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1st article continued...
Among concerns:
* Benefits and pay: Secure in the knowledge that they can get cheaper workers overseas, American companies might begin slashing benefits here, critics say. Even U.S. workers who get jobs could see wages slashed because of the competition posed by their counterparts overseas, they say. Companies have already been curbing benefits as labor costs -- driven largely by health care costs -- escalate.
Pay has also suffered as companies cut back on raises in a sluggish economy. As more companies start tapping overseas workers, critics say American workers will lose the last vestiges of their bargaining power.
At 123jump.com, a Miami Beach-provider of investment advice, the company's 32 financial analysts live in India, Bulgaria and Argentina, earning $15,000 to $20,000 a year.
CEO Manish Shah says he could shell out $150,000 or more to hire analysts here. But why? His analysts usually have MBAs and speak fluent English.
"Can we stop [globalization]? No," Shah says. "We go to the cheapest possible cost with the best possible product."
* Loss of American jobs: Labor unions and consultants fear a repeat of what happened to the manufacturing sector, which has lost more than 2.6 million jobs in the past three years.
The scope and type of jobs being farmed out show how vulnerable many professional positions are. J.P. Morgan Chase expects to have 40 research analysts in Mumbai (formerly called Bombay) by year's end. Deloitte Consulting has about 1,000 employees in Hyderabad and Mumbai, many handling research work. A.T. Kearney uses workers in New Delhi to for research and office support.
IBM has expanded offices in Bangalore, India, to handle engineering work, and is reportedly considering a big off shoring push. Hewlett-Packard has 5,000 employees in India, doing research, developing software and staffing call centers.
* An unstoppable force: While the overall percentage of jobs being farmed out to overseas workers is still small, the advantages to U.S. companies are so attractive that labor unions fear any congressional efforts to curtail the practice will be doomed.
Already, major companies are able to work around the clock because of their overseas presence. Oracle has two big development centers in India, and 4,000 employees will be stationed there by the end of the year. Programmers there pick up projects when their American counterparts leave for the day, and vice versa. That way, Oracle is working 24 hours a day.
The numbers are continuing to swell. Consulting firm Brulant recently surveyed 38 large companies about their outsourcing plans. While only 18 percent were seriously considering outsourcing, "100 percent of them were evaluating it," says CEO Len Pagon Jr.
If outsourcing takes off, it's unlikely to stop, experts say.
"The jobs aren't coming back, that's for sure," says Forrester Research analyst John McCarthy.
While the trend has been under way for years, only now -- as the pace of outsourcing picks up and new projections show its use continuing to grow -- is debate about the practice increasing. One reason for the attention is the recent economic doldrums. With unemployment at 6.2 percent in July, more white-collar professionals are becoming anxious about job security. While many have been shaken by layoffs, workers' new concern that jobs could be lost permanently to other countries is sounding an alarm.
Says Josh Bivens, an economist at the Economic Policy Institute in Washington: "This will cause more churning and concern higher up the professional food chain. Blue-collar workers have been used to this for years."
Since the first migration of white-collar work involved technology jobs, other employees in professional jobs thought they were immune. Now, office jobs many thought could never be done overseas are being farmed out.
Workers in India hired to handle telemarketing, for example, assume an American name and take cultural training in U.S. customs.
"In India, it's a very respectable job," says Chaitra Aiyar, 23, who works at Cellbion, a call center near Mumbai. She goes by the American name Cindy Newman when making calls.
Workers who have never set foot in an American office are handling such sensitive areas as payroll and benefits. Procter & Gamble handles payroll, travel, benefits, accounts payable, invoice processing and other work at offices in San Jose, Costa Rica; Manila; and Newcastle, United Kingdom. About 7,000 people work in these offices, which opened in 1999.
"There are real security risks," says John Guinasso at Data Systems Security in San Jose, Calif. "Corporations here don't have control over who has access to information once it gets out of their hands. There are real concerns."
Are the fears real?
Is all the hand wringing overblown? Labor groups say no, but companies and some analysts argue that shipping white-collar jobs overseas is hardly a menace to American jobs.
"The recession is making all sorts of people insecure. I don't see this as a huge threat to the U.S. economy," Bivens says.
Since labor and land in countries such as India can be cheap, the cost savings can be "extraordinary," says A.T. Kearney Vice President Andrea Bierce. An MBA with three years experience in India will make about $12,000 a year, compared with $100,000 in the USA, she says. A programmer will make $5,000, compared with $60,000 in the USA, she says.
"There are an awful lot of companies thinking about this," Bierce says.
But it's the fact that overseas workers are so cheap that has detractors crying foul.
It even gnaws at some employers. David Stixrood, president of Dallas-based Corp-Wireless, which provides broadband wireless connectively to the Internet in truck stops, opted not to use an overseas help desk -- even though it was cheaper -- partly because he's concerned about what outsourcing will do to American jobs.
"We're going to lose all those jobs," Stixrood says. "Unfortunately, we live in a very competitive world and sometimes competition is very cruel."
