Outsourcing Clash Heats Up Election Campaigns

With John Kerry almost certainly destined to emerge victorious from the Democratic primary fray, he is turning up the heat on the hot-button topic of overseas outsourcing — and the Bush administration is preparing to respond in earnest.

The overall US$10 billion IT outsourcing market still makes up less than 3 percent of global spending on information technology services, according to research by consultancy Brean, Murray & Co. However, the recession of 2000-2001 and the achingly slow economic recovery have made outsourcing a flashpoint issue for many U.S. citizens and corporations.

After all, outsourcing is good for companies. General Electric, for example, has saved an estimated $300 million per year — $30,000 per job — by sending some process-related positions to India. But laid-off workers’ chances of finding another job at a comparable salary seem increasingly dim.

Revolutionary Rhetoric

In recent weeks, Kerry has blasted the chief executives of companies that outsource jobs ranging from low-level computer programming to entry-level managerial services, calling them “Benedict Arnold CEOs,” an allusion to the famed traitor of the American Revolutionary War of 1776.

And when N. Gregory Mankiw, chairman of President Bush’s Council of Economic Advisers, stated last month that outsourcing is still good for the economy, the White House’s political foes began accusing the Bush Administration of being insensitive to the plight of ordinary people facing job loss.

Now, Sen. Kerry’s liberal colleagues in the U.S. Congress are trying to back up his campaign for the White House with attention-getting legislation — a common election-year tactic.

Polarizing Legislation

For example, Rep. Bernard Sanders (I-Vermont), a self-described socialist, has introduced the Defending American Jobs Act of 2004. He says he has 50 co-sponsors — not even close to the amount needed to pass a bill in the House of Representatives, where the GOP is the majority party among 435 members.

If the bill were to pass, companies seeking government assistance would have to disclose their local and overseas workforce levels and would be ineligible for assistance if their policies favored overseas workers at the expense of U.S. workers.

“It is an insult to the middle class of this country that American taxpayer dollars are being used to provide loans, loan guarantees, grants, tax breaks and subsidies to huge and profitable corporations who then say to the American people: ‘Thanks for the welfare, chumps. But we’re closing your plant and taking your job to China,'” Sanders said in a statement.

Sanders claimed major IT companies, including Motorola, Lucent Technologies and IBM, have outsourced jobs overseas and simultaneously pleaded for export assistance from the federal government.

MBA, Unemployed

Amid this heavily charged atmosphere of war and economic upheaval, many people in an array of careers, not just entry-level IT workers, are having trouble landing on their feet.

Rich Wagner completed his master’s in business administration at the American University in Washington, D.C., at the end of 2001 — but he didn’t find a professional position until nine months later.

“It was a lesson in humility,” Wagner, who was 27 years old when he received his diploma, told TechNewsWorld. “I thought that by getting an MBA I would have to barricade my door to protect myself from headhunters and employers. But that was not the case.”

Mirroring Wagner’s experience, students who graduated last year from MBA programs around the country — even at Ivy League schools like Cornell University — are finding the job market inhospitable. Although the recession is technically over, the recovery is not robust, and some top-flight schools are reporting that more than 20 percent of their new MBA grads are still without full-time work.

Long-Term View

Many students who are still in school, moreover, are starting to think of their graduate degrees differently than in the past — not as a ticket to instant riches, but as a vehicle to enhance their careers over the long term, according to a new survey by Kaplan Test Prep.

“The instant gratification of the nineties has been replaced by an appreciation for the long-term investment in human capital that the MBA offers,” said David Wilson, CEO and president of the Graduate Management Admissions Council, in an interview with TechNewsWorld.

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