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Post a great earnings quarter then
October 22, 2002 7:56 PM   Subscribe

Post a great earnings quarter then cut jobs and send them to India. Nice job Bank of AMERICA
posted by Macboy (21 comments total)

 
Welcome to the global economy
posted by zeoslap at 8:11 PM on October 22, 2002


You mean exploiting both the third world and Americans at the same time? Some global economy...
posted by UKnowForKids at 8:13 PM on October 22, 2002


Sounds like somebody still has a case of the Mondays.
posted by Stan Chin at 8:13 PM on October 22, 2002


That's one of the reasons why I got out of the tech industry and got into an industry where jobs are less likely to be farmed out to motivated people in other countries willing to work for much less money.
posted by gyc at 8:17 PM on October 22, 2002


You mean this Monday? Are you doubting BOA's future?
posted by whatzit at 8:18 PM on October 22, 2002


You mean exploiting both the third world and Americans at the same time? Some global economy...

Eh...exploiting, employing...tomayto tomahto....
posted by goethean at 8:39 PM on October 22, 2002


depressing/revolting/entirely unsurprising.
posted by xmutex at 8:52 PM on October 22, 2002


Macboy - I hear this VAST SUCKING SOUND: it's the sound created as highly trained Indian IT workers generate a vacuum, relative to the US, and suck jobs their way (for 1/2 US wages, but this is a lot more money than they would earn doing anything else). I've been hammering away at this point for a year and a half or so. Few in the US seem to get it.

BANGALOR'S LAW:
Any developed world (IT) job not defined by or affixed to it's place in a specific locale -- in terms of the need for timely local information and/or interpersonal human relationships -- will soon migrate to the developing world (and even those which are so fixed will go soon enough!) .

TROUTFISHING'S COROLLARY: most jobs in the current US economy, including many not currently classified as such - doctor, lawyer, sales, and many teacher, police and gov. functions, positions, etc. - will soon be IT jobs. These jobs will first migrate to the developing world. Then, the human workers performing the function will be displaced by AI.

You are now obscelescent! Get it? Time to start a vegetable garden.......
posted by troutfishing at 9:08 PM on October 22, 2002


I extend condolences to those who've lost their jobs, but until I have a better picture of the IT culture there I'll withhold my sympathy, particularly given the size (25,000) of the tech/op staff. I know from whence I speak - I'm an IT manager for a mid-sized management consulting firm that has just gone through a major, wrenching IT restructuring.

Four to five years ago (prior to my arrival) a fast-growing LOB broke away and formed its own IT department because it wasn't getting the level of service that it required from the centralized IT department. That LOB's IT department grew to about 350 by the beginning of this year. About a year ago the board-level technology steering committee saw the results achieved by the new LOB and brought in a consultant to restructure the entire IT staff. It wasn't pretty - half of the central IT department lost their jobs and were replaced by the LOB's IT department in the consolidation. (Don't misinterpret this as simple "overstaffing". I anticipate that we will start hiring again soon to return to the levels we need.) The CIO retired. Friends of mine lost their jobs, but anybody that didn't see this coming four years ago just wasn't doing their job.

More importantly, when the company brought in the restructuring consultant, they had already made a clear decision that IT would not be outsourced. IT is a strategic asset, period. IT is the biggest reason why WalMart owns retailing (though a part-time work force certainly helps) and it's how DELL maintains the lowest operational costs in the industry. Most companies still don't know how to use their IT departments any better than they knew how to use the Internet, but those who do know that you can't creatively and strategically collaborate with a staff that's 12 time zones and a thousand times as many miles away.

On an individual level, there are only a few keys to success and high compensation in IT, and they're not very different from any other profession in the 21st century - understanding the business you're operating in (and I'm not talking about IT), a customer service-oriented attitude, continual learning and a thorough, disciplined working style.

A couple of other reactions to the article. 1) I really find it hard to believe that 62% of the Fortune 1000 outsource any percentage of their IT to India. 2) Whan are we going to start outsourcing the accounting function to India?
posted by coolgeek at 9:08 PM on October 22, 2002


depressing/revolting/entirely unsurprising.

I hate it too when poor indian people get jobs. What did they do to deserve food, shelter, and happiness? It's called the American way of life for a reason, God damn it.

OK, had to get that off my chest. Apologies to everyone, especially xmutex, for the troll. I know it isn't that simple.

