinois judge's finding that cash
balance plans violate federal age-discrimination laws. Sanders's amendment was adopted.
IBM's role became public last fall. The company said then and yesterday that it didn't
alter the substance or wording of the document, which was headlined "Treasury
strongly opposes the Sanders amendment to the Transportation/Treasury appropriations
bill," but simply reformatted it to make it clear that it had come from the department.
If link is broken, view
Adobe Acrobat version [PDF--31KB].
- Wall Street Journal: Treasury
Says Employees of IBM Doctored Item Sent to Lawmakers. Excerpt: The Treasury Department's inspector general said
employees of International Business Machines Corp. had doctored a Treasury document that
was circulated to lawmakers last fall, adding that he hasn't ruled out criminal prosecution.
... The amendment, introduced by Mr. Sanders, was aimed at preventing the Treasury from
issuing pension regulations pertaining to cash-balance pension plans, which are controversial
because they reduce pensions for most older workers. The regulations, if implemented, could
have been used to overturn a federal court's ruling that IBM's cash-balance plan violated
age-discrimination laws. The amendment subsequently passed with wide bipartisan support;
on Tuesday, the Treasury withdrew its proposed regulations. If link if broken, view
Adobe Acrobat version [PDF--45 KB].
- From the September 13, 2003 edition of these highlights: Wall Street Journal: House
Moves to Prevent Proposed Pension Rules.
Excerpts: In an unexpected move that involved possibly doctored Treasury documents, an
expensive full-page advertisement in the New York Times and a lot of heat over cash-balance
pension plans, the House passed an amendment that could prevent the Treasury from issuing
controversial pension regulations. Rep. Bernie Sanders, a Vermont independent, offered
the amendment, which was tacked on to an appropriations bill, to stop the Treasury from
issuing final regulations on cash-balance pension plans -- regulations
that have been on the drawing board for more than 15 years. The vote passed 258 to 160,
with 65 Republicans and 192 Democrats in favor. Cash-balance plans are controversial
because they usually cut pensions for older workers. In late July, a federal district
court in Illinois concluded that International Business Machines Corp.'s
cash-balance plans had discriminated against older workers. Mr. Sanders and his co-sponsors,
who include Reps. Gil Gutknecht (R., Minn.), George Miller (D., Calif.) and Maurice Hinchey
(D., N.Y.), say the Treasury regulations would have reversed the
court's decision in the IBM case. "The court found that IBM knew that older workers
would lose up to 47% of their pensions under the cash-balance conversion," Mr. Sanders
the Treasury is about to help employers make an end run around the courts and illegally
On Monday, an IBM lobbyist, Susan M. Siemietkowski, sent a document she called the "Treasury's
statement of opposition" to various lawmakers' staffs, including Mr. Gutknecht. The Treasury
document, on official Treasury letterhead, noted "Treasury Strongly Opposes the Sanders Amendment" and
advised lawmakers to oppose the amendment, which it said "will weaken the defined benefit
system." Tara Bradshaw, a spokeswoman for the Treasury, said the agency didn't issue the document. "It
is a Treasury generated fact sheet stating our position on a set of [past] amendments that
were never offered. However, they were not sent in the format you provided and, therefore,
appear to have been doctored." She said the Treasury had prepared an earlier document pertaining
to an amendment offered by Mr. Sanders last year, but that the original document was "designed
for informational purposes and was not formally released," she said. "We were not aware
the document had been circulated beyond a very limited number of select staff."
If link is broken, view
Adobe Acrobat version [PDF--47 KB].
- Also from the September 13, 2003 edition of these
highlights: Representative Sanders' Web site: Sanders
Seeks Treasury Dept. Investigation into IBM Lobbying Practices [PDF--217
Excerpts: I appreciate the opportunity during today's Financial Services Committee
we had to discuss, however briefly, the very distressing revelation that it appears "doctored" Treasury
Department documents were used to lobby Members of Congress in opposition to the
cash balance amendment which the House overwhelmingly adopted yesterday. Combating
this type of fraud, in my view, goes beyond partisan differences people may have in general
or more specific differences you or I or any one else may have with respect to
cash balance pensions. What is at stake here is the integrity of your Department and
the legislative process. No one is surprised when important issues involving billions
and billions of dollars such as cash balance conversions are hotly contested or that
many corporate lobbyists and other corporate resources are brought to bear. But the distribution
of phony documents purporting to be from the Treasury Department goes beyond even the
very loose ethical rules that lobbyists too often seem to follow in Washington. Therefore,
I was gratified when you committed to looking into this matter personally.
