[jsfg_cinti] Re: U.S. Programmers at Overseas Salaries (Indian-style wages to American workers)

-----Highlights and Response from the Follow-up Message-----
From: jsfg_cinti-bounce@xxxxxxxxxxxxx
[mailto:jsfg_cinti-bounce@xxxxxxxxxxxxx]On Behalf Of Tony Malinauskas
Sent: Tuesday, December 30, 2003 9:04 PM
To: JSFG listserv
Subject: [jsfg_cinti] Re: U.S. Programmers at Overseas Salaries
(Indian-style wages to American workers)

...This means MORE growth and jobs in the long run, even though in the
short-run many resources (e.g. people) will have to adjust...

In the last three years, the "short-run" adjustment period, which is said
will continue, has seen a significant loss in career growth and financial as
well as retirement savings.

The Y2K Dot Com bust caused me, and many like me, to be unemployed and
working on part time contracts or for Home Depot for $9/hr.  Then to top
that off, my 401K investments saw a loss of over 60% of the 96-99 gain much
less the 100% loss of the 99-2000's "false or exaggerated gain".

Since Y2K, there was said to be a glut of programmers as well as a loss of
jobs.  But, there were also a significant number of growing Cincinnati
high-tech companies that suddenly vanished, such as in the field of process
control and embedded software development.  This city went from a world
leader in the high-tech engineering field of equipment control and robotics
to...well maybe three tiny companies remain. Even these companies are
supported primarily by defense contracts.  Literally, all of this high
technology has left Cincinnati.  A shopping center and huge parking lot now
sits on the site of one of the greatest technologically advanced
firms...Cincinnati Milacron.  Why?  Reallocation of resources?  Stupidity or
short sightedness of the owners?

Cincom systems was once a world renowned Oracle & Microsoft all in one.
They developed leading edge products such as Supra DB and Mantis 4GL.  Supra
towered over Oracle in both performance and usability.  It was 20% faster
than Oracle and had a much smaller footprint?  Why did Cincom fail?  Now
what's left of Cincon is becoming a help center and data center support
service provider.  No more high tech.

...readers would be better served by messages that presented BOTH sides of
the issue...

Yes, I need to know these things.  What am I to do with my career?  I am a
high-tech techi who is nowhere near having the new standards for IT people.
IT today is not about fundamental algorithms, operating system design,
language compiler design, data base internals development, and data
structures, it is about lofty high level functional methodologies.  No
longer do programmers work at a terminal by them selves coding large
programs.  It is now a "team" approach requiring significant social skills.
A programmer is an ideology or methodology designer, not a programmer.  And
this person must fill several rolls such as client/user/customer support.
In the end, one does not have to be technically oriented to program.  All on
needs is a good memory for all of the unrelated non-intuitive details.  The
methodologies have changed.  This is because most companies are relying on
the ever-evolving out-of-the-box single-provider solutions.

...reallocating worldwide resources to their most cost-effective use...

So, where does this leave a dinosaur like me?  I have to be retrained...at
age 54?  Do I have to study for 4 years to work an additional 9 years before
I retire...in a new ideology I don't like?

...INsourcing in production because computer technology has closed the gap
between in-house and outsource production costs, in-house production reduces
the number of information transfers and thus improves accuracy...

Well, yes, but I think the technology is becoming more like the other
engineering disciplines such as chemical, mechanical and architectural
engineering.  But, what about artificial intelligence?  What ever happened
to that?  There is this and other advances in computer technology that are
still to come.  There is so much computer work a person like me can to do,
that it would take ten times the number of me to do it all.  But who will do
it?  Well, when I went to China this past summer, I found out who is doing
all of this work.

...overseas salaries...

It is touted that this situation of the US as well as the global salary
scale will eventually level it self out as it did in the 60s and 70s when
electronics production went to places like Japan & Taiwan, and automobile
production went to Japan in the 70s and 80s.  But these were different
times.  I believe that the current trend of having most manufacturing move
to third world countries is a jolt downward that...I'm not sure the US can
easily recover from.  Remember, there is a significantly large part of the
population that will come on line for government services...starting in
about 5 years.  Couple with that is this outflow of productivity...  How's
all this going to be paid for?  Well, it has Uncle Sam shaking in his boots.