However, I do think it's high time that developers learned to organize and exert power. I used to work in the Internet dept. at Bank One, and met tons of assistant VP's (making $70K - $100K per year) and tons of developers (same salary). And to a person, the developers were smarter, more valuable, and harder working. But they were idiots about business and working the bureaucracy to advance their own interests. The assistant VPs were geniuses at this. Notice who is getting outsourced.

Developers could do something about this. But they will first need to drop their arrogance and deign to realize that that the suits are kicking their ass at a very important game. One most developers pretend doesn't even exist...

OK, end rant.
posted by spotmeter at 9:11 PM on October 22, 2002


As an operations manager at an IT consulting and recruiting firm, this is indeed a common thing. Frankly, I believe the 62% number to be, if anything, too LOW.

I believe that there's plenty of blame to go around. I suspect that in many cases, the managment of these companies simply feel that it's payback time for the IT workers that overcharged then back during the Y2K days.

Coupled with the H1-B percieved crisis by my side of the industry, this is definitely a double hit to the US economy. Another hidden cost is not only the drain of the dollars going overseas, but the long term loss of intellectual capital and overall work ethic.
posted by insulglass at 9:26 PM on October 22, 2002


Gee, how far do you think the IT centers that are getting BoA's tech jobs are from the sweatshops that are getting the Hathaway shirt work. Prolly right next door to each other.
What a trade off, they get our jobs and we their doctors and budding gas station moguls.
posted by MikeMc at 10:13 PM on October 22, 2002


Labor movement is a natural part of the global economy, exactly. That may have been fine to a lot of Americans when it was manufacturing jobs at stake, but I don't think a lot of people believed workers in developing countries were capable of learning IT skills. Turns out they are, and the old adage that learning a real skill would protect you from being undercut by low-wage workers abroad turns out to be false. (Yes, coolgeek, finance and accounting jobs are next.)

Whether the geographic barriers can be bridged successfully by the Internet and telecommunications has yet to really be determined. If call centers, software developers, etc. really can get the job done more cheaply in India and other places, you better believe this trend isn't going to stop. If it's any consolation, I bet you'll see wages rise in India and the other countries, and eventually you'll see some sort of labor movement there that could start to drive up costs. Eventually, this stuff tends to balance out, as I'm sure the free-market advocates here on Metafilter will assure you. At the same time, I'm wondering whether we'll see any resurgence of the labor movement in this country. It's hard to understand why workers continue to be shuffled around because of Wall Street pressure and continue to do little about it.
posted by phantroll at 10:19 PM on October 22, 2002


Hmmm... as CTO of a small software company, and one who has watched his former company fall on its face on multiple outsourcing instances, I have to say this problem is two-pronged:

1) As time goes on, there will unquestionably be a tendency toward worldwide wage equilibrium, discounted for project management overhead.

2) Never underestimate ability of the combination of enthusiasm and Brooks' Law to keep entrepreneurial U.S. software developers in business.

Which means: if you work in a well-defined business, using legacy technology, and your teams regularly come in over-budget and/or are staffed primarily by contractors, consider yourself outsourced; if, on the other hand, you understand your business well, can manage people and projects, and can stand the stress of moving into new markets/lines of business, AND you can program in a new language/learn new APIs with a few weeks' tinkering, consider yourself well-employed for the rest of your life.

Of course, this latter combination is REALLY stressful, which is why I was not surprised a few years ago at seeing a Gartner study which stated that the average IT career lasted less than four years, about what an NFL player lasts.

(Note to CIO/CTO types: make sure you understand, for your part, which parts of your business are likely to change quickly/continuously, and which not: that's your number one outsourcing criterion.)
posted by minnesotaj at 12:20 AM on October 23, 2002


It's not hard to find coverage of this issue in technology centers. Slowdown sending tech jobs overseas, from the Mercury-News; The Lure of India, from the Austin Statesman, which notes that the US isn't the only loser -- Singapore has been hard hit -- and India isn't the only winner -- because Africa is nipping at its heels (Aetna processes insurance forms in Accra, Ghana). Tech jobs squeezed out, from the Seattle Times.

Still, India has proven not immune to downturns itself. And we can't say we didn't know about this several years ago; one of the arguments for expanding the H-1B program was keeping those jobs in the US. Today, there are fewer visas issued than the prior cap, or less than one-third of those available.