- Wall Street Journal: Treasury
Withdraws Proposed Pension Regulations. Excerpt: The Treasury Department yesterday withdrew proposed
regulations on cash-balance pension plans that critics claimed discriminated against older
workers. Cash-balance plans are pensions that instead of guaranteeing a stream of monthly
payments in retirement, as traditional pensions do, provide hypothetical accounts for individual
employees that grow each year with contributions. When employers adopt them, older employees
can see their pensions fall 20% or more because of the formula for setting them up. The
proposed regulations had concluded the cash-balance plans should be excluded from age-discrimination
laws that pertain to pension plans. Their withdrawal may reflect the Administration's unwillingness
to anger older voters in an election year. ... Employee advocates hailed the news. "The
Treasury Department's ill-advised plan would have seriously harmed millions of white collar
employees nearing retirement, and I'm glad to see that, under pressure from Democrats in
Congress and workers across the country, the Administration has decided to discard the
Rep. George Miller (D., Calif.), the senior Democrat on the House Education and Workforce
Committee, in a statement. ...
Cash-balance plan conversions have saved employers billions
of dollars, but their legal status remains in doubt. Last July, a federal district court
ruled that International Business Machines Corp. discriminated against older workers when
it adopted a cash-balance plan, and three appeals courts, most recently in a case against
Xerox Corp., have concluded that cash-balance plans must follow pension law when calculating
pension payouts. For months, members of Congress and various government agencies have been
discussing ways employers could adopt cash-balance plans, while still providing some protections
to older workers. But there is still considerable disagreement over what to do. Employers
generally want any changes to be retroactive, while employee advocates say that this would
reward employers who have violated pension law. If link if broken, view Adobe Acrobat version
- New York Times: Healthier
and Wiser? Sure, but Not Wealthier. Excerpt: New evidence
suggests, though, that the waning of the pension has, imperceptibly but surely, stripped
workers of an immense store of wealth - much more than they probably guessed, if they
thought about it at all.
Retirement benefits today, particularly the 401(k) account, simply are not worth as
much as the older kind of
benefits. Some studies suggest otherwise, but they tend to rely on average balances
of retirement accounts, and
the averages have been skewed upward by the extraordinary gains of a few wealthy households.
When the holdings of more typical households are tracked instead, today's near-retirees
turn out to be a little
poorer, in constant dollars, than the previous generation was when it approached retirement
in 1983. The
sweeping change in employee compensation appears to be the reason, according to new
research by Edward
N. Wolff, an economist at New York University who analyzed 18 years of household financial
by the Federal Reserve.
Mr. Wolff found that the average net worth of an older household grew 44 percent, adjusted
for inflation, from
1983 to 2001, to $673,000. But much of that growth was in the accounts of the richest
pushed the averages up. When Mr. Wolff looked at the net worth of the median older
household - the one at
the midpoint of the economic ladder, a better indicator of what is typical - the picture
changed. That figure
declined by 2.2 percent, or $4,000, during the period, to $199,900. (Editor's
note: This is a must-read article. IBM's changes to its pension plan are mentioned).
If link is broken, view
Adobe Acrobat version [PDF--28 KB].
- The American Prospect: The
Great Tax Shift. Excerpt: Without a doubt, and despite White House rhetoric to the
contrary, the direct effect of the tax cuts is to widen after-tax income inequality.
If the tax cuts are extended into 2011, after-tax incomes will increase by more than
9 percent for households in the top 1 percent of the income distribution in that year,
by between 2 percent and 3 percent for households in the middle 60 percent, and by only
0.1 percent for households in the bottom 20 percent.
- 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:
a sample "Workplace Survey": I was being asked to join a notoriously underperforming
business unit of IBM -- the old Business Innovation Services,
predecessor to IBM Business Consulting Services, formed with the
acquisition of PWCC. (In fact, BIS historical performance was a major
reason why we acquired PWCC.) All my friends and colleagues in various
IBM business units warned me: "Don't do it! It's a no-win situation.
BIS is a disaster." ... So I joined IBM as a Band D exec responsible (I thought)
for BCS sales
execution in EMEA. In retrospect, it turned out to be perhaps the
greatest mistake of my career. After months of mind-numbing
frustration, I finally quit. I went through the entire acquisition and post-acquisition
integrating the two legacy cultures of BIS/IBM and PWCC. Suffice it to
say that I, along with many others, noticed from the beginning that we
had a major clash of philosophies, beliefs, business mores and values,
etc. on our hands. Despite the hype and hoopla in the marketplace and
spread internally, both sides were clearly coming from completely
different postcodes when it came to client service and how best to
capitalize on the acquisition to generate revenue.
- "LouGestner" comments on the Workplace Survey. Full excerpt: Based on my personal
experience, the information is fairly accurate; however, I would not fault the old
'BIS' management for the divisions performance. Instead, just like now, consulting
was used to sell hardware/software/ outsourcing. BIS/BCS was/is a loss leader and will
continue to be in the future. Unfortunately, the BCS leadership (mostly former PWC partners)
is hapless and cannot accept they are a loss leader for the organization. The new
model is definitely too top heavy with lots of high paid partners / associate partners
who are not driving new business but living the 'partner' lifestyle. In the end, it's
the consultants / senior consultants and managing consultants (both PWCC and BIS) who
are carrying the overhead with little or no bonus or merit increases.
