AFSCME Privatization Update

Source: James K. Jackson, Specialist in International Trade and Finance, Foreign Affairs, Defense, and Trade Division, CRS report (.pdf), Updated May 13, 2008

Summary
The impact of foreign direct investment on U.S. employment is provoking a
national debate. While local communities compete with one another for investment
projects, many of the residents of those communities fear losing their jobs as U.S.
companies seek out foreign locations and foreign workers to perform work that
traditionally has been done in the United States, generally referred to as outsourcing.
Some observers suggest that current U.S. experiences with outsourcing are different
from those that have preceded them and that this merits legislative actions by
Congress to blunt the economic impact of these activities. Other observers argue that
investing abroad by U.S. multinational companies impedes the growth of new jobs
in the economy and thwarts the nation's investments in high technology sectors.
Some opponents also argue that mid-career workers who lose good-paying
manufacturing and service-sector jobs likely will never recover their standard of
living.

Posted by Info Center at 11:26 AM in Offshore | Permalink

Source: Steven Greenhouse, American Prospect (subscription req.), May 27, 2008

....... The rise of high-tech, some experts predicted, was to be the salvation for America's economic ills and beleaguered workers. And in the late 1990s, the high-tech boom did in fact do wonders for the economy, helping to reduce the jobless rate to its lowest level in decades to lift real wages at their fastest clip in recent memory. But the high-tech bubble burst in 2000, and now it seems that if high-tech is going to be a salvation for anyone, it will be for workers in Bangalore and Beijing.

Posted by Info Center at 1:22 PM in Information Technology | Offshore | Permalink

From the National Foundation for American Policy -

A complication of links including reports, a Summary List of States With Proposed Outsourcing Restrictions, Executive Orders and Directives from Governors on Outsourcing and full-text of state legislation.

Posted by Info Center at 10:49 AM in Offshore | Websites/databases | Permalink

Source: By Suzanne Barlyn, Time, Thursday, Apr. 03, 2008

Mark Alexander, a Dallas attorney, says he's ethically obligated to do what's best for his clients, "and that includes saving them money." So when one of them asks him to research a securities-fraud topic, for example, or breach of contract, he doesn't even think about applying his $395 hourly rate. Instead, he calls Atlas Legal Research, an outsourcing company based in Irving, Texas, that uses lawyers in India to provide the service for $60 per hr. "When a client pays me a $25,000 retainer and I can save them money, I will do so," says Alexander. Handing off the work to a $225-per-hr. junior associate is not an option. "They don't even know where to stand in the courtroom," he says.

Related article from New York Law Journal at Law.com: Legal Outsourcing to India Is Growing, but Still Confronts Fundamental Issues

Posted by Info Center at 3:31 PM in Offshore | Permalink

Source: Novella Bottini, Carlo Cattaneo University-LIUC, Italy; Christoph Ernst, Economic and Labour Market Analysis Department, International Labour Office; Malte Luebker, Policy Integration and Statistics Department, International Labour Office; International Labour Organization.

This paper reviews some of the issues brought forward in the debate on offshoring. It defines the term clearly and draws the border between offshoring and related terms. The study also identifies the forces that drive offshoring, the tasks that are most susceptible to relocation, and the most likely destinations. A more technical section presents the tools and the available data to measure offshoring and its consequences. Special focus will be given to the impact of offshoring on employment and inequality, both in the countries that offshore and those that host offshored activities.

Posted by Info Center at 3:27 PM in Offshore | Permalink

Source: Financial Week: February 1, 2008

A torrent of jobs are offshored every year. And every year, a trickle of jobs return home--or are "backshored"--after companies experience disappointment and frustration with remote, foreign workforces.

Accurate counts of both flows are elusive. Perhaps one dollar's worth of work gets backshored for every $10 offshored, according to some experts. Others say the numbers could be much higher. Companies don't reveal numbers of offshored or backshored jobs. Although efforts have been made to count offshored jobs, backshoring reports are anecdotal.

Posted by Info Center at 10:50 AM in Offshore | Permalink

Source: Robert Half Technology press release, January 23, 2008

MENLO PARK, CA -- Despite the attention focused on the outsourcing of technology jobs overseas, a recent survey by Robert Half Technology shows that the majority of U.S. companies are not engaged in the practice. Ninety-four percent of chief information officers (CIOs) surveyed said their company does not outsource information technology (IT) jobs outside the United States (see table 1). Among companies that once sent IT jobs overseas but discontinued the practice, nearly six in 10 (59 percent) respondents cited management challenges as the top reason.

