Outsourcing has hit Madison Avenue.

Until recently, Web ads were produced mostly by creative types in downtown lofts in places like New York City or San Francisco. But big marketers are now increasingly shipping off that work to little-known businesses in places like Costa Rica and Bulgaria.

One company reaping the rewards is avVenta Worldwide, which has 415 employees in San Jose, Costa Rica; Kiev, Ukraine; and London, as well as Charleston, S.C. Since avVenta launched in 2005, it has built a business out of doing behind-the-scenes production work on Web ads for the agencies that work with some of the world's biggest marketers, including General Motors, Microsoft and Bank of America, at rates about 20% to 50% lower than what agencies pay for similar work in the U.S., ad executives say.

There are a lot of talented people in this country, but there is just a different work ethic that comes with working with people from another country," said Dan LaCivita, senior VP-executive director of Firstborn, a 40-person digital agency headquartered in New York. Referring to a one-to-ten scale system, he said that in the U.S. you can hire "100 'sevens' or 'eights', but you can't hire 100 '11s'. And I want there to be 40 '11s' here."

Labels: H-1Bs, offshoring, outsourcing

It is not altogether inconceivable that the resolve once expressed by a past chairman of the Federal Reserve Board — he would bring the prime rate down to the level of zero if that would save the American economy — might well be rendered real by his present successor. Even that most extreme measure could be of little avail. For meanwhile, business process outsourcing has cast a shadow across the nation’s landscape. [Emphasis mine]. If to the American entrepreneur an open economic system offered the opportunity to outsource work whereby costs could be markedly pared down, the crisis in employment would persist irrespective of whatever happened to the interest rate structure. Low interest rates will encourage the induction of relatively more capital-intensive technology, while the supply of trained personnel to operate such technology could be ensured by persuading the authorities to issue generous H1B visas. The thrust of the presidential poll campaign has been directed against both BPO and H1B visas, with politicians crying hoarse for a return to a non-liberal regime; leaders of the badly scarred American working class have been shouting the most. Not surprisingly, proposals about how to restore for domestic workers the estimated three million jobs the Bush administration has exported out of the country have held centrestage in the campaign debates.

All the greater reason to expect that greater attention will be riveted on the pre-poll commitments on economic issues. The cry of saving the jobs of American youth will grow shriller. Pressure will intensify to close loopholes in trade laws to prevent placement of orders on foreign firms on work that could be as competently done at home [emphasis mine] never mind if at higher costs. In case necessary, some tax relief may be considered for firms offering extra consideration to domestic workers. Penalty for breach of legislation enjoining preference to domesticemployees, could be stiffened too. There could also be a drastic reduction in the number of H1B visas issued each year.

How will all this affect India? The fastest growing among our industries is the information technology-related services. Many of them depend for as much as 90 per cent or more of their activities on orders flowing in from the US. A substantial part of India’s high rate of growth of GDP, touching more recently almost 9 per cent per annum, has a strong link with the high rate of growth in IT services. Suppose a severe contraction occurs in the activities in the IT sector following the ushering in of the new administration in the US next year. The spin-off could be a major setback for our GDP growth too. Whether such a possibility would turn into a probability can only be speculated on at this moment. What is however obvious is that an interdependent global system has its positive as well as flip sides. Foreigners can offer us bliss; excessive attachment of foreigners can also bring problems in its train.

Even in a world ruled by neo-liberal ideology, economics does not decide everything. Just because in an international framework of costs and returns, our software industry has proved to be a world-beater, we cannot expect the Americans to favour us perpetually, if to do so would hurt the interests of their own workers. Economic calculations cannot afford to ignore the desideratum of national interests. [Emphasis mine.]

Should not we at least prepare ourselves for the contingency of a sudden shrinkage in the demand from the US for our IT-related services? If we have to maintain the momentum of our GDP growth, we need to look for a substitute commodity or service to fill the space the IT sector would be forced to vacate. Do we have the faintest notion where to look for it? In case we have not a clue in that regard, we would have to fall back on growth induced by demand germinating within the domestic economy [emphasis mine]. That would however call for a drastic restructuring of income and assets distribution, including widespread land reforms. This is where China has scored over us. China’s export boom is pivoted on exports of commodities, not so much on outsourcing. That apart, it accomplished one of the most thoroughgoing programmes of land reforms the world has ever seen before it set on the road to export-led growth. It did not put the cart before the horse; we did.

