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What Companies Owe Their Employees


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December 27, 2006

What Companies Owe Their Employees

Steve Hamm

Over the Christmas weekend I spent time with two people who see the writing on the wall: their jobs are likely to be outsourced and off-shored to India. In both cases, both women, they're taking a very sober and realistic look at their prospects and thinking hard about what they can do to avoid becoming victims of globalization. One of the women works for UBS in Stamford, Connecticut. The other works for Time-Warner in Manhattan. In both cases their companies have sent signals that big changes are on the way. Time-Warner's financial executives are spending a lot of time in India. UBS has told employees that it's hiring Wipro as an outsourcing partner. But neither has given employees very much info about what?? coming and how they can prepare themselves for it.

Both of my friends are taking their fates into their own hands. The Time-Warner woman is taking courses to allow her to shift career direction. The UBS woman has shifted into a new job that seems less likely than some others to be shifted off shore. While neither woman is happy about the situation, neither of them is belly-aching about it.

They have reason to gripe, though, in my opinion. I don't fault American companies for outsourcing work or shifting it overseas if that's the financially and strategically prudent thing to do. But I do fault companies that don't give their current employees adequate warning of what's coming and information about the changes that is specific enough to help employees re-position themselves. It's not just employees who are harmed by these practices. The companies risk losing the good will and trust of the employees who stay on after the outsourcing strategy is implemented. And that's a valuable thing to lose.

10:49 AM

outsourcing

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hey steve.

nice post here. thats the problem with any company. nobody has a clue as to what the company's plans are. And this is not just the case with the people at the bottom but also with the people in the middle-management. We are all just clueless and ultimately the top-management will take a decision on the basis of the recos of a few high paid, worthless consultants.

Posted by: Krithika at December 28, 2006 05:46 AM

The lack of knowledge is a huge issue for the employees. I recently changed jobs due to my employer being acquired. We went months without any information as to their intentions or our fate. some people were on hold for 7 or 8 months. It makes it very hard to plan for yourself when you get zero information for months and then suddenly are told you are done in 2-3 weeks. It is life, but it could be handled much better.

I know several people that looked at how badly the communication was handled and decided they didn't want to be part of the new owners. They had the opportunity to do so, but if they can't handle simple communication, then how bad is everything else?

Posted by: John Balestrieri at December 28, 2006 08:18 AM

While the federal civian budget has decreased on the books because of the tens of thousands of employees whose jobs are outsourced the real budget has more than doubled. A programmer making around 30/hr is exchanged for a contractors programmer who gets a similar figure but whose employer gets an additional figure worth upwards of three times that amount. Does anyone at OMB equate that with so-called perks?

Posted by: Pete Kusnick at December 28, 2006 08:19 AM

Sometimes, even when it is within their own best interest, executives don't let the employees know what is going on. For example: My brother's tech company recently merged with another. Management decided to let employees stay in limbo by not telling them whether they would be retained or put on the chopping block. Management conducted layoffs in waves, starting after the merger was announced but before the merger was completed. All the finance/accounting people immediately started job searching after the first cut and most landed jobs quickly. Management then had the problem of finishing the merger without their best accounting people.

Posted by: Joe at December 28, 2006 09:33 AM

Hey Steve,

I believe that companies can only outsource the jobs not the talent of an individual...and soon the world will turn giving back everything to America again...but the only frustation in such situation presently is the vague attitude presented by the top management pushing the employee into dilemma

Posted by: Vivek at December 28, 2006 10:44 AM

Americans may want to stop using the term outsourcing. It implies we are sending jobs out of the country, when we are actually losing the work to other countries fair and square. Understanding what the real issue is, global competition, gives us a chance to win in the game. We are in denial.

Posted by: Jack Okawaki at December 28, 2006 12:18 PM

The best way I have had the outsourcing dilema explained to me. Is that it is easier to bring the USA down to the level of poorer countries(outsourced countries)than to bring their standard of living up to our level. Business will always do the easier thing when it comes to profit!!!!!!

Posted by: Francis Keating at December 28, 2006 01:28 PM

I have had 4 managers in my career thus far in IT. None of them have had a technical degree but have claimed have worked on many leading edge projects. The easiest way out to these kind of managers -- outsource the 'thinking' and stick with what they are good at 'fancy presentations'.

To get work done they either hire a H1b (who stays mum since his/her Greencard is in process) or outsource it or even better buy a third party tool recommended by a consultant!!

Of late many of the internet postings condemning outsourcing or foreign workers are getting more and more geared towards one nationality. Why do we blame them when the core source of the problem are our managers and to certain extent our system?