Posted by Info Center at 3:25 PM in Information Technology | Offshore | Permalink

Source: By John Miller, Dollars & Sense (subscription req.), September/October 2007

Accelerated offshore outsourcing, the shipping of jobs overseas to take advantage of low wages, has forced some mainstream economists and some elements of the business press to have second thoughts about "free trade."

Posted by Info Center at 3:11 PM in Offshore | Permalink

Source: by Jared Bernstein, James Lin, and Lawrence Mishel, Economic Policy Institute, November 14, 2007

In recent years there has been increased attention to the fact that more jobs, particularly white-collar jobs, have become vulnerable to being offshored. This new analysis examines the characteristics of these jobs. Examining the occupations identified by Princeton economics professor Alan Blinder as "potentially offshorable," this EPI analysis finds that between 18% and 22% of today's jobs -- about 25 to 30 million -- could potentially be offshored. Interestingly, the workers most vulnerable to offshoring are those with at least a four-year college degree.

Read this publication in PDF Format

Posted by Info Center at 11:52 AM in Offshore | Permalink

Source: By Peter Pae, Los Angeles Times, October 21, 2007

Gary Richardson left this boomtown-gone-bust in 1996 for a computer job in Dallas, the big city 60 miles north.

...... Not until this year, when Northrop Grumman Corp. opened an information technology center in town and began recruiting IT specialists and software engineers. In a twist on offshoring that Northrop has dubbed onshoring, the global defense and technology corporation has been shipping computer work to small-town America, shunning India's Bangalore and Mumbai.

Posted by Info Center at 1:30 PM in Offshore | Permalink

Source: Adam Davidson, NPR Morning Edition, September 6, 2007

Indian software firm Wipro plans to open a big software design center in Atlanta. The Bangalore, India-based firm expects to hire around 500 computer programmers in the next three years. It's a curious turnabout from the much more familiar story: a U.S. software company creating jobs in India.

Posted by Info Center at 10:46 AM in Offshore | Permalink

Source: Centre for Education and Communication, Communication Workers of America, Jobs with Justice, New Trade Union Initiative, and Young Professionals Collective, October 2006

Background Business Process Outsourcing (BPO) or outsourcing of business processes to external service providers has become a global phenomenon. Companies in developed countries outsource low skilled service jobs to developing countries. An educated labour force, high unemployment and relatively low wage levels make developing countries attractive for outsourcing back office service work. India has become one of the top back office service provider countries since it started to provide business services to developed countries like the US, the UK and Australia in the late 1990s. The resultant boom in the service sector in India has been accompanied by emerging global debates on the loss of service sector jobs in these developed countries.

Posted by Info Center at 3:42 PM in Offshore | Permalink

Source: A.T. Kearney, Inc, POD ATK307011

One thing about offshoring is certain: If an issue arises offshore, you can bet it will get five to 10 times more negative attention than if it had occurred onshore. The mainstream media deliver offshoring headlines through a very large megaphone. Nevertheless, companies continue to aggressively pursue offshoring—moving selected functions or processes to places in the world where they can be conducted at lower cost, either by third parties (outsourcing) or by their own, newly built (captive) capabilities. Why? Because their leaders know the wider realities of offshoring. They know that although it may be a risky game, offshoring also offers potentially great rewards: It helps companies compete in a global age, creates value for their shareholders, and improves their operational performance.

Posted by Info Center at 3:41 PM in Offshore | Permalink

Source: Devashish Mitra, Priya Ranjan, Institute for the Study of Labor, IZA Discussion Papers, no. 2805, May 2007

In this paper, in order to study the impact of offshoring on sectoral and economywide rates of unemployment, we construct a two sector general equilibrium model in which labor is mobile across the two sectors, and unemployment is caused by search frictions. We find that, contrary to general perception, wage increases and sectoral unemployment decreases due to offshoring. This result can be understood to arise from the productivity enhancing (cost reducing) effect of offshoring. If the search cost is identical in the two sectors, or even if the search cost is higher in the sector which experiences offshoring, the economywide rate of unemployment decreases. We also find multiple equilibrium outcomes in the extent of offshoring and therefore, in the unemployment rate. Furthermore, a firm can increase its domestic employment through offshoring. Also, such a firm’s domestic employment can be higher than a firm that chooses to remain fully domestic. When we modify the model to disallow intersectoral labor mobility, the negative relative price effect on the sector in which firms offshore some of their activity becomes stronger. In such a case, it is possible for this effect to offset the positive productivity effect, and result in a rise in unemployment in that sector. In the other sector, offshoring has a much stronger unemployment reducing effect in the absence of intersectoral labor mobility than in the presence of it. Finally, allowing for an endogenous number of varieties provides an additional indirect channel, through which sectoral unemployment goes down due to the entry of new firms brought about by offshoring.

