Friday, August 29, 2008

R E G I O N: Hindu mobs attack churches as India violence continues

* Hundreds flee homes
* Peace committees set up to initiate talks among community leaders


BHUBANESWAR: Hindu mobs ransacked a church and clashed with Christian villagers in eastern India on Thursday, as hundreds fled their homes.

Rampaging Hindu mobs ransacked a church and clashed with Christian villagers, police said, as authorities struggled to control spiralling religious violence in the region. Police deployed more than 3,000 personnel in the streets but they could not stop the ransacking of at least one church. Local media said as many as four churches were attacked. "Police are marching in several areas now," Orissa police chief Gopal Chandra Nanda told Reuters.

Television pictures showed mobs armed with rods putting up roadblocks on Thursday and others attacking churches. Other mobs armed with bows and arrows and axes have attacked Christian homes, dragging out women and children. Hundreds have fled to forests and nearby hills, officials said.

"Moments after we passed by a Christian village, people set it on fire and everything was over within minutes," a senior police officer, speaking on condition of anonymity, said from Kandhamal, the worst-hit district.

Peace committees: On Thursday, peace committees were set up in villages to bring community leaders together for talks, but Christians in many villages said attacks were worse than what the government has said.

Police said more than 100 people had been arrested after rioters torched nearly 500 houses as well as Christian prayer halls and vehicles in eastern Orissa state. "Over 300 people fled our village and have taken shelter in the forest," Kanu Chandra Nayek told the Indian Express newspaper after his village was attacked by a Hindu mob. "Here we have almost nothing to eat, there's a constant downpour, our children are sick," Nayek was quoted saying.

Indian police have been ordered to shoot on sight after the killing of a popular Hindu holy leader on Saturday sparked the riots, which have drawn the condemnation of the pope. Orissa authorities say nine people have died, but government officials speaking on condition of anonymity have put the toll at 16. "The situation is certainly tense but under control," local civil administrator Satyabrata Sahu told AFP.

Residents waited in a mile-long queue to buy essential supplies when the curfew was relaxed for a few hours in the worst-hit Kandhmal district. Pope Benedict XVI on Wednesday "firmly condemned" the violence in Orissa, where Australian missionary Graham Staines and his two young sons were burnt alive in 1999 - a crime for which a Hindu man is serving life in jail. agencies

IT workers hit hardest by offshore outsourcing, survey finds

Jobs most at risk for offshore outsourcing are computer programming, development
Patrick Thibodeau
 

August 28, 2008 (Computerworld) As many as 8% of IT workers have been displaced by offshore outsourcing, either through job loss or an involuntary transfer to a new job by their employer, which is twice the rate of workers in other occupations, according to a study based on data collected from some 10,000 people, which may be the largest survey of its kind.

The survey, conducted by researchers at the New York University Stern School of Business and the Wharton School of the University of Pennsylvania, also backs up the long-standing view that IT employees in purely technical jobs -- computer programmers and software developers who have little customer interaction -- are at the most risk from offshore outsourcing.

The broad conclusions are unlikely to surprise many high-tech workers, but what may make this offshore outsourcing study unique is its breadth: some 6,700 workers across a variety of occupations and more than 3,000 hiring managers and human resources professionals were surveyed.

There has been a dearth of data about the impact of offshore outsourcing on U.S. workers, and its authors, Prasanna Tambe of the Stern School and Lorin Hitt of Wharton, said their work is the first to pin down offshore outsourcing's impact by occupation.

The job site Careerbuilder.com funded the research, which looked at a spectrum of occupations, including technology, and published initial data from the survey in April. But the 44-page paper, posted this week on the Social Science Research Network (registration required) analyzes what the data is saying about the fate of high-tech workers who have been directly affected by offshore outsourcing.

Tambe, an assistant professor of information, operations and management sciences at NYU, said the data isn't a forecast of how extensive offshore outsourcing will be, but instead tries to fill in the gaps of the theoretical work on offshore outsourcing and address the dearth of data on this topic.

But the impact of offshore outsourcing on IT jobs may just be a sign of how this trend will unfold across a broad range of occupations. "I think [IT] is definitely ahead of the curve, but I think that gap will probably close in the future," Tambe said.

The base rate of offshoring across all industries is just over 15%, but some 40% of all tech and telecommunications companies are doing some type of offshore work, according to the research.

By occupation, more than 30% of the survey respondents said they are offshoring computer programming and software development jobs, but only about half, or 15.5%, reported offshoring systems analysts, who typically interact more with others in a business.

Among employees, across all occupations, slightly more than 4% of workers were displaced because of offshore outsourcing, half the rate of IT workers. The survey's 8% figure for IT displacement represents the percentage of workers who have ever been affected by offshore outsourcing, a rate that implies an annual offshoring-related displacement of 1% to 2% per year for IT workers, according to the study.

Of those displaced by offshore outsourcing, 70% lost their jobs, with older workers more likely to be displaced.

The researchers don't predict what future displacement rates may be, but they say that as offshoring grows, tech workers without jobs that don't require interpersonal skills, are being replaced more rapidly.

IT workers concerned about displacement "can focus on further developing these interpersonal skills, or may find more robust long-term careers in IT professions that involve significant face-to-face interaction such as those involving cross-organizational process change or hands-on support functions," the report's authors wrote.

Since IT workers have been more severely affected than other types of workers, Tambe and Hitt argue that policy-makers could focus on tech workers to provide help, including job training and government compensation to offset wage losses. Educational institutions will have to react as well, with "increased emphasis on the development of interpersonal and management skills within the IT curriculum."

Obama raises anti-outsourcing pitch, India Inc says, US cos need it

Agencies

Posted online: Friday, August 29, 2008 at 1749 hrs IST

Washington/New Delhi, August 29:
Making a strong anti-outsourcing pitch after getting the Democratic Presidential nomination, Barack Obama vowed to end tax breaks to companies that ship jobs overseas if he is elected to office.

Playing to the gallery on the hot button issue of outsourcing in his acceptance speech, Obama kept up with the rhetoric on the subject that has been a staple of Democratic campaigning and went on to spell out what he would do as President on the front.

"Unlike John McCain, I will stop giving tax breaks to companies that ship jobs overseas, and I will start giving them to companies that create good jobs right here in America," said Obama, who has been fiercely opposing outsourcing. The remarks drew a loud applause at the Denver Democratic National Convention.

Often played the anti-outsourcing card since he entered the Presidential race, Obama has said that while the US cannot 'shy away' from globalisation it would have to take measures to ensure that jobs are not shipped overseas.

Facing the heat from US Presidential hopefuls who blamed 'shipping jobs' to China and India for rising US unemployment, the India Inc had launched a counter-offensive telling Americans that the industry is in fact creating new work opportunities for them.

Reacting to the fresh offensive from Obama, NASSCOM Chairman Som Mittal feels American companies will themselves favour outsourcing.

"The US companies themselves will have to find the right balance of who they want to service themselves and MNCs who have set up their own houses in India have increased competitiveness in furthering their own company objectives," Mittal said.

Infosys' HR Director T V Mohandas Pai said the US industry has accepted India's outsourcing story but preferred to wait for what the US policy would be after the Bush Administration demits office.

Thursday, August 28, 2008

Painful lessons from IT outsourcing gone bad

In tough times, companies look to shift tech work to outsiders, whether offshore or down the street. Be careful: This "cure" could be deadly.



