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March 27, 2007
Global Layoffs: Not Just About IT Anymore
The saga of the expendable worker is making headlines again -- this time with a high-end global twist.
In advance of a formal press release due in mid-April, Citigroup yesterday announced plans to lay off approximately 15,000 high-cost workers in cities where doing business carries a high price tag -- New York, London and Hong Kong.
The downsizing comes as Citigroup chief executive Charles Prince traveled to India to announce the expansion of Citigroup’s India operation into areas such as research, investment banking and credit analysis, as reported in the New York Times.
Citigroup has long outsourced its call centers and global processing to India, where it currently employs 22,000 workers. As for the trend of offshoring of white-collar jobs, it’s long been predicted by various sources, including the consulting firm A.T. Kearney. While this story may not be new “news,” it prompts numerous questions for discussion.
Will Citigroup’s action be sufficient to appease disgruntled shareholders like Saudi Prince Alwaleed bin Talal? (Talal is Citigroup’s largest individual shareholder.) Is it the tip of the downsizing iceberg for financial service firms? How much higher up the management chain will such layoffs extend? Some sources predict that no one, not even upper management, will be safe.
The Citigroup announcement is part of a long-term trend. Millions of laid-off American workers in the IT industry and other sectors have seen their jobs washed away due to offshoring.
Can white-collar jobs be successfully offshored? Is offshoring a threat to your white-collar job? What do you think will be the next white-collar industry to move overseas? Post your comments below.
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Posted by Connie on March 27, 2007 at 10:49 AM in Current Events | Permalink | Comments (49) | TrackBack (0)
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Comments
Outsourcing is not as bad as AMD has done. There phone support is outsourced to India abd they then let all of the U. S. people go that did the deskside support and server administrators go and the same company from India sends their people over to run the all of the server and do deskside support. They(the Company) have bought houses in Austin, Texas to house the worker and their paycheck stays in India, they live on credit cards.
Posted by: Howard | Mar 28, 2007 11:57:43 AM
My biggest issue here is a bit of an ongoing concern. How is the average American supposed to buy products that companies are selling when they have no job? I can understand that businesses are obviously in business to make money, but where has the corporate responsibility gone? It's all about cutting costs and cutting jobs, so who can benefit, the upper-crust people. Some of us would genuinely like to work hard and CAN learn from the work ethic of some foreigners, but for crying out loud, we need jobs! I guess we'll see the companies come back in about 30 years when wages of other countries match that of the United States and there is no advantage to be gained by outsourcing. Who is the real beneficiary in all of this?
Posted by: Phillip | Mar 28, 2007 11:27:06 PM
Interesting how financial companies thought it a good thing to send personal financial information to India, one of the most corrupt countries in the world. My bank is Washington Mutual, who has decided to outsource their customer service department to the Phillipines. I don't remember ever giving my permission to send my personal info to a foreign company within a foreign jurisdiction in which the FBI has no power.
Doesn't anyone find it strange that U.S. companies have been downsizing for the last 20 years and now claim there is a "shortage" of workers?
Posted by: sonja | Mar 28, 2007 11:36:08 PM
Guys and Girls,
The global economy is here! The only winners are executives and owners at large multinational corporations. The local ties to businesses have been severed with an ax. "Free Trade" is not Fair Trade. Taxes and tariffs were demonized by foreign businesses and govenments as "protectionism". Is it wrong to protect your home and family from those who want what you have? Our governmental leaders have thought that. GATT, NAFTA and "Most Favored Trade Status" to China have crippled our economy. What has happened to the world's industrial giant?
We have done it to ourselves! Go through your house and try to find something made in the US! Go into your favorite clothing department at a major department store and ask if they can show you any products made in the US. I have and the sales person was fumbling, when he couldn't find a single item. We bought the cheap disposible stuff and that financed the ability of off-shore companies to buy matching technologies from US companies, eager to make a quick buck. The Law of Unintended Consequences or as I call it, "Immediate Profit at Any Cost".
