India Outsourcers Find Back Door in Canada 717
securitas writes "Metro International newspapers Toronto edition reports that more Indian companies are opening back doors into the United States by setting up shop in Canada. The issue of outsourcing, offshoring and nearshoring has become a hot issue, with the 2004 presidential election less than a week away. Candidate John Kerry has said he will close the tax loophole that makes it advantageous to outsource call centers."
Kerry in the senate... (Score:5, Insightful)
Well at least you will be able to understand them (Score:4, Insightful)
Re:Kerry in the senate... (Score:4, Insightful)
splendid (Score:5, Insightful)
Close the tax loophole? (Score:5, Insightful)
If there is a loophole, closing it would mean more revenues for the government (plus for them) and/or less outsources (plus for us)
Re:Near-shore is still off-shore (Score:4, Insightful)
News flash: People are people, some of us had the fortune of being born and raised in stronger economical and freer political environments, but to act like it's wrong for a person to find a better job somewhere and for a company to hire that person is completely antithetical to what freedom and our capitalistic nation is all about.
Re:Near-shore is still off-shore (Score:4, Insightful)
I think there are two different keys parts to this statement, (no, i'm not defending one candidate or another).
The first issue is the location of the worker. A mexican immigrant that comes here to work, gradually gaining citizen ship, is contributing to the economy. His wages are taxed, and the things he consumes are local. i.e. he's going to be buying groceries, goods, renting a house, etc. All of this keeps the money in the US, and in a roundabout way, helps create more US jobs. (need more grocery clerks, more construction, etc.)Once they gain Citizenship, they have a vested interest in staying in this country, and continuing to work and consume.
The second issue is the level of education, and the skill level of the jobs. There is a huge percentage of highly educated and/or skilled workers in India and Canada that are "taking" american jobs, and spending the money in their own country. The majority, (no, not all, but the vast majority) of workers from Mexico are relative unskilled laborers. They are not taking over $40k/year jobs with benifits. Of course, this does saturate the lower level, unskilled jobs, and drive their wages down.
To get technical though, in the long run, sending the money to other countries raises their income, and lowers the value of the dollar, making american goods less expensive than before. Exports will go up, but profit will go down, meaning more jobs outsourced to get more profit, and down the downward spiral our economy goes!
What exactly can be done? (Score:2, Insightful)
Re:Close the tax loophole? (Score:5, Insightful)
I'm sure the Canadians view this as pretty ironic given that a similar trick was used by the Americans to destroy the Canadian car industry vis using the two FTAs with Canada & Mexico to sell Mexican built cars to the Canadians as if they were American for the purposes of tarriffs.
And John Howard has just signed Australia up for an FTA with America - smart move John, we'll be thanking you for that one for the next 50 years. The only hope Australia's got IMHO is to sign a FTA with China & threaten America with mutually assured destruction if they try to play fast & loose with the terms of the contract. Note - first ever correct usage of the word "loose" in the history of slashdot
Re:Close the tax loophole? (Score:3, Insightful)
Lower wages equates directly into lower taxes. You may not have noticed but the government taxes your wages. The less an employer pays for an employee the less taxes the government gets. Not to mention the secondary issues, such as the fact that overseas workers won't be paying US sales tax on bought goods.
give me a break (Score:5, Insightful)
First off I'm voting for Kerry, but the idea that new legislation is going curb the tax advantages of outsourcing is ludicrous. So lets say Kerry does pass such a bill, what will happen? Large companies will simple open up offshore subsiaries to skirt the law, similiar to what Haliburton did under the leadership of Dick Cheney, by having a Caymen islands phantom corporation in order to business with nations like Iran.
Re:Close the tax loophole? (Score:4, Insightful)
Outsourcing to Canada (Score:2, Insightful)
The difference is that Canada has a significantly better quality of life than the average Indian. So the Indian company can pay an Indian call center employee 8,000 a year, he'd still have to pay a Canadian call centre employee 30,000 or 40,000 a year. This is vs a call center employee here making 40,000 to 50,000 a year. (All WAG's, recent tech support position advertised on dice.com was for 55 an hour).