By Ephraim Schwartz, IDG News Service


August 25, 2008

As companies look to economize in a weak economy worsened by rising energy costs, it may be more tempting than ever to consider outsourcing your IT -- whether to a cloud-based provider, to a shop in your town, or to a provider in some far-off land. Certainly, outsourcing has worked well for many companies, but it can also lead to business-damaging nightmares, says Larry Harding, founder and president of High Street Partners, a global consultancy that advises company on how to expand overseas. After all, if outsourcers fail, you're left holding the bag without the resources to fix the problem.

In his consulting, Harding has seen many outsourcing horror stories, from corrupt general managers "with all sorts of conflicts of interest" (such as service providers getting kickbacks from landlords on the leased space) to projects torn apart by huge turnover rates. "You end up with project teams that are hugely inconsistent. You might have a good team in place, but a month later, three-quarters of the team has transitioned," Harding says.

[ If  your IT job is moving overseas, maybe you should too. Find out where the hot jobs are abroad and what it takes to move where those jobs are, in InfoWorld's "offshore yourself" special report. ]

"Only when executed well can it pull out hundreds of millions in cost and transform organizations," says Brian Keane, CEO of Dextrys, an outsourcing service provider that focuses mainly on China.

In the sometimes panicked desire to save money -- especially with the powerful lure of "half-price" workers in places like India, China, and the Philippines -- good execution flies out the window. And that's where the problems flock in. Outsourcing is not for the faint-hearted or the ill-prepared. It just doesn't "happen."

That's why understanding what can go wrong before you jump into outsourcing is a great way to reduce your risk, because then you can approach outsourcing with eyes wide open, Harding notes. The companies who've lived through outsourcing horrors have two things in common: lack of preparedness going into a new relationship and lack of communication once the projects gets under way. Other factors can make these worse, of course.

Outsourcing's biggest horror show
In the pantheon of outsourcing horror stories, the $4 billion deal between the U.S. Navy and global services provider EDS stands out as one of the most horrific. It started back in 2003 when the Plano, Texas, vendor beat out the likes of IBM and Accenture for the contract. The deal was to manage voice, video, networking, training, and desktops for 350,000 Navy and Marine Corps users. But just one year later, EDS was writing off close to $350 million due to its inability to come even close to fulfilling its obligations.

The reasons behind the failure are complex, but suffice it to say that one of the major causes behind the debacle was that EDS, perhaps anxious to win the prize, never realized that the Navy and Marine Corps had tens of thousands of legacy and custom applications for which it was expected to either integrate or rip and replace. An EDS spokesperson said at the time the company's goal was to get the number of legacy apps down to a mere 10,000 to 12,000.

While there was plenty of blame to go around at EDS, the Navy took its share of blame as well. One of the major issues with the Navy was that the buck stopped nowhere. There was no single person or entity that could help EDS determine what legacy applications were needed and what applications could be excised. EDS, for example, found 11 different label-making applications, but there was no one who could say which 10 to eliminate.

[ If  you're planning to outsource, get the collective wisdom of those who've had success in InfoWorld's "13 best practices for outsourcing." ]

Most companies will never face outsourcing problems on the scale of the Navy and EDS. But many will face their own horrors on systems and projects just as critical. Consider these four modern examples and what lessons the companies painfully learned.

Horror No. 1: A medical firm's configuration management surprise
When Fran Schmidt, now a configuration engineer with Orasi Consulting ,was told at her previous job in the medical industry to head up a team to outsource the existing in-house development and quality assurance IT departments, she faced the usual problems.

"There was one Indian fellow no one could understand over the phone. It took us months to figure out what he was saying," Schmidt recalls with a smile.

That was expected. But what the medical firm didn't count on was that its existing configuration management tool, Microsoft Visual SourceSafe, which worked fine locally, would be a total bust when used collaboratively between two groups 8,000 miles apart. It took the remote teams in India an average of 13 hours to get updates on source code. And with a time difference of about 11 hours, the outsourcers were behind a full day's work.

"When we hit the [Send] button, there was no code done by the previous shift the entire time they were at work," recalls Schmidt. Not having immediate access to what was previously done the day before caused major problems for in-house developers. "All our progress schedules were behind. It's a domino effect with everyone playing catch-up." And the firm's customers paid the price: They were upset because they were not getting the same level of care that they expected.

The medical firm ultimately switched its configuration management tool to AccuRev, cutting the transoceanic updating from 13 hours to about an hour and a half. All told, it took around six months to recover from the disaster, Schmidt recalls.

The obvious lesson was the need to test your infrastructure before going live in an offshoring scenario. But the medical firm also learned another hard lesson: The desire to save big bucks so blinded the executives that they didn't realize they were replacing a group of people experienced with using a product to a group of people who were looking at it for the first time. "We underestimated the loss of knowledge that would take place during the transition," Schmidt says.

[ At many companies, IT is under extreme pressure, and may be at the breaking point. Find out how under-the-gun IT is responding to such duress in our special report "IT workers pushed to the limits." ]

Horror No. 2: Manufacturing efficiency doesn't extend to marketing
Executives in charge of a small consumer product group at Hewlett-Packard were under the gun. They were told in no uncertain terms to cut all costs related to getting the product into the big-box stores like Best Buy and Circuit City, recalls Margaret McDonald, then marketing manager for the HP department and now president of her own company, McDonald Wordsmith Communications. (McDonald would not name the product and would only say that it is sold today at places like Best Buy.)

"We were trying to get as much work as possible over to the Taiwan manufacturer with the goal to get the cost for these products down as low as possible," McDonald recalls. The Taiwanese outsourcer had a great deal of experience in getting the bill-of-materials costs lower, and HP was seeing that benefit. So managers started pushing for more savings elsewhere, insisting that the entire project be handed over to Taiwan -- everything from manufacture to writing the instruction manuals to all the marketing materials.

"These execs were being evaluated on cost, not on the quality of the brand," says McDonald. When she tried to tell her managers that what they wanted was unreasonable for an outsourced manufacturer to deliver, they accused her of just trying to hold on to her job.

As she predicted, the project turned out to be a disaster. Take this example of the Taiwan-produced marketing materials: "This glamour of new product will perfectly fit to your daily life from any of locations!" Of course, non-native English prose like that never saw the light of day, but it wasted six months until the higher-ups finally realized what was happening.

McDonald isn't sure her managers learned a lesson. She sees the failure not due to the offshore firm hired or even the miscommunication between the U.S. and Taiwan firms. Instead, she sees the problems as a failure within HP, between its own internal organizations. "The main [HP] branding people had no idea was going on." And the local managers reacted to the extreme cost pressures in a vacuum, with no concern for protecting the brand, McDonald says. The fact that the job was outsourced simply created the right circumstances for these internal flaws to finally become evident.

Horror No. 3: Giant telecom stumbles in transition to offshore
Steve Martin, a consultant and partner at Pace Harmon, a company that is often called in to help fix outsourcing deals gone bad, recalls the giant telecommunications company headed for disaster: It never considered the fact that although its new offshore provider, though good at coding, did not understand the business side of telecommunications.

The outsourcing project was divided into two phases. In phase one, all the internally managed operations were moved to an outsourced service provider (in this case, based in the United States). The idea was to test and stabilize the outsourcing approach with a local provider first, before taking the riskier step of moving the application development offshore.