Bitterness at All" from "Dose of Reality": Excerpt: I answer it. I really have
no bitterness toward IBM at all. My contributions to this forum are sourced from,
and motivated by, a totally dispassionate clinical evaluation, and the self-satisfaction
that I get from potentially saving others from years of career wallowing, or worse.
My “stay away” admonitions are generally couched with qualifications of “if
you have no other options”, or if there are compelling circumstances… To
that end I have demonstrated that my purpose is not to hurt IBM, it is to help candidates
with due diligence. Otherwise, I would be much more absolutist about my advice or
just interject short, focused, hyperbolic rants. My current perspective was originally
developed in fiscal 2000, when the impact of the cyclical downturn, and the culmination
of the previous years’ short sighted,
cashing out, strategies really started to affect the treatment of rank and file
(higher targets, lower compensation, ill-conceived cost-side squeezes).
Reduction for Dummies Repost", satire by "Dose of Reality". Excerpt: ARMONK,
N.Y. IBM will reduce its workforce by an unprecedented 120 percent by the end of
2004, believed to be the first time a major services firm has laid off more employees
than it actually has. IBM's stock price soared more than 12 dollars on the news.
The reduction decision, announced Wednesday, came after a year-long internal review
of cost-cutting procedures, said the IBM CEO. The initial report concluded the company
would save $6.2 billion by eliminating 20 percent of its 300,000 employees. From
there, said The CEO, "it didn't take a genius to figure out that if we
cut 40 percent of our workforce, we'd save $12.4 billion, and if we cut 100 percent
of our workforce, we'd save $31 billion. But then we thought, why stop there? Let's
cut another 20 percent and save $37.2 billion. "We believe in increasing shareholder
value, and we believe that by decreasing expenditures, we enhance our competitive
cost position and our bottom line," he added. IBM plans to achieve the 100 percent
internal reduction through layoffs, attrition and early retirement packages. To
achieve the 20 percent in external reductions, the company plans to involuntarily
downsize 90,000 non-IBM employees who presently work for other companies.
- "Irrational_Exuberance" offers "positive" points
about working as a consultant for IBM Global Services. Full excerpt: 1) don't have
to worry about taxation issues associated with high income and wealth; 2) no anxiety
over what your raise or bonus will be - easy to predict every year; 3) Amerisuites
points are a valuable commodity for personal vacations; 4) Get to learn more about
exciting gateway connecting cities; 5) Retro time, expense, forecasting, and billing
systems will bring back the nostalgia of the "good old days"
- USA Today: Fraud,
waste mar plan to wire schools to Net. Excerpt: IBM was denied $250 million in E-rate
funding after the FCC found it and eight school districts short-circuited competitive
bidding. IBM won contracts without making specific price proposals. And by apparently
helping the districts write the bid requests, it "may have unduly influenced the
selection process in IBM's favor," according to the FCC.
- New York Times: Waste
and Fraud Besiege U.S. Program to Link Poor Schools to Internet.
Excerpt: When the El Paso school system wanted to upgrade its Internet connections three
years ago, it tapped into a federal program that offers assistance for such projects.
The program paid the International Business Machines Corporation $35 million to build
a network powerful enough to serve a small city. But the network would be so sophisticated
that the 90-school district could not run it without help. Foreseeing the problem, I.B.M.
charged the district an additional $27 million, paid by the federal program, to build
a lavish maintenance call-in center to keep the network running. The center operated for
nine months. Then, with no more money to support it, I.B.M. dismantled it and left town.
- Los Angeles Times: Big
Perks Put Seven CEOs in a Whole 'Other' Club. Excerpt: A million
bucks isn't a lot for chief executives in this day and age. But a million in perks
during a single year still lands you in rarefied company. At least seven chief executives
from California's 100 largest public companies pocketed $1 million or more last year
in what financial statements classify as "other compensation," according
to The Times' annual executive compensation survey. The category excludes salary, bonuses,
stock options, restricted stock and other commonplace rewards. But it does include a grab
bag of other perquisites such as insurance, forgiven loans, windfalls triggered by companies
going private, special retirement payments and personal use of corporate jets. Another
benefit sloshed into the other-comp bucket is the "gross-up," a term
applied when the company covers the taxes that executives otherwise would have to pay
on all those perks. Several California CEOs logged millions of dollars in gross-ups,
the bane of many shareholder and consumer advocates. "The most highly compensated people
in the country would appear to me not to need any help settling their tax bills," said
Paul Hodgson, senior research associate with the Corporate Library, a Web-based corporate
governance research firm.
- Forbes: The Big
Blue Muzzle. Excerpt: "Free as in freedom" used to be the rallying cry of
the open source movement, back in the day when volunteer hackers did the programming.
Now, with big companies writing most new open source code, will some of that freedom
go away? Will the movement be co-opted? Maybe it already has been. It's not just the
bear hug that IBM seems to be applying to customers to keep
them from dropping AIX, IBM's pricey, Unix-based operating system. One prominent open
source advocate fears IBM could use its patent portfolio to undermine the open source
movement. "They have shown, in standards
bodies, a preference for embedding royalty-generating patents into industry standards," says
Bruce Perens, an open source pioneer. He adds that IBM could use its software patents to
squeeze open source developers.
