Wednesday, September 26, 2007

Outsourcing back ?

Starts off with statement about 'many' jobs are coming back to the West ... but NOTHING in the remaining article indicates this is happening ... at all .... 'some' grads turning down Google for India ... then, just one anecdote is mentioned ... not exactly a trend

September 25, 2007

Outsourcing Works, So India Is Exporting Jobs

MYSORE, India — Thousands of Indians report to Infosys Technologies’ campus here to learn the finer points of programming. Lately, though, packs of (by 'packs of' does he mean 'some') foreigners have been roaming the manicured lawns, too.

Many ('many' = 'a few') of them are recent American college graduates, and some (here 'some' seems to = 'one') have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company’s American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

To fight on the shifting terrain, and to beat back emerging rivals, Indian companies are hiring workers and opening offices in developing countries themselves, before their clients do.

In May, Tata Consultancy Service, Infosys’s Indian rival, announced a new back office in Guadalajara, Mexico; Tata already has 5,000 workers in Brazil, Chile and Uruguay. Cognizant Technology Solutions, with most of its operations in India, has now opened back offices in Phoenix and Shanghai. (at least Phoenix is US .. jobs moving 'back' ??)

Wipro, another Indian technology services company, has outsourcing offices in Canada, China, Portugal, Romania and Saudi Arabia, among other locations. (Canada , close enough !)

And last month, Wipro said it was opening a software development center in Atlanta that would hire 500 programmers in three years. (bingo! 500 jobs in 3 years ... wish he would contrast this added employment with their growth elsewhere in the world ... this would be insignificant, and due to the economics, might never come to fruition)

In a poetic reflection of outsourcing’s new face, Wipro’s chairman, Azim Premji, told Wall Street analysts this year that he was considering hubs in Idaho and Virginia, in addition to Georgia, to take advantage of American “states which are less developed.” (India’s per capita income is less than $1,000 a year.) (considering is not 'doing' ... also per capita Indian income is meaningless ... more relevant is per capita IT workers in India , probably somewhere between $15K - $30 depending on the type of work and amortized per capita)

For its part, Infosys is building a whole archipelago of back offices — in Mexico, the Czech Republic, Thailand and China, as well as low-cost regions of the United States. (Infosys is doing this for 2 reasons 1) low pay because no other alternative jobs available , and 2) low attrition rate, hopefully ... and normally these are low-end, low-pay jobs to begin with , i.e. mostly call-centers ... being done because of backlash due to communications problems with Indian based call centers) ...

The company seeks to become a global matchmaker for outsourcing: any time a company wants work done somewhere else, even just down the street, Infosys wants to get the call.

It is a peculiar ambition for a company that symbolizes the flow of tasks from the West to India.

Most of Infosys’s 75,000 employees are Indians, in India. They account for most of the company’s $3.1 billion in sales in the year that ended March 31, from work for clients like Bank of America and Goldman Sachs.

“India continues to be the No. 1 location for outsourcing,” S. Gopalakrishnan, the company’s chief executive, said in a telephone interview.

And yet the company opened a Philippines office in August and, a month earlier, bought back offices in Thailand and Poland from Royal Philips Electronics, the Dutch company. In each outsourcing hub, local employees work with little help from Indian managers.

Infosys says its outsourcing experience in India has taught it to carve up a project, apportion each slice to suitable workers, double-check quality and then export a final, reassembled product to clients. The company argues it can clone its Indian back offices in other nations and groom Chinese, Mexican or Czech employees to be more productive than local outsourcing companies could make them.

“We have pioneered this movement of work,” Mr. Gopalakrishnan said. “These new countries don’t have experience and maturity in doing that, and that’s what we’re taking to these countries.”

Some analysts compare the strategy to Japanese penetration of auto manufacturing in the United States in the 1970s. Just as the Japanese learned to make cars in America without Japanese workers, Indian vendors are learning to outsource without Indians, said Dennis McGuire, chairman of TPI, a Texas-based outsourcing consultancy. (only problem is that this analogy doesn't hold AT ALL ... Japanese cars are now assembled in US ... the work that left India is NOT returning to the US, but going to other low-cost countries )

Though work that bypasses India remains a small part of the Infosys business, it is growing. The company can be highly secretive, but executives agreed to describe some of the new projects on the condition that clients not be identified.

In one project, an American bank wanted a computer system to handle a loan program for Hispanic customers. The system had to work in Spanish. It also had to take into account variables particular to Hispanic clients: many, for instance, remit money to families abroad, which can affect their bank balances. The bank thought a Mexican team would have the right language skills and grasp of cultural nuances.

But instead of going to a Mexican vendor, or to an American vendor with Mexican operations, the bank retained three dozen engineers at Infosys, which had recently opened shop in Monterrey, Mexico.

Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers working 150 miles south of the United States border. (not sure how this is different or new from US using Mexican subsidiary for Latin contracts ... what's so new about this ?)

In Europe, too, companies now hire Infosys to manage back offices in their own backyards. When an American manufacturer, for instance, needed a system to handle bills from multiple vendors supplying its factories in different European countries, it turned to the Indian company. The manufacturer’s different locations scan the invoices and send them to an office of Infosys, where each bill is passed to the right language team. The teams verify the orders and send the payment to the suppliers while logged in to the client’s computer system.

More than a dozen languages are spoken at the Infosys office, which is in Brno, Czech Republic.