The first phase went fairly well, so the telecom initiated phase two, shifting the effort to India. That didn't proceed so smoothly. The Indian provider simply didn't understand the telecom business, so lost in the transition halfway across the globe was all the telecom's inherent knowledge of the business applications -- what it is supposed to do and why. "All of that knowledge got left in the U.S.," Martin recalls.

Because the Indian firm didn't understand what it was coding, it took much longer to develop the applications. And they didn't work well, resulting in even more time and effort to figure out where they went wrong and fix them. It got so bad that the telecom canceled the offshoring midway and brought the effort back home.

Of course, there were lingering problems to resolve, such as how to handle the disputes over tens of millions of dollars in service credits the telecom believed it was due from the Indian outsourcer, which argued that it delivered what it had been asked to do. "An amazingly large amount of costs had to be reconciled," Martin notes. The two companies eschewed a legal battle to avoid the bad publicity, ultimately settling the dispute privately.

What the telecom company learned the hard way was that there is more to a deal than signing the contract. In the original deal, pricing took precedence over every other consideration because the executives wanted to show that they saved millions of dollars. Shortchanged in the process were the details of the transition, the development processes, and the governance. Adequate thought was not given to the obligations of the people who were responsible for executing the transition.

"The contract was executed from a business perspective, where it looked great, but not enough thought was given to how to programmatically move to the new environment," Martin says.

Horror No. 4: Service provider blacks out the client
James Hills, president of marketing firm MarketingHelpNet, probably had one of the most terrifying offshore experiences of all. When a dispute between his new company and the Web site developers grew heated, he came into the office one day -- only to discover the developers had shut his client's site down.

"I came in and checked e-mail. No e-mail, no Web site. They had simply turned it off. It was all gone," Hills recalls. While he was shocked to discover this, in some ways, he was not surprised. After all, the relationship with the offshore provider had been troubled from the start.

It started when Hills took on an assignment from a major client. Rather than trying to develop Web design skills needed to complete the client's project, Hills decided to farm that part of the job out to an offshore provider in the Philippines, at a savings of half of the cost of working with a local Web site designer, says Hills.

As soon as the offshore provider began sending back completed work, Hills knew there was trouble: "Functionality and community features didn't mesh properly and the design wasn't what we were looking for." On top of that, the offshore provider continually missed deadlines.

Becoming increasingly frustrated, Hills didn't make the final payment. The result, of course, was a panicked wake-up call from his client telling him there was no e-mail and no Web site.

Looking back, Hills says that if had he to do it over, he would have been more diligent in checking references. He did only a perfunctory check of references, unfortunately taking it for granted that the offshore design firm actually created the Web sites they claimed.

Time differences also played a key role in the soured relationship. "We weren't able to communicate directly, only through IM," Hills says. And as a small startup at the time, he couldn't support multiple shifts at home to get overlap with India, nor ask his staff to work 20 hours a day to cover both time zones. And sending a manager to the Philippines was out of the question, Hills says.

Hills doubts he'll ever outsource again, but if he did, he would insist that the job be done with a U.S.-based company that puts its offshore staff onto the company's payroll. "No contract workers," Hills says tersely.

ABA Gives Thumbs Up to Legal Outsourcing

Anthony Lin
08-27-2008

The American Bar Association has waded into the debate over legal outsourcing with an ethics opinion blessing the outsourcing trend as "a salutary one for our globalized economy."

A growing number of legal process outsourcing (LPO) companies have sprouted up in recent years to offer the services of lawyers abroad to handle the most labor-intensive aspects of U.S. legal matters, especially document review in large-scale litigation. India has been the most popular destination for legal outsourcing because it has a common-law system and English is widely spoken.

Companies operating there have hailed the advisory by the ABA's ethics committee as a major step forward for their nascent industry.

"Several of us were waiting for this," said Ram Vasudevan, the chief executive officer of New York-based Quislex, which has 170 lawyers in Hyderabad, India. "This lays out the framework for how to do this."

Ethics Opinion 08-451, dated Aug. 5 but announced by the ABA Tuesday, states that sending legal work overseas is ethically permissible as long as the lawyer doing the outsourcing takes steps to ensure the protection of client confidences and preservation of attorney-client privilege. The advisory also states that attorneys should check to make sure that foreign lawyers are suitably trained and competent and that bills for outsourced work be reasonable.

Vasudevan said the major LPO companies already took all of the precautions outlined by the ABA but said the advisory would help set industry standards for newcomers and also comfort potential clients still wary of outsourcing legal work.

David Perla, the co-founder and co-CEO of New York-based Pangea3, one of the largest LPOs with 300 lawyers in Mumbai, India, said the positive language of the ABA's opinion was particularly heartening. A handful of state bar groups, including the New York City Bar Association, have already signed off on overseas outsourcing, but none has been as enthusiastic as the ABA, he said.

The advisory noted that outsourcing "affords the lawyers the ability to reduce their costs and often the cost to the client to the extent that the individuals or entities providing outsourced services can do so at lower rates than the lawyers' own staff." The ABA also said outsourcing created new opportunities for smaller firms to handle larger matters.

Such language would "lessen the fear and uncertainty that opponents of this are spreading," said Perla.

The most visible opponents to overseas outsourcing of legal services are U.S. lawyers performing document review work on a contract basis. Many temporary lawyers, who generally earn a fraction of the pay of full-time associates at large firms, fear that outsourcing to India will drive their wages down even further.

Though lawyers, they are as vociferous in their opposition to outsourcing as union members. After Perla compared the skills of U.S. contract lawyers unfavorably with those of Pangea3 lawyers in an interview with the Law Journal earlier this year, he was vilified in online message boards and blogs frequented by contract lawyers. The blog "Temporary Attorney: the Sweatshop Edition" called Perla an "anti-American traitor."

Scott Bullock, a contract lawyer who has blogged about the woeful economics of non-big-firm practice, said, "It's just preposterous that we have to go to an American law school and pass a bar exam and then see our jobs shipped overseas. Why even require people to go to law school?"

But Bullock said he was not surprised to see the ABA back outsourcing. He said the bar group is widely perceived among contract lawyers as representing the interests of wealthy partners at large law firms.

Vasudevan said the perception of job loss in the legal profession due to outsourcing is exaggerated.

"I don't think we have taken any legal jobs away," he said. "We've made the process more efficient, but there is still plenty of work."

LPOs face some potential obstacles to continued growth. The number of new entrants in the industry has made recruiting of well-qualified Indian lawyers more competitive. The expansion of the Indian profession and a possible opening of the now-closed market to international law firms may rob LPOs of their best staff down the road.

But the trends so far are positive, said Pangea3's nonexecutive chairman, Lawrence G. Graev, the former law firm head whose private equity fund is now a major backer of the LPO. He said Pangea3 had its best month ever in July and that the company was benefiting from a critical mass of a strong and seasoned staff in India, and greater acceptance among U.S.-based clients. He said the ABA's ethics opinion would only increase client interest.

"It's like a perfect storm," he said, "for us."

180 jobs affected by P4U's IT outsourcing

August 27, 2008


Phones 4U outsources IT department to Indian firm Tata Consultancy Services

Phones 4U is outsourcing its IT department to Indian firm Tata Consultancy Services (TCS).

The move will mean the majority of Phones 4U's IT staff will, from October, work for TCS under the same employment terms and conditions.

