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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 said. "Now the Treasury is about to help employers make an end run around the courts and illegally cut pensions."

    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 KB]. 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 plan," said 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 [PDF--26 KB].


  • 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 older 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 data collected 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 households, which 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:
    • From 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 attempts at 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.


    • "Note 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).


    • "Cost 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, Bonavia said.


  • 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. It’s gotten 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 of Action.


  • 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 report.


  • Silicon.com: Ageism in 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 Issues
  • 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 study.


  • 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.

Now 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.


  • Hill 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.


  • Think Twice for June/July 2004 [PDF]. Feature articles in this issue include:
    • 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

  • United 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.

"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
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