Saturday, February 26, 2005

Even Republican State Lawmakers Block Offshoring

According to the National Foundation for American Policy’s Table Tracking State Global Sourcing Legislation, 140 state bills have been submitted to monitor or curtail some aspect of offshoring since 2003. Only 8 were submitted in 2003, but a whopping 132 bills followed in 2004. The trend doesn’t seem to be subsiding either.

Democrats sponsored most anti-offshoring bills in state legislatures but many had bipartisan sponsorship. However, Republicans in Viriginia, South Carolina, Missouri and Indiana introduced measures that are virtually no different than Democratic-sponsored bills. Here’s the list that Republicans have sponsored:

Virginia – House Bill 315 (prefiled January 9, 2004). Provides a 3 percent preference to any person with facilities in Virginia in awarding contracts over $500,000.

Virginia – House Bill 243 (prefiled January 8, 2004). Provides preference in procurement to U.S. based firms or corporations so long as “not more than 20 percent greater than the bid price of the low responsive and responsible foreign-based firm or corporation.” Companion to Senate Bill 151.

Tennessee – House Bill No. 3235 (introduced January 5, 2004). Prohibits state contract work from being performed overseas as well as state contracts with companies headquartered outside the U.S. Identical to SB2822.

South Carolina — House bill 4434 (filed on December 3, 2003). Virtually identical legislative text to North Carolina Senate bill 991. Prohibits state government contracts for telemarketing or call service centers with any company that does not perform the work in the U.S. and only with individuals authorized to be employed in the U.S. Also requires a call center operator to disclose the employee’s location upon request and written permission for call center to send a person’s financial, credit or other information to a foreign country. (this has 1 Democratic sponsor)

Missouri — Senate Bill 853 (prefiled on December 1, 2003). No state government contracts "where personal information regarding residents of the state who are not a party to the contract will be collected in performance of the contract, shall be made or maintained with any bidder who intends to or actually performs any part of the contract outside of the United States, either directly or indirectly through a subcontractor." Such personal information includes, but is not limited to, social security numbers, medical and financial information, date of birth and names of relatives.

Indiana — Senate Bill 4 (introduced November 18, 2003). The bill would permit work in service contracts with the state to be performed only by U.S. citizens or individuals authorized to work in the United States.

Tuesday, February 15, 2005

Companies Must Train their Suppliers

Remember how the news stories focus on techies training their replacements? Training is at the heart of manufacturing and service outsourcing. If you aren’t willing to train your supplier – you can’t successfully outsource .

Successful outsourcing means that a company must pick an internal process, then extract it from others, put this process out to bid, and then have the current employees train their foreign replacements.

Take the human body as a business example of outsourcing. You would pick a process say, the circulatory system. You would then segregate it from the human body and convert it to stand-alone so that a supplier could bid on maintaining the circulatory system. Part of the bid would specify that you would train the overseas supplier to maintain your circulatory system.

The most devastating part of off shoring for the nation is not the loss of jobs, but the loss of knowledge! This is true for both manufacturing and service.

The only real problem with off shoring is that, even in the short run, we are committing technical suicide. Government agencies will want to maintain this technical knowledge, especially when making decisions on economic development.

Illinois will have Stats on Offshoring in 3rd Qtr 2005

Companies that bid on state contracts must now report where contracts will be executed because of a new law that takes effect in July, 2005. Although some might be tempted to think this law "curbs" offshoring, don't you make that mistake. It's a data gathering bill, with a report on offshoring due by 2007, written by Central Mangament Services, the major procurement division of the state of Illinois.

prospective vendors shall disclose
in a statement of work where services will be performed under
that contract, including any subcontracts, and whether any
services under that contract, including any subcontracts, are
anticipated to be performed outside the United States.

What goes into a Bill may not always Come out as Legislation
This bill was originally written to prevent companies that offshore state work. Apparently, members received word that Central Management Services (CMS), was dismayed by the intent of the original bill. Because of this, successful efforts were undertaken to subsantially change the impact of the bill.

Legislators then re-worked the bill so that companies bidding on contracts must report their offshoring activities. Rep. Harry Osterman, from Chicago, added some teeth to the bill at the last minute by allowing the state to end a contract early - if the company decides to offshore the work after receiving the contract.

As may of you are aware, offshoring is a new phenomanom. Most foundations and think tanks aren't yet studying the issue yet, so in this regard this legislation may provide some data in the later part of 2005.

Tuesday, February 08, 2005

Bi-partisan Effort to Block Offshoring in Arizona

I'm taking my hat off to all those Arizona techies whom made this happen.

A measure has been put forward at the state Legislature prohibiting the foreign outsourcing of state government work.
It prohibits the state from entering into contracts or taking other actions that results in state government jobs, contract positions or other work being shipped outside the United States.

The legislation is sponsored by three conservative Republicans and 18 Democrats.

