Business coalition battles backlash
Mar 1, 2004
With overseas outsourcing a hot US election-year issue, big business is quietly mounting an offensive against state and federal efforts to keep jobs at home and otherwise restrain globalization.

Some of the best-financed trade groups in the U.S. have formed a coalition to beat back federal legislation that would restrict foreign outsourcing by government contractors and limit visas for non-American workers with technology skills.

Calling itself the Coalition for Economic Growth and American Jobs, the new entity comprises about 200 trade groups—including the U.S. Chamber of Commerce, the Business Roundtable, the American Bankers Association, the National Association of Manufacturers and the Information Technology Association of America–as well as individual companies.

The Wall Street Journal, USA

HSBC to move 6,000 jobs...
Mar 1, 2004
BHSBC Holdings, the world’s second-largest bank by market value, said today it plans to move 6,000 jobs to support centers in India, China and Malaysia by the end of 2004 as it shifts work to lower-cost sites in Asia. At the end of 2003, the lender employed 8,000 people at such centers.

"It’s our duty to our shareholders, and frankly also to the markets in which we operate, to be making use of our resources in the most optimal way, said CEO Stephen Green in Hong Kong. "One of the things we do is to create jobs in environments where there’s a shortage of them," he added. HSBC, said that its 2003 profit rose 41% to $8.77 billion, buoyed by its purchase of Household International last year, and as other financial institutions are moving jobs to Asia, where labour is cheaper, to save on costs.

Last year (2003), the UK lender said it plans to cut 4,000 jobs in the UK and move the positions to Asia. It opened its first processing centre in Guangzhou, China, in 1996 and started moving back-office employees to India in 2000.

Agencies, HK

Meeting Needs is Key to Growth
Mar 2, 2004
HOW concerned should advanced nations be about the outsourcing of manufacturing to China or software development to India? Fear of jobs lost to low-wage nations strikes a populist chord, but misses a vital point: developed nations’ prosperity hinges primarily on entrepreneurship.

After all, no economy can raise living standards forever through innovations that make production of existing goods more efficient. In the short run, more efficiency reduces the cost of a good or service, so people consume more of it.

Eventually, though, consumers refuse to buy more even if prices continue to fall. After that, further efficiencies require shedding workers.

Creating and satisfying new consumer desires keeps the system going by absorbing the labour and purchasing power released by the increasingly efficient satisfaction of old ones.

At the other end of this process, producers who satisfy old desires continue economising, because they compete for employees and consumers with producers who satisfy new desires.

Similarly, outsourcing to low-wage countries improves living standards only if the human capital released can be used to make new goods and services. Otherwise, outsourcing merely reduces demand for domestic labour, just like other efficiency gains.

Business Day, Johannesburg, SA

Two-Way Street
Mar 11, 2004
The January 31 issue of The Economist described the consequences of high-tech jobs moving overseas. The story says: "With the trans-Atlantic shift in R&D goes many high-value jobs, as well as a greater share of the industry’s profits". This trend has led to an "increasing concern" in the industry, with some executives speaking out against the outsourcing trend. Old news, you might say.

The twist here is that the article is about biotech research jobs being outsourced to the US from Europe. But the language is eerily familiar: replace "biotech" with "infotech", switch the roles of Europe & US. This could pass for yet another Silicon Valley requiem.

Articles like this should remind us that trade is a two-way street. The money paid to foreign producers, whether businesses or workers, typically comes back home to buy domestic goods and services, thereby generating domestic employment. That is true whether it is European companies paying American biotech researchers, or US companies paying Indian programmers.

The New York Times, USA

Alan Greenspan

Ban on Outsourcing Jobs Could Ignite Trade War: Fed chief
Mar 12, 2004
Federal Reserve chairman Alan Greenspan yesterday criticized the "alleged cures" that political candidates are proposing for joblessness—including limits on moving jobs offshore—saying they will erode America’s living standards and do little to reduce unemployment. Although "new-job creation is lagging badly" for the moment, he said, the best way for Congress to help Americans get and keep good-paying jobs is to improve their math and technical skills so companies won’t be tempted to outsource to better-trained workers in China and India.

The Miami Herald, USA

Benefits fall far short of losses
Mar 10, 2004
White-collar outsourcing has a greater impact on our economy than does overseas manufacturing. Those lower-paying manufacturing jobs provided money mostly for food and rent. The professional jobs provided income that is spent on high-ticket consumer goods and services that provide employment to those who once worked in the manufacturing industry.

Every lost professional job probably represents a loss of two lower-income jobs. Additionally, these professional positions helped the US economy by requiring the purchase of computers, software and educational products and services sold at US prices. Outsourcing will be a drain on America’s intellectual capital. While the US lost its dominance in manufacturing, we saw a rise in technological superiority. China, India and Russia have always been able to educate computer scientists. However, due to political and cultural environments, these nations never produced an IBM, Microsoft or an Oracle.

Every engineering or programming job outsourced robs our nation of its potential for technological breakthroughs. As the market for these jobs diminishes, these professions will become unattractive to American college students.

The argument that American companies need outsourcing to be competitive is completely false. Manufacturing requires a person to be paid for every piece manufactured. Software companies pay one time for the product to be created. With Internet downloads, creating copies and delivering software has virtually no cost.

Having software coded in India for $125,000 instead of for $500,000 in the US would barely affect a company’s profit margins when it sells the software for millions or even billions of dollars.

Outsourcing technology jobs is the ultimate expression of greed. To say it helps the nation is a lie.

Atlanta Journal-Constitution, USA

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