...careers where personal contact is necessary, such as health care,
tourism, hospitality, etc...

I have heard this a thousand times that the US will soon be a nation of just
government, farming, insurance, financial investments, entertainment, the
military, service providers, tourism, and medicine.  If this is really
really true, then, I have to totally change my life right now... or learn a
language like Chinese...

The point I am trying to make is that I need to know that what I am doing
career-wise is the correct thing.  While more and more of "the few" get
fabulously rich, I and many like me are having to sacrifice so much for the
sake of the increasing idiosyncrasies of our system.  We are constantly
being told that we have to reinvent our selves every three to five years, go
through down swings in the economy and to learn to live with less.

...these salaries will rise overseas as demand for workers increases
relative to supply...

Yes, these salaries will increase...and our salaries will fall.  The problem
is that liabilities, promissory notes, and mortgages on fixed assets will
not easily fall.  What bank in their right mind will forgive part of a loan
because a property is no longer worth what was borrowed against it?  Also,
when the value of assets do fall below the value of the liabilities this
will cause an increase in bankruptcies if not a significant loss of personal
assets.

Even if this adjustment takes ten years, the average person who is in the
baby boom generation or older will suffer significantly because of this
decreasing value of their mortgaged property and the loss of a supporting
tax payer base.

... geography a less significant barrier...

Yes, you are right about this.  But you-know, even though China is still a
dog of a place to live, coupled with my Chinese fiancé, the current value of
my assets would translate into me being a millionaire if I lived in China...
There I could also have my high tech job. (LOL)

...messages can be demotivating, which is NOT an effective response...

You are correct.  But, few people have had any kind of helpful suggestions.
By the time I learn the new technologies they will nearly be obsolete.  In
the mean time, computer technology will inevitably move away from coding
programs and more towards computer aided design tools such as UML based IBM
Rational products.  This is the future...of most of the engineering design
disciplines.  So, it probably would be a good idea for us to learn this type
of design methodology, where...the computer will eventually do the coding...

I know it is hard to predict the future.  But, I think that all information
is important.  I found this article about this trend to be very important
information.  That is what this group is all about.

I know that many employers will also read this article and I have already
heard that some employers are thinking of offering lower compensations.  I
was tentatively offered 45 to 50K by a consulting firm. They thought my
standard for 65K was too high.  If I would have known then what I know now,
I might have had a job.

So, to whoever posted the link to the article...I thank you.

Homepage: SteveS.US

Happiness is that state of consciousness which proceeds from the achievement
of one's values.

-----Original Message-----
From: jsfg_cinti-bounce@xxxxxxxxxxxxx
[mailto:jsfg_cinti-bounce@xxxxxxxxxxxxx]On Behalf Of Tony Malinauskas
Sent: Tuesday, December 30, 2003 9:04 PM
To: feldman8396@xxxxxxxxx; JSFG Main listserv; JSFG ITSIG listserv
Subject: [jsfg_cinti] Re: U.S. Programmers at Overseas Salaries
(Indian-style wages to American workers)

First off, while I'm sure the original message was sent to keep job-seekers
informed of job market conditions so they could "respond effectively", I
think that your readers would be better served by messages that presented
BOTH sides of the issue rather than just the problem. "Here's the problem"
messages can be demotivating, which is NOT an effective response for
job-seeking.

