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• Reuters: Firms mute job-migration talk in U.S. election year. Excerpt: Mum's the word for U.S. companies exporting jobs to India and other countries in a presidential election year. But their silence isn't golden. Instead, it's rooted in fear. ... Executives, who have recently become much more reluctant to talk about outsourcing or offshoring jobs, also fear for their own jobs. They worry that their jobs will be next on the chopping block -- if they don't cut costs fast enough. The upshot? The media, investors and analysts are often kept in the dark. "The public discussions are significantly lessened, but that doesn't mean that the activity is going away," said Peter Allen, president of outsourcing consultant TPI. Allen added that companies are more likely to recruit American service providers such as International Business Machines Corp., with offices in India, instead of going directly to Indian service providers such as Infosys Technologies Ltd. This can help them mask where the jobs are going, he said. The fear of political backlash -- and media exposure -- also is driving more clients to ask service providers not to disclose offshoring deals to the media.



• Outsourcing humor from Despair, Inc. (Editor's note: Fans of motivational posters should not miss this one!)



• CNN/Money: Answers on Outsourcing. A finance professor argues against placing blind faith in outsourcing. Excerpt: The costs of the decision to outsource are not borne by the decision maker. As a society and as a country, we experience many costs from outsourcing, including the loss of jobs, social costs, higher costs of raw materials and loss of national sovereignty. Loss of jobs reduces the tax base, creates high unemployment benefit costs, and raises the cost of government retraining programs. Displaced, unemployed workers have higher rates of child and spousal abuse, alcoholism, bankruptcy, divorce, etc. As China and India and other large populations grow, they demand huge quantities of oil, gas, steel and other basic raw materials. These costs are born by all of us -- every time we fill our gas tanks, for example. And as a nation, we lose our ability to make independent decisions that are in our best interest when we are dependent on foreign debt and foreign manufacturing. This is a classic externality.



• New York Times: Send Jobs to India? Some Find It's Not Always Best. Excerpt: "Only certain kinds of tasks can be outsourced — what can be set down as a set of rules," said Nariman Behravesh, chief economist of Global Insight, a forecasting and consulting firm based in Waltham, Mass. "That which requires more creativity is more difficult to manage at a distance." Another Indian executive in the United States who has soured on outsourcing is Dev Ittycheria, the chief executive of Bladelogic, a designer of network management software with 70 workers, also in Waltham. Bladelogic, whose client list includes General Electric and Sprint, outsourced work to India within months of going into business in 2001. But it concluded that projects it farmed out — one to install an operating system across a network, another to keep tabs on changes done to the system — could be done faster and at a lower cost in the United States.



• WashTech: Indian Business Lobby Fetes Congressional Delegation. Democrats take outsourcing tour to India. Excerpt: In January, two of the most influential Indian trade lobbies subsidized a nine-day, five-city trip for a United States Congressional Delegation to discuss political, defense, health and economic ties between India and the United States. ... Democratic Party leaders and presidential candidate Sen. John Kerry have clearly voiced a position that the Bush Administration’s support of unrestricted outsourcing has hurt the country. So it is eye-opening that a sizable group of Democrats would so willingly participate in an obviously pro-outsourcing travel junket — two Congress members and their spouses billed over $34,000 for the trip — all paid for by CII, the biggest Indian high-tech lobby. ... As the debate over outsourcing has increased, American companies engaged in outsourcing have sought to limit public exposure in which their names are associated with Indian contract companies, mindful of the public outcry that has arisen over unemployment and job security. But Indian lobby groups have not been shy about promoting the positive effects of outsourcing. "I want to promote the India, Inc. brand abroad," said NASSCOM president Kiran Karnik, the former head of the India Discovery Channel, in a profile published on the organization’s Web site. "I want to make India and IT as synonymous as France and wine or Switzerland and watches." ... On a local level, Dobrowner said he would also take a closer look at politicians who promote outsourcing when it comes time to vote. “I don’t want to hear vagaries. If you tell me to go back to college to get reeducated, I want to know what in. Should I go to McDonald’s University and learn to flip a burger? Just tell me what to do.”
  • Sidebar: What the Indian Lobby Spent on a Junket


• Computerworld: India upbeat about grappling with labor crunch. Big companies are blamed by Indian service providers for pushing up salaries. Excerpt: As business booms for Indian IT outsourcing service providers, hiring and retaining software engineers at salaries considered reasonable in that country has become difficult. Despite the staff crunch, however, multinational companies are still setting up or expanding software development facilities in the country or outsourcing to Indian software service providers. ... However, large multinational technology services companies like Accenture Ltd., Electronic Data Systems Corp. and IBM Global Services are hiring staff by the thousands in India and are being blamed by Indian service providers for pushing up salaries. These big companies "are willing to give 30% to 40% hikes in salaries," said Laxman Badiga, chief executive for staffing at Wipro Ltd., one of India's largest IT services companies.