Well here is the short game: Americans loose middle income jobs and take multiple low wage jobs and then have a higher cost of living because they must pay for the additional services eg. child care, fast food, and lawn service, because they don't have time. The long term game is grimmer: Manufactring skills and infrastructure disappear. When the financial powers shift to China and India and their costs of business increase, we will not have the ability to switch the plants back on. It drives me nuts when GM and Ford are shutting down plants, but Toyota, Nissan, and Hyundai are opening them up.
The solution is 300 million squeaky wheels need to start the democratic process of voting with their dollars. Demand domestic products at your retailers or do not shop there. Domestic consumption will yield domestic production! If you own any stock in a company, be a participating owner. The board and managers work for you!
Posted by: Mike | Mar 29, 2007 1:09:02 PM
Again, when it was the manufacturing positions being sent overseas there wasn't a worry in the world. I believe several years ago it was President RR who stated "that we were going from a smokestack economy to a service economy".
That statement really got the ball rolling. The long and short of a global economy is this: It is made overseas and shipped back to the US for consumption. We are the largest consumers in the world.
Doesn't any person in their right mind believe that if countries such as China were to consume their own manufactured goods in total that they wouldn't be the largest most formidable economy in the world?
Now it's the white collar service jobs turn! And , the politicians have since the 1950's or better have allowed it to happen. I have an idea; why not send political jobs off-shore and if we need to call congress or any other political entity at any level, we can call a proxy desk in India or China!
Good Luck all in your career hunts!!!
Posted by: Sal | Mar 30, 2007 8:43:40 AM
Corporations are looking overseas at new markets. The American economy has matured and growth lies in international areas. American jobs and American consumers are less and less of interest to large international corporations and therefore government policy, etc.
Posted by: Alex | Mar 31, 2007 2:25:29 PM
I think US companies should stop outsourcing their call centers, BPO's and high tech jobs.
Reason 1:- The other day I ordered a digital camera through dell phone support and some chinese guy answered phone. He ordered 3 cams instead of one and I had to spend sleepless night to get rid of other cams delivered to my home.
Reason 2:- High tech jobs are worst performed in India and other countries. They squeeze the s**t out workers and pay less. Who is making the rest of the money? On average, 70% of the money paid by a company goes into consulting firms in India.
Posted by: Dave | Apr 1, 2007 5:42:04 PM
Perhaps the off shoring of white collar jobs is a good thing. Perhaps the American worker will finally pass laws that protect them from it. The first step would be a law that puts into practice a policy that import tariffs that increase the price of a commodity to what it would be if it was strictly produced in this country. We need a system were companies do not benefit from lower over sea costs and this can happen if the white collar worker starts to insist on it happening.
Posted by: Gerald Bollinger | Apr 2, 2007 10:17:33 AM
omg grow up you guys. Everyone benefits from free-trade and outsourcing. Foreign countries receive higher wages and better living conditions, and U.S. citizens receive lower prices. Protectionism benefits the rich, free trade benefits all. Protectionism gets rid of competition. W/O protectionism, businesses have to compete to make better products and lower prices.
Eventually as wages start to grow in other countries and the quality of life improves, they will have more purchasing power and be able to purchase more goods from us. If free trade is such a bad thing, why has the U.S. economy grown so well in the last 30 years?
Posted by: edude | Apr 2, 2007 3:55:53 PM
It's hard enough to find jobs these days without even more unemployed flooding the workforce. The cost of living is increasing much faster than wage increases for those lucky to still have their jobs. Millions of families are struggling to make ends meet. More people are attending college and less than expected are retiring, making openings for those new graduates. We keep allowing jobs to leave our country and we'll eventually end up living like the countries our jobs have been shipped off to.
Posted by: jessica | Apr 3, 2007 11:11:46 PM
Maybe it's time to recognize that this world is changing and we're in the thick of it. And getting past resisting the change can be an extremely positive place to be.
Being laid off is a huge opportunity to look to your past and see what a dismal job you had, way apart from the kind of work you truly wanted.
