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Outsourcing actually creates U.S. jobs, study finds
Tech trade group says sending positions overseas will pay off; a Fed governor and the Treasury secretary agree. And a new book says some exported jobs are coming home.
By MSN Money staff and news services
Has outsourcing -- the practice of sending jobs to low-wage countries such as India and China -- been unfairly pegged as the culprit behind U.S. economic woes? A new study, a new book and an influential Federal Reserve governor think so.
A study released today by the Information Technology Association of America (ITAA) says that outsourcing white-collar jobs has thrown some Americans out of work, but predicts that the trend will ultimately lower inflation, create jobs and boost productivity in the United States.
The ITAA said the migration of tech jobs to low-paid foreigners has eliminated 104,000 American jobs, nearly 3% of the positions in the U.S. technology industry. But that's nothing, the ITAA said, compared with the home-brewed dot-com meltdown that has eliminated more than twice that many jobs since 2000.
"The myth is that we've started this long decline into the midnight of the technology work force,'' ITAA president Harris Miller said. "This report shows that, assuming the recovery continues, the number of IT jobs will actually increase.''
Outsourcing dramatically cuts labor costs (Indian programmers earn a sixth of their U.S. counterparts' wages), allowing companies to sell goods more cheaply or at a greater profit. That means more money to buy equipment, build facilities and conduct research.
Savings from outsourcing allowed companies to create 90,000 new jobs in 2003, with more than one in 10 of them in Silicon Valley or elsewhere in California, researchers said. The report predicts that in 2008, outsourcing will create 317,000 jobs -- 34,000 in California.
Don't blame trade
Meanwhile, Fed governor Ben Bernanke, tackling an issue that has resonated in the U.S. presidential campaign, said there has been undue focus on the movement of U.S. jobs abroad.
"The single most important factor explaining lagging job creation is the astonishing gains in labor productivity that have been achieved in the U.S. economy in the past few years," Bernanke said in remarks prepared for delivery to the Duke University Fuqua School of Business in Durham, North Carolina.
"Outsourcing abroad simply cannot account for much of the recent weakness in the U.S. labor market and does not appear likely to be an important restraint to further recovery in employment," he said.
"I continue to believe that steady improvement in the labor market over the remainder of this year is the most likely outcome," he said.
Investment banker Goldman Sachs last year estimated "offshoring" accounted for 1 million of the 2.7 million manufacturing jobs lost since summer 2000.
Bernanke also said the "dire predictions about a wholesale 'export' of U.S. jobs in coming years" were off the mark.
"Outsourcing abroad has proved profitable primarily for jobs that can be routinized and sharply defined," he said. "For the foreseeable future, most high-value work will require creative interaction among employees, interaction that is facilitated by physical proximity, personal contact, and shared cultural experiences."
Treasury Secretary John Snow agreed. "It's part of trade," he told the Cincinnati Enquirer on Monday. "It's one aspect of trade, and there can't be any doubt about the fact that trade makes the economy stronger.
No panacea, if it ever was
A survey released last week found that most U.S. companies plan to outsource more of their back-office functions overseas, where labor is cheaper, despite a public relations backlash and weaker prospects for cost savings.
About 86% of 182 U.S. companies surveyed plan to increase the use of offshore outsourcing firms, according to a poll by Chicago-based management consulting firm DiamondCluster International.
But companies have lost the illusion of dramatic cost savings from outsourcing, the survey said, because managing far-flung international operations can be costly and difficult. They expect outsourcing to save only 10% to 20% of their costs, down sharply from 50% two years ago.
Companies may decide even that price is too high if they read a new book by a University of Southern Mississippi professor who studied the call center industry for eight years.
David Butler's book, "Bottom-line Call Center Management," examining the job that employs 7% of the American work force, hits print just as the topic becomes a political hot potato.
"What CEOs don't tell reporters is that outsourcing is still experimental and the experiment may not be working," said Butler, who heads the international economic development doctoral program at the University of Southern Mississippi in Hattiesburg. "Overseas call centers can cost more in customer goodwill than they save in staff salaries."
Many corporate executives who outsourced call centers to Asia confided to Butler that they are plotting quiet moves back to U.S. soil. They don't want to lose face by admitting errors. But they don't want to lose American clients who resent having customer service calls answered on the other side of the world.
"The current political climate and terrible jobless numbers have made outsourcing a hot-button issue even for white collar professionals," Butler said. "Airlines, brokerage firms, banks and manufacturers need to look at call centers as part of brand imaging. Call centers are the continuous bond customers have with companies. Call center staff calm panicky customers with detailed advice. They help them choose new products. They create empathy."
