Will Your Job Survive?

[OnlyMe]

2-3 times as many services jobs at risk than manufacturing in the US, according to ex Fed VC>

No reason to believe the US is any different to the UK - if anything the UK being a far more expensive country now to operate in relative terms the susceptibility may be higher.

http://www.washingtonpost.com/wp-dyn/conte...6032101133.html

By Harold Meyerson

Wednesday, March 22, 2006; Page A21

In case you've been worrying about how the war in Iraq will end, or the coming of avian flu, or the extinction of the universe as we drift into the cosmic void, well, relax. Here's something you should really fret about: the future of the U.S. economy in the age of globalization.

.....

There follow some back-of-the-envelope calculations as Blinder totes up the number of jobs in tradable and non-tradable sectors. Then comes his (necessarily imprecise) bottom line: "The total number of current U.S. service-sector jobs that will be susceptible to offshoring in the electronic future is two to three times the total number of current manufacturing jobs (which is about 14 million)." As Blinder believes that all those manufacturing jobs are offshorable, too, the grand total of American jobs that could be bound for Bangalore or Bangladesh is somewhere between 42 million and 56 million. That doesn't mean all those jobs are going to be exported. It does mean that the Americans performing them will be in competition with people who will do the same work for a whole lot less.

[The Colour]

As Blinder believes that all those manufacturing jobs are offshorable, too, the grand total of American jobs that could be bound for Bangalore or Bangladesh is somewhere between 42 million and 56 million. That doesn't mean all those jobs are going to be exported. It does mean that the Americans performing them will be in competition with people who will do the same work for a whole lot less.

According to the times:

http://business.timesonline.co.uk/article/...1544348,00.html

15,000 city jobs will be lost in next 5 years, and

A total of 100,000 jobs will be lost to low-cost countries over the next five years, according to Troika, the financial services consultancy behind the research.

I personally don't think there is a hige scope for outsourcing even in the the services industry. It's been tried with call centers and some have now been re-insourced. Many people think that IT will go the same way, and it's happenning, but in my experience it doesn't really work now. However, as technology advances, IT may become easier to outsource.

[Ignorant Steve]

According to the times:

http://business.timesonline.co.uk/article/...1544348,00.html

15,000 city jobs will be lost in next 5 years, and

I personally don't think there is a hige scope for outsourcing even in the the services industry. It's been tried with call centers and some have now been re-insourced. Many people think that IT will go the same way, and it's happenning, but in my experience it doesn't really work now. However, as technology advances, IT may become easier to outsource.

I outsource IT - primarily to Turkey and India. It's difficult but worthwhile. Can't see the trend reversing. The complexity of work we outsource is increasing.

Turkish IT skills are impressive. Turkish govt has pushed this hard over the last 10 years.

[The Colour]

I outsource IT - primarily to Turkey and India. It's difficult but worthwhile. Can't see the trend reversing. The complexity of work we outsource is increasing.

Turkish IT skills are impressive. Turkish govt has pushed this hard over the last 10 years.

Which parts of IT do you outsource - Infrastucture or Operations or Applications?

[adibrown]

I outsource IT - primarily to Turkey and India. It's difficult but worthwhile. Can't see the trend reversing. The complexity of work we outsource is increasing.

Turkish IT skills are impressive. Turkish govt has pushed this hard over the last 10 years.

Outsourcing isnt working in the games industry. All outsourced work is now being brought back inhouse. I think the call centre example is a sign of this. On paper it seems like it might just work, in practise cultural differences impend the smooth running of any outsourcing practise. We ended up spending more time managing outsourced projects than we would any inhouse project. The end product was inferior and the cost reduction especially on Indian outsourcers wasn't a great deal and certainly not worth the efforts. India is actually becoming an expensive place to live and work. Cities like Bangalore now demand prices for property similar to the UK.

My opinion is that the article is flawed. The job losses have been sensationalised. If anything the inclusion of China and the Third World into the global economy is more likely to generate employment in the UK and US. I've spent time in China and India and industrious as they are as people they have no idea about marketing, ecommerce and other advanced business techniques. When a new billion people market opens up there will be plenty of people in the UK and US taking full advantage dont you worry. There may be some kind of shift necessary in terms of skills required and we may move into another era which advances service and manufacturing but we will adapt and do well from it. Dont see it as a threat but an opportunity.

[DabHand]

I heard through my line of work that they are running out of Indians to easily train into competent IT staff. Can anyone confirm or refute this?

[Ignorant Steve]

Which parts of IT do you outsource - Infrastucture or Operations or Applications?

Various simple SAP modules. ie all the stuff that can be taught at University (which is what Turkey does).

Mainly ABAP, but we also have "designers" outsourced to a varying degree of success.

I heard through my line of work that they are running out of Indians to easily train into competent IT staff. Can anyone confirm or refute this?

I've had both Indians and Turkish staff poached. Much more prevalent in India at the moment.

Outsourcing isnt working in the games industry. All outsourced work is now being brought back inhouse. I think the call centre example is a sign of this. On paper it seems like it might just work, in practise cultural differences impend the smooth running of any outsourcing practise. We ended up spending more time managing outsourced projects than we would any inhouse project. The end product was inferior and the cost reduction especially on Indian outsourcers wasn't a great deal and certainly not worth the efforts. India is actually becoming an expensive place to live and work. Cities like Bangalore now demand prices for property similar to the UK.