Grasping this opportunity may be just what changes your life - for the positive if you are prepared to go deep down and make big decisions.
Martin Haworth
http://www.HowToLandYourDreamJob.com
Posted by: Martin Haworth | Apr 4, 2007 6:19:23 AM
Sorry,edude,but havent you noticed all the unemployed people nationwide? We DON'T benefit from outsourcing. Alot of jobs that were once done by Americans are not any longer. There are plenty of starving families to prove it.The only one who benefits from outsourcing are the corporate top dogs. Its all about being able to pay less wages and give little to no benefits to the overseas workers. Our labor laws are impotent overseas. The executives get the elevator,we get the shaft,plain and simple. I sure as heck am NOT benefiting from outsourcing,and its not limited to American workers.Outsourcing even hurts everyone who goes to the store. Nothing is made in the US anymore. Thats only cheaper for NOW,but in the long run,its actually more expensive because of how often you have to replace whatever you bought. Alot quicker than when it was made in the US. But to be fair,American society is to blame for that one. Its all about faster and cheaper. People dont look to the future anymore. Outsourcing is good for short term benefits but if you want a future where more Americans have jobs,and the stuff we buy actually lasts as long as it used to,then outsourcing needs to stop
Posted by: Princess Delilah | Apr 4, 2007 8:43:28 AM
The US economy has grown at the expense of the average non-executive worker. The mantra through the 80s used to be, "Take care of the employees and they'll take care of the company." This was replaced by, "Maximize shareholder wealth at all costs." Since a company's shareholders may be international investors, and half of Americans don't own stocks, what's good for the shareholders ISN'T necessarily what's best for the nation.
Furthermore, the record profit numbers haven't been because of better traditional management, but due to a dismantling of the pension system and other employee benefits. These savings go directly to the bottom line and allow executives to maximize their stock options. The winners are the CEO, top executives and the shareholders who quietly sell their stock to reap the millions.
I predict the creation of white-collar unions. While your Economics professor might teach that this is the root of all evil, ask him if he would support the university ending the tenure system to save money and maximizing tax-payer wealth!
Posted by: benthere | Apr 4, 2007 9:18:03 AM
Years ago I wrote my Congressman about the inherent inequities in the world economy. The far left focuses on ourselves, the poor worker, the Republicans focus on the investor who will rationally invest his or her money in Adam Smith's free market economy. What a beautiful construct, capitalism at its best, free market economy. Let's lead the world, it built America! Hooray! We're a nation of billionaires and millionaires even as some starve to death. We pollute our environment but we can always pull out of that. Our healthcare and benefits are provided by private enterprise because again that provides the worker with choice. We're a people with so many choices open to us.
Now enter a new world. Enter a world in which the West has been successful. The Eastern, so-called developing world, with their population in the millions and growing, are now getting their share of the pie. About time, they say to themselves, the US has consumed the lion's share of the world's resource, meanwhile we starve to death.
No one is crying because the Western world, chiefly the US, is going towards a major cliff quickly. Both sides of the aisle seem to have come to an absolute standstill. Meanwhile each and every day John Q Citizen sees not only his SUV going the way of the "doozy do-do" but his whole way of life.
The problem, my fellow citizen, is that the US is dealing in a world that is absolutely unfair. Capitalism is based on a true free market, market driven economy. But the bulk of the world isn't market driven. If you want to form a service business in India, guess what? You have to build factories, you have to conform to laws. Fifty years ago the Indian government wouldn't have given a hoot - if you employed their people in any way - whatever you did it didn't matter. But today the Indian government engages in protectionism the likes of which the US would be scandalized for. But the US keeps playing the same game. We keep telling the world, "now play nice, treat your people well, engage in human rights, keep your air and water clean". Yes, that's the US. That's what we tell the world - we dump CO2 into the environment as if it were as clean and pure as could be. We create global climactic change every single day we all drive to "work".