Among concerns:
* Benefits and pay: Secure in the knowledge that they can get cheaper workers overseas, American companies might begin slashing benefits here, critics say. Even U.S. workers who get jobs could see wages slashed because of the competition posed by their counterparts overseas, they say. Companies have already been curbing benefits as labor costs -- driven largely by health care costs -- escalate.
Pay has also suffered as companies cut back on raises in a sluggish economy. As more companies start tapping overseas workers, critics say American workers will lose the last vestiges of their bargaining power.
At 123jump.com, a Miami Beach-provider of investment advice, the company's 32 financial analysts live in India, Bulgaria and Argentina, earning $15,000 to $20,000 a year.
CEO Manish Shah says he could shell out $150,000 or more to hire analysts here. But why? His analysts usually have MBAs and speak fluent English.
"Can we stop [globalization]? No," Shah says. "We go to the cheapest possible cost with the best possible product."
* Loss of American jobs: Labor unions and consultants fear a repeat of what happened to the manufacturing sector, which has lost more than 2.6 million jobs in the past three years.
The scope and type of jobs being farmed out show how vulnerable many professional positions are. J.P. Morgan Chase expects to have 40 research analysts in Mumbai (formerly called Bombay) by year's end. Deloitte Consulting has about 1,000 employees in Hyderabad and Mumbai, many handling research work. A.T. Kearney uses workers in New Delhi to for research and office support.
IBM has expanded offices in Bangalore, India, to handle engineering work, and is reportedly considering a big off shoring push. Hewlett-Packard has 5,000 employees in India, doing research, developing software and staffing call centers.
* An unstoppable force: While the overall percentage of jobs being farmed out to overseas workers is still small, the advantages to U.S. companies are so attractive that labor unions fear any congressional efforts to curtail the practice will be doomed.
Already, major companies are able to work around the clock because of their overseas presence. Oracle has two big development centers in India, and 4,000 employees will be stationed there by the end of the year. Programmers there pick up projects when their American counterparts leave for the day, and vice versa. That way, Oracle is working 24 hours a day.
The numbers are continuing to swell. Consulting firm Brulant recently surveyed 38 large companies about their outsourcing plans. While only 18 percent were seriously considering outsourcing, "100 percent of them were evaluating it," says CEO Len Pagon Jr.
If outsourcing takes off, it's unlikely to stop, experts say.
"The jobs aren't coming back, that's for sure," says Forrester Research analyst John McCarthy.
While the trend has been under way for years, only now -- as the pace of outsourcing picks up and new projections show its use continuing to grow -- is debate about the practice increasing. One reason for the attention is the recent economic doldrums. With unemployment at 6.2 percent in July, more white-collar professionals are becoming anxious about job security. While many have been shaken by layoffs, workers' new concern that jobs could be lost permanently to other countries is sounding an alarm.
Says Josh Bivens, an economist at the Economic Policy Institute in Washington: "This will cause more churning and concern higher up the professional food chain. Blue-collar workers have been used to this for years."
Since the first migration of white-collar work involved technology jobs, other employees in professional jobs thought they were immune. Now, office jobs many thought could never be done overseas are being farmed out.
Workers in India hired to handle telemarketing, for example, assume an American name and take cultural training in U.S. customs.
"In India, it's a very respectable job," says Chaitra Aiyar, 23, who works at Cellbion, a call center near Mumbai. She goes by the American name Cindy Newman when making calls.
Workers who have never set foot in an American office are handling such sensitive areas as payroll and benefits. Procter & Gamble handles payroll, travel, benefits, accounts payable, invoice processing and other work at offices in San Jose, Costa Rica; Manila; and Newcastle, United Kingdom. About 7,000 people work in these offices, which opened in 1999.
"There are real security risks," says John Guinasso at Data Systems Security in San Jose, Calif. "Corporations here don't have control over who has access to information once it gets out of their hands. There are real concerns."
Are the fears real?
Is all the hand wringing overblown? Labor groups say no, but companies and some analysts argue that shipping white-collar jobs overseas is hardly a menace to American jobs.
"The recession is making all sorts of people insecure. I don't see this as a huge threat to the U.S. economy," Bivens says.
Since labor and land in countries such as India can be cheap, the cost savings can be "extraordinary," says A.T. Kearney Vice President Andrea Bierce. An MBA with three years experience in India will make about $12,000 a year, compared with $100,000 in the USA, she says. A programmer will make $5,000, compared with $60,000 in the USA, she says.
"There are an awful lot of companies thinking about this," Bierce says.
But it's the fact that overseas workers are so cheap that has detractors crying foul.
It even gnaws at some employers. David Stixrood, president of Dallas-based Corp-Wireless, which provides broadband wireless connectively to the Internet in truck stops, opted not to use an overseas help desk -- even though it was cheaper -- partly because he's concerned about what outsourcing will do to American jobs.
"We're going to lose all those jobs," Stixrood says. "Unfortunately, we live in a very competitive world and sometimes competition is very cruel."