The move comes alongside plans to restructure Phones 4U's head office compliance and audit departments, putting 60 places at risk of redundancy.

The retailer currently has 1,000 employees at its head office and 200 IT staff, of which 180 will be affected by the outsourcing.

A Phones 4U spokesperson said the cuts are not due to poor performance on the high street.

The spokesperson said: "The business is performing well, although it is difficult on the high street. Despite the tough retail environment, we are out performing the market and are satisfied with our performance.

"Our key reasons for outsourcing are to increase capacity, acquire better access to key skills and create a more flexible IT model. We've put a large investment in IT so we thought that by restructuring we would be more efficient. There will be a consultation in 30 to 60 days."

 

Outsourcing Pullback
Vidya Ram , 08.27.08, 12:30 PM ETLONDON - A day after India's Infosys announced its first British acquisition, telecom firm BT Group is said to be mulling a sale of its stake in Tech Mahindra, an IT outsourcing joint venture. It's yet another sign that the dynamics of the sector are changing rapidly, amid a slowdown in spending on sourcing, particularly in the U.S.

A representative for BT declined to comment on a report that it was considering selling its 31.0% stake in Pune, India-based Tech Mahindra, a 95.4 billion rupee ($2.2 billion) IT outsourcing joint venture with truck maker Mahindra and Mahindra. "BT has operations and investments worldwide, which we regularly review," he told Forbes.com.

Tech Mahindra investors shrugged off the report, with its shares closing down 1.7%, or 13 Indian rupees (29 cents), at 772.65 Indian rupees ($17.59), Wednesday, against a 1.3% drop in the Sensex Index.

There are some reasons to think that BT would want to cling on to its stake: BT Global Services outsources some of its work to Tech Mahindra. In July, BT signed a $700.0 million contract with Tech Mahindra, on top of a $300.0 million contract last year.

Still, a number of multinationals have begun to pack up their own outsourcing divisions. In July, British insurer Aviva announced that it was selling its offshore services operations to WNS for 115.0 million pounds ($210.8 million), which would continue to provide the services.

Amid the downturn in the global economy, the once-booming IT services outsourcing sector has begun to look decidedly less attractive as American companies cut back spending. Infosys' acquisition of Axon has been seen as an attempt, not only to expand its SAP consultancy expertise but also to move away from its dependence on the American market. A sign of the more downbeat market was the significant decline in the number of new employees taken on by Infosys, which fell to 25,000 for 2008 from 32,000 a year earlier. Last month, reporting a 21.0% rise in first-quarter net profits, Infosys warned that IT spending would be impacted in the short term.

However, analysts are less gloomy about the long-term prospects. In a note published in May, analysts at ABN Amro said that though revenues in the first half of 2009 for Indian IT services companies would be "muted," they expected revenues for the year to "match or exceed" 2008 figures.

BT set up the joint venture with Mahindra & Mahindra back in 1986. BT did not participate in an initial public offering of the venture two years ago; as a result, its stake fell by 6.0%, to 37.0%.

Monday, August 18, 2008

Should You Outsource Your Company Blog?

BloggerThere's no question entrepreneurs are strapped for time and can benefit by outsourcing things like payroll or administrative work. But, outsourcing your company blog?

Some technology consultants are pitching "blog management" services to companies they say want the benefits of blogging but are too busy to manage a blog themselves. They do everything from writing pithy, thought-provoking posts about a company or industry to managing comments and getting a blog better play on search engines.

I spoke with one such company, MoreVisibility, a search-marketing consultant in Boca Raton, Fla. About a year and a half ago, MoreVisibility began selling blogging services, including building a blog, writing and maintenance.

The company brainstorms "hot topics" to blog about with its clients and then its search-marketing-experts-slash-copywriters write "keyword rich" posts on those topics, says Danielle Leitch, executive vice president. The ghostwriter also embeds relevant links in the posts and lets clients review the posts before they're published.

MoreVisibility charges clients about $500 a month for one weekly post to about $2,000 a month for daily posts. It also charges a one-time fee starting at $2,000 for setting up the blog. The company manages blogs for about 20 businesses, Ms. Leitch adds.

The main reason companies outsource their blog, she says, is lack of time. But also many companies like the idea of having someone handle it who understands search-engine optimization and has the technical know-how to best write and market a blog.

One client, PoliSeek Insurance Agency, an El Segundo, Calif., start-up auto insurer, pays MoreVisibility about $500 a month to write a weekly blog post on topics like the dangers of chatting on a cellphone while driving and tips for teen drivers.

"To find time to do the blogging and do it accurately and make it work, we just didn't have time to fit it in," says Kim Riddle, PoliSeek's marketing manager. The insurer's lawyers review all the posts before they go up.

Though outsourcing a blog may be a tempting idea, some social-media experts don't think it's such a smart move. The whole point of blogging, they say, is having an authentic voice and giving customers a more personal connection to the company. Hiring a ghostwriter defeats the purpose. "You will get a better response from the public/community when you are the one writing," social media blogger Kyle Lacy writes.

Readers, do you think outsourcing a blog can be a good solution for a time-strapped entrepreneur? Or should businesses make the time to do it themselves?
AUTOMOBILES

Ford to make new Fiestas in Rayong

Ford Motor Co has confirmed plans to build its new Fiesta subcompact cars at its Rayong plant in Thailand next year, following the start of production of the models at its plant in Germany last week.

The Rayong plant is under construction to increase domestic production by at least 100,000 cars per year for export. In addition to the Fiesta, the first of a generation of new global small Ford cars, the subcompact Mazda 2 will be built at the plant.

Ford, in partnership with Mazda, is investing more than US$500 million to expand the Rayong plant.

The two companies plan to export the small cars to Asean, Australia, New Zealand and South Africa in addition to selling them in the domestic market.

The all-new Fiesta was conceived by the European arm of Ford's global product development team to meet the expectations of customers around the world, according to Ford Motor.

It is also the blueprint for future Ford global development, bringing together Europe, the Americas and Asia. The new Fiesta will be tailored for each region and will go on sale progressively between now and 2010, starting with Europe.

The plant in Cologne, Germany is the first Ford assembly facility in the world to build the new car. It will be followed in January 2009 by another Ford plant in Valencia, Spain.

In addition to Rayong, production sites for the new Fiesta outside of Europe will be Nanjing in China and Cuautitln in Mexico. They will begin to make the cars for their respective regions from late 2008 through early 2010.

For this year, Ford plans to manufacture 148,000 new Fiestas in Cologne. When operating at full capacity, it will make more than 1,900 cars every day.

Since the very first Fiesta was launched in 1976, more than 12 million have been sold, with more than 400,000 customers in 2007 proving the enduring popularity of the model.

Sunday, August 17, 2008

Cognizant head says outsourcing industry continues to grow


Sunday, 17 August , 2008, 16:35



Outsourcing industry will continue to grow: Cognizant head

Chennai: Despite the global economic slowdown and bad publicity against the industry, India's outsourcing sector would retain its high growth rate, says R Chandrasekaran, president of Cognizant India, a leading global and business process outsourcing (BPO) company.

Indian industry seeks cutting edge IT solutions from vendors

The number of foreign companies outsourcing jobs to India is increasing geometrically, the industry leader told IANS in an interview.