- Cleveland Plain-Dealer: 82
million in U.S. uninsured for health care in last 2 years.
Excerpt: Nearly 82 million people - one-third of the U.S. population younger than 65
- lacked health insurance at some point over the past two years and most of those were
uninsured for more than nine months, says a study by the private group Families USA.
The problem reaches deep into the middle class, affects African- Americans and Hispanics
disproportionately and is most pronounced among people younger than 25, according to
the group's analysis of census data.
- CNET News: Big Blue: The future
is now. Excerpt: Samuel Palmisano, on the job as CEO
for less than a year at the time, was intent on proving that IBM was anything but a relic. "We
are on the cusp of a dramatic shift in this industry," he told customers
and employees at the event. "Think about this change. See the world from a different
dimension. Don't manage it strictly by functional silos, because a lot of this is really
about culture--cultural transformation."
- Computerworld: Canadian
IT execs say U.S. peers are overpaid. They suggest that high wages could be fueling offshore
moves. Excerpt: Ask a group
of Canadian CIOs if they think U.S. IT workers are overpaid. After the laughter dies
down, there will be a lot of affirmative head-nodding. "They are grossly overpaid,
certainly relative to Canadian scales," said Allen
Borak, vice president of information systems at Canadian Pacific Railway Ltd. in Calgary,
Alberta. "It's quite astounding."
- CBS News: U.S.
Lags In 'Legal' Time Off. Excerpt: U.S. workers have fewer legal rights
to time off for family matters than workers in most other countries, and rank near the
bottom in pregnancy and sick leave, a Harvard School of Public Health study found. The
report, released Wednesday in Washington, D.C., was based on research on 168 countries.
- Computerworld: Sprint
to lay off 1,100 workers. Excerpt: Overland, Kan.-based Sprint Corp. announced today
that it will cut 1,100 jobs over the next several months in order to be more competitive
in the long-distance market. In a statement, Sprint said it will cut 850 workers in
its Sprint Business Solutions (SBS) division and up to 250 employees in corporate jobs
that support that division, including IT workers. Sprint said it will notify the affected
employees by mid-July. Company spokesman Mark Bonavia said that 50% of the cuts would
be in Sprint's Kansas City area headquarters. Currently, the company has 65,000 employees,
- Washington Post: Kerry
Plan Could Cut Insurance Premiums.
Catastrophic Relief Garnering Support. Excerpt: For more than a decade, the health care
debate in America has focused on the millions of people without insurance. Now, Sen.
John F. Kerry (Mass.), in an unconventional twist for a Democrat, is focusing on the
162 million Americans who are purchasing insurance and what can be done to ease the double-digit
premium increases paid by employers and their workers. At the center of Kerry's ideas
is his proposal to have the federal government reimburse employers 75 percent of medical
bills over $50,000 that a worker runs up in a year. The reimbursement would, in effect,
make the government a secondary insurer and ease costs for employers, workers and private
insurers. In exchange for the benefit, Kerry would require employers to offer insurance
to every worker and to provide health programs that detect and manage chronic illnesses
such as high blood pressure early enough to prevent the diseases from worsening.
- Jim Hightower: Corporate
Tax Evaders. Excerpt: But as happens so often with W, he talks big... but wilts when
it comes to action. For example, one specific promise he's made repeatedly is that
he'll get tough with corporate tax cheats. But an independent analysis of IRS data by
experts at Syracuse University finds that there has been a sharp decline of such tax
enforcement under Bush, with fewer audits, fewer prosecutions, and fewer penalties. During
the last decade, IRS audits of the largest corporations have fallen almost by half, and
the agency's enforcement focus in Bush's tenure has shifted from corporations and wealthy
investors to you-know-who – us ordinary working stiffs. This comes at a time when
corporate sharpies have created all sorts of new tax dodges, allowing these scofflaws
to shrink their tax payments to historically low levels. The General Accounting Office
reports that in the four years prior to Bush's term, 60 percent of large corporations
paid no income taxes – zero.
- AFL-CIO: Voice@Work
National Workplace Week of Action, June 28–July 4, 2004. Excerpt: Today, working
men and women in America have lost a basic right. When workers try to form unions to
improve their lives and win workplace justice, employers respond with campaigns of
intimidation, coercion and retaliation. Federal law fails to address this injustice.
so bad that three times more workers want unions—some 42 million—than have
unions, according to research by economist Richard Freeman and political scientist
Joel Rogers. Working families and their allies are mobilizing to help workers regain
the basic human right to form unions and bargain collectively. Between June 28 and
July 4, union members plan to celebrate Independence Day with a National Workplace Week
- Workforce Management: Hiring
Without Limits. Excerpt: At IBM, disabled workers contribute
millions to the bottom line, and provide a crucial point of view for a company that makes
and sells technology for people with disabilities. "We consider diversity strategic
to our organization," says Jim Sinocchi, director of diversity communications or
IBM, who is a paraplegic. "We don't hire people who are disabled just because it's
a nice thing to do. We do it because it's the right thing to do from a business standpoint."
