http://www.rockymountainnews.com/drmn/technology/article/0,1299,DRMN_49_2415759,00.html
Outsourcing cuts costs, jobs
Low-wage workers can telecommute from far end of globe
By Hiawatha Bray, The Boston Globe
November 10, 2003
MANILA - To hear how far and deep the outsourcing of American jobs has
traveled, listen to Christian Mancenon in barely accented English take
an order over the phone for HBO from a man in Lebanon, Ill.
"I'm showing here that you love movies," the 25-year-old Filipino
said, while looking at his computer screen in a low-rise building in
Makati, Manila's business district. Mancenon and 600 others work for a
subsidiary of Philippines Long Distance Telephone Co., which fields
customer calls for Littleton-based EchoStar's Dish Network satellite
TV.
Like India, Pakistan and Russia, the Philippines has a growing share
of the world's high-tech jobs that have fled high-cost places, such as
Massachusetts and California's Silicon Valley. But even workers
filling customer orders, with few skills, have trouble competing with
the $300 a month Mancenon is paid in the Philippines, one-fifth of
what a worker in the United States would get for doing the same job.
The spread of outsourcing, beyond hard-hit technology workers, is a
big reason the United States' economic recovery so far is a jobless
one. A study released recently by the University of California at
Berkeley says the country lost more than 1 million white-collar jobs
in the 1990s and "hundreds of thousands more since the turn of the
century."
Precise data are hard to come by, but the UC study says that
outsourcing is accelerating. "If you simultaneously read Indian
newspapers and U.S. newspapers, you're going to get a good correlation
between layoffs here and jobs being created there," said Ashok Deo
Bardhan, a researcher for the study. He added that as many as 30,000
jobs were lost to India alone in June and that 14 million U.S. service
jobs are vulnerable.
Lured by lower costs overseas that enable them to increase profits in
tough times, companies like Dell Computer, Procter & Gamble, American
Express and Citibank employ 20,000 Filipinos to answer phones. The
Philippine government says that call center jobs will double over the
next year.
Filipinos also are competing for high-tech jobs like software
development and engineering, the kind of work U.S. firms have been
sending to India. U.S. jobs also are going to Ireland, Russia, China,
even Ghana.
Many economists say the lost jobs will be absorbed as the economic
expansion lengthens and as baby boomers retire, shrinking the overall
U.S. labor force. But the UC study says that unless the U.S. economy
pioneers new high-wage industries to employ the displaced workers,
they can expect a future of lower pay.
U.S. companies say they have no choice. In a global economy, they say,
they must stay competitive with companies that operate in lower-cost
countries - akin to the argument that if one guy does it, everybody
has to survive.
Despite a Commerce Department re****t last week that the economy grew
at a 7.2 percent annual rate in the third quarter, the sharpest growth
in 19 years, the economy still lost 41,000 more jobs.
One school of thought says that over time, Americans will benefit from
the higher cor****ate profits that come from outsourcing. Low-level
work will be performed in low-wage countries, saving U.S. employees
for more higher-paying tasks.
Mike Gildea, executive director of the Department for Professional
Employees of the AFL-CIO, which represents 4 million white-collar
workers, does not believe the explanation that Americans will do
better in the long run. "It's a load of crap," he said. "This is
exactly what we were told about manufacturing jobs 15 years ago."
In a country as poor as the Philippines, outsourcing is a bonanza. The
Philippines is regarded as the Asian tiger that never roared, a
promising country that did not achieve the booming economic growth
that came to Taiwan, Singa****e or South Korea. The country's 84
million people include a sizable middle class, but according to
government statistics, average household income as of 2000 was about
$2,600.
But the literacy rate is well over 90 percent. The universities
produce 350,000 graduates a year, 50,000 of them engineers. Most speak
English.
Because the Philippines is near the Asian mainland and Australia, and
because of longstanding economic and military ties to America, the
country has superb telecommunications links. A network of undersea
fiber optic cables connects the islands to North America, Asia, Africa
and Europe.
But decades of corrupt misrule spoiled the Philippine economy. Once
the only hope for educated Filipinos was a plane ticket out. Today,
it's a phone or a computer terminal.
Cristina David, a 35-year-old engineer at Software Ventures
International in Manila, oversees several software projects for U.S.
firms. Like many of her colleagues, she knows how things are done in
America.
"I worked there for two years," she said. "I felt so lonely, so I had
to come back."
And why not? She can do the same work in the Philippines, and although
a $4,000 annual salary is sub-poverty in the United States, it lets
David live the sweet life in Manila.
The strategy has been working. A growing number of U.S. firms have
sent programming work to the Philippines. Since 2000, Thomson West, an
Eagan, Minn., publi****ng company, employed Software Ventures for
software maintenance and sup****t services. Con-Way Trans****tation
Services, a trucking firm in Ann Arbor, Mich., has had software
maintained by Software Ventures since 2001.
At one call center, the company sends workers through "Amspeak"
training courses. The schooling seeks to purge workers' voices of
"foreign" accents and familiarize them with American slang.
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