According to him, lower salaries, compared to the global standards, is the unique selling proposition (USP) of India. However, he added "On the global GDP linked purchase power parity grid, India is the fourth country ahead of Germany, the UK, Italy, Canada etc., according to the listings of the International Monetary Fund (IMF) and the World Bank. Doesn't that indicate something?"

Chandrasekaran also expressed confidence that India would catch up with the global pace in the IT industry and technological advancement.

"From mobile telephony that helps us keep track of vehicles that ferry our associates from home to jobs, to application of RFID (Radio Frequency Identification), Nano and virtualisation methods, all in their infancy globally, our research is on a par with the world," he said.

Asked about the computer hardware prices, he said prices would come down further in two years as all "aspects of life will depend on computing per se" by that time.

While he pointed out the crippling shortage of electricity in the country and particularly in Tamil Nadu, where Cognizant has units, Chandrasekaran said "No matter what the world says, we are happy here. Further, shortages in some form or other are a global phenomenon."

Despite humble beginnings from a Tamil medium school, Chandrasekaran has built an empire whose last balance sheet showed an annual revenue of $2.13 billion.

Cognizant is the second company in India to have been accorded the honour of ringing the Nasdaq (US stock exchange) bell for the start of trade March 5, 2007.

"In 2006, we grew 60 per cent but the rising rupee, the global slowdown and competition have trimmed it almost by half. Yet, our revenue guidance index is close to $2.8 billion and we are India's fastest growing services company in IT," Chandrasekaran said.

Asked about the company's efforts to reverse brain drain, Chandrasekaran said he was one of those who started the process successfully. "Roughly 70 per cent of our top people are the best examples of reverse brain drain," he said.

Chandrasekaran said Cognizant was against making too many attractive offers to students before graduation as these result in dropouts.

"We invest in R&D in educational institutions, rewarding faculties for cutting-edge results and encourage systems of education like technical writing, content management, e-learning to prepare students for the future. Our collaborative ventures in Manipal have resulted in a new course in pharmacological methods," he said.

More India business stories

Asked about bad publicity against the IT industry, he said "While our strict controls, sensitisation methods, constant monitoring have prevented any wrongdoing, some sections of the media play up minor aberrations as it's fashionable to titillate underachievers by blaming the smartest guys and girls of India."



"© 2004 sify.com India Limited. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Knowledge Process Outsourcing Represents the Next Generation of Outsourcing Services

Aug 14, 2008
URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210100188

Knowledge process outsourcing, or KPO -- in which service providers take over high-level tasks requiring professional judgment and industry experience -- looks to be the next frontier for the outsourcing industry. Many expect financial services companies to lead the way in KPO, and there's data to support such a view. For example, 45 percent of financial services executives who participated in a recent InformationWeek Analytics survey said they see the industry knowledge of their business process outsourcing (BPO) providers significantly improving. That's more than any other area of improvement.

Top Five Drivers of Business Process Outsourcing: Financial Services vs. Other Industries

Another reason is that there's a notable "strategic minority" of companies, according to the InformationWeek Analytics survey of 372 business technology professionals, including 110 in financial services, that see BPO as a road to competitive advantage, with goals such as transforming processes and increasing revenue, not merely cutting costs and meeting short-term goals. In financial services, that strategic group is about 15 percent (with another 24 percent responding that BPO is "more strategic than tactical").

Yet the top concerns about BPO revealed by the survey will only be magnified as financial services companies consider KPO, which might be used for capital market functions such as equity research in support of domestic analysts. It takes a high degree of trust to transfer custody of customer data, share tacit knowledge and work as a single team. Yet the No. 1 concern financial services companies have about BPO is data security, according to InformationWeek Analytics, a sibling property of Wall Street & Technology. No. 2 is the difficulty of managing BPO, followed by tension between employees and outsourcers, the difficulty in reversing deals, and reduced flexibility to change processes.

Where's the Outsourcing Innovation?

There's also the question of whether outsourcers have the innovation capability needed for KPO. Just 10 percent of financial companies gave providers high marks for innovating process change. Only 16 percent of financial services respondents said they see improvement in vendors assigning quality people for their projects. Companies that aren't getting bright ideas and top people on everyday projects won't likely rush vendors up the knowledge stack.

All signs point to companies' use of BPO continuing to grow. The survey finds 28 percent of companies plan to increase BPO, about four times more than those planning to decrease the use of outsourcing. Yet cost cutting through additional outsourcing only goes so far. Given that outsourcing is mature -- with organizations having made significant investments in offshore BPO capabilities -- any increase in the amount of outsourcing has to press beyond self-imposed limits and barriers with which companies have become comfortable. Market pressures -- including troubles within the financial services industry -- may compel companies to push those limits into areas such as KPO.

Engg services exports jump 25.6% in FY08
Bs Reporter / New Delhi August 16, 2008, 4:43 IST

Driven by the offset requirements of India's defence purchases and the country's enhanced profile as an engineering base after the launch of the Nano, engineering services outsourcing to India will accelerate, indicates a new Dataquest study.

The engineering services exports (excluding software product engineering, semiconductor design, and other high tech/telecom engineering) from India grew 25.6 per cent in 2007-08 to reach Rs 10,110 crore. The Indian third-party service providers accounted for 56 per cent of the revenue, while captives had a share of 41 per cent. The non-Indian third-party service providers accounted for the rest, reveals the study.
 

TURNING HIGH PROFILE
Top 15 engineering services exporters (Excluding IT/Telecom)
Company
Revenue (Rs cr)
Growth
(%)
FY07  FY08
TCS 725 832 14.70
HCL 580 762 31.40
Satyam 451 610 35.40
Tata Technologies 595 596 0.20
Infotech Enterprises* 330 410 24.20
Geometric Software 252 339 34.50
Rolta 195 317 62.70
Infosys* 223 240 7.80
Patni* 216 234 8.20
Quest 153 207 35.00
Wipro* 142 202 42.30
KPIT Cummins 106 199 87.70
L&T Infotech 113 141 25.10
Mahindra Engineering Services* 70 120 71.40
Neilsoft 65 78 19.40
Others 304 400 38.50
Total 4,520 5,688 25.60
*estimates for exports revenues                         Source: Dataquest

Aerospace and automotive industries led the engineering design and services outsourcing to India. A few recent developments in these industries have significantly impacted the engineering services outsourcing.

Some of these include high oil prices leading to design of newer fuel-efficient cars, India's plans to buy 100-plus fighter aircrafts with significant offset requirements (which stipulates that 30 per cent of the total contract value to any supplier will have to be spent locally), and the launch of Tata Motor's Nano, which has raised the profile of India as an automotive engineering base.

"All these developments have significantly enhanced the action in the engineering services outsourcing area. They have paved the way for the revenues to start flowing in beginning this year when we can expect the growth to accelerate sharply," said Shyamanuja Das, editor, Dataquest.

The study also outlines that India's own market as a major automotive market has drawn many of the automotive manufacturers and their tier-I OEM suppliers to India.

Most of them have also used the opportunity to tap India's engineering talent. Car manufacturers such as Ford, GM, Chrysler Honda, and Volkswagen and their suppliers such as Delphi, Eaton, and Visteon have all set up engineering design centres in India.

The top 15 firms account for 93 per cent of the total engineering services exported by the India-based engineering services firms. India's top IT services firm, TCS, leads the list, followed by HCL and Satyam.