Butler cited a notable example of "call center repatriation" from last year. Dell (DELL, news, msgs) moved its call center support for corporate business from India into Texas, Iowa and Tennessee. Dell clients had complained some Indian staffers spoke with indecipherable accents and responded to technical questions with generic answers.
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These, for the most part are not bad jobs as I know them at least in my area...
Registered Nurses - always been in high demand - my sis is one and she works part time at two hospitals, one is non-union and pays her $32 dollars an hour for an average of 20 hours per week - SUburban Hospital... and the other union one, her primary, Memorial Hospital of Long Beach - pays her $29 an hour and she puts in 32 a week there with full benefits... She could actually make a better rate but these are both with in a few miles of her house. 600,000 of those is an aweful lot of money... Good deal
Postsecondary Teachers - Median annual earnings of all postsecondary teachers in 2002 were $49,040. The middle 50 percent earned between $34,310 and $69,580. The lowest 10 percent earned less than $23,080, and the highest 10 percent earned more than $92,430. These numbers are from http://www.bls.gov/oco/ocos066.htm Mostly Union members and 600,000 of those is damn good too... Heck both of these so far are making more than I am...
Retail Salesperson - this one will run the board... I know some in retail sales that are on comission that also bring home a lot more than I do annually... Sure there will be new shoe salesmen that will get all of a few hundred dollars a week... I would bet dollars to donuts that the average income in this area is not too shabby either...
Customer Service Reps - There are 42 of these that work for my company locally... My company pays based on local averages for wages done by independent research groups and ours start at $15 per hour and senior reps earn over $17... Not a bad position and I know this is the average due to the research group, actually being in management and knowing my company I can guarantee that this is the lower spectrum of the average, because that is what they do...
Combined food prep and Service - Broad category - naturally the fry guy does not make beans, nor the guy sweating over the dishes in the back, I have heard of some in fancier establishments making fair money with tip sharing but mostly this is a low end job...
Cashiers - Doink... There is a bad one... I would say pretty much with every company that is an entry level and very unskilled position (unless you are in a grocery store - then for some reason it is like rocket science). Typically however this position is used as an entry level and or training position to sales or other retail work...
Janitors and Cleaners - I am sure this one varies also but a very large portion of those that do this work are also union. The local school districts here, that I know what the pay is, averages over $20 per hour. We contract with an ex employee and he gets $300 a week... He spends about 2 hours there and has 20 other companies that he does night cleaning for also...
General and Operations Managers - Another pretty good job, and good to hear because this is what I am... I currently make about 60,000 a year and most others that I have applied for, as of late, start out at 40,000 and go up based on years of experience...
Waiters and Waitresses - I would consider this a good job, hard work but typically pays pretty well. I have a friend with a degree in accounting that chooses this as his career because it involves less time... He works about 5 hours a night and takes home a little over $300.00 per night. I am sure that is on the high end but my sister also worked her way through nursing school at a little breakfast spot... She did quite well there also, typically $100 a day in tips, plus her base... (acheapy diner also)...
Nursing Aides, Orderlies and Attendents - not a great job, but not a bad one either... I would bet that the pay is pretty close to the average for any given area...
I think it is all good news at least if it is accurate, I feel much better about our personal financial future... The majority of those jobs will be fairly well paying... 1.5 to 2 million of which currently pay more than I make if not close...
These, for the most part are not bad jobs as I know them at least in my area...
Registered Nurses - always been in high demand - my sis is one and she works part time at two hospitals, one is non-union and pays her $32 dollars an hour for an average of 20 hours per week - SUburban Hospital... and the other union one, her primary, Memorial Hospital of Long Beach - pays her $29 an hour and she puts in 32 a week there with full benefits... She could actually make a better rate but these are both with in a few miles of her house. 600,000 of those is an aweful lot of money... Good deal
Postsecondary Teachers - Median annual earnings of all postsecondary teachers in 2002 were $49,040. The middle 50 percent earned between $34,310 and $69,580. The lowest 10 percent earned less than $23,080, and the highest 10 percent earned more than $92,430. These numbers are from http://www.bls.gov/oco/ocos066.htm Mostly Union members and 600,000 of those is damn good too... Heck both of these so far are making more than I am...
Retail Salesperson - this one will run the board... I know some in retail sales that are on comission that also bring home a lot more than I do annually... Sure there will be new shoe salesmen that will get all of a few hundred dollars a week... I would bet dollars to donuts that the average income in this area is not too shabby either...