+ Full Paper

Posted by Info Center at 3:40 PM in Offshore | Permalink

Source: René Morissette and Anick Johnson, Statistics Canada, Catalogue no. 11F0019MIE — No. 300

From introductory information:
In this study, we assemble a wide variety of data sets in an attempt to produce a set of stylized facts regarding offshoring and the evolution of Canadian employment in recent years. Our main finding is that, in almost all of the data sets used, there is, so far, little evidence of a correlation between offshoring, however defined, and the evolution of employment and layoff rates. While our analyses are fairly simple, they all suggest that if foreign outsourcing has had an impact on Canadian employment and worker displacement so far, this impact is likely to be modest and thus, unlikely to be detected either with industry-level or occupation-level data.

Posted by Info Center at 3:37 PM in Offshore | Permalink

Source: Rudiger, Katerina, The Work Foundation, 2007

Global changes in the location of production and the outsourcing of tasks to low-wage countries have dominated the public discourse for some time. Especially the relatively recent IT boom in India, which has led to some media hype, nurturing a fear in high income countries such as the UK that even relatively high-skilled, well-paid jobs are now also under threat by this next wave of technology driven globalisation.

This paper aims to provide a big picture account of this phenomenon by examining the extent and the nature of offshore outsourcing as well as its impact on the UK labour market.

Posted by Info Center at 10:47 AM in Offshore | Permalink

Source: Labor News, June 22, 2007

AT&T announced this week that it will be bringing back from overseas nearly 650 Tier I DSL technical support jobs and locating them in Las Vegas and Reno, Nevada, later this year. The jobs are coming back to the United States as part of the agreement CWA reached with AT&T last fall to return the tech support work that had been contracted overseas.

Posted by Info Center at 10:26 AM in Offshore | Permalink

Source: By Michael Mandel, Business Week, June 18, 2007

Whenever critics of globalization complain about the loss of American jobs to low-cost countries such as China and India, supporters point to the powerful performance of the U.S. economy. And with good reason. Despite the latest slow quarter, official statistics show that America's economic output has grown at a solid 3.3% annual rate since 2003, a period when imports from low-cost countries have soared. Similarly, domestic manufacturing output has expanded at a decent pace. On the face of it, offshoring doesn't seem to be having much of an effect at all.

But new evidence suggests that shifting production overseas has inflicted worse damage on the U.S. economy than the numbers show. BusinessWeek has learned of a gaping flaw in the way statistics treat offshoring, with serious economic and political implications. Top government statisticians now acknowledge that the problem exists, and say it could prove to be significant.

Posted by Info Center at 2:28 PM in Offshore | Permalink

Source: By Bill Cotterell, Tallahassee Democrat (FL), October 27, 2006

Backed by two women whose secret ''whistleblower'' lawsuit exposed the transfer of state employee personnel data to a computer processing company in India, the Democratic nominee for attorney general said Thursday that privatization of state personnel services has posed ''a clear and present danger'' of identity theft.

State Sen. Walter ''Skip'' Campbell said terrorists might even find use for personal information contained in more than 100,000 files that were indexed by a Denver company, GDXData, in the ''People First'' personnel system.

..... Newcomer said the lawsuit against GDXData is ''in the final investigative part'' determining to expand the case to include Convergys.

Posted by Info Center at 3:46 PM in Horror Stories | Human Resources | Offshore | Permalink

Source: By Jason Szep, Boston Globe, September 29, 2006

BOSTON (Reuters) - Private tutors are a luxury many American families cannot afford, costing anywhere between $25 to $100 an hour. But California mother Denise Robison found one online for $2.50 an hour -- in India.

"It's made the biggest difference. My daughter is literally at the top of every single one of her classes and she has never done that before," said Robison, a single mother from Modesto. Her 13-year-old daughter, Taylor, is one of 1,100 Americans enrolled in Bangalore-based TutorVista, which launched U.S. services last November with a staff of 150 "e-tutors" mostly in India with a fee of $100 a month for unlimited hours.