The list itself is a mix of three types of players — the broad-based IT services firms such as TCS, HCL, Satyam, Infosys, and Wipro; the specialised players such as Infotech Enterprise, Quest, Geometric and Neilsoft; and the design arms of Indian engineering companies such as Tata Technologies, Mahindra Engineering Services and L&T Infotech.

Sony, Toshiba to boost overseas LCD outsourcing

Fri Aug 15, 2008 10:09pm EDT

TOKYO, Aug 16 (Reuters) - Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) and Toshiba Corp (6502.T: Quote, Profile, Research, Stock Buzz) are set to sharply increase the percentage of their LCD televisions outsourced to Taiwanese manufacturers as a cost-cutting move, the Nikkei business daily said on Saturday.

While both companies will continue to make LCD televisions at their own factories, they hope to meet growing demand through electronics manufacturing services EMS firms in Taiwan.

Sony, which outsourced production of roughly 500,000 LCD televisions to Taiwanese firms in the 2007 business year, is set to raise this to more than 3 million in the current business year ending in March 2009, the Nikkei said.

To do so, it is believed to have signed a contract with Hon Hai Precision (2317.TW: Quote, Profile, Research, Stock Buzz), the paper added.

Toshiba has contracted out LCD television production to Compal Electronics (2324.TW: Quote, Profile, Research, Stock Buzz), with that firm expected to make a bit more than 20 percent of Toshiba's planned LCD television shipments for the 2008 business year.

Officials at both companies were not available for comment.

Sony said in May that it aims to sell 17 million LCD televisions in the year to next March, up from 10.6 million in the year just ended.

The company, which traditionally has strengths in mid-range to high-end products, plans to launch low-cost, entry models this year, broadening its Bravia LCD television lineup. (Reporting by Elaine Lies; Editing by Kim Coghill)

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Friday, August 15, 2008

US debtors boost Indian outsourcing

By Joe Leahy in Mumbai

Published: August 14 2008 19:14 | Last updated: August 14 2008 19:14

The declining fortunes of the consumer in the US, and increasingly the UK, are proving to be a boon for India's outsourcing industry, with some leading operators gearing up to increase the size of their debt collection and recovery units.

Firstsource, an Indian business process outsourcing company that handles credit recovery for most of the top five US banks and half the top 10 credit card issuers, said it was increasing staff numbers to win business from growing credit card defaults in both national markets.

"There is more demand for that service. If I could add 100 people today, overnight, I would do it," said Ananda Mukerji, Firstsource chief executive, in an interview with the Financial Times. Overdue accounts at the six large US credit card issuers increased in June on the back of rising unemployment, food and fuel prices.

Loans on which repayments were more than 30 days late increased five basis points to 4.03 per cent, after falling for two months as hard-hit consumers used tax rebates to try to reduce their debts, according to Bloomberg data.

The worst affected issuer in June was American Express, with loans overdue by 30 days rising 16 basis points to 3.21 per cent. Firstsource is predicting the situation will also worsen in the UK.

Market research conducted by the company and released last month showed that 22 per cent of consumer credit managers who responded to a survey reported increased write-offs in the past 12 months.

Firstsource said its staff for conducting collections in the US alone had risen from 250 when it started the business in 2004 to 600, while revenue from collections had risen from $20m to $50m in about three years.

Indian outsourcing companies offer collection services by stationing people in the US and India. Firstsource specialises in accounts that are 90-180 days overdue, with its staff making phone calls and writing letters to defaulters.

The post-360 days overdue work, which often involves legal action against defaulters, is performed by other agencies with a greater local presence.

"We have seen some ramp-up on the collection side," said Amitabh Chaudhry, chief executive of Infosys BPO, a unit of India's second-largest computer services outsourcing company.

He said debt collection was one of the areas helping to balance a slowdown elsewhere in the outsourcing industry, such as the business of processing mortgages from western clients.

However, while there was more bad debt, the deepening credit problems of the US consumer were also making it harder to collect.

The liquidation rate – the amount of revenue realised from collecting on bad debt portfolios – had fallen by 15-20 per cent.

Firstsource's Mr Mukerji said: "There are more credit card outstandings being defaulted on today than there were a year back, so that's a growth opportunity for us and we are adding people in the business right now. But the profitability is lower because it is harder to collect today than it was a year back."

Thursday, August 14, 2008

Indian outsourcing firms should reduce headcounts

Gartner report shows Indian service providers are falling behind in revenue per employee

Large Indian outsourcing providers will need to cut down on staff numbers if they want to maintain their unprecedented business success, analyst firm Gartner has warned in a new report.

Gartner has released facts showing the big three Indian providers – Tata Consultancy Services, Infosys Technologies and Wipro Technologies – are increasingly considered for service deals over today's global "megavendors" but demonstrate much lower levels of productivity.

The lower productivity level of the Indian providers is shown by their smaller revenue per employee compared to global services giants IBM, Accenture and EDS.

"The Indian providers will have to address the issue of moving away from resource-intensive revenue growth to a model that provides higher leverage and increase revenue without a linear relationship to head count," noted the Gartner report.

The "India-3" are emerging as the next generation of IT service megavendors and are growing three times as fast as the world's current megavendors, according to the figures released by Gartner. Gartner also predicts that the large Indian providers will replace today's megavendors by 2011.

However, the Gartner figures also show that each global megavendor had roughly £50,000 higher revenue per employee than any of the Indian firms.

Gartner explains the three big Indian players will have to achieve similar levels of revenue per employee benchmarks to the current megavendors to "truly achieve megavendor status".

Ideally, a company wants the highest revenue per employee as possible as it denotes higher productivity.

"Revamping and continually reinventing their delivery capabilities, even as they address the challenges of managing their growth opportunities, will determine how and when these emerging megavendors will actually achieve megavendor status," said Partha Iyengar, Gartner research director and vice president.

Wednesday, August 13, 2008

Bob McClure
Outsourcing of jobs must stop
Article published on Tuesday, Aug. 12, 2008
OK, it's bad enough that home insurance rates and taxes went sky-high a couple of years ago.

Recent spikes had us all gasping for air, which most of us still have not recovered from.

Making matters worse has been the downturn in the economy, spurred by a struggling real estate market and the passage of Amendment 1.

Through all of this another negative phenomenon has been taking place in larger numbers and it's something you don't hear our government leaders talking about too much.

We're talking about the loss of jobs to other countries. More specifically, outsourcing.

Outsourcing is nothing new. U.S. companies started it back in the 1980s.

It's basically a subcontracting process, such as product manufacturing, to a third-party company in the interest of lowering costs.

While, on the surface, it was once a good idea for some U.S. companies, it has become so prevalent now that it is ripping the heart out of the American work ethic.

Globalization and a weaker U.S. dollar have forced companies like Wisconsin-based Paper Converting Machine Co. to shrink a 2,000-person workforce in half and send about 900 jobs to China.

Other companies are following suit.

The Tampa Tribune is outsourcing its advertising production services to a cheaper company in India. According to a report on National Public Radio, an online community newspaper in Pasadena, Calif., recently outsourced its city council coverage to a company in India. Dell computers uses Pakistani and Indian workers on its help desk. So does America Online. And the list goes on.

Here locally, Coca-Cola announced plans last week to outsource about 150 accounting jobs from its Brandon-based Tampa Bay center to Guatemala, India and Poland.

As Apollo 13 astronaut James Lovell so famously quipped in 1970, "Houston, we have a problem."