When India starts fining the companies dumping waste into the Ganges, the companies will pass on the costs to the citizens which will then require raises in order to be able to afford the goods these companies sell. When the wages get too high, they'll outsource to China. Then China will start fining the mining companies (chinese dieing in unsafe mines because it's either work the mine or starve) or waste management folks (chinese exposed to toxic waste from computer salvaging) and the cycle starts again.
I think my salary (currently non-existant) is globally balanced. When you consider all aspects, I was getting paid the same amount, adjusted for living conditions, as the guy in India who got $10,000 and pays
Re:History repeating itself (Score:2, Insightful)
The result is that majority of Toyotas sold in the U.S. today are built right here by workers who get paid lower than before.
Same thing might happen in the IT industry.
Doubt it...
It cost time and $$$ to ship raw materials to Japan and it cost more time and $$$ to ship the finished product back. Thus it makes perfect sense to put the plant near the customers.
With IT, your finished product is not as tangible. The cost to ship support or software from a boiler room to North America is the cost of the phone/data lines in between.
Re:Near-shore is still off-shore (Score:1, Insightful)
Re:Kerry in the senate... (Score:1, Insightful)
Re:why do we care what kerry said? (Score:4, Insightful)
Remarks like this cause me to think perhaps people who make 6 or 7 figures per year forget that going to school isn't particularly cheap, and that doesn't even consider the dynamics and costs of supporting yourself while taking classes full time just so that one can complete their education in a timely manner. Student loans help matters somewhat, but one has to remember that they are, in the end, just loans... and one has to pay it all back.
Re:Thats transitivity for ya (Score:3, Insightful)
No. There is no free market. There are massive no-cost incentives to fire people and destroy their careers. That's not a free market.
Comment removed (Score:2, Insightful)
Re:why do we care what kerry said? (Score:4, Insightful)
Except that it used to be a place to read about really cool stuff, really neat stuff, things on topic for the online community, not stuffed with politicking. And maybe you don't mind Taco's obvious bias, but it gives me agita, and I don't need it. I want my old Slashdot back! Maybe things will be back (or closer) to normal after the election.
Re:Kerry in the senate... (Score:5, Insightful)
Because our education system fails utterly to teach people about the basic function of our government.
Re:Kerry in the senate... (Score:1, Insightful)
A tenet of the democrats is to help the disadvantaged. India is a very poor country, and so it should be helped. What better way than to let good jobs go to India? The money they obtain will eventually help the entire, poor country.
But somehow, the Democrats have ended up on the other side of this argument. I don't understand how that is ideologically consistent. Because you are born in America, you are worthy of help, but if you are born in India, you are not?
Somehow, I feel if I continue on this line of reasoning, it will be down modded for something it is not, so I'll stop here and let others determine the logical conclusions, which I think are many.
Sad how ... (Score:4, Insightful)
Re:Kerry in the senate... (Score:1, Insightful)
Re:Kerry in the senate... (Score:2, Insightful)
Re:Kerry in the senate... (Score:2, Insightful)
Re:Close the tax loophole? (Score:1, Insightful)
Do you really think anything is going to change if Kerry gets in? I believe that would be a bit naive.
Comment removed (Score:2, Insightful)
Re:Kerry in the senate... (Score:1, Insightful)
Re:Kerry in the senate... (Score:1, Insightful)
Re:what the article means (after you read it) (Score:3, Insightful)
Personaly, I like having cheap tech support workers because even if they don't know much more, they are still better than talking to a computer. And, they can pass me up to somone who doesn't need a script if the script won't solve my problem.
Not to mention the the fact that the money these companies are saving will be invested on other things which creates more jobs.