My opinion is that the article is flawed. The job losses have been sensationalised. If anything the inclusion of China and the Third World into the global economy is more likely to generate employment in the UK and US. I've spent time in China and India and industrious as they are as people they have no idea about marketing, ecommerce and other advanced business techniques. When a new billion people market opens up there will be plenty of people in the UK and US taking full advantage dont you worry. There may be some kind of shift necessary in terms of skills required and we may move into another era which advances service and manufacturing but we will adapt and do well from it. Dont see it as a threat but an opportunity.

Yup - agree.

Opportunity not threat.

[Gone baby gone]

Outsourcing to Turkey will have to be short term only. When Turkey joins the EU (eventually) the skilled Turks will up sticks and move themsleves into decent paying jobs in the better markets, in a similar way to the Poles. Maybe you will be able to temp your Turkish workers (if you know who they are) into moving to your company, or maybe your competitors will tempt them. Now where did I put that how to speak Mongolian CD....

[OnlyMe]

Next step in offshoring is this.

Once there is a sufficient pool of talent, experience and money earned from the business extracted from the West there will be a plague of me-too business starting up that will then turn the tables of those oiginal outsourcers who still have the burden of carrying their expensive CEO's and managers and keeping them in the style to which they have become accustomed. It will be the completion of the cycle, turning the west into an economic morass and the new upstarts the leaders in every field that they wish to participate in.

[Ignorant Steve]

Outsourcing to Turkey will have to be short term only. When Turkey joins the EU (eventually) the skilled Turks will up sticks and move themsleves into decent paying jobs in the better markets, in a similar way to the Poles. Maybe you will be able to temp your Turkish workers (if you know who they are) into moving to your company, or maybe your competitors will tempt them. Now where did I put that how to speak Mongolian CD....

I think you're wrong about wanting to move to UK. Why? They have a great standard of living in Turkey and are in prime position to benefit from further economic growth.

And yes I do know who they are. Crucial to successful outsourcing is trust and a decent relationship. They all get inductions in the UK - at least 2 months, sometimes more.

It's not a short term solution.

[Gone baby gone]

I think you're wrong about wanting to move to UK. Why? They have a great standard of living in Turkey and are in prime position to benefit from further economic growth.

And yes I do know who they are. Crucial to successful outsourcing is trust and a decent relationship. They all get inductions in the UK - at least 2 months, sometimes more.

It's not a short term solution.

I'm sure they do have a good standard of living, but the relatively massive salaries on offer in the existing EU member countries will be too tempting to resist. I have been contracting across Europe in IT for the last 10 years. On my last job in London I was working with a highly competent Polish chap who gave up his well-paid Polish development job (C++) last year to come to the UK. He was shocked at the high cost of living in the UK, but his plan was very sound: Stay here for 2 years, contracting for good money and living in cheap rented accomodation and then take his stash back with him to Poland. By doing contract work in the UK vs full time in Poland he was earning about 15 times as much. He already had 3 properties before coming to the UK (2 were short-term lets in a holiday destination). Chances are he can probably avoid paying tax in the UK as well (many short stay antipodeans operate the same approach).

When the EU opens it's doors the first thing that happens is that the skilled, mobile labour leaves. Over the longer term some will return (or so we hope!) and will provide a shot in the arm to the local economy of these new member countries by brining their money and experience to the home market.

[Nem]

Off Shoring IT doesn't work, this has been proven again and again. You cannot replace people with years of experience with a knowledge transfer which usually last about 6 weeks. This is not speculation, it is fact....

The promised money savings, never happen.... Infact you'll find the only people who say it does work are the consultants and project managers whilst lining their pockets with huge bonuses usually just before they leave before the transition finishes....

Big suprise there eh?

[Ignorant Steve]

I'm sure they do have a good standard of living, but the relatively massive salaries on offer in the existing EU member countries will be too tempting to resist. I have been contracting across Europe in IT for the last 10 years. On my last job in London I was working with a highly competent Polish chap who gave up his well-paid Polish development job (C++) last year to come to the UK. He was shocked at the high cost of living in the UK, but his plan was very sound: Stay here for 2 years, contracting for good money and living in cheap rented accomodation and then take his stash back with him to Poland. By doing contract work in the UK vs full time in Poland he was earning about 15 times as much. He already had 3 properties before coming to the UK (2 were short-term lets in a holiday destination). Chances are he can probably avoid paying tax in the UK as well (many short stay antipodeans operate the same approach).

When the EU opens it's doors the first thing that happens is that the skilled, mobile labour leaves. Over the longer term some will return (or so we hope!) and will provide a shot in the arm to the local economy of these new member countries by brining their money and experience to the home market.

I too have been working all around Europe for many years. And you're right some will try to work in the UK for UK contract rates. I've seen dozens (out of possibly 100s) decide to move to the UK. Most stay for 2 - 3 years (as your example above) and then go back "home".

Seems the best of both worlds to me - we get skills (and hopefully some tax) without the education costs and no pension liability either!