And a big problem it is. Fewer jobs in this fine nation of ours means higher unemployment, which is a major ingredient to any recession.

This situation has been an accident waiting to happen for a long time. The question is how do we rebound from it?

Should U.S. companies be given incentives to return call centers and manufacturing to the United States? Maybe companies that outsource jobs should be hit with higher taxes and penalties. Perhaps something even more stringent should be invented. Maybe Congress needs to become involved.

It's anybody's guess and certainly not my area of expertise.

But it doesn't take a rocket scientist to figure out a very simple solution that was once the hallmark of our nation.

Very simply, we need more manufacturing and exports. Only then will the dollar rebound and maybe the term outsourcing will be discussed only in history books.

Bob McClure is editor of the Seminole Beacon.

IT outsourcing the way forward to cut costs



IT outsourcing will grow if the UK enters a recession, according to the HR chief at a provider that has boosted its takings this year.

Barry Hoffman, HR director at Computacenter, said employers would increasingly look to third-party IT providers to cut costs.

The firm, which employs 5,000 people in the UK, last month announced revenue growth of 8% in the first half of this year. It saw revenue of £2.38bn in 2007.

Computacenter said it expected to make lower profits in the first six months of this year than the same period last year, largely due to investment costs and a poor start to the year.

But Hoffman told Personnel Today that the IT outsourcing and infrastructure firm was in a good position to cope with the current economic turmoil.

"The IT outsourcing market will grow," he said. "In an economic downturn, people look to outsourcers to cut costs and add value. We innovate with our clients to add value for them."

But Hoffman added that there was no room for complacency.

"The situation still challenges us," he said. "We cannot take our eye off the ball."

Monday, August 11, 2008

Report: India isn't just for outsourcing anymore

India is starting to assert itself as a center of high-tech innovation, according to a study set to be released Monday morning.

A talent pool of engineers working in research and development that barely existed 15 years ago has blossomed to 250,000 people, more than 140,000 just in Bangalore, said Vamsee Tirukkala, co-founder of the consulting company Zinnov, which conducted the study. That's second only to Silicon Valley. And as Indian ex-patriots return home and new college graduates stay home rather than read to regions such as Silicon Valley, as they have in the past, those numbers are only expected to grow, Tirukkala said.

"The brain drain 10 years ago is actually helping the market today," he said. "These are the people going back today...bringing domain expertise with them. The opportunities in India have dramatically increased for them."

If there's a point to be taken for Silicon Valley in Tirukkala's admittedly enthusiastic report it's one that Valley leaders have discussed for years: The next real competitor for high-tech leadership won't be another American tech hub like Massachusetts' Route 128 corridor or North Carolina's Research Triangle Park. It will be in a developing region such as India's Bangalore.

The growth in R&D investment in India, is perhaps the report's most interesting data point. India's high-tech industry may have gotten its start in call center outsourcing, giant services business, and basic "grunt" software coding, but that's beginning to change. R&D offshoring to India is currently worth an estimated $9.35 billion, according to the report, and that's expected to more than double to $21.4 billion within the next four years. ( I'm just guessing, it's either we can't do the work, or we won't do the work.)

Interestingly, American companies that have been moving more R&D work to India will continue to do so, but for a reason that is perhaps different than the cost-savings that drove them over the last decade: they want to tailor products for the growing local market, and the best way to do that is to have local people who understand cultural and business differences doing the work. (Interesting concept... local people who understand cultural and business differences doing the work.  What is outsourcing again....? )

Does that mean Bangalore is going to surpass Silicon Valley for tech industry leadership anytime soon? No. The Valley still receives, by a wide margin, more venture capital investment than any other region in the world, and the big tech companies and universities that call the Bay Area home aren't going anywhere.

Sunday, August 10, 2008

Globalisation – The Nature of the Beast

from Belgium, alias-- Spirit Across The Sea

Preamble

A month or more ago, after I came out of hibernation, Freeacre asked me to do a political post. At that time I had neither the time nor a subject to write about. Now I have decided to tackle arguably the biggest subject which is presently affecting all of our lives – Globalization. This is the first of a three part series. In this first part I want to explore the nature of the beast and then see what effects this has on the macro level. Part two will deal with the effect globalisation has on the individual level by looking at the daily life of a Chinese sweat shop worker. We will then go on to see how the product she makes is marketed world wide. Part three will begin by looking at how the biggest single player in the global market conducts its business (Can you guess who it is – clue, it is a US company) and we will end by discussing some measures organizations are taking to redress the balance point in the direction of the majority of the population.

This first part draws on extracts of a paper by Kevin Danaher "Globalization and the Downsizing of the American Dream".

The Nature of Globalization

If we listen to those in the vanguard of the globalization movement we would be led to believe that all peoples of the world are being integrated into one great happy brotherhood of mankind. Growth and efficiency will provide happiness for all, well if only governments would stop interfering and just let market forces just get on with doing the job properly.

On the other side we see that manufacturing in industrialised countries of the west is being transferred to second and third world countries with corresponding loss of jobs. It is only too plain that if industrialists can cut their cost of sales by employing very much cheaper labour with small reductions in prices then they can pocket the difference. Nations with non existent safety and emissions standards are systematically poisoning a rape victim, mother earth. We see refugees and economic migrants by the millions roaming the planet seeking jobs and protection from armed conflict. We see large corporations like a cancer, eating up smaller companies and leaving the body of world society leaner and less able to cope. Gone are the days when a man could go out to work and support a household and large family. Now both partners have to work just fend off foreclosure. We are left with the gut feeling that it has all gone terribly wrong but it has happened so imperceptibly it is difficult to put your finger exactly on the where or when. The decline in our standard of living can be seen in numerous ways.

As US corporations have extended their global reach they have put the western work force in direct competition with second and third world countries so increasing their profits whilst at the same time driving down our wages and general standards of living.

Instead of technology providing the 'leisure society' where everybody enjoyed greater benefits whilst working fewer hours, corporations have used it to reduce their workforces thus causing anxiety over job security.

As global corporations become less-dependant on any particular nation, they have less interest in supporting any particular nation with taxes. This reduction in the fiscal tax base causes government expenses to outrace revenues.

By using the rationale of global competition to drive down the living standards of the majority, the corporate class has transferred more money from our pockets to theirs. This growing inequality is causing resentment and serious disquiet amongst those who are loosing ground.

The gradual wing clipping of labour unions who were always accused of "Holding the country to ransom" whenever they stood up for themselves has rendered them an ineffectual force making it easier for industrialists to do as they please.

Big Business Prefers to Deal with Dictatorships

Corporations have become so mighty that many of the Fortune 500 companies now have annual revenues greater than the GNP of most Third World countries and some in excess of industrialised Scandinavian and Baltic countries. For example, in 1995 General Motors received revenues equivalent to 19 million Americans earning the minimum wage. Such companies are making decisions with little regard for national boundaries and are therefore less dependent on any particular workforce. This does not stop them wanting to have their cake and eat it. Any subsidies offered will be snatched out of governments hand before the next corporation can get it but when it comes to any measures of reciprocation such as governmental or labour control, big business preaches free trade; deregulation and the downsizing of government. A truly democratic state is one of the greatest threats to big business and this is borne out in practice. Dictatorial states such as China and Indonesia are winning the battle for US export orders over the new democracies like Poland and South Africa. The New Economy Information Service (NEIS – a think tank set up to gauge the effects of globalisation), reported that at the end of the cold war in 1989, 53.4% of all US imports from Third World countries, excluding oil came from democracies. Now with more democracies to choose from, that figure has reduced to 34.9%. Speculating on why this should be so, NEIS said lower wages in dictatorships gave corporations an advantage. Also dictators can give quick decisions, deliver results and stamp out opposition. This is obviously a meeting of minds with many CEO's. Dictators', who have to answer to neither voters nor a legislature, can deliver investment incentives such as tax breaks, freedom from environmental laws and a docile work force. These are powerful lures for foreign corporations and whilst dictatorships are gaining market share, democracies are going steadily downhill.