Re:Unpopular consideration... (Score:5, Insightful)
Maybe in 3rd world nations were slave labour is fine
comment. Software Developers in India (including me) are paid 350 times the prevailing minimum wage in India. They aren't slaving away at all. That's the REAL reason outsourcing is working. Because the people in the 3rd-world companies are NOT being exploited. They're paid astronomical sums by their country's standard, but dirt cheap by American standards, so it works out just fine. This article [economist.com] may help. Eventually our salaries will rise (they've been rising about 6% every year for the past 5 years) and eventually the work will move elsewhere - or it might even move back to USA after y'all make a painful adjustment and decide to work for $30,000 instead of $40,000 At some point, it will no longer be worth the communication, distance and time lag problems to hire 50 Indian workers to do the work of 12 American developers. Yes the work might then be outsourced to the Philipines or China or some place but this is unlikely and I'll tell you why: The reason India is a chosen destination is population. There is just such a LARGE pool of english-speaking univeristy graduates relative to other developing nations. So philipines might take some of the work, but never as much as was shipped to India. China is unlikely, because its standard of living is already higher than India's. This means that Chinese workers are already more expensive than Indian ones (plus in terms of english-speaking people and IT China has some ways to go - by the time China catches up with India in this particular demographic its standard of living also be higher thus meaning that the price differentials between Chinese and American workers ain't too big so no outsourcing). In order for this to truly be a race to the bottom as all of you Slashdot panickers assume you would need another country of India/China's size in terms of population, with a standard of living lower than them and with a large percentage of young, university graduates that can speak the language of the western world. There is no other country. So this is what the future holds - American wages fall a little, Indian wages rise a LOT. It becomes financially unviable to outsource to India so some work comes BACK to the US, some work gets shipped to Sudan or the Philipines or Croatia or whatever and some other work stays in India. And now that India has higher wages, they start buying more developed world products, trade increases, your economy picks up again blah blah. But yes, if you're a software engineer, it'll be hard to find a job for the next 5 years or so - this all hinges on how fast Indian wages rise, and how fast American wages fall. If Americans are willing to work for less, then less jobs will be outsourced. I'm not saying you SHOULD be willing to work for less, I'm just stating the facts.
Re:Kerry in the senate... (Score:5, Insightful)
Kerry is smarter then my dog. *
Right there you have two reasons not to vote for bush.
* I bought two toys for my dog. I named one "abu abbas" and the other one "abu nidal". My dog was able to differentiate between the two in less then ten tries something Bush was not able to accomplish.
Re:Close the tax loophole? (Score:2, Insightful)
Re:Near-shore is still off-shore (Score:3, Insightful)
Re:Unpopular consideration... (Score:3, Insightful)
wow you've totally missed my point haven't you.
He's likely (understandably) worried that by the time everything's evened-out he'll be dead and gone. Not earning enough to drive a Porsche is one thing; not being able to afford a $250,000 mortgage or $300/month healthcare is another.
Re:Unpopular consideration... (Score:2, Insightful)
*sigh* (Score:3, Insightful)
Moving on. The factor that really makes offshoring attractive is that, for a call center as an example, the labor and utility costs are so much less. An American might demand $12/hr to work at a call center, which is expensive for someone who just reads a script over the phone all day. On top of that, the company has to pay for real-estate (which is ridiculous in this country right now), insurance (which is also ridiculous thanks to frivolous lawsuits), payroll taxes (FICA, Medicare) which are high because of government fat, high utilities due to high cost of energy in general, and a host of other factors that makes low-income jobs difficult to maintain in the US.
What makes these things cheaper in a place like India? Well, first of all, a dollar in America goes a long way in India because of the exchange rate and the differentiated standard of living. Something that costs $10 to buy here costs $1 in India, including labor. Second, India itself has a hugely growing economy and infrastructure, and for American businesses to participate in building that growing nation, they have to have a presence there anyway. India has a very nationalist government and they won't allow foreign companies to simply walk in and take money out of the country. India needs call centers for India, too, and those call centers by Indian law must be located in India. Also, Indian law also requires things that are sold in India to have some % of Indian-manufactured content. So, for infrastructure companies to sell their goods, they have to have a presence there as well.
India's nationalist policies are working well for them because they are a growing nation. There is so much stuff to be done and sold there that it is worthwhile for companies to locate jobs there. Nationalist policies often work for rapidly growing countries because it keeps money in the country. However, once that nation is mature, those companies and the jobs they brought will leave just as quickly as they came. This is why nationalism does not work in a world where it is easy to move resources around, or in a matured nation that is in a state of continuation rather than development.