- When Work Doesn't Pay. A
Report by the Democratic Staff, Committee on Education and the Workforce, Hon. George
Miller, Senior Democratic Member June 3, 2004 [PDF]. Excerpt:
The new jobs being created are not as good as the jobs we are losing.
According to EPI, in nearly every state, higher paying jobs have been
replaced by jobs in lower paying industries since the recession
officially ended in November 2001. On average, industries that are
adding jobs pay 21 percent less per year then industries that are
shedding jobs. In fact, in nearly every state that has shown job
gains, those gains have been in industries that pay less then the
jobs lost. In addition, all across the country, job creation since the end of
the recession has been in industries that are less likely to provide
health care coverage for employees. Across the country, industries
adding jobs since the recession provide coverage to only 55 percent
of their workers, compared to industries that have shed jobs, which
provide insurance to 68 percent of their workers. Through the end of April 2004,
35 states still have fewer jobs then
when the recession first began, and in 49 states, job creation simply
has not kept pace with the increase in working age population. In 42
states, unemployment rates were higher at the end of April 2004 then
they were before the recession began.
- Bloomberg News, courtesy of the Philadelphia Inquirer: Poor
prognosis for employee health, retirement benefits. A business group said fewer
retired workers would be covered and the system was "headed
for a crisis." Excerpt: U.S. workers' health and retirement benefits will shrink
even if their pay rises in the next 10 years as more companies cut costs, according
to a report from the American Benefits Council, which lobbies Congress on behalf of
Fortune 500 companies. Fewer workers will receive health benefits for their retirement,
the report said. The move away from traditional company-funded pension plans to 401(k)s
that rely mainly on employee contributions will require workers to more actively manage
their retirement money than in the past, the study said. "In almost every area -
retirement income, active and retiree health and long-term care - the employee benefits
system is headed for a crisis," according to the
IT: Over 40? Forget about getting a job. Excerpt: It surprised us how early
the prejudice starts. We heard from readers who felt discriminated against by age 40
or even a few years earlier. One reader wrote his job search stalled because "at
37 I am too old [for IT] and have been told so by a number of agencies". Another
wrote that when a company "found out how old I was they said they couldn't
take me as their policy was not to employ anyone over 35". ... Another explained
ageist hiring as a symptom of how we view IT. "If we thought of IT professionals
as people who understand the principles of providing systems solutions... rather than
experts in a particular technology, then we would have a basis for valuing experience
that is not related to a particular technology," wrote
a reader from Cheshire. Or perhaps it's just a matter of insecurity on the part of
hiring managers and headhunters, who see experienced applicants as a threat. As a 56-year-old
reader put it: "Who wants an oldie who will tell you that your
software is crap and that there are more efficient ways of using the crap that you
have? "Youngsters want to make their own mistakes; in general they know that older
people have more experience and they fear it. God forbid that they should hire someone
with experience, listen to them and make millions."
- Accounting Web: Perk-Heavy
Tax Bill for Corporations Gets Nod from House Panel. Excerpt:
The House Ways and Means Committee has approved a bill that would give corporations
huge tax benefits while repealing a tax break on exports that was ruled illegal by
the World Trade Organization. ... The bill is far-reaching and includes tax breaks
for companies to repatriate foreign earnings, a $9.6 billion buyout for tobacco farmers,
and benefits for certain businesses—ethanol, ranching, timber, horse-racing, fishing,
bow-and-arrow industries and more. NASCAR racetracks, distillers, cruise lines and
energy companies would also get tax breaks. ... Meanwhile, the Washington Post reported
that many senators have significant personal investments in the manufacturing companies
that would be big winners if the bill is passed. According to 2003 financial disclosure
statements, some of the wealthiest members of the Senate held stock worth tens of thousands
of dollars in the very companies that would benefit the most from the legislation.
- New York Times: Social
Security Better Off Than Forecast, Study Says. Excerpt: The Congressional
Budget Office said Monday that it foresaw a significant, growing deficit in the Social
Security program, but concluded that the long-term outlook was less dire than the administration
had projected. The results of the study by the nonpartisan budget office are significant
because President Bush has strongly suggested that given Social Security's problems,
he will make a major effort to overhaul the system if he is re-elected.
|Coverage on H1-B and L1 Visa and Off-Shoring
- Navhind Times (India): Tennessee
first US state to enact anti-outsourcing law. Excerpt:
The new law asks state procurement officials to prefer only US-based employees
relating to data-entry and call-centre services. Lawmakers had overwhelmingly approved
last month the legislation, which was signed into law last week. “It kind of
rubbed people the wrong way that state tax dollars we are giving were going out of
the country,” lawmaker, Mr Dough Overbey was quoted as saying.