Customer Service Reps - There are 42 of these that work for my company locally... My company pays based on local averages for wages done by independent research groups and ours start at $15 per hour and senior reps earn over $17... Not a bad position and I know this is the average due to the research group, actually being in management and knowing my company I can guarantee that this is the lower spectrum of the average, because that is what they do...
Combined food prep and Service - Broad category - naturally the fry guy does not make beans, nor the guy sweating over the dishes in the back, I have heard of some in fancier establishments making fair money with tip sharing but mostly this is a low end job...
Cashiers - Doink... There is a bad one... I would say pretty much with every company that is an entry level and very unskilled position (unless you are in a grocery store - then for some reason it is like rocket science). Typically however this position is used as an entry level and or training position to sales or other retail work...
Janitors and Cleaners - I am sure this one varies also but a very large portion of those that do this work are also union. The local school districts here, that I know what the pay is, averages over $20 per hour. We contract with an ex employee and he gets $300 a week... He spends about 2 hours there and has 20 other companies that he does night cleaning for also...
General and Operations Managers - Another pretty good job, and good to hear because this is what I am... I currently make about 60,000 a year and most others that I have applied for, as of late, start out at 40,000 and go up based on years of experience...
Waiters and Waitresses - I would consider this a good job, hard work but typically pays pretty well. I have a friend with a degree in accounting that chooses this as his career because it involves less time... He works about 5 hours a night and takes home a little over $300.00 per night. I am sure that is on the high end but my sister also worked her way through nursing school at a little breakfast spot... She did quite well there also, typically $100 a day in tips, plus her base... (acheapy diner also)...
Nursing Aides, Orderlies and Attendents - not a great job, but not a bad one either... I would bet that the pay is pretty close to the average for any given area...
I think it is all good news at least if it is accurate, I feel much better about our personal financial future... The majority of those jobs will be fairly well paying... 1.5 to 2 million of which currently pay more than I make if not close...
Tell me your kidding?
__________________
26-year-old Saermengsi last season rated average 25.1 minutes, with 7.5 hours, 2.7 times and 2.7 backboard secondary attack, he Yifusen general as the replacement came in March Yifusen injuries ever period of time, three matches in a row, his secondary attack will reach 10. By Sun team, he could strengthen outer lane line, but also as the replacement fullback scored his general customary activities in the stadium two wings. On the season Saermengsi-ball hit rate reached 30%. He was in flames and Jones made a three-year teammate, Jones said that the organizers he pitches, but he can also shooting. His shooting is deceptive.
For the most part, no I am not kidding, 60 to 70,000 a year is a pretty good wage...
But we also have to know, will those jobs actually replace the lost jobs, or will the make up for the new people (such as myself) entering the workforce?
__________________
26-year-old Saermengsi last season rated average 25.1 minutes, with 7.5 hours, 2.7 times and 2.7 backboard secondary attack, he Yifusen general as the replacement came in March Yifusen injuries ever period of time, three matches in a row, his secondary attack will reach 10. By Sun team, he could strengthen outer lane line, but also as the replacement fullback scored his general customary activities in the stadium two wings. On the season Saermengsi-ball hit rate reached 30%. He was in flames and Jones made a three-year teammate, Jones said that the organizers he pitches, but he can also shooting. His shooting is deceptive.
My parents, and my other's parents where told by THIER government to send their kids to colllege. There will be the place that they will get the knowledge to obtain Hi-tech skill for tommorrow's jobs.
Well tommorrow is here and the jobs are gone. I can't tell you how happy I am to know that the 5 years of academic he!! I went through to become an electrical engineer are all for nought. Plus the thousands apon thousands I spent to get the degree. Only to come out of college to the tune the the technology economy is in the toilet, my degree is worth toilet paper, and that I wasted 5 years of my life.
OH THANK GOODNESS. That there is an increase in jobs! Yeah f-ing right!
You don't have to go to college to obtain ANY of the jobs listed in the posts above. You can go to any trade school for MAX 2 years and get one of those jobs.
I could have save thousands, and earned thousands in the time I wasted in college.
Whoop-T-DOOO! I have an engineering degree and now I can go work at Walmart. Were I am randomly piss tested, and constantly treated like crapola! ALL for a whopping $9.00 and hour, and a benefits package that doesn't actually pay for anything. Yeah and that huge salary will help soften the blow of the outragious amount of taxes we pay. The outragious amount we have to pay for healthcare. It will help us save for our retirement since solcial security is bankrupt.
Thank goodness all that money and effort put towards college was to put me in a better position to obtain a job.
