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CIOs Silent in Outsourcing/ Protectionism Debate
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Can we keep jobs in the US and still take advantage of the economic benefits of outsourcing? This is a question that’s flared into a contentious debate, one that’s not going away as long as Americans continue to lose jobs. .
It’s also an issue that is of vital concern to CIOs, yet to date IT executives have been largely silent on the matter. But let’s back up a minute and recap some of the developments that are fueling this issue.
* In January a measure was passed in the U.S. House as an amendment to a bill that passed to reform the Troubled Assets Relief Program – AKA TARP. That measure, which was introduced by U.S. Representative Sue Myrick (R-N. Carolina), prohibits TARP recipients from outsourcing call-center work to foreign companies. The bill has not yet been taken up by the Senate.
* On February 6, however, the Senate voted to put stricter limits on banks and other recipients of taxpayer money through TARP that want to hire high-skilled workers from overseas under the H-1B visa program. The Senate approved the measure – introduced by Senators Charles Grassley (R-Iowa) and Bernie Sanders (Independent-Vermont) – by voice vote as an amendment the economic stimulus package President Barack Obama is urging the Senate to pass.
Meanwhile, Congress has been telling companies like GM and Chrysler and the major banks that have received billions in TARP (tax payer money) that they can’t spend any of their windfalls outside the US.
Now some of the benefactors of this massive bailout such as JPMorgan Chase & Co., nevertheless plan to increase outsourcing to India and will manage the integration of systems from Washington Mutual Inc. and Bear Stearns Cos. in that country to bring down the cost of projects, the Economic Times of India reported. In fact, JPMorgan Chase plans to increase its Indian outsourcing to nearly $400 million this year. The bank currently outsources $250 million to $300 million to Cognizant, TCS and Accenture Ltd. .
Meanwhile, IBM is adding to its Indian presence while slashing about 10,000 American jobs. Of course, to my knowledge at least, IBM has not benefited from any TARP funding.
That financial institutions, automotive companies, technology companies and others continue to outsource and bring new hires into the US under the H-1B visa program has set off a firestorm of criticism, and understandably so, at least on a visceral level. Americans who have seen their jobs outsourced to Mumbai or Beijing are mad as hell, and like the Peter Finch character in the movie “Network”, they’re not going to take its anymore.
But wait a minute. What is GM supposed to do, pull all its outsourced IT work out of India and bring it back to Detroit? That’s a noble idea, and maybe it could happen over the long run, but for now, forget it. And these H-1B employees? For years, we been told that if American can’t attract the best and the brightest talent from abroad, we’re going to lose our place as the world’s leading innovator. .
As for JPMorgan Chase, admittedly the hubris level there and at other banks and insurance companies like AIG is exceeded only by their respective greed and incompetence. Yet the point of the bailout is to try to ensure that these organizations survive and prosper. Can JP Morgan Chase do that without sending the Bear Stearns and Washington Mutual systems work offshore? I haven’t a clue, but the Economic Times said Guy Chiarello, JPMorgan Chase's current CIO, is concerned about meeting cost-reduction goals.
With protectionism on the rise, Chase and Chiarello have been sharply criticized by some of the trade press and IT bloggers, One blogger even suggested that Chairallo be dragged before Congress and made to testify. Actually, that might provide Congress and the rest of us with some insight into an incredibly complex and important issue. No one in the corporate world understands this subject better than chief information officers, and to date most of the debate about the topic is being waged by politicians, pundits and vendors. It’s time for IT chiefs to weigh in.
Comments (1)
1. 04-08-2009 11:20
Glad you were willing to raise the issue.
Without diving into all the details, one is worth calling out: The purpose of the H-1B program.
It isn't to attract the best talent from abroad. It's to address staffing shortfalls resulting from insufficient numbers of qualified U.S. applicants.
It's appropriate to re-purpose content for new uses. It's appropriate to re-purpose software for new uses.
Legislation, though, should be restricted to its original purpose. If we think we need legislation to attract the best foreign talent, let's pass it, instead of operating by pretext.
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