Thursday, September 23, 2004

Outsourcing: Technology will not save us,

Read her in the Boston Globe about how start-up tech firms are outsourcing functions.

High-tech start-ups feel push to outsource
By Beth Healy, Globe Staff | September 23, 2004

Venture capitalists have a pressing new question for high-tech entrepreneurs who come looking for money: What's your India plan?

While large American companies have drawn the most attention for shifting jobs to cheaper overseas markets, the practice has quietly taken hold among start-ups as well. It's a trend that financiers of young technology companies say is inevitable. But they also admit it's controversial, and likely to rock a sector that Boston relies on for jobs and a vibrant economy.

''It's the invisible hand," said Ramanan Raghavendran, a managing director of TH Lee Putnam Ventures, a $1.1 billion dollar venture fund, referring to the corporate world's inexorable search for low-cost labor. But, he acknowledged, ''That's not a compelling answer for the 35-year-old software engineer who's out of a job."

Speaking to a group of venture capitalists and business executives at a Harvard Club dinner on Tuesday evening, Raghavendran said that Boston-based TH Lee is urging the companies it invests in to ''build offshoring into the business plan from day one." If management doesn't ''get it," Raghavendran said, ''venture firms need to drive the thinking" about hiring offshore.

Increasingly, young companies are getting it. Many say they have no choice, if they want to be competitive in selling software, telecommunications equipment, and services. They can get an Indian employee for $21,000 in Bangalore or Hyderabad who would cost three or four times as much in Cambridge, Waltham or Silicon Valley. And the foreign workers are highly productive, people who manage them say.

Sort of says it all doesn't it? Another nail in the coffin of the tech optimists hanging over from the neo-liberal (actually post-liberal just as neo-conservatives are actually a post-conservative philosophy) delusions from the ninety. Wake up and smell the coffee, and welcome to the real world. They're not just offshoring present jobs, here in no nonsense completely unmistakable terms they are directly shipping job growth itself overseas from the beginning. Expect a stagnant or declining job market in the face of a growing population.

Welcome to the new normal, and don't you wish that it was legal to jail for fraud all those who have made you such pretty promises about how it was all going to work out for the best?


At September 24, 2004 at 1:28 AM, Anonymous Anonymous said...

Yep it was to be expected, you and Lou Dobbs are about the only ones I know who've pointed this ugly progression in off-shoring.

The other economists are still in la-la land and still selling us off-shoring snake oil.

I don't know what it is with this particular group, but they seem to be hard of learning to say the least. They didn't see what has happened with NAFTA, GATT or any other of the acronym laden trade treaties.

And yeah, I wish we could all these pimps for off-shoring in Rykers Island for a year or so. Considering all the damage they done promoting lies to the American worker and their bank accounts emptied for help displaced workers.

At September 24, 2004 at 7:39 AM, Blogger J Thomas said...

Supply and demand. If foreign standards of living don't come up to ours, we can expect ours to go down to meet theirs.

For working people.

In that way Bush's "Ownerships Society" idea is consistent. Anybody who can collect enough capital to be an owner instead of an employee has a chance to save himself.

At September 24, 2004 at 9:07 AM, Anonymous Anonymous said...

Nice catch Oldman though not a surprise - it's not mostly the old jobs that are going (as Greenspan noted months ago). It's the new ones.

And no, it isn't inevitable. Few things are inevitable and this isn't one of them. It could be stopped tomorrow by an Act of Congress.

At September 24, 2004 at 10:50 AM, Anonymous Anonymous said...

You alluded to somewhere that you share my disgust at our pollyanna business press, so when I saw this in Yahoo news I immediately thought of you. Check this sh&t out:

But the latest durable goods report issued ahead of the bell provided some cheer for investors.

Total orders for new durable goods fell a larger-than-expected 0.5 percent in August, held back by a 42.8 percent drop in orders for civilian airplanes,

However, excluding the 6.8 percent drop in orders for transportation goods, however, orders rose 2.3 percent, the biggest increase since March.
So things were worse than expected but if you take out the really horrifying parts it is good news!!

At this point they should just fucking dig up that river in Egypt and move it here.

- a different chris

At September 24, 2004 at 4:27 PM, Anonymous Anonymous said...

As many have already deduced, this is about greed and the fear of losing in a competitive arena.

What they are doing is draining the reservoir down to a swamp to turn a desert into another swamp. They just get paid to move the water. What we need is more water. Economies need to be built to service regional demand. Jumping from one cheap workforce to another is just a rat race. A form of strip mining of human beings and local societies.

None of these VCs and business executives realize that unemployed workers will not be buying cars, houses, appliances, computers, electronics, etc. No big screen TV for a family on unemployment with the parents retraining for non-existent jobs and kids soon to be in college! Worse still will be what happens to these people as they get to "retirement" age. Not that they will be able to retire ...

At September 24, 2004 at 4:54 PM, Anonymous Anonymous said...

One way to fight the situation is to find out who are the venture capitalist companies and the names of the corperations and companies that do the off shoring, AND NOT BUY THEIR PRODUCTS!!!

This might even save you money that you can inturn, use to pay OFF your debt!!! Or invest that money. A big percentage of Germans are doing this since they changed over to the Euro dollar. This is a small percentage of the reason why the German economy is stagnant.

Jim Coomes

At September 24, 2004 at 10:40 PM, Anonymous Anonymous said...

Good idea Jim, but very few venture capital-funded companies produce consumer products that can be easily boycotted.


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