China won't be any different - isn't any different - do we think that the manufacturing in Shanghai or any number of provinces in China are creating clean, pure, sweet environments for their people? Not on your life. Will China change? Sure it will. It will have to - the cost of health care will rise just as it has here in the US.
The difference between the developing world and the US is and will be this: they look out for number one - for themselves. We appear to - but we shoot ourselves in the foot in the process.
We do not demand parity in trade. We do not demand that countries that compete with us have at least the same standards as we do. In other words - we passed laws a hundred years ago so that children and adults wouldn't be hurt, so that our food wouldn't be adulterated - the list goes on.
But our companies in this country are so bereft of ethics that no demands whatsoever are made on them when they select where they will do business. And companies which do business in the US are under no obligation whatsoever. So a firm in India can send goods to the US but in the process use child labor, pollute the environment - do whatever they wish. But if a US manufacturer wanted to compete they could not do so - you see - we have to pay our workers a living wage, we have to conform to state and federal laws. Let's not use India - let's use Indonesia instead.
The Indonesians can produce whatever they wish. They can send their best and brightest to the US. We in turn churn that person out of a US university - often their government will pay for the individual or the US will. Instead of being on the Indonesian "dole" the individual can work in the US on a student Visa for a period of time. But if Indonesia wanted to - they could take that student engineer, we'll call her, and put her to work in a new engineering development park in Jakarta. Her firm, then comes to the US, sets up shop as an "Outsourcer" and suddenly the people of Indonesia are essential US workers without Visas. You see they're doing the work of US workers, but they do it in Indonesia instead. Indonesia might provide state insurance, state benefits, the worker might have to deal with a physical environment that is polluted - but the government will eventually be forced to change that.
See the trend...US jobs are going overseas - and they're changing the rest of the world for the better - but the US for the worst. And do you think for ten seconds that other countries will allow US citizens to work in their nation? Do you think they will create quotas for US workers so that we can work there? Take a look at Europe - how difficult is it for a US worker to get a job in the European Community - I'll tell you from experience - it's nearly impossible.
Whether you're a liberal or a conservative - the fact is that the rest of the world doesn't follow Adam Smith's law - free enterprise outside the US isn't so free - and we're not playing a level playing field. If you feel otherwise - you need to really re-examine the realities of the world marketplace - because it isn't happening. Period. And that's my two cents (and some change).
Posted by: Kevin Handy | Apr 4, 2007 10:11:23 AM
Outsourcing of jobs cannot be stopped.Why should a CEO in US get paid so much money when a person 10 times smarter can be hired at 1/2 or 1/3 of his or her cost?Definition of a job's worth has changed with a leap in communications technology and growing competence around the world.99% of US(and European) jobs can be done by a large number of people around the world at a substantially lower cost. Think,what has been the main reason over the centuries for people to emigrate to wealthy countries? Now it has become possible that the work can emigrate.Employees at all levels in wealthy countries have to solve complex problems to earn that very high standard of living: more ceberal output. Ask: why should I get paid 10-20 times more then an Indian or Chinese or anybody, other than that I live in a high-paid society and I need it.
Posted by: Mayajal | Apr 4, 2007 11:58:08 AM
I think the golden age of off-shoring will come to an end this decade. I have several Indian colleagues who all report that the Indian IT job market is red hot, wages are growing in the double digits yearly, and employee turnover is becoming a real problem. Indian IT positions that used to pay 20% of the wage of a US worker a decade ago, are now going for 50% of the wage. If this trend continues, I think it will soon be uneconomical to offshore all but the largest IT projects.
p.s. "Haven't you noticed all the unemployed people nationwide?". I'm not sure what country you're living in, but here in the US, the Department of Labor reports that unemployment amongst all "professional occupations", including the IT and financial sectors, is running at 1.9%, well below the 3% - 4% range that most economists consider "full employment". Anecdotally, I agree there was some real unemployment after the Internet bust (2001 - 2002), but since 2003 the job market has been pretty good and I don't know anyone in the IT field who's unemployed at present.