Congratulations for working together on this. Could these legislators soon find themselves humming Howie Day's new song, "
You and I Collide"?

This legislation is probably in response to a brew-ha-ha over offshoring government customer service. Arizonans who were down on their luck found themselves calling India to get help managing their food stamp alottment.

Here's a short 4-minute clip from the nightly news. My colleague, Rob Sanchez appears in this. I'm mentioning as an effort in full disclosure.

Can other states, particularily Illinois, make sure that the dollars they spend go into the local or domestic economy?

Keep checking back; I've got some stuff I'll be rolling out. Maybe we in Illinois could soon be humming Maroon 5's new song, "And She Will Be Loved!"

(Is it obvious to you that my radio is playing in the background?)

Democratic Insiders Listening

I am pleasantly surprised by the messages I have received. I encourage everyone to post here with the details of your circumstances. Why? Because I just spoke with a Democratic insider who is keen to understand our issues and circumstances. He wants to listen to our knowledge and experience and needs to understand what we face.

Government policy is shaped from detailed information.
As you know, this issue hasn't gotten the detailed attention that it requires. At the present time, we have this detailed information in our heads and we can convey some of this rich detail here. Otherwise, we will wait years for foundations to realize that they need to fund researchers to study us to tell politicians how to address our circumstances.

So let's cut out the middle man, right here on this blog.

When you post to this blog, you are the star and your story is unique. Pack your sentences with names, dates, and figures. This will help some of the Democratic insiders understand us.

Politicians think differently than we do. They see specific examples and extrapolate from there. We tend to organize our thoughts by understanding the general and then boring down to the specific.

So instead of writing, " I worked for a company in southern CA..." try to this:
I'm a systems programmer with a Masters in Computer Science, 1992. I worked for Lockhead Martin in Van Eyes, CA from 1995 to 2000....

If you're unsure how to word something and want an editor, send me your post and I'll return it with comments or edits.

I'll change the settings to allow Anonymous posts.

Great jobs, gals and guys. Keep up the good work.

Friday, February 04, 2005

On-the-Job Training is Only for H1-B’s

On-the-job training is not available for the majority of technical professionals - unless you have a visa the company can hold.

In the '70 & 80's high tech jobs were paths to upward mobility, especially for women and minority groups. Veterans were scooped up immediately, regardless of their race. The reason I was able to break into the industry was due to a labor shortage. I was a smart kid and they gave me a break! Labor shortages always advantage disenfranchised groups.

Congress should allow companies to solve their staffing problems the old-fashioned way – thru in house training, giving smart kids a break, and using the Human Bonding method of transferring knowledge to the young upstarts.

H1-B: tech knowledge transfer via Human Bonding
Tthe IT industry is highly exclusionary and government programs like the H1-B provide the best guarantee that the Human Bonding method of knowledge transfer - mentoring - will result in a worker remaining with the company for at least 3 years. ALL H1-B’s go through a training period – some are even trained by their replacements!

Training is rarely provided to IT professionals – they are expected to “hit the ground running” and we do! f this training were provided to you or me, there would be no guarantee that we couldn’t be snatched away in one day by another tech company who needs that skill or experience. The H1-B program substantially lowers the risk that a tech professional will seek employment elsewhere during his stay.

The H1-B program legally creates a glass ceiling. Once the job is removed from the domestic workforce with approval by the Department of Labor, federal hiring guidelines can legally be circumvented. It also creates a glass floor where technical knowledge will never flow. So in this scenario, how does a sharp kid get a break?

Now, the tech knowledge transfer is the part that’s so devastating to the US workforce. The H1-B and the L1- programs are the crucial players in successful offshoring. Without transferring technical knowledge via the Human Bonding method, the company cannot offshore the job. This very intensive training takes at least 6 months to 1 year.

Tech Firm’s Project Driven Business Model needs H1-B’s
The vast majority of tech work is now project driven. In fact, this business model has evolved in tandem with the H1-B program. This project-driven business model is dependent on long-term temporary labor, similar to major construction projects. So we now have the majority of tech guys (their increasingly guys now) who are hired like tradesmen – all qualified the day they start, work for 6 months to 3 years, and are then let go.

This would be a good model if we were unionized, since the union would get us the jobs, negotiate our rate and mentor the young upstarts via union-provided training. Providing skilled labor and providing knowledge transfer would be the union’s responsibility – not the governments or the tech firm’s.

Instead, the government via the H1-B program provides skilled labor and training. So in this model, how does a smart kid get a break?

The End of Aspiration
The H-B program is crucial in constricting opportunities into the Digital Economy for citizens, green card holders, and even the undocumented. This is part of the reason the Gen-X'ers have limited opportunities.

Sharp kids that got breaks created the computer industry. We were trained by the company, mentored and furthered our education. We were ordinary folks who took the opportunity and ran with it.