Labels: Election, H-1Bs, India, offshoring, outsourcing

A widespread shortage of information technology (IT) graduates across North America is forcing Microsoft Corp. and other software companies to look to developing countries such as China to meet their needs, Microsoft Chairman Bill Gates says.

“When we want to hire lots of software engineers, there is a shortage in North America—a pretty significant shortage,” Gates said in an interview with The Associated Press. “We have this tough problem: If you can’t get the engineers, then you have to have those other jobs be [relocated to] where the engineers are.”

....younger workers have more energy and are sometimes more creative. But he adds there is a lot they don't know and can't know until they gain experience. So he says his company recruits aggressively for fresh talent on university campuses and for highly experienced engineers from within the industry. One is not at the expense of the other, he insists. For him, it is all about hiring the best and brightest—age and nationality are not important. He acknowledges that the vast majority of Microsoft hires are young, but that is because older workers tend to go into more senior jobs and there are fewer of those positions to begin with.

Labels: Bill Gates, education, H-1Bs, L-1s, Microsoft, offshoring

Forrester Research forecasts that the value of legal outsourcing to India will grow to $4 billion by 2015 from $80 million today. Legal Process Outsourcing, or LPO as it is popularly called, is the latest trend in outsourcing. The impact of globalization along with the significant cost savings and increases in productivity and efficiency which can be realized, are but a few of the reasons why law firms and in-house counsel are shifting operations abroad.

Some of the latest legal specialties and tasks that "...are susceptible to outsourcing": (or, in other words, Jobs Americans Won't Do - JAWD) are:

• Litigation - Document reviews, compliance and research (legal and business information)
• Corporate - drafting and revising, abstraction, due diligence, corporate governance and corporate secretary, credit analysis.
• Patent - search, drafting, analysis, enforcement and monetization, and patent litigation.

To be honest, most of this work is not even done by full-fledged lawyers, but by law clerks, paralegals, legal secretaries, word processors, or (if given a chance) even just smart people off the street. Junior lawyers may be found doing this work as entry-level work assignments.

Is it even necessary for me to say that many Americans enjoy this type of work, and find it challenging and rewarding rather than mundane and routine? Or how about the fact that top-level lawyers start off by doing this kind of work, which can serve as a solid foundation for a successful career?

One of the speakers is David Perla, the Co-CEO of Mumbai-based Pangea3 LLC. The Careers section of their website indicates openings in India for contract lawyers, scientists, engineers, technologists, patent lawyers, legal researchers and litigation lawyers. Notice how the New York office only publishes openings for a Litigation Sales Lawyer and a Patent Lawyer. Notice also how the openings in India specify they want applicants who have between 2-10 years of experience or 1-7 years of experience. I'm not sure what 40-year old Indians are supposed to do with themselves after they've reached the upper limit on the experience chart.

Check out the Pangea3 blog section where Kevin Colangelo, on December 6, 2007, wrote about the presentation he gave at the Center for Economic Policy Studies’ (CEPS) Fall Symposium at Princeton University:

Simply stated, it’s clear to me that the intellectual debate over offshoring has become merely that: intellectual. Finally. Complex, thoughtful discussions on global economics are indeed valuable and necessary, but at the end of the day, a roomful of non-attorneys did not seem fazed by the notion of Pangea3’s Indian attorneys doing U.S. and U.K. legal work. Their questions were focused on the details of how we do the work, rather than whether it is good for the economy or how this will impact the distinguished U.S. and U.K. legal professions.

I’m hopeful that the insight demonstrated at this Symposium is further proof that offshoring, and in particular, the offshoring of legal services, has matured to the point where it is viewed as a key, but uncontroversial, element of our economy.

In other words, the offshoring geniuses don't have to justify sending our jobs overseas anymore. They are off the hook. Everyone does it now, and there's not a damn thing the peasants can do about it.

(Special thanks to a loyal reader for letting me know about Pangea3. Cross-posted to Carrie's Nation.)

Labels: offshoring, outsourcing

Labels: employment, globalization, offshoring

Labels: Big Three, corporatism, globalization, homeownership, mortgage crisis, offshoring