Globalisation’s next wave: Labour India Inc.

Americas Uncategorized

The number of unemployed in the US continues to swell while jobs to the Indian sub-continent are increasing. Market evolution or cruel corporate cost cutting? Chase Morrison investigates…

Here in 2009, the unemployment office beckons.

Inside you see not the dishevelled computer programmers and office clerks. Instead, there are men here with custom tailored suits, speaking into wristwatches that double up as cell phones.

Echelons of shoulder pads and Starbucks impede your vision. Has the corporate executive finally been phased out? Or have the companies found something better, thus, cheaper?

During the generation of our grandparents, careers lasted for lifetimes. A man could spend 40 years working the same job and safely retire; this is no longer the case.

The average stay of a person in one job is less than five years in present-day America.
Jobs are becoming more and more coveted and workers more insecure, as they could be fired and replaced in no time.

Outsourcing is a growing trend in America – it is now all the rage. It amounts to a huge cost reduction for businesses, and thousands of lay-offs for American workers.

In the case of America, outsourcing means going overseas to look for workers.

The advantage in this arrangement is obvious: Why pay a software engineer $90,000 a year when you can pay an engineer in India, who is equally capable, $20,000 a year?

It is being called globalisation’s next wave.

Virtual workers

Because of instant communication and high-speed data transfer rates it is now possible not to have a traditional office, but rather a collection of individuals connected on a broadband-powered network.

It is now possible to have your main office in New York (in fact, you don’t even need an office), and have all your software written in India and sent to you in less than 10 minutes.

Your Indian co-workers will work for 60 per cent less than any software designer in the United States.

The US has always had the attitude and the ill-conceived notion that it is the only country in the world that retains the intelligence and experience to work with advanced technology.

Now, with university attendance up tremendously all around the world, thousands upon thousands of young minds are being added to the world’s burgeoning labour pools.

This influx of labour coupled with the worldwide recession is driving down wages and failing businesses are looking for innovative ways to make a buck.

Enter outsourcing

The trend of outsourcing in America began almost 20 years ago with jobs such as the manufacturing of shoes, cheap electronics – we’ve all seen the logo – "Made in Taiwan" – and the making of toys.

Now that high speed Internet has been made available, there has been a frenzy of hiring across the oceans from companies in the United States.

Now, even corporations like Microsoft and Intel are moving jobs overseas at a breakneck pace. Designing software and microprocessors are things that can be done just as well overseas as in America – and for nearly half the cost.

Meanwhile, a battle is raging through the United States Congress on the future of outsourcing.

Many Congressmen see outsourcing as a threat to the American working man, and seek to place limits on the hiring of non-US residents.

The battle is heating up as many groups are working to prevent Congress from placing limits or rulings on the economics of outsourcing.

According to C Srinivasan, head of offshore operations in India for Electronic Data Systems Corp., Indian software companies deliver savings of more than 60 per cent to US companies, fostering growth and creating new jobs.

No matter where people stand on this issue, it is a good bet that outsourcing will continue to grow in popularity, and as Srinivasan puts it: "In the next three to five years, the India solution will be a critical part of every portfolio."

This seems very likely, as businesses will always seek to cut spending to foster productivity and profit.

The blame does not fall alone on the cost-cutting corporations.

Bush vs Labour

According to many experts and special interest groups, the Bush administration in particular seems to have its fingers crossed whenever it speaks of job growth.

Just this September, George Bush happily signed into law the Singapore and Chile Free Trade Agreements.

As Bush noted in his press conference during the signing: "I’m honoured to sign into the law these two pieces of legislation, implementing our free trade agreements with our friends Chile and Singapore."

However, many sources paint a completely different picture of these agreements.

Project USA, an immigration-reform organisation, was quoted as saying: "The Chile/Singapore free-trade agreements will allow ‘American’ corporations to move an unlimited number of ’employees’ from those countries to ours…With 18 million Americans struggling to find full-time employment, the Bush Administration has no business making agreements with foreign nations to flood the labour market with an unlimited amount of imported labour."

With unemployment at its highest in years, the Bush Administration claims they are doing everything they can to foster job growth notwithstanding signing legislations such as the Chile/Singapore FTAs.

Rob Sanchez, a critic of work-visa abuse, commented in May, 2002: "Once these agreements are passed, American workers will be powerless to stop the flood of workers that will arrive to compete with them in the job market."

The corporations are not to be solely blamed for the flurry of outsourcing that is contributing to American job losses for the Bush Administration continues to astound economists and workers alike with their labour policies.

The administration fosters its agenda based on deals and breaks for corporations, while the American workers are handed the bill.

Syndicated columnist Phyllis Schlafly places the blame squarely on the Bush Administration: "What makes this racket possible is the partnership between corporations and the government."

If you believe you are immune to outsourcing by being high up on the totem pole you are probably dead wrong.

Firms such as Lehman Brothers and Bear Stearns, for example, are beginning to use financial analysts from India for accounting and stock picking.

In fact, one man I’ve recently interviewed put things in perspective: "Don’t think the people at the unemployment office are stupid. I know many people there, and many of them have degrees from schools such as Harvard and Yale, and MBAs from Wharton.

"In fact, one man I know has two degrees from Harvard and is now working the returns counter at Home Depot. Why? Because he can’t find work anywhere else," he said.

John McCarthy of Forrester Research was recently quoted in Business Week’s premiere article on outsourcing.

"You will see an explosion of work going overseas," says McCarthy.

He predicts that 3.3 million white-collar jobs alone and $136m of wages will move overseas by 2015.

Making things worse, this hiring spree overseas is coinciding with massive corporate layoffs happening right here at home as our unemployment rate climbs.

Our days of security and one-upmanship in the job market may be numbered.