This is also why nationalist policies will not solve our outsourcing "problem." There really is no solution because we cannot control what is going on in other nations. The best we can do is do what we've always done - persevere. I've been fortunate enough to keep my job even though I can definitely see my job going to India in the next 24-36 months. I will have to get another one, which is why I am training for it now and not later.
This really is a sink or swim situation, and the choice lies with each individual. One cannot be dead-set on a specific job at a minimum rate of compensation. If you are flexible, willing to learn a new profession, and willing to relocate, you will be able to find employment. The jobs are out there. The unemployment rate has been falling steadily since the post-9/11 peak, and is lower now than it was for the first 4 years of Clinton's presidency. Historically, the unemployment rate has fallen in between 5 and 7%, which occasional excursions outside that range both above and below. Right now it is 5.4%.
What we're seeing is a shift away from technology jobs because that period of growth is over. The explosion of the Internet is what gave us the first period of prosperity, and now we're in a period of continuation. Time to find something else to do.
Re:So now we can really... (Score:3, Insightful)
Why can't the employees just shoot their CEO's? ummm errr I mean push them down the stairs? We all know CEO's don't do much, other than try and look good. IF CEO's were good, wouldn't they lower their own paychecks to make product prices more competitive?
Hey, here's an idea, why don't we outsource our CEO's?
hmmm Guess I'd never make it in the business world, better stick with being a simple Systems Admin.
Re:give me a break (Score:2, Insightful)
No, they *could be* good ideas. If they were used to ensure human rights and environmental protections matched what's in the US, then costs would be similar and people in foreign countries would have better lives.
Re:Kerry in the senate... (Score:3, Insightful)
The point you clearly miss is that while the US can't help the entire world, the US IS helping India. India is going through a massive economic boom right now. One of the poorest nations in the world is rapidly rising out of third world poverty. I don't understand why this brings such horror to Americans. God forbid any place other then Europe and America enjoy some of the wealth in the world. India is rapidly rising and the American economy continues to chug away despite 9/11 and the popped technology bubble. With a miniscule 5% unemployment is it suddenly time to throw up trade barriers and stamp out the historic growth of India? Are the people of India not worthy of being put on an equal footing when it comes to employment by American multinationals?
3) Charity begins at home. We really ought to tace care of our own problems first. We should devote MOST of our resources to making sure our own citizens are taken care of first.
That opinion is not only disgustingly selfish, but foolishly naïve. The US government will never solve its citizens' problems. The US government has failed to solve its own problems for the past 200 years. You think that John Kerry or George Bush if reelected will suddenly just solve these problems? I know American politicians have promised everything but the kitchen sink, but did it ever occur to you that they do this same thing every four years?
If the US is going to solve all of its problems before it helps the rest of the world, then they are never going to help the rest of the world. The rest of the world has thrown open its doors to US products allowing Americans to live at the high standards they enjoy today. Americans would not have such high incomes and high standards of living without the rest of the world. The least the Americans can do is allow the rest of the world to compete. If the only place India can compete are low end IT jobs, why in the hell should America complain? America doesn't need to save the world, just give the rest of the world a fair chance to compete.
If Kerry's attitude is that the US should selfishly protect a few low end jobs that could do wonders for other world economies, then I actually hope he loses.
Re:Kerry in the senate... (Score:2, Insightful)
The difference is that conservatives (of which I am one, who also happens to be a registered Republican) don't buy the original argument: that some people are, by default, "disadvantaged". We believe that all people are equal and capable of great things. Yes, each and every individual - if they try and work hard - can be successful.
I'm obviously excluding physical handicaps which I think we can all agree on are truly disadvantaged. But it appears that liberal Democrats see disadvantage in everything: race, religion, sex, weight, diet, geography, household circumstances, upbringing, the color of socks one wears, etc.
Liberals' desire to "help" (read: take from producers at the point of a gun and under the threat of jail to redistribute to said "disadvantaged" people) all these groups gets back to your #2 point: "It's impossible to help everybody in the world" mixed with #3 "We should devote MOST of our resources to making sure our own citizens are taken care of first." - we suddenly can't afford to help anybody in the world because we can't afford to devote "MOST" of our resources to helping everyone who is suddenly "disadvantaged" here. Hmmm, starts to look like a plan, eh?