The Government lied to my parents and brainwashed them to brainwash me to go to college.
Now the government is lying again saying jobs are comming back. Yeah, great. Have fun supporting your family with a job at Walmart, or Home Depot. Where you personell life is under a microscope. Where your intellegence and potential goes towards stocking shelves, and squeaking out a living. I will not be treated like poop for $9 an hour.
Well F! the "new jobs". F! Bush and his disgusting abuse of power, and lack of intellegence.
Conspiracy theory gentlemen. More control by the rich over the poor. Don't trust the government, don't trust these "elections". Everytime you trust the government you end up losing money. They wonder why people don't vote. They wonder why people protest everything done by the government.
They only thing the government doesn't understand is that if they keep on dicking people around voilence will come up and blow them all away. I hope that people will wisen up and start to better this country PEACEFULLY, and not drive it to the brink of war.
Peace
__________________ A-Dub on Playoffs:“You get a great sense of pride you stuck it out,” Wilson said, “now that it’s finally here.” An Out of State Fan's Guide for Seeing the Cardinals in AZ: http://www.arizonasportsfans.com/vb/blog.php?b=71
Rugby you bring up some excellent points. We are brainwashed but the answers are not top secret and normal average people in this country are still able to rise above their station in life. The trick is to not be distracted by the consumer spending and consumer credit out there because that is the trap. ( I could stand to follow my own advice)
We have been sold a bill of goods about getting a college education and some company will take care of us. Unfortunately that is not the way it is any more. If you want to be free economically you have to have capital assets as well as labor assets. Capital assets are those things that pay you money (savings, investments, business enterprise). If you are solely dependant on wages and your labor you will always be dependant on "the man" who ever that man happens to be.
The problem is capital assets are not easy to get if you don't already have them. (takes money to make money) It takes a lot of saving and sacrifice to get to a point where capital assets can support you. However, when you get there you are calling the shots, you can work at what you want to do and are not beholden to others for your livelyhood.
In a classic capitalistic social system a few elites are owners. The trick is to become an owner if even in small ways. A socialist system has no ownership but the labor force is still ruled by an elite minority.
I believe free enterprise, free markets, and individual liberty is the only thing that will same us. Education is a joke and only instructs us on how to follow along not how to think or be good learners.
Check out www.cesj.org and the just third way. It is interesting stuff.
This article on saving and spending I thought was very interesting and instructive.
Good luck man. The government says they will look out for you but don't believe them, they are looking out for themselves and the people that give to their campains.
__________________
“votes are collared under democracy, not by talking sense but by talking nonsense.” ~H. L. Mencken
We have been sold a bill of goods about getting a college education and some company will take care of us.
I agree with most of you points except the one above... If we (meaning someone other than me) were sold on the idea that if you went to college for an education some one would take care of us. and then someone actually believed it, they are in trouble... I have never heard that and I was never promised that. Actually as I enrolled in college (a while back) I was given statistics that consisted of - Most Employees with a four year degree do not work in a field related to said degree. I was also told that if you were basing your major on a job that was currently hot, or slated to be hot, you were already behind the times...
Did they change this and start telling everyone that if they got their degree, someone would care for them and make them rich for the rest of their lives?
Quote:
Originally Posted by SirChaz
Unfortunately that is not the way it is any more.
I never knew it was this way, let alone any more...
Quote:
Originally Posted by RugbyMuffin
This is bullpocky!!!!!!!
My parents, and my other's parents where told by THIER government to send their kids to colllege. There will be the place that they will get the knowledge to obtain Hi-tech skill for tommorrow's jobs.
No one owes me a job, no one owes you a job... You (or we rather) need to work with what there is, get the most out of it and learn to suceed... If you have a degree in any field I can guarantee you that it will change...Structures change, methods change, needs change... It will never stop... If you think you can study for four years and be done, you are sadly mistaken...
I do not know why your parents told you that, but I was never told that by my parents, and I have not spread any kind of false sense of security like that to my children, I have taught them that they too will need to learn, adapt and work for their financial security. If "THEIR government" did tell them that, neither I nor my parents got that citizens memo, or I was not in the country that your parents were in...
Quote:
Originally Posted by RugbyMuffin
There will be the place that they will get the knowledge to obtain Hi-tech skill for tommorrow's jobs.
That actually sounds like the Army advertisment and in all actuality they are still hiring for those exact same positions... You should be able to find what you need to know about benefits and all that is required, perhaps even enroll online at this site... http://goarmy.com/army101/benefits.htm
But we also have to know, will those jobs actually replace the lost jobs, or will the make up for the new people (such as myself) entering the workforce?
