More Jobs Without Borders

Career Hub, an excellent blog for job seekers, just wrote about how employees of the Boston Globe are protesting the outsourcing of their jobs to India.

You're probably wondering if you read that correctly.  A major American newspaper is outsourcing to Bangalore? It's true.

And they're not the only one.  Manufacturing jobs being sent overseas is old news, but many companies are sending highly-skilled, college-degree-requiring jobs away too.

• At call centers, like AOL’s hub in Bangalore, employees earn $300/month.
• Stock market analysts in Bangalore make $15,000/year.
• The 70,000 accounting graduates coming each year out of Indian universities start work at $100/month.
• Indian MBAs earn only $12,000/year for financial analysis.
• Indian graphics artists doing movie special effects earn only $5000 a year.
• GE has several thousand PhD scientists working on cutting edge projects at its research and technology centers in Bangalore.
• “Personal remote executive assistants” who will do anything up to creating a complete PowerPoint presentation and finding relevant research overnight, can be hired in India for $2,000 per month.

Because Indian workers are able to work for such a pittance, they now being used by foreign companies for business, administrative, clerical and IT support functions.*  US financial service industry are projected to save approximately $30 billion from outsourcing--enough money that it doesn't matter to them that they will have to get rid of 8% of their American workplace.

Here's a few more jobs that are being sent over to India:

• In Bangalore alone, Intel employs 1,800 electrical engineering and computer science PhDs to design their next generation of microprocessors.
• Insurance-processing service Wipro uses 2,500 university graduates to deal with insurance claims.
• Global management consulting firm A.T. Kearney predicts that a half-million financial service jobs will be transferred to low-cost places like India before 2010.
• Non-profit labor analysts RAND Corporation estimates that 500,000 financial service jobs will be moved to India within the next five years.
• In 2005, an estimated 400,000 tax returns were done in India.

Students just about to graduate will be no longer be entering a stable workplace where job competition come from college graduates in the same city.  The rise of offshoring has changed the value of human capital in the US and today's college graduates will be entering into a completely new competitive job environment.  As a result, college grads need to work on their intangible skills--the human interaction and higher-level thinking skills that cannot be easily sent overseas.

* A pittance in American terms.  Cost of living in India is significantly cheaper than in the US.

(Books used as sources after click through.)

Friedman, Thomas L. The World is Flat. Penguin Group, New York: 2005.

Karoly, Lynn A. and Constantijn W. A. Panis.  The 21st Century at Work: Forces Shaping the Future Workforce and Workplace of the United States. Prepared for the US Department of Labor by Rand Labor and Population. Rand Corporation. Pittsburg: 2004.

Pink, Daniel. A Whole New Mind. Riverhead Hardcover. New York: 2005

Prestowitz, Clyde. Three Billion New Capitalists: The Great Shift of Wealth and Power to the East. Basic Books. New York: 2005.

Comments

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[Employment Blog]

There really is no way that Americans can compete unless we can do the outsourced jobs better than they are being done in India. And even if we can, the extraordinary cost savings may make quality differentiation a moot point.

Juan Rodriguez
Editor, www.JustJobs.com

Juan, you're right. The cheaper price tag of overseas labor gives them an advantage that's hard for American workers to beat.  For that reason, it is doubly important that American college students focus more on soft skills that can give them an advantage.  Although many, many Indians are fluent in English, many companies will still be interested in fantastic communicators and innovators here in America.  That's how Americans can differentiate ourselves!