I think everyone should relax and stop worrying about the sky falling.
Posted by: Todd Pepin | Apr 4, 2007 12:08:08 PM
I'd like to go back to that idyllic time when everyone could get a good job if they just worked hard, if such time ever existed. But we can't, so we should spend our energy making the best of a situation with both good and bad. Legal changes can, at best, slow down outsourcing at the margin, e.g., by limiting favorable H1B visas, so it is a bad idea to count on our leaders to solve the problem for us individually.
The overall unemployment rate is much lower than it was in, say, the 70's. Many well paying jobs are gone and income growth for ordinary people is slow--but incomes they are growing, and much of the stuff we use every day has gotten quite cheap, due to globalization. We buy huge TV's and cheap stuff at Walmart, and the average house size keeps getting larger to store it all.
For 30 years, there was as shortage of IT talent. In 2000, that situation was reversed with the tech industry crash coupled with large-scale outsourcing. But jobs are coming back. We in the IT industry may never again have the same level of security, but the rest of the economy will be stronger for suffering from a constant shortage.
Getting angry at forces beyond our control is a waste of energy better spent looking for a good job.
Posted by: Laura Keating | Apr 4, 2007 12:14:22 PM
The whole thing about outsourcing is that it not only takes away job oportunities from Americans, but it also erodes our ability to produce.
Regarding the quality question that was raised, I bought two pairs of shoes about 4 months ago at Wal-Mart. They were made over seas, as you would have guessed. The laces on those shoes outlasted the shoes themselvs. Niether pair can even be worn any more as the souls are all torn apart and comming off. I have bought other items of clothing from Wal-Mart and other retailors, and I'm lucky if I get 6 month's use out of them.
So PLEASE don't tell me how benificial outsourcing is to me.
Finaly, I quite agree, that the likelyhood of any American Citizen getting a job in any foreign country is slim to none, and slim just left town. Furthermore, if you should be the 1/100 of 1% who does get hired to work in...let's say....China, you better be able to SPEAK, READ AND WRITE in Chinese. If you get a job in France, you better be able to SPEAK, READ AND WRITE in French. If you move to Germany and by some miracle of Biblical perportion you get hired, you better be able to SPEAK, READ AND WRITE German.
Why is it, that when you call for tech support for some digital device that you bought, or when a telemarketer interupts your dinner to sell you a subscription to the "Chicago Tribune" or some other news paper, that you can hardly understand them? About a month ago, I was in a McDonalds ordering breakfast. The person at the cash register could barely understand a word I was saying to him, and I could hardly understand him. I had to repeat my order SIX TIMES, and he still screwed it up.
At the risk of sounding like a bigot, I think at the very minimum, if anyone is going to work in the United States, he should have to demonstrate fluency in SPEAKING, READING AND WRITING English.
Mike
Posted by: MikeOBrien | Apr 4, 2007 12:22:00 PM
I think that it is unfortunate but what else? Do we want to become like Europe, where the governments operate without regard to their competitive future?
This trend is indicative of the increased competition from new world powers and we can't hide in the sand. We as workers need to stand up and improve our own skills to better compete.
In the end, we'll be stronger and more valuable.
Posted by: Steve | Apr 4, 2007 5:24:56 PM
Fine outsource our jobs... just means I wont have money to buy crap. I'll survive... food is pretty cheap.
Didn't really need all the junk anyway. Life is too short to spend it chasing material wealth.
Posted by: Patrick | Apr 4, 2007 5:42:17 PM
Simply put, charity begins at home. Sure it's cheaper to outsource to another country. Unfortunately, with that, comes poor quality service. How can another country, especially one with a radically different culture, possibly relate to an American consumer? There has been a few times I had to call for techincal support and I got someone who could barely speak english. This is just tech support. What will happen when other types of business is outsourced to other countries? We're having a hard time dealing with illegal hispanic immigrants who demand us to speak their language,now we'll have to learn hindi? Where will it end? I'm already seeing a trend of corporations wanting bi-lingual people. In 30 years, it's going to be required that everybody looking for a job to speak 5 or more languages. There's going to be a lot of screaming and unemployment until politicians get on corporations to stop outsourcing. Then again, politicians are supported by corporate donations so we can't depend on them for support. The only thing that will help us is a surge in serious corporate ethics. I think it should begin with each state passing laws against outsourcing. Then other states will follow. I'm not against immigrants who are leagal, or doing business with other countries, but globalization needs to be regulated else there will be serious reprecusions on both sides of the shore.