That site claims that those are in addition to existing jobs, it also has a complete secondary section that talks about the fastest growing types of jobs..
Now as a side note, I have kind of followed these kinds of statistics and speculations for a while, since my junior year in Highschool, and I will tell you that these projections are typically not very accurate... There is really no way for anyone to tell you exactly what is going to happen in 2012... These are just based on input analysis and are also based on the last census data as it refers to needs, population growth and replacement rate... Some of these include immigration and some do not, I am not sure if this one does or not..
When I was taking my PSAT and SAT's I was told that the fastest growing field was architectural drafting and engineering... My guidance counseler told me that by the time I recieved this degree the boom would all but have faded... It is still a great industry and pretty much stable but she was correct and it did pretty much flatline.
The only thing you can be sure of is that there will always be a million lawyers... some one needs to sue some body else for promising these kids that if they got a degree they were set for life...
Well tommorrow is here and the jobs are gone. I can't tell you how happy I am to know that the 5 years of academic he!! I went through to become an electrical engineer are all for nought. Plus the thousands apon thousands I spent to get the degree. Only to come out of college to the tune the the technology economy is in the toilet, my degree is worth toilet paper, and that I wasted 5 years of my life.
Current starting annual pay (low to no experience) for an "electrical engineer 1" in the state of New Jersey is $50.416 - mid range is $56,660 - and upper end is $61,967. These figures go much higher for EEII, EEIII, EEIV and EEV. Not to mention that there are also many related EE supervisory position wages...
Current companies running ads in search of an "electrical engineer I" in New Jersey and surrounding commutible areas - 319 companies with over 400 openings.
Your right CardFan67. It has been changing for a long time.
I guess I was refering to long ago (50's, 60's, 70's maybe) that people worked for a company for a long time. I think there is still a bit of that residual attitude of company loyalty that really doesn't exist anymore.
I still think there is a bit of a get a degree and a job and the money will start flowing. In reality getting the degree is just the beginning of an education not the end of it.
Also education today (primary and secondary education not necessaraly higher education) teaches kids to be obiedent little lemmings and not how to be free thinkers and how to be life long learners.
__________________
“votes are collared under democracy, not by talking sense but by talking nonsense.” ~H. L. Mencken
With sales up 5 percent last year, Merck & Co. was not satisfied: To hold down costs, the pharmaceutical giant shed 3,200 jobs as 2003 drew to a close, and announced that an additional 1,200 positions would go this year.
But Merck's picture abroad was quite different. It made 1,300 new hires in 2003 outside the United States, on top of the 900 brought on the year before. Company documents indicate that Merck had a cumulative $18 billion in foreign earnings untaxed by the end of last year, $3 billion more than in 2002. And the company said it had no intention of ever paying U.S. taxes on that burgeoning sum.
Current starting annual pay (low to no experience) for an "electrical engineer 1" in the state of New Jersey is $50.416 - mid range is $56,660 - and upper end is $61,967. These figures go much higher for EEII, EEIII, EEIV and EEV. Not to mention that there are also many related EE supervisory position wages...
Current companies running ads in search of an "electrical engineer I" in New Jersey and surrounding commutible areas - 319 companies with over 400 openings.
I think your current field is still just fine... Perhaps a few of those benefit days off from Walmart and a few resumes will perk up your spirits...
Yeah, I have been playing the resume game for about 18 months. And it is not working. But I am not saying I won't try. I am part of the IEEE which is a "network" of electrical engineers. It has been a REALLY bad time for electrical engineers. It is because the technology economy is in the toilet.
As for the 400 jobs in NJ. Well 399 of them are for guys with 10 years experience, and who are prolific in some specialization. So pretty much they are looking for somebody to contract out for 6 months and drop once the project is over. So first off I don't see how I get 10 year experience if I can't even find an entry level position job, and I am not to crazy of working for 6 months and looking for jobs for 18 months.
But I do agree that my parents should have known better. But lots and lots of people followed the crowd and pushed their kids into college because that was "the right thing to do" And unfortunately my 18 year old self was not prepared to look into the other options that life had to offer, and was not ready to fight against my parents to not go to college. My parents are probably the nicest, generious, faithfull, and compassionate people on the planet. So I can rip them a new one for trying to do what is best for me.
Hindsight being 20/20 I would have NEVER wasted all that time and money to go to colllege, and would have become a plumber. Good Job security, and good wages.
Now I must admit you make many good points, and I thank you for bringing them up. Especially that nobody owes you anthing, especially a job. A job is somethin