Also note that it's important to point out that once we get into the liberal world of endlessly designating (!cough! i.e. vertically-challenged !cough!) "disadvantaged" peoples, who is the designator? Who makes those decisions about who is better than who, and why, and for how long, and for how much? Affirmative Racism^m^m^m^m^m Action comes to mind as just such an ongoing anti-disadvantaged-solution debacle...
No, this post wasn't PC, but like you said - "Just compassion mixed with a little bit of realism."
(Score:-5, Conservative on
Sigh. Slashdot libertarian economists. Sheesh. (Score:5, Insightful)
It is a sink or swim situation. However, when the ship suddenly plunges, it's difficult to avoid being sucked in. Your wages, your job, are dependant not just on your abilities and efforts, bu the state of the entire (in this case) American economy. Being a good mechanical engineer on the Titanic probably didn't help so much when the ship hit the iceberg.
As many people have said on Slashdot, and on more academic boards, the entire point of outsourcing is to lower labor costs. That's it. Nothing else. Nothing more. A capitalist system exists primarily to generate a return to those who own the capital. Cutting labor costs increases the capitalists returns. No, I'm not speaking from any Marxist point of view here. Read Adam Smith.
India's policies work do to the low pay of their workers. Nothing more. Not a policy choice, but a cheap labor force due to a massive and desparate population. So, do you really think American workers can compete against about two billion Indian and Chinese workers? The only way we can do that is to have our own wages plunge to a level that would be difficult for most American's to imagine.
As wages fall for workers facing international competition, wages fall in other fields. Think of this: if the automobile factory closes the next town over, business probably won't be that good. When we combine outsourcing with a taxation system that encourages the concentration of wealth, we can foresee serious structural problems in the American economy. I've tried to think of a simple way to explain this - maybe the greatest evidence is the fact that American real wages have been flat for thirty years, despite incredible increases in productivity.
Jobs are out there - but job quality, measured in wages and in hours, is falling. If your job is outsourced, its unlikely - and against economic theory - that you'll be able to find an equivalent job in the same field and roughly the same locale for the same wage. And as the Democrat's have been happily pointing out, the new jobs being created pay far lower than the ones lost.
Other employers understand outsourcing, and they'll be happy to give you a lower offer. Of course, your bank doesn't care about outsourcing and your mortgage stays the same. So does your health insurance, children's tuition, etc. So your in serious trouble.
I have a question for all of our fun Libertarian economists on /. If immigration to the US averages about 200,000 per month, and the Administration claims that 1.7 million jobs were created in the last four years, how many new jobs were available for the native population? Guys, unemployment statistics are easily manipulated. I'd recommend you visit the Bureau of Labor Statistics site and, well, read between the lines. Alos, please consider that unemployment statistics only count those who are receiving unemployment benefits. Once you've exhausted your six months, you're no longer unemployed, you become a "discouraged worker." Off the roles, out of thought. Same thing occurs if you take a low wage job - say go from being a chip designer to a chif fryer. Still counts as a job.
I have to say this: The government of the United States exists to protect the welfare of the American people, not to protect the welfare of the wealthiest American's bank accounts. And the two are not one and the same.
Re:Kerry in the senate... (Score:1, Insightful)
Helping is teaching someone to fish. Rewarding poor life decisions is keeping them in bondage.
How soon our country forgets. The Democrats fought tooth and nail to avoid segregation. Just because someone gives you something for nothing doesn't mean they are really helping you. Buying your vote perhaps, but definately not helping.
Re:Near-shore is still off-shore (Score:2, Insightful)
Believe it or not, Gov't is not there to protect you.
Re:Near-shore is still off-shore (Score:3, Insightful)
FYI, Canada is already the second biggest outsourcer for U.S. jobs.
It's easy to say that if you are not unemployed (Score:3, Insightful)
Re:Unpopular consideration... (Score:3, Insightful)
This would be fine if it was true for all workers (although people would call it deflation and it would probably be bad for other reasons). The problem is that there are still many industries -- and therefore goods and services -- which are priced as high as ever.