After the fall of communism and whilst the former Yugoslavia was picking up the pieces following its various wars, the CEO of an automotive wiring loom company related that it was his companies intention to quit the UK, move to Romania for two years, collecting whatever subsidies it could get along the way and then dump the Romanians to relocate in Bosnia. This is just one example of corporate thought processes.

Having said this, not every large corporation which outsources is intrinsically disreputable. Airbus, the plane maker, wanted to keep its operation within Europe but has been forced to obtain components from further afield because its international contracts are priced in dollars and with the steady tanking of the dollar it must either outsource or renege on its contracts. This is a little bit self-inflicted since the devaluing of the dollar had been predicted for some time. If others knew the dollar was on a slide how did the smart accountants and lawyers of Airbus overlook this? The clever thing would have been to peg a dollar / Euro rate for the date each contract was signed, a bit like a fixed rate mortgage. They might not have made so much as they might have but at least they would have been safe. This is always a danger for companies who manufacture relatively small amounts of high value articles. It is reassuring to know that the big guys can sometimes come unstuck, although it is large sections of the workforce who have again been handed the dirty end of the stick.

The unnerving effect of US workers being placed in direct competition with Third World Dictatorships has had severe consequences at home. Average real wages, corrected for inflation, have been falling since their peak in the early 1970's. By 1992 earnings in the non agricultural part of the economy were 19% lower. One quarter of the US workforce now earns less in real terms than the 1968 minimum wage! On the other side of the coin, massive layoffs have been accompanied by top CEO salaries soaring to 200 times that of an average worker. In 1996 the magazine Newsweek ran a hard hitting cover story entitled "Corporate Killers" in which they said "Something is plain wrong when stock prices keep rising on Wall Street while Main Street is littered with the bodies of workers discarded by big companies. Once upon a time it was a mark of shame to fire your workers en masse. Today the more workers a company fires the more Wall Street loves it and the higher its stock price goes". In recent times transnational corporations have gotten basically everything they wanted: the collapse of communism; free trade agreements; deregulation; lower taxes; the weakening of trade unions and the pushing down of wage rates. Yet while profits and the stock market soar the standard of living for most Americans is plummeting. It should be remembered that it is now commonplace for a CEOs package to be partly made up of stock options so they are financially benefiting from decisions which inflict suffering on great numbers of American families.

Some years ago we were told that automation would benefit all. With machines to do the work and increase productivity we could enjoy higher wages with less input. The leisure society was about to explode on us. But the technology turned against us and now companies see it as a way to dump workers who make demands and question authority and replace them with machines which have never been known to form a union. Over the last 30 years employment in the US manufacturing sector has halved from 33% to 17% of the workforce even though output has steadily increased over the same period.

Will the Service Sector Absorb Jobs Lost by Manufacturing?

Contrary to popular opinion the service sector will not pick up all the jobs lost by the manufacturing sector. Even allowing for the fact that pay is usually lower here, service sector jobs are also being lost to technology. There are many examples of this: Computer program coding, a highly skilled and once sought after profession is now largely done in India and results posted over the internet; optical scanners have eliminated large sections of postal workers and in the ten years following 1983, banks replaced 179,000 human tellers with ATM machines. The result is wide spread insecurity that saps worker morale. Another factor adding to the malaise is that with an increased potential workforce chasing fewer jobs, employers can pick highly qualified people for increasingly menial positions thus simultaneously providing worker dissatisfaction and devaluing the qualification. Consequently, many have asked Uncle Sam to take them as a new recruit; to become a cannon fodder professional. But even though there are no shortages of military adventures to take part in, many are wising up to their leaderships true motives and sitting on their hands.

Like many governments with unpopular news the US government masks the true level of unemployment by defining it away. Instead of defining it as the number of people who want a job but can't find one, it does not count those who are so discouraged they have stopped looking and counts 30million part time workers as full time. In 1994 this brought the percentages down from 15.9% to 6.1%. Every company can justify shedding its workers but when all these drips in the bucket are added up the result is economic stagnation. Many women adversely affected by this economic treading of water are staying home unwilling to take available work at sometimes half their previous salary.

The Casino Economy

Another dynamic in play by those with money to invest, is the shift away from building up the infrastructure of the country, opening factories, hotels, restaurants and the like to investing in the so called casino economy. By buying into in stocks, bonds and other financial instruments a profit can be made without the hassles associated with production. Not only that

but stocks and bonds are more readily converted to cash as more lucrative speculation presents itself. This is not so easily accomplished if you have set up a factory or a restaurant chain. One step further removed from directly investing in financial instruments is the derivatives market. Whereas the working classes bet on horses, dogs or the outcome of football matches, the upper echelons bet on whether one financial instrument or currency will rise or fall in value relative to some other over a given period of time. The annual value of global merchandise trade is about $4 trillion. The global derivatives market equals this dollar value in just two days. The shift of investments away from the real economy to the casino economy has weakened the power of governments to control national economies and protect peoples' jobs.

The US Congress and the media, when it chooses to address such things, have focussed our attention on the spending side of the ledger but monies coming into the government are equally as important. When there are less active workers in the economy the demand for government services such as unemployment benefit and other forms of income support increases in a direct relationship to revenues receivable drying up. Innovations over the years in computerised communication allow financiers to transfer billions of dollars around the world instantly and the next day the same billions of dollars are invested somewhere else in the world. This makes it exceedingly difficult for governments to tax such transactions. Even though the rich are becoming increasingly rich and the poor are becoming increasingly poor, taxes received from companies have fallen from 76 cents for every dollar received from individuals in 1950, to 21 cents today. From this it is clear where monies to support infrastructure are coming from. Even so, the government could not put this entire burden on the collective 'us'. Therefore in order to support the infrastructure; it has borrowed from the capital markets, in other words taxing our children and grandchildren. But here we have a situation which is self compounding. One generation will need to put the next two generations in debt and that generation the next four or so. It is clear that this will never be sustainable. During the 1990's two trillion dollars was redistributed up the social ladder in interest payments to those who own the national debt.

Contrary to what the GOP has been preaching, it is not big government which has been undermining Main Street USA. Rather Main Street is being undermined by the fact that the US government is dominated by moneyed interests and these are increasingly global, owing no allegiance to any particular country.

Sources

Globalisation and the Downsizing of the American Dream:

From Global Exchange - By Kevin Danaher

http://www.globalexchange.org/campaigns/econ101/americanDream.html

Wiring Looms to be made in Romania and then Bosnia:

Related personally by automotive exec seconded to Lucas Industries

Airbus outsources components:

BBC World Service news item

US Corporations Prefer Dictatorships:

From Global Exchange – By R.C. Longworth

http://www.globalexchange.org/campaigns/econ101/survey.html