Posted by Info Center at 10:40 AM in Offshore | Permalink

Office of Governor Edward G. Rendell news release, Sept. 14, 2006


PITTSBURGH — Governor Edward G. Rendell announced today that the commonwealth is taking a new step to ensure that the state is using its resources to support and sustain domestic jobs and promote economic development. The Governor signed an executive order encouraging state contractors to use American workers rather than outsourcing operations overseas.

Posted by Info Center at 2:19 PM in Laws/Legislation | Offshore | Permalink

Source: By STACY A. ANDERSON, Wall Street Journal (subscription req.), July 11, 2006

Companies may be tapping the brakes in the race to outsource information-technology. A survey by DiamondCluster International Inc., a Chicago-based management-consulting firm, found that 64% of the buyers of offshore outsourcing services and 50% of buyers of onshore services planned to increase their use of such services in the next 12 months, a much lower figure than in previous years. Last year, 74% of the survey respondents said they planned to increase their outsourcing overall.

Posted by Info Center at 1:13 PM in Information Technology | Offshore | Permalink

Source: By LAWRENCE ORLOWSKI and FLORIAN LENGYEL, New York Times, June 9, 2006

COSTS are rising everywhere for American corporations, from energy to employee health insurance premiums. Yet in their drive to cut expenses, most notably by moving factories and call centers to other countries, they are overlooking the escalating cost of the executive suite. It's time to apply market logic to this disturbing trend and begin outsourcing chief executives. This measure would unlock tremendous value for shareholders. So far, outsourcing manufacturing and services has led to higher chief executive compensation, at the expense of shareholder profit. For example, I.B.M.'s chief executive, Samuel J. Palmisano, who has been moving jobs to India, last year saw his total compensation rise 19 percent to $18.9 million — even as the total return for his company's stock fell 16 percent.

Posted by Info Center at 3:14 PM in Offshore | Permalink

Source: New York Times, April 19, 2006

…….. Apparently, hospitals were starting to send their radiology work to India, where doctors who make far less than American radiologists do were reading X-rays, M.R.I.'s and CT scans. ….. Economically, in other words, radiology has a lot in common with industries that are outsourcing jobs. It has high labor costs, it's growing rapidly and it's portable. Politically, though, radiology could not be more different. Unlike software engineers, textile workers or credit card customer service employees, doctors have enough political power to erect trade barriers, and they have built some very effective ones. To practice medicine in this country, doctors are generally required to have done their training here.

Posted by Info Center at 11:00 AM in Offshore | Permalink

Source: By DIANE LEVICK, Hartford Courant, March 10 2006

CIGNA HealthCare confirmed Thursday that it will lay off another 65 employees in Bloomfield and 26 in Chattanooga, Tenn., in May and June as it sends the work to the Philippines through vendor Accenture. The latest job cuts come on top of 109 - 56 of them in Bloomfield - that the health insurer disclosed in January in its ongoing efforts to trim expenses. That work was earmarked for Accenture, too.

Posted by Info Center at 11:02 AM in Health | Offshore | Permalink

Source: By Kevin Rothstein, Boston Herald (MA), Thursday, February 23, 2006

Under fire from U.S. Sen. Edward M. Kennedy, the Romney administration yesterday defended its policy of outsourcing state jobs, saying that Massachusetts work formerly done in India is now handled in the United States - albeit in Utah. .... “Even governments are part of the offshoring bandwagon,” Kennedy said. “The state of Massachusetts has hired a contractor that uses workers in Bangladesh to process Medicaid data. It’s hired another contractor using workers in India to answer questions about food stamps.” Kennedy’s staff later acknowledged the jobs were sent to India, not Bangladesh, but argued that the principle is the same. ..... JPMorgan Chase, the previous food stamp contractor, had farmed out the call center work to India. When that contract expired, though, the state Department of Transitional Assistance required the work be done in the United States. Call center giant ACS was awarded the $27 million, seven-year contract.

Posted by Info Center at 3:53 PM in Offshore | Social Services | Permalink

Source: Shay Totten, Vermont Guardian, December 2, 2005

Officials in Burlington have a message for companies that outsource jobs to faraway countries: Don’t come looking for business at City Hall. A resolution adopted unanimously by the city council on Nov. 21 sets a policy that the city will not give service contracts to contractors, subcontractors, and vendors who are not performing that work in the United States or Canada. An amendment to strike Canada from the ordinance failed on an 8-3 vote.

Posted by Info Center at 10:54 AM in Laws/Legislation | Offshore | Permalink