Our future managers should be ones with a technical background not the guy who wears fancy suits!

Posted by: Dvae at December 30, 2006 09:30 PM

Any idea on McGraw-Hill's offshoring projects and plans?

Posted by: steve baker at December 31, 2006 12:18 PM

Hi,

Read your post and the various comments associated. I completely agree with you that disclosure of such information is the least a company can do to fore warn its employees. However, at the bottom of outsourcing is not "bringing up poorer countries to the level of America" as one of the comments puts it, but rather ensuring that America stays on top. No job where America has a comparative advantage be it cost or scale gets outsourced. Job where either the progress of technology or sheer competition has eroded America's competitive advantage get outsourced. And why? to ensure that the American companies stay in business.. And why that..? To ensure that the taxes they pay keep the governments kitty nice and fat..! There is no disagreement that people whose jobs are lost are getting the worst of all this... but perhaps the reason for this agony lies within... Cheers

Posted by: Nitin Sareen at January 2, 2007 03:10 AM

Baker,

I'm forbidden by my BW ethics policy from answering that question in this forum. I signed the annual declaration today, so I'm up-to-date on its contents.

Steve

Posted by: Steve Hamm at January 2, 2007 04:47 PM

Hahaha, "...rather ensuring that America stays on top", typical management rethoric. I am an American software engineer, but I believe the outsourcing trend was at least partially caused by software guys themselves. The fact is, there hasn't been anything useful innovations for the last 5 years in the software world (AJAX was developed 10 years ago by MS). I don't blame management for being fed up with mediocracy. These days software guys put old technologies in new wrappings and called them the next big wave. I don't think I'll ever hear the end of the SOA hype, of course until business people start asking, "where is the big savings you promised?". At least they know they can save money by outsourcing. If you are an software developer, I'd suggest you quit trying to impress your boss with buzz words and show some real results. The number one thing that business folks hate is unpredictability, the buzz words are not going to help you deliver what you promised. If you are a manager, especially a senior executive, outsourcing is not going to save your business. It only delays the inevitable. Instead, try to evaluate your people for what they have delivered, not what they promised or their buzz word vocabulary.

Posted by: us techie at January 2, 2007 10:07 PM

"No job where America has a comparative advantage be it cost or scale gets outsourced."

The problem is that with current exchange rates, India has a five-to-one comparative advantage in just about everything. Everything from an egg to a kilowatt-hour of electricity to a hip replacement to an IIT professor's salary costs consistently about five times less in India than in the U.S.

Can Americans compete with Indians on an equal basis? I say, bring it on! But can Americans compete with Indians living well on $10,000 per year on the backs of their suffering neighbors?

Posted by: A Parent at January 3, 2007 03:13 PM

To A Parent

I was the Western world (US/UK/Europe) which pressurized India to devalue the rupee in late 1980's.

As the Infy CEO once put it, 'India was pressurized by the Western world to open up and compete and once India opened up the Western world started to complain'.

Its give and take, if McDonald's and Pizza Hut want to get into India something has to come out...

Its for us to choose either provide more scholarships to football/golf/basketball or to science/math. No where in the world would you here a golf or a football scholarship.

Posted by: Rack at January 3, 2007 07:58 PM

A lot of Indians, Chinese and people from other countries came to America for jobs and better opportunities when we had a high rate of unemployment in our countries...We thought "globally" and we moved countries and learnt the culture of another country, contributed to their tax in all fairness...

So what is stopping the Americans from moving to other countries to look for jobs, if they are losing theirs in their country?

Posted by: Gita at January 4, 2007 03:32 PM

Well if the IT companies start cutting off their jobs from the rest of the developing countries(who work for less $$ compare to USA employees) and put the jobs back into USA market with only USA based employees working in them with comparibly higher wages, then are we as a customers willing to buy the products at a higher prices?

It's all a fair game, who would like to buy a pair of shoes for $100 when he could get the same thing, also same quality at a price of $20.

Posted by: Firasat at January 20, 2007 03:12 AM

Modern Management has many negative things too its positive things, most companies expect employees integrity, loyalty as well as expect ethics where as most companies them self indulge in many un acceptable practices to show more profits at the same time take advantage of cost effectiveness to business changes.

In this terms theres never a single thought of integrity to loyalty. Human rsources are looked upon as use and throw objects than integrated or loyal partners in building organisations.

If we look at history a organisation with healthy competition, policies and security has always forced willingfully its workforce to achieve amazing feets in terms of deliverables to building new quality standards.

With lack of this its mere do assigned work and gety paid. That ownership does not exist much.

Posted by: vijay kurhade at February 10, 2007 04:30 PM


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