I'm teaching Economics at NKU and UC; here's my take on the situation.
Improved telecommunications technology has made geography a less significant
barrier to information and resource mobility among different markets. This
is a good thing; we will end up reallocating worldwide resources to their
most cost-effective use, which means that companies will be able to use cost
savings as investment to make the business grow. This means MORE growth and
jobs in the long run, even though in the short-run many resources (e.g.
people) will have to adjust; for example, retraining to flow to industries
where they can earn more. (By the way, careers where personal contact is
necessary, such as health care, tourism, hospitality, etc. will probably be
less susceptable to outsourcing. At the same time, there has been some
moderate INsourcing in production because computer technology has closed the
gap between in-house and outsource production costs, in-house production
reduces the number of information transfers and thus improves accuracy, and
managers have more flexibility for custom orders and changing conditions
with in-house production.)

Finally, if overseas salaries are the main item that managers consider for
evaluating a decision to outsource (it should ultimately be the differential
in "labor productivity", not just salary and benefits), these salaries will
rise overseas as demand for workers increases relative to supply.

Best of luck to you in the New Year.
Tony Malinauskas
Econ Adjunct Professor & Former JSFGer

----- Original Message -----
From: "feldman8396" <feldman8396@xxxxxxxxx>
To: "JSFG Main listserv" <jsfg_cinti@xxxxxxxxxxxxx>; "JSFG ITSIG listserv"
<CincinnatiOH-JobSearchFocusGroup-ITSIG@xxxxxxxxxxxxxxx>
Sent: Tuesday, December 30, 2003 7:20 AM
Subject: [jsfg_cinti] U.S. Programmers at Overseas Salaries (Indian-style
wages to American workers)


> What do you think of the ideas discussed in this article?
> Could this be the future for all U.S. jobs (i.e., competition from
overseas will drive down the wages paid to the level of third world
countries)?
>
> Notice the final sentence where the article's author comments that if this
trend continues "the results could be quite interesting".  If this trend
continues, what would be the results?  In what way would the results be
interesting?
>
> -----------------------------------------------------------
>
http://techupdate.zdnet.com/techupdate/stories/main/US_Programmers_at_Overse
as_Salaries.html?tag=zdafavorites
>
> U.S. Programmers at Overseas Salaries
> By David E. Gumpert
> December 4, 2003
>
> It's the great unanswered business-economic question of our day: How do we
replace the hundreds of thousands of information-technology, call-center,
paralegal, and other jobs rapidly exiting the U.S. for India, Russia, and
other low-wage countries? The main answer that the so-called experts put
forth, without a lot of conviction, is that we'll create new "high-value"
jobs to replace those leaving the U.S. What are those jobs? No one seems to
know.
>
> In the meantime, the matter of overseas subcontracting appears to have
become open-and-shut. If you're an executive with half a brain, you can come

to only one conclusion when tallying the differences in costs between hiring
computer programmers in the U.S., vs. India or Russia. These days, the jobs
are going to Indians and Russians.
>
> ...
>
> Jon knew the numbers for experienced American programmers doing the
specialty work he required: $80,000 a year, with benefits adding an
additional $5,000 to $10,000 per programmer. The intermediary came back with
the number for the services from India: $40,000 per programmer.
>
> ...
>
> And then Jon had a brainstorm. What if he offered Americans the jobs at
the same rate he would be paying for Indian programmers? It seemed like a
long shot. But it also seemed worth the gamble. So Jon placed some ads in
The Boston Globe, offering full-time contract programming work for $45,000
annually. (He had decided that it was worth adding a $5,000 premium to what
he'd pay the Indian workers in exchange for having the programmers on site.)
>
> The result? "We got flooded" with resumes, about 90 in total, many from
highly qualified programmers having trouble finding work in the down
economy, Jon says. His decision: "For $5,000 it was no contest." Jon went
American. And the outcome? "I think I got the best of both worlds. I got
local people who came in for 10% more (than Indians). And I found really
good ones."
>
> ...
>
> What if other companies begin taking the same approach -- offering
Indian-style wages to American workers? On the positive site, we could begin
to solve our job-creation problems. But on the negative side, America's
standard of living would inevitably decline. There's only one way to find
out for sure how it all might shake out, and that is for other executives to
replicate Jon's experiment. The results could be quite interesting.
>
> -----------------------------------------------------------
>
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>
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