Posted by: Todd Ponton | Apr 4, 2007 5:57:57 PM
Benthere hit it right on the head. With few exceptions, most outsourcing and mass layoffs are aimed strictly at maintaining break-neck profit margins, not lowering the costs of the product or service to consumers. Call me cynical, but I've seen too many layoffs occur not because a company is in financial dire straits, but because they didn't meet a profit expectation for a quarter. At one time, most companies saw this as a part of the normal business cycle and didn't react by closing down facilities, tossing employees to the curb and leaving the ones left with twice the workload.
Of course our government doesn't help things much, with its often overbearing, very costly and often ineffective (Sarbanes-Oxley anyone?) regulation that just makes US companies less and less competitive in the global economy.
Posted by: Bart | Apr 4, 2007 7:54:47 PM
It's time for the American consumer to stop buying anything but the basics what they need for their day to day survival. I say forget the multinational corporations and their ilk. It is time to stop wasting your money on what they want you to buy out of their third world factories. Why should you continue to see your standard of living decline so the top one percent get richer. The top income groups control a vast majority of the economic output yet do the least to produce. Ever see a higher management person do anything worthwhile except hold pointless meetings of how to mess with the producers?
By the way, let the corporates and their henchmen take all of their garbage overseas that way they can sell it to the Chinese, Indians, whomever. Start supporting your local businesses and your local people that are actually interested in your LOCAL community. Not the big box stores and their low wage counterparts. It's amazing to me how people in this country who work hard and use their minds still get the shaft so some pampered executive who is at the top of the food chain gets it all and you are left with the scraps. Go tell the mass amount of Americans making less than 15 an hour how little they really do. Yeah right. And to have some worm in a suit to tell us all how valuable they are.
Posted by: Jim | Apr 5, 2007 12:17:28 AM
My husband and I lived overseas between '92 and '96. When we returned to the States, I noticed the big shift away from American-made products. Everything I picked up was labeled "Made in China." I couldn't believe it. What happened in those few short years?
It actually began with shoe manufacturing back in the 70's. Then I was working for a major retailer. The manager of the shoe department told me, "You know we don't manufacturer shoes anymore in this country. Or really, why not? Because it was cheaper to send the manufacturing overseas." Then, you could buy shoes at K-mart for under $10.
That's what happened! We all wanted to buy shoes for under $10. The American consumer wanted 'cheap' products. Stop blaming the polictians, and the corporate CEOs. Believe me, all those people work for YOU.
If you don't like what's happening, stop blogging and write your congressman and other representatives. More importantly, stop buying cheap goods. Invest your money in companies that are American-owned and staffed.
I sure and the h_ll don't like what I'm seeing today.
Posted by: cleod2833 | Apr 5, 2007 9:45:17 AM
1) Hardware service is hard to outsource.
2) Inflated union wages and corpotare greed are
but two of many factors relating to the cause of this problem.
3) Over time, the free market will prevail.
1) Large Laser printers, cars and plumbing service
is hard to do over the phone.
2) The United Auto Workers, AFLCIO, and other unions
demanding $20.00 an hour for a job a person with a
$8.00 an hour skill level can do, along with extreme environmental regulations forced manufactures to seek other venues.
3) Artificial forces will be superceeded by universal laws: Water seeks its own level, the energy of a body is dependent on its velocity, money is power, energy equals work over time.
Blitzman
Posted by: Blitzman | Apr 5, 2007 10:28:56 AM
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