Offshore Dental Clinic

Inside a floating boat, right off the continental US ...... far enough
to be on the open seas and of course, beyond US tax laws. Isn't that
the same as flying to Turkey to get your teeth cleaned?

We could have helicopter service from the Port Authority ........

Come to think of it, why not an offshore McDonald's ........... they
make the hamburgers on the ship and you eat them in the helicopter on
the way back.

Skeptical? Okay then let's change it. You eat the crispy chicken in
the helicopter on the way back.





Joely



**


December 22, 2003
NEW ECONOMY
Offshore Jobs in Technology: Opportunity or a Threat?
By STEVE LOHR

he United States economy is finally getting stronger, but there seems
to be one unsettling weakness: the apparent wholesale flight of
technology jobs like computer programming and technical support to
lower-cost nations, led by India.

The trend is typically described in ungainly terms - as "offshore
outsourcing" or "offshoring." But that rhetorical hurdle has done
nothing to lessen the recent public debate and expressions of angst
over this kind of job migration. There are some early signs of
political reaction. Last month, for example, the State of Indiana
pulled out of a $15 million contract with an Indian company to provide
technology services. And a proposed bill in New Jersey would restrict
the use of offshore workers by companies doing work for the state.

Forrester Research, a technology consulting firm, published a report
this month pointing out that the movement abroad is only gradual. The
firm bemoaned "the rising tide of offshore hype." Yet Forrester itself
played a significant role in framing the debate on offshore
outsourcing, as well as stirring fears, with a report last year. That
report, published in November 2002, predicted that 3.3 million
services jobs in America would move offshore by 2015, and added that
the information technology industry will "lead the initial overseas
exodus."

So what is really happening? Is the offshore outsourcing of technology
jobs a cataclysmic jolt or a natural evolution of the economy?

The short answer is that the trend is real, irreversible and another
step in the globalization of the American economy. It does present a
challenge to industry, government and individual workers. But the
shifting of some technology jobs abroad fits into a well-worn
historical pattern of economic change and adjustment in the United
States.

"To be competitive and to maintain and improve American living
standards, we have to move up the technology food chain," said Craig
R. Barrett, the chief executive of Intel.

That may seem like easy advice from someone perched at the top of the
food chain, but Intel represents a good example of a company that
successfully navigated an earlier round of threats from international
competition, from Japan in the 1980's.

In the early 1980's, Japanese chip makers appeared to be taking the
semiconductor industry by storm, supported by their banks and their
government. The Japanese were focused on the market for memory chips,
which store data. At the time, Intel was getting battered and still
received much of its revenues from memory chips. It made a
bet-the-company decision, abandoned the memory-chip business and
focused on microprocessors, the bit-processing engines in personal
computers.

The bet, of course, paid off as the personal computer business
blossomed. In retrospect, Intel's triumph might seem to be a foregone
conclusion. But it did not necessarily look that way back then.
Remember, those were the days when the term Japan Inc. struck fear in
corporate boardrooms across America, and there was a resonant ring to
the bleak prognosis of the nation's economic future by the former vice
president, Walter F. Mondale: "What are our kids supposed to do? Sweep
up around Japanese computers and sell McDonald's hamburgers the rest
of their lives?"

It did not quite work out that way, did it? Today, the overseas
challenge in technology services comes from linking nations with
strong education systems like China, India and Russia with the global
economy. The Internet is a big part of the phenomenon. The spread of
high-speed Internet connections in the last few years has meant that
Indian programmers are a mouse-click away from American corporations
that are eager to cut their software development costs.

The salary comparisons are striking. A programmer in the United States
would earn about $80,000 a year on average, compared with $20,000 or
less in India. But analysts say the actual cost savings on a
development project are not proportionate. Whole stages of a project -
analysis, design and deployment - typically require face-to-face
meetings. Communications and cultural differences add to costs and
sometimes reduce effectiveness.

On a typical corporate software project, employing 40 programmers for
a year, the savings from offshore outsourcing in India would be more
in the range of 20 to 40 percent less than employing higher priced
labor in the United States, estimates Joseph Feiman, an analyst at
Gartner Inc., a research firm. Sometimes, American services firms with
special expertise are the preferred choice, despite higher labor
costs.

"The math of looking only at salaries is just wrong," Mr. Feiman said.
"And it is a prevalent misconception."

Some offshore work has returned to the United States, but whether the
few reported cases represent any kind of incipient "backlash," as it
is sometimes portrayed, is uncertain. Lehman Brothers confirmed last
week that it had stopped using offshore India workers for its internal
computer help desk, and earlier this month Dell Computer acknowledged
that some of its technical support for corporate customers had been
brought back to the United States.

A closer look at the job migration numbers finds them less frightening
than at first glance. Take the Forrester figure of 3.3 million
services jobs moving offshore between 2000 and 2015. To begin with,
projections of the future are always tricky, and even more so when one
tries to look 12 years ahead. The projections show that half of the
3.3 million jobs are in traditional office services, like bill
processing, order handling and the like. Only 14 percent of the total
are in computer services, according to Forrester.

But even the larger number of 3.3 million needs to be put in
perspective. The United States has more than 130 million employed
workers, about 70 percent of them in the services sector. Over the
last 10 years, 3.5 million private sector jobs a year have been
created on average, or 35 million. Even in good years, a lot of jobs
are lost through layoffs and business closings - 2.5 million jobs in
1999, for example. Given the normal job creation and destruction in
the economy, the Forrester projections of offshore movement - roughly
214,000 a year from 2000 to 2015, in all categories of service
employment - do not seem so alarming.

"What we did was size a trend that was out there," said John C.
McCarthy, the Forrester analyst who wrote the report. "We tried to be
conservative."

In an information economy, technology services are an "input'' in the
same way that steel, glass and rubber are parts of a car. So reducing
the cost of technology services curbs inflation while improving
efficiency and productivity. A recent study by the McKinsey Global
Institute estimated that every dollar of costs that United States
companies move offshore yields a benefit of $1.12 to $1.14 to the
American economy, mainly from cost savings and steering workers toward
jobs that add more value than those replaced.

The difficulty of finding good jobs for workers, however, is a thorny
policy issue. In software development, for example, the jobs that will
continue to reside toward the top of proverbial economic food chain
will be for people who can use technology to solve problems in
specific businesses like banking, manufacturing and retailing. The
software jobs most at risk, analysts say, involve straightforward
coding, where technical specifications are handed off to a programmer
who is told, "Do this." Not everyone is going to be able to make the
transition from software coder to designer.

That is similar to the experience of workers who lost manufacturing
jobs to low-cost imports. A study by the Institute for International
Economics, examining manufacturing jobs losses from 1979 to 1999,
found that a fourth of factory workers who were re-employed took pay
cuts of 25 percent or more.

Research groups and academics have suggested forms of wage insurance,
either publicly financed or privately financed by the companies that
benefit from offshore outsourcing, to soften the blow for some
transition period.

"Wage insurance is worth considering because technological change is
so rapid," said Robert B. Reich, a professor of social and economic
policy at Brandeis University who was secretary of labor during the
Clinton administration. "It would spread the costs of economic change
over a much larger pool."



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