- Business Week: Offshoring:
You Ain't Seen Nothin' Yet. The transfer of service jobs abroad will gather
steam for generations. Excerpt: Forrester Research Inc., the most widely
quoted company on offshoring statistics, estimates that 3 million to 5 million
more jobs will be transferred in the next 5 to 10 years. But that projection
and others like it may vastly underestimate the future challenge. The combination
of rising productivity made possible by widespread use of information technology,
plus the unrelenting pressure on U.S. companies to continue to cut labor
costs, guarantees that more work will be done in America by fewer people.
In addition, from China to the Czech Republic, there is virtually an unlimited
supply of industrious and educated labor working at a fraction of U.S. wages.
And these workers' skills will be enhanced by the expansion abroad of the
research operations of companies such as IBM and Intel employing
local talent. Moreover, as U.S.-based employers consider the cost of adding
either one American or, say, one Indian to the payroll, the alternative of
offshoring will put downward pressure on middle-class wages throughout the
U.S. And in a broadband world that allows overseas work to be supervised in real
time, the sheer speed at which large swaths of the service sector can be moved
to another country will create far more disruption for workers and communities
than we've seen so far in the slower-moving manufacturing sector. ... Long after
the American occupation of Iraq, and years after the current upswing in the
business cycle, the issues raised by offshoring will be a central American concern.
In giving them short shrift, both George Bush and John Kerry are not only
letting Americans down today but also ensuring bigger problems down the road.
- Common Dreams: Collective
Strength: White-Collar Offshoring Spurs Union Growth.
Excerpt: During his 15 years with The Boeing Co., Stephen Gentry never pictured
himself wearing the union label. Then the computer programmer from Auburn,
Wash., was laid off last summer after training his replacement, a high-tech
worker in India. Now Gentry, who hasn't worked since, is among those convinced
that America's white-collar workers have to band together to keep their futures
from being exported to places where skilled labor comes cheap. "I don't see
any other options," said Gentry, 52, who's joined a Seattle-based
union trying to organize tech workers around the country. "There's no loyalty
anymore. I feel my job was taken by corporate greed."
- New York Law Journal: Law
Firms Offered Outsourced Support Staffs. Excerpt: The
outsourcing of U.S. jobs to India and China has emerged as one of the most
hotly debated issues on the presidential campaign trail. And Hildebrandt International
wants to make sure that debate takes place among law firm managing partners
as well: The well-known law firm consulting group announced today a joint venture
to offer American law firms a means of outsourcing their support staffs to
India. ... Short said the case for outsourcing is compelling. Given an estimated
30 percent to 60 percent cost savings in support tasks, he said, outsourcing
could potentially free funds for firms to hire more lawyers. But law firms
might just as likely use the savings to increase partners' compensation. Though
corporations can point to shareholder benefit or increased research and development
spending in justifying outsourcing, law firms are vulnerable to charges that
such moves are motivated only by greed. Ganesh Natarajan, a former partner
at McGuireWoods and the founder of Mindcrest, a Chicago-based legal outsourcing
company, said the political side of the issue is influencing a number of law firms. "We
have been told very clearly by some law firms that they are going to wait until
after the election," he said. Vita acknowledged that outsourcing is a controversial
subject at the moment, but he said he expects the rhetoric to die down now
that the presidential race is past the primary phase.
- Computerworld: Microsoft
plans expansion in India. Excerpt: Microsoft Corp. is planning a number
of moves to increase and potentially consolidate its development activities in
India, according to company officials and sources. Microsoft is increasing
the number of employees at its software development center in Hyderabad in the
South India state of Andhra Pradesh from 200 to about 500 by 2005, according
to a company spokeswoman. ... The news that Microsoft is moving into its own
large facility in Hyderabad sparked protest from the Seattle-based Washington
Alliance of Technology Workers (WashTech). "Microsoft expanding in India
means that workers in Redmond will face direct competition from workers that
make a fraction of their wages," said
Marcus Courtney, president of WashTech. "This will only lower wages and
benefits for Microsoft U.S.-based employees. The work that Microsoft is getting
done in R&D in India can be done in this country."
- Computerworld: Offshore
Threat Debated at Hearing on Network Security. Vendors put on defensive before
House. Excerpt: Offshore software development is one factor behind the escalation
of exploitable network vulnerabilities, according to testimony at a hearing
on network security before a U.S. House subcommittee last week. Software
companies must add more controls to the development process for software
produced outside the U.S., said Steve Solomon, CEO of Citadel Security Software
Inc. in Dallas. "Software development organizations should be required to have
all overseas-developed software examined for malicious capabilities embedded in
the code," Solomon
told the House Government Reform Committee's Subcommittee on Technology,
Information Policy, Intergovernmental Relations and the Census. "Industry and
government must work together to develop some form of standard or review process
to address this growing threat."
- Computerworld: Study:
India's outsourcing industry continues to boom. The U.S. and U.K. markets
accounted for about 85% of revenue. Despite protests in Europe and the U.S.
against outsourcing and the moving of jobs to India, the country's software services
and business process outsourcing (BPO) services business is booming, according to
data released today by the National Association of Software and Service Companies
(NASSCOM) in Delhi. India's software and services exports business recorded revenue
of $12.5 billion in the fiscal year that ended March 31, up by 30.5% over revenue
of $9.6 billion in the previous year, according to NASSCOM. The revenue figures
include billings by Indian outsourcers and wholly owned software development and
BPO operations in India of multinational companies.