The tide was turned in 2004. The combination of loss of jobs, offshoring and the reservation of jobs via the LCA database means that the next generation of average technical kids must have an easy path to immigrate – especially to India.

Thursday, February 03, 2005

Blue Cities Face Higher Risk of Offshoring

Democrats take note: offshoring will impact your economies more than the national average.

According to this report, 10% of all jobs in the US face the risk of offshoring. However, 11%-16% of all jobs in the metropolitan areas of Alanta, Boston, Chicago, Houston, Los Angeles, New York, San Francisco and San Jose face the risk of offshoring.

Berkeley researchers, Bardhan and Kroll, say that the widely quoted Forrester Research (an independent technology research company) report issued in 2002 that 3.3 million jobs would be lost to outsourcing by 2015 already seems conservative.

An old article (2003) but has great pictures. The entire report is located at the end. It's easy to read, especially if you are a wonk.
Second Wave of Outsourcing Jobs

Can Democrats, with the help of technology professionals, mount a bi-partisan effort to secure a bright future in their own back yards?

Wednesday, February 02, 2005

10,588 Illinois companies removed 167,023 jobs

10,588 Illinois companies have taken advantage of the H1-B program to remove 167,023 jobs across the state during 2001 and July 2003 alone. Within Chicago, 4,752 companies have removed 76,734 jobs from the local job market via the H1-B program during the same period.

The H1-B program gives the power to corporations to reserve, exclude and remove jobs from the domestic job market via a form called the Labor Condition Application (LCA). It is the pre-condition for applying to receive a visa for a citizen from abroad but it is not identical to hiring an H1-B visa holder.

Once the Department of Labor (DOL) approves the LCA, corporations can circumvent federal hiring guidelines. Once the job is removed, no citizen, green card holder, or even the undocumented can qualify. Only citizens from abroad can compete for these positions.

The Department of Labor is required to make all of these requests to remove a job from the domestic market public. By filing a job in this database, the DOL assumes that companies have previously advertised to fill this position. However, no documentation showing that these steps were taken is required in order to remove the job.

You can use this database to see what companies are reserving jobs in your city.

We Americans have a history of using laws to discriminate in hiring. Under the Jim Crow era, the Black Codes specified jobs that black men couldn't compete for. However, the Black codes had exceptions.

If a black man could prove that he was qualified for an excluded job, he could present his qualifications to a judge and receive a certification to compete for that job. Under the H1-B program, we don't even have this exception.

Citizens and immigrants should have the right to compete for all jobs in this country. We may not have the qualifications for every job out there, but having the right means, we have the opportunity.

And opportunity is the fuel for aspiring to succeed.


Offshoring Needs Guest Worker Programs

Some of the top off shoring companies have built their business model around government regulations that prevent the US workforce from competing for these new positions, according to a study conducted by Ronil Hira, from the IEEE-USA.

“For example, a recent financial statement from Wipro says: "If U.S. immigration laws change and make it more difficult for us to obtain H-1B and L-1 visas for our employees, our ability to compete for and provide services to clients in the United States could be impaired." Wipro's Ramasubbu said there could be a delay in work heading to India if the visa programs were abolished.”


Wipro will be forced to change it’s business model when the local workforce is legally allowed to compete for these positions. They would just hire locals and send them to India for training, as a Chicago company, ThoughtWorks, is doing.

Their growth will slow initially, but this would be the way that the local economy and workforce will be connected to the global economy. In fact, understanding how to “domestically offshore” is allowing companies that are based in rural areas like Arkansas and New Mexico, to compete against these companies. Raiding employees is a tradition in the IT industry because the IT industry has always resisted investing in their employees. In addition, because we haven’t embarked on a national program to transfer technical knowledge the way we did during the Agricultural Revolution, this knowledge is still highly dependent on job experience.

Offshoring’s risky business
It’s worthwhile to note that Wipro is dependent upon only a few companies, as they stated in this SEC fining, “our ten largest clients accounted for 38% and 33% of our Global IT Services and Products revenue.” This is quite a risky ratio. Most businesses are healthy when their top ten clients represent 20% of their revenues or less.

Forbes reported that Wipro’s 3rd quarter earnings for 2004 showed a 90% employee turnover rate for their off shoring services division.

Wipro won’t pay taxes in India for another 9 years
Most Americans are unaware that Indians kicked out the ruling BJP party last spring, because the BJP was “giving away the store” to many of the IT outsourcing companies.

As they state in this SEC filing, “Currently, we benefit from tax holidays the Government of India gives to the export of information technology services from specially designated “Software Technology Parks” in India. As a result of these incentives, our operations have been subject to relatively insignificant Indian tax liabilities. And “…a substantial portion of our pre-tax income has not been subject to significant tax in recent years.”

L-1’s are not protected with prevailing wage rates, but instead are paid the wages that they earn in their home countries.