In any event, interest in this sort of cost-savings effort is a typical feature of a mature, flat industry -- and as noted many of the companies doing this are Fortune 1000s. Outsourcing is only possible for certain location-nonspecific jobs, and works best with core operations that are set in stone. When growth kicks back in for these companies they will be making technology changes and seeking new business that will spur them to greater flexibility and local hiring again -- and if not, then the same impetus will come from smaller, more nimble firms that aren't big or settled enough to take advantage of the outsourcing anyway. Meanwhile the growth afforded by job movement in the developing countries will increase the overall size of global markets -- because this isn't a zero-sum game.

And wage equilibrium will always be chasing wage disparity. Always. There will always be buggy-whip makers who need to retrain as fan-belt makers.

Meanwhile, file this one under "globalization sometimes good for oppressed brown peeps" -- unless you really think that a $5000 salary in India is impoverishing.
posted by dhartung at 12:48 AM on October 23, 2002


The industry has already been through this debate 10 years ago. Ed Yourdon wrote an entire book about this. Not coincidentally, The Decline and Fall of the American Programmer appeared in 1992, at the tail end of the last big recession. An important idea of the book was that there's a lot of management, process, and technical sophistication in Bangalore: if you're thinking sweatshops, you're lapsing into a (maybe unconscious) condescending racism.

He subsequently rescinded a lot of his thesis in The Rise and Resurrection of the American Programmer. It's about communication (minnesotaj nails it). When things change fast (i.e., when we're not in a recession), IT needs to be close to the business. When jobs get moved to India to cut code, jobs are created in the US for people who understand both IT and the business to do analysis, project management, acceptance testing, user support and training. The people who are losing out are not the true geeks, but the typically overpaid bureaucratic drones who thought that they were entitled to an easy desk job writing Visual Basic in a big bank by virtue of being white Americans.

If you're just cutting code, why should you be taking a job away from someone who has busted his ass in India to develop his skills? I am astounded by those who are portraying the creation of skilled jobs in India, paid for by developed-world money, as a bad thing. And I'm especially impressed by talk of a "sucking sound": the ideologybots here on MeFi manage to take their canned phrases from both the Chomsky left and the Buchanan right.
posted by fuzz at 2:00 AM on October 23, 2002


The way I look at it is that America, and to a lesser extent, Western Europe and Australia have been benefiting from a brain-drain exodus from the third world for decades. It's a bit hypocritical to whine when things go the opposite direction.
posted by salmacis at 3:02 AM on October 23, 2002


Wage Equilibrium

I'm sorry, but this is a myth. There are potentially 1 BILLION Indians ready to absorb our jobs. Not to mention the number of Chinese, Mexicans, and Africans. Just considering India, if all the jobs went there and our wages here were to go down 40%, the wages in India would go up 10%. Factor in the rest of the world, and that 10% gets even smaller.

Remeber, there are a hell of a lot more of them than there are us.
posted by eas98 at 6:46 AM on October 23, 2002


It's like an economic French revolution, and we are Louis XIV.
posted by goethean at 8:39 AM on October 23, 2002


while we have the CHANCE We'd better donate some money now to wretchedly poor Indian villages for SANITATION and SCHOOLBOOKS so that they will remember when we are picking scraps out of trash cans and they have the good jobs.
posted by troutfishing at 9:24 AM on October 23, 2002


Now if we could just get "management" outsourced to a qualified and cheaper workforce...wait...my own well known feelings on the exploitation of jackasses just kicked in. Sorry. Forget that idea.

/Dilbert

When growth kicks back in for these companies they will be making technology changes and seeking new business that will spur them to greater flexibility and local hiring again -- and if not, then the same impetus will come from smaller, more nimble firms that aren't big or settled enough to take advantage of the outsourcing anyway. Meanwhile the growth afforded by job movement in the developing countries will increase the overall size of global markets -- because this isn't a zero-sum game.

Actually, it most definitely IS a zero-sum game, unless you and the Cato Institute are still trying to convince people we live on a Euclidian plane. The mythology of endless, beneficial "growth" is the basic philosophy of your average cancer cell.

But one supposes we should really be thankful there are no right wing ideologues around here hissing a wordy version of the standard "what's good for GM is good for the world" mantra.
posted by fold_and_mutilate at 3:42 PM on October 23, 2002


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