Tag Archive for Outsourcing

RB | April 5, 2009
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Tech Layoffs Continue to Mount

351,202 families’ lives have been disrupted in the tech sector since October 2008, when the  banks lead us into the current depression recession economic downturn.  32,820 lay-offs have been announced in the tech sector during March 2009. The tech layoff leaders for March 2009 are:

The March total is the lowest since the depression recession economic downturn started.

  • February 2009 = 48,064
  • January 2009 = 150,014
  • December 2008 = 36,278
  • October 2008 = 50,204

This does not include the chaos that the President Obama’s abandonment of the working class, by sending GM and Chrysler into likely bankruptcy. We are seeing the further dismemberment of the middle class as Chrysler has outsourced its IT to India’s  Tata Consultancy Services in “a multi-year contract” worth about $120 million.

Chrysler’s remaining  2,100- person information technology department, mostly in Auburn Hills, MI will immediately loose 200 salaried technology workers. The balance of the layoffs will come from the ranks of contract workers in that department. They will leave in greater numbers, but Jan Bertsch Chrysler vice president and chief information officer didn’t offer specifics in the Detroit News article. Some employees may be hired by Tata or Computer Sciences, she said, and some work will be moved entirely off-site. According to the media, Tata will provide support, maintenance and services that “will encompass a portion of the functional areas within Chrysler, such as Sales and Marketing and Shared Services.”

Category: Business, Layoffs, Out-sourcing | Tags: , ,
RB | September 5, 2008
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Time to Rethink Off-Shoring

McKinsey Consulting published an article, Time to Rethink Off-Shoring in the September 2008 edition of the McKinsey Quarterly that may be a silver lining in the current U.S. economic recession. McKinsey identifies three factors in the current economic conditions that may casue firms to re-evaluate off-shoring practices. McKinsey believes that energy costs, wage inflation and the weakness in the US dollar are factors which firms should evaluate as part of their off-shoring analysis.

Energy costs According to the article, CIBC World Markets estimates that in 2000, when oil prices were near $20 a barrel, the costs embedded in shipping were equivalent to a 3 percent tariff on imports. Today, that figure is 11 percent, representing a threefold increase in shipping costs since 2000. The article goes on to point out that increasing energy costs not only impacts exports but also increases the price manufacturers pay for raw materials. As an example, McKinsey points out that it now costs about $100 to ship a ton of iron from Brazil to China-more than the cost of the mineral itself.

Wage inflation McKinsey states, that in dollar terms, annual wage inflation in China has averaged 19 percent since 2003. An average production worker, paid $1,740 a year in 2003, makes $4,140 today. By contrast, wage inflation in the United States has averaged only 3 percent.

McKinsey suggests that the combination of increased shipping expenses driven by higher energy costs, wage inflation in off-shore countries and the weak US dollar has eliminated the cost benefits that many firms sought by off-shoring jobs.

Category: Out-sourcing | Tags:
 

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