- Computerworld: Alcoa
to ship 70 IT jobs to India. Most of the positions had already been outsourced.
Excerpt: A "vast majority" of the affected jobs are already outsourced
and are currently being performed by a U.S.-based services provider, said Kevin
Lowrey, a spokesman for the company. The only difference under the new arrangement
is that the jobs will be handled by an offshore contractor instead of a domestic
one, Lowrey said. He declined to name the U.S.-based services provider. ...
News of Alcoa's plans comes at a time when U.S. companies are increasingly
reluctant to talk about their offshore moves because of the strong sentiment
against the trend. The growing lack of transparency is making it difficult
to get a true handle on the level of offshore outsourcing that's taking place, said
Marcus Courtney, president of the Washington Alliance of Technology Workers in Seattle.
WashTech operates a Web site that tracks companies that have outsourced jobs
to overseas locations. So far, the organization has compiled a list of 250 companies
culled from media reports and insider tips. "Corporations are doing everything
they can to keep their activities and the number of jobs being moved overseas from
being publicized," Courtney said.
- Jim Hightower: India
Rebels Against High-Tech Plutocracy. Excerpt: Endless articles have been written
about the sudden economic boom in the gleaming, new high-tech centers of Southern
India. As the CEOs of Dell, Microsoft, Intel and the rest fattened their bottom
lines by replacing American programmers and engineers with much cheaper ones in India,
we were told that such self-serving outsourcing was really a morally responsible
move, for it was generating a newly-affluent, upper-middle-class over there––a
golden example of the boundless glories of corporate globalization. But what
they didn't tell us is that the so-called "boom" went only
an inch deep, not touching the vast majority of this nation's one billion
people, much less lifting them out of grinding poverty and drudgery. While the government
launched a PR campaign it called "India Shining" to tout the new high-tech
economy, two-thirds of the people still depend on agriculture to eke out
a living, 300 million Indians still live on less than a dollar a day, and
thousands of villages have no schools, hospitals, or clean water. Indeed, the lives
of the majority have worsened, for the government slashed public services, privatized
agencies, cut wages, and eliminated millions of jobs in an effort to attract
foreign capital and offer subsidies to high-tech moguls.
- WashTech News: Visa
bills stalled until ‘05.
Congress likely to pass on H-1B and L-1 visa bill decisions. Excerpt: “If
industry insists that it does need people with graduate degrees, then they
should hire the tens of thousands of American programmers and engineers who
have graduate degrees but are unemployed.” Matloff was blunt in his analysis
of companies hiring foreign graduate students with H-1b visas. “The reason the
industry hires H-1Bs, in the vast majority of cases, is that the H-1Bs are cheap.
The fact that industry is hiring so many H-1Bs and that we've hit the cap is due to
the fact that industry wants to hire cheap labor, not because it can't find Americans
to fill the jobs.”
- Washington Post: What
Outsourcing Problem? Excerpt: The gist of a new
layoff study by the Labor Department is that very few U.S. job losses can be blamed on "offshoring" --
a finding that is already being slammed by critics who say the government
dramatically undercounted the number of jobs heading overseas to cheaper
labor markets. At the same time, the findings are expected to buttress the arguments
of various industry groups and economists who say sending technology, manufacturing
and other jobs to India and China and other cheaper labor markets is in the long-term
best interests of the economy at large. As the Knight Ridder news service put it, "While
certain industries, manufacturing and software among them, were found to
have been hit harder than others, the report implies that public anxiety
about jobs moving overseas, called offshoring, may be overblown."
- Wall Street Journal: Big
Three's Outsourcing Plan: Make Parts Suppliers Do It.
Using Chinese Prices as Base,
Car Makers Set Targets
That Force Firms Offshore. Excerpt: According to a recent study of parts suppliers
by Roland Berger, 133,000 jobs, or 16% of the labor pool, in the American parts industry
have disappeared over the past four years as parts suppliers cut costs by improving
productivity or shifting jobs to lower-cost countries such as China and Mexico. By
2010, the same study predicts a further 127,000 jobs, or 18% of the 707,000 remaining,
will disappear or move overseas, says Andreas Mai, the author of the Roland Berger
- New York Times: High-End
Technology Work Not Immune to Outsourcing. Excerpt: In
the debate over high-technology work migrating abroad, there has been widespread
agreement on at least one thing: the jobs requiring higher levels of skill
are the least at risk. Routine software programming and testing jobs, analysts
agree, are the ones most susceptible to being grabbed by fast-growing Indian
outsourcing companies. By contrast, the people who devise the early blueprints
for projects - the software architects - have been regarded as far less likely
to see their jobs farmed out. But Microsoft contract documents show that as far back
as 2001 the big company had agreed to pay two Indian outsourcing companies,
Infosys and Satyam, to provide skilled "software architects" for Microsoft
projects. The documents were obtained this month by WashTech, an organization of
technology workers based in Seattle, which gave copies to The New York Times.