Healthcare is an ideal example. If most of the people in the US could afford to pay their medical bills, everything would be fine. But as you send more jobs overseas and replace them with wages that are minimal, now many people can't afford health care.
Housing is another one. Same situation, a job for an unskilled worker 80 years ago let that worker afford a modest house. Now that worker is on government assistance, living in subsidized housing.
The IT industry might be just a small chunk of the US economy, but outsourcing, which has been going on for years, is raising the standard of living for some US citizens while lowering it for many others. Taken to the extreme, all jobs should be outsourced, and then no one would be left to buy any goods or services, and no one would be left to innovate either (because innovation comes from the ground up). That isn't good for this country in the long run.
Re:Pot Kettle situation (Score:2, Insightful)
What some people are implying is that Kerry, through his wife, through Heinz, is personally outsourcing American jobs. That's simply a joke.
People don't talk as if Cheney runs Haliburton. The idea is that Cheney uses his position as VP to benefit Haliburton. The reason he does this is because he still has deferred payment from Haliburton, and has Haliburton stock options. When Haliburton does well, Dick Cheney directly benefits. To put together the dots for you, the idea is that Dick Cheney is using his position as Vice President for personal financial gain.
If Kerry started awarding 2 billion dollar no-bid contracts to Heinz, or some other similar move that would benefit him or his wife personally, you can bet there would be a stink. To date, there's no evidence of this, circumstantial or otherwise. Try again.
Politics is "Stuff that Matters". Deal with it. (Score:3, Insightful)
Hmmm. Don't like after-the-purchase EULAs the UCITA enforces interfering with your ability to examine code? Worried about the Patriot act leading you to be investigated because of your opinions or curiosity? (note: happened to friend of mine). Concerned with Microsoft OS security flaws in eVoting? Dislike the broken U.S. patent system? Don't like the DMCA forbidding what you can and cannot release? Want a good anti-spam law, or at least the existing laws to be enforced (or not?) Here's a clue: these are all LAWS. LAWS are approved by various Representatives we colloquilly call POLITICIANS. Selecting the most acceptable Politicians is called Politics.
Maybe it was true 20 years ago that Nerd-type news could safely ignore politics. But not today. Why? Because we nerds collectively create a lot of money, and where money is involved, there will be a lot of businessmen pushing and shoving, power plays, and even less savory things that require our attention, unless we want to be steamrolled.
Oh, but you are not really upset about Politics per se. It's really that Slashdot allows people of any opinion to post. In this very discussion, I've read several Libertarian viewpoints, some Democratic, some Republican, a number of foreigners, and one that might be considered too socialist to be Green. This obviously disturbs you. Like most US conservatives these days, you are obviously more comfortable with the "Shut up Shut up Shut up Cut His Mike" style of GOP cable news in the U.S., so anything that doesn't censor opinions you disagree with must be, perforce, "Bias". You want validation, dammit!
In truth, you're right: Taco is "biased". He's given a substantial media platform to third party candidates far disproportionate to their ability to ever get them implemented. He seems positively enamored with Libertarians. That's ok. I'm not whining. I like having my views challenged. Enjoying intellectual discourse is part of being a "Nerd".
Re:So now we can really... (Score:2, Insightful)
We can argue whether greed is wrong or not, but let's not quibble over a moral issue. . . . Many of them make a couple million dollars a year, but a lot of that is in stock options.
The average CEO makes 300 times the salary of an average worker. This one [freep.com] burned the company's original stockholders, leaving them with nothing, and walks away with $100 million because he's being replaced. And his options were vested as a reward. Let's not forget the $1.5 million bonus. And he gets to stay on the board of directors where he gets to set the compensation for the next CEO. It's not a quibble over a moral issue, it's a financial obscenity. It's called looting a company.
Tax loophole? (Score:3, Insightful)
So Kerry is going to close that pesky tax loophole that allows indian and other workers to get paid a fraction of what US workers make?
The reason outsourcing is profitable is because workers are willing to work for a lower wage outside the U.S. That's not a tax loophole.