• WashTech: For Whom the Bell Tolls: Media Examines The Human Cost of Offshoring. Excerpt: And last week's episode of NBC's "The West Wing," had presidential aid Josh Lyman (played by actor Bradley Whitford) agonizing over the realization that he successfully negotiated a trade pact that allowed a U.S. tech company to offshore 17,000 jobs to India. "Do you ever wonder if we forget the human face of trade? The blood and muscle?", Lyman wondered aloud to another White House staffer. The unintended consequence of the trade pact torments Lyman, who remembers that the Bartlett administration made a promise to the head of the Communications Workers of America during Bartlett's first presidential campaign. The promise, viewers were left to presume, was to protect American technology jobs. It was a promise the Bartlett administration was prepared to break in the interest of "creative destructionism," an oxymoronic term meaning, apparently, that sometimes it is necessary to destroy part of a country's economy in order to rebuild it, to allow it to become more dynamic than it once was.



• AccountingWEB.com: Outsourcing to India to Increase 50% Next Year. Excerpt: All the talk against foreign outsourcing this political season has not translated into action by U.S. executives, who plan to send 50 percent more work to India next year. According to a study by Ernst & Young, while opposition to outsourcing has intensified in the presidential campaign and among union groups, the flow of work to India has remained constant, the Financial Times of London reported. "The sentiment is very strong. None of our participants felt business on the ground had been affected," said Gopal Jain, a private equity investor involved with the Indo-American Chamber of Commerce in Mumbai, which jointly produced the report. The study backs up forecasts by the National Association of Software and Service Companies (Nasscom), the main group representing India’s booming technology industry.



• San Jose Mercury News: Tax relief for offshoring? Excerpt: Infosys Technologies, an India-based software development company with its U.S. headquarters in Fremont, asked the state for more than a million dollars in tax relief, saying the standard tax formula fails to reflect that two-thirds of its U.S. work is done offshore. In its petition to the California Franchise Tax Board, Infosys argues that it pays its engineers in California nine times more than those in India and that difference inflates its California tax liabilities. State tax officials rejected the claim last week. But the request for a lower tax burden by the company -- which derives about 75 percent of its $1 billion a year in revenue from U.S. companies -- left some observers dumbfounded. "They're asking for a tax break on the grounds their payroll costs one-ninth in India,'' said Lenny Goldberg, director of the California Tax Reform Association. "It takes a lot of nerve to ask that, considering the context in which they operate.''

• James Leas Speech to the IBM Stockholders. Excerpt: On July 31, 2003, in the class action case of Kathy Cooper v. IBM, a federal court in Illinois declared that IBM had violated federal discrimination law. But IBM stockholders were not convicted. Nor were IBM customers or employees found guilty. Mr. Palmisano, you and your predecessor, Lou Gerstner were responsible for making and maintaining the decisions, and the federal court essentially convicted both of you. The court rejected IBM's excuses that the law changed and that IBM did not know the law. From IBM's own documents Judge G. Patrick Murphy stated that "IBM was aware of the age discrimination issues that would come with the new cash balance formula." The court said that indeed the plan's actuaries told IBM of two separate ways that the cash balance formula violated the law. Thus, from IBM's own documents Judge Murphy concluded that "IBM proceeded [with the cash balance plan] with open eyes and was fully informed of the consequences of the litigation that was sure to come." Mr. Palmisano, the court found that you and Mr. Gerstner knew you were engaged in illegal action. While IBM's liability has now been established, the judge has yet to rule on the remedy, which IBM said could cost it $6 billion. ...
  
  What if the real purpose of slashing pensions was to use what was then a little known accounting rule treatment of pension money to inflate IBM's profit report with "vapor profit" from the pension fund and boost executive pay? The vapor profit did not help stockholders because no money could be transferred from the pension fund. It was just an accounting rule gimmick. So only the executives gained, and their personal gain was the underlying reason for the illegal action. Previous IBM executives, to their credit, had done the opposite. They had established and built this pension trust fund that enabled IBM to provide a very valuable benefit to every IBM employee and retiree at no cost to IBM and at no cost to shareholders. The pension provided enormous competitive advantage in attracting and retaining the most talented employees in the industry, and building loyalty and dedication. When you and Mr. Gerstner reneged on that promised pension and retirement medical, you blew that competitive advantage, you blew that loyalty, and you blew that trust.