- CNET News: Consulting group:
Send more jobs offshore. Excerpt: In the latest salvo in a debate over sending
tech work overseas, a report sponsored by an industry group concludes that
the practice is good for the U.S. economy and its workers. Offshore outsourcing
of software and information technology services tasks not only is boosting
the U.S. gross domestic product but also helping to generate U.S. jobs, including
positions in the IT sector, according to the report. Released Tuesday, it
was prepared by research firm Global Insight and sponsored by the Information Technology
Association of America trade group. ITAA's members include tech giants IBM, Electronic
Data Systems and Accenture. These companies are among those that are locating
operations in lower-wage countries such as India.
on the Alliance@IBM Site:
- Non-Union workers
LOSE their Weingarten Rights—NLRB Holds That Employees in
a Nonunionized Workplace Are Not Entitled to Representation at a Disciplinary
Interview. Excerpt: The National Labor Relations Board has ruled by a 3-2
vote that employees who work in a nonunionized workplace are not entitled
under Section 7 of the National Labor Relations Act to have a coworker
accompany them to an interview with their employer, even if the affected
employee reasonably believes that the interview might result in discipline.
... In this case, IBM, whose employees are not represented by a union,
denied three employees' requests to have a coworker present during investigatory
interviews about a former employee's allegations that they had engaged in harassment.
An NLRB administrative law judge, applying Epilepsy Foundation, found that IBM
violated Section 8(a)(1) of the Act by denying the employees' requests for the
presence of a co-worker. Upon review, a Board majority reversed Epilepsy and therefore
reversed the judge.
Urged To Review SBC-Communications Workers Contract. Excerpt: Conservative
business leaders are urging Congressional Republicans to look into the pending contract
worked out by SBC Communications and the Communications Workers of America. Led by
the National Legal and Policy Center, the opponents of the deal suggest that it will
cost Americans in higher bills, lock in SBC's market domination, and give more power
to the CWA, which is anti-Bush.
Twice for June/July 2004 [PDF]. Feature articles in this issue
- IBM Stockholders Meeting Report
- Speech to IBM Stockholders’ Meeting by Jimmy Leas
- Tally of Alliance shareholder resolutions
- Life of a SSR Gets Tougher Every Quarter
- IBM Offshoring Hits Australia
- Contractors face new pay
cuts and lack of respect
States Cited as Violator of Workers’ Freedom to Form Unions. Excerpt: Global
competition is destroying workers’ rights worldwide, and the United States
is noted for its violations of workers’ fundamental right to form unions,
according to the annual
survey of trade union rights by the International
Confederation of Free Trade Unions (ICFTU). The report finds employers in
the United States increasingly hire union-busting consultants to prevent
workers from gaining a
voice at work. In addition, two of every five U.S. public-sector workers
are denied basic collective bargaining rights.
- Arizona Republic: Workers
not happy about offshoring. Excerpt: "This issue
is really resonating out there," said Rick Cohen, a partner at Phoenix's Lewis
and Roca law firm, the Arizona representative for the ELA network. "This is much
greater reaction than with layoffs in general. There is a sense out there we
shouldn't be trading jobs for profits." While only 6 percent said they have lost
a job because of offshoring, 30 percent said they know someone who had lost a job
because of offshoring. Eight percent said they feel personally at risk of a losing
a job because of offshoring.
- Detroit Free Press: Organizing
could get harder for UAW, others. Excerpt: In what
could be a blow to the United Auto Workers and other unions, the Republican-majority
National Labor Relations Board said it would decide whether to curtail a union's
ability to organize workers through a simplified process known as card-check
agreements. The case probably won't be decided until sometime in 2005, and
the outcome of this November's presidential election will likely decide the
issue. The party that occupies the White House gets to control three of the
five seats on the board, which regulates union-management relations in the
United States. The current 3-to-2 GOP majority would swing back to more union-friendly
Democratic control if U.S. Sen. John Kerry of Massachusetts, the presumptive Democratic
nominee, wins the presidency. All sides agree that the case represents a turning point
in the question of how easily unions should be allowed to organize workers.
- Arizona Republic: Over
50? Keep foot in door. Excerpt: I had never felt so lonely
and helpless. I had been working since I was 16 years old. After college I
had gone to work for IBM, where it took me 15 years to make the executive ranks
and 21 years to break $100,000 a year. I left IBM to become a director of communications
for ROLM, an IBM and Siemens joint venture. And then I became a vice president,
first at Digital Equipment Corp. and then at Nortel Networks before heading
back to IBM in early 1999. I was lured here to Phoenix in late 2000 to work
for ON Semiconductor. ... If you are over 50 and job hunting, take 10 years
off your resume. You won't even get in the door if the recruiter or hiring
HR manager finds out you are over 50. If you do get in the door, you will at
least get a chance to let them see just how good you really are and why they should
hire you. If your hair is gray, color it.