The American program here in Mysore is meant to keep open that pipeline of diversity.

Most trainees here have no software knowledge. By teaching novices, Infosys saves money and hopes to attract workers who will turn down better-known companies for the chance to learn a new skill.

“It’s the equivalent of a bachelor’s in computer science in six months,” said Melissa Adams, a 22-year-old trainee. Ms. Adams graduated last spring from the University of Washington with a business degree, and rejected Google for Infosys. ( sounds like she failed the 'sanity test' ... turned down Google chance to learn 6 months of programming/IT skills ??)

And yet, even as outsourcing takes on new directions, old perceptions linger.

For instance, when Jeff Rand, a 23-year-old American trainee, told his grandmother he was moving to India to work as a software engineer for six months, “she said, ‘Maybe I’ll get to talk to you when I have a problem with my credit card.’ ”

Said Mr. Rand with a rueful chuckle, “It took me about two or three weeks to explain to my grandma that I was not going to be working in a call center.” (don't be so sure ... you may be managing one in a low-cost area of the US !!)

New push for more H-1B

Political and corporate push to get more H-1B workers because of a 'severe shortage' . Where else is there a severe shortage of any commodity but no concommitant rise in the cost of that commodity. If they need 'talented' (does this mean 'foreign') workers then they could get talented workers if they paid more. Market forces should prevail and technical workers would start commanding 'tech-bubble' year 2000 salaries and college students would be overwhelming their comp sci depts like they did then .

Wanted: Foreign tech workers

Congress faces pressure to raise the number of visas for temporary employees.

By Eilene Zimmerman, FSB contributor

FSB -- When Elizabeth Charnock couldn't find the talent she needed to keep her small Silicon Valley (high cost of living requiring high people costs) software company Cataphora ( growing, she looked for workers overseas. Finding the skilled employees she sought, the CEO applied for eight H1B visas for fiscal 2008. The documents enable foreigners with technical skills to work temporarily in the U.S.

"We did everything you're supposed to do," says Charnock. "We hired an immigration lawyer, we filed the first day. It went into a lottery. Five of our eight hires got visas." Two of the three that didn't had already sold their homes to move to California from Europe. "Their lives were turned upside down. They are stuck," adds Charnock, "and so are we. The competition for these people here is insane." (from Europe! this is an unusual path .. would be interesting to know if these were native Europeans or Asian immigrants doing H-1B type work in Europe ... Europe might be new 'training league' for US ?)

Being able to get H-1B visas for needed workers is essential for small companies, she says. "It levels the playing field," she says. (does this mean 'cheaper labor costs allow us to compete'?)

Charnock is one of a groundswell of entrepreneurs and advocates for immigrants who say Congress needs to raise the cap on H-1B visas to help the economy. Last week 1,000 protestors-mostly legal immigrants-drew attention to the situation of highly skilled foreigners who want to work for companies in the U.S. by marching on Capitol Hill.

The demonstrators said that potential employees-who are needed in growing fields such as engineering and software development-are being shut out because of a lack of H-1B visas. According to the protesters, if the U.S. does not accept more foreign workers with skills in math, engineering and computer science, the nation risks losing ground in the global economy, because the computer scientists who can't find work in the U.S. will go to work for economic rivals. (part of the lack of H-1B availability are the head-hunting agencies that grab up most of the visas on opening day ... they then control the human traffic and further lower the real wages that the immigrants receive) .

Governors from 13 states are now weighing in on the issue. California's Arnold Schwarzenegger, Deval Patrick of Massachusetts, and New York's Eliot Spitzer, were among those who signed a Sept. 11 letter ( to Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner urging them to raise the cap on the number of H1-B visas, which the governors say was set "arbitrarily" and today "bears no relation to our economy." (note that the 3 governors listed here are from high-tech states, California, NY and Mass, with significant high-tech corps lobbying these governments)

The H-1B program has its critics, including U.S.-born programmers, who say the visas serve mainly to drive down salaries of American tech workers. Some employers also question the value of the H-1B program. Miles Thomason, CEO of Levia Softwar (, a four-person company in Atlanta, says that when other companies hire H1-B workers and pay them a lower wages than Thomason pays his American workers, he loses competitiveness. He has tried to hire foreign-born programmers, but has not had positive experiences: "On paper they look good but the interviews don't go well," he says. "Communication issues alone are problematic for us." (this is the almost universal experience of users of the program , from the people who are close to the ground , people who interface with the hires, like this guy with just a 4 person company)

Should the U.S. raise the cap on H-1B visas? Comment here.

Nonetheless, many in the technology community (does this mean coporate lobbyists , immigration lawyers and immigrant advocate orgs ?) have complained for years about the shortage of qualified American job seekers. They (ubiquitous) have been pushing Congress to raise the cap on the number of H-1B visas granted each year. The current cap of 65,000, set by Congress in 1990, was raised to 195,000 from 2001-2003. It wasn't until 1997 that the number of applications exceeded the H1B cap, according to USCIS spokesperson Marie Sebrechts. On April 2, the first day for applying for visas for fiscal 2008, the USCIS received more than 130,000 applications, forcing the agency - for the first time - to put all applications into a computer-generated selection process similar to a lottery.

American-born workers do not seem to be rushing to gain the skills that technology companies want.( and why would that be?) Only about 13 percent of graduate degrees awarded in the U.S. are science degrees, according to the most recent numbers from the National Center for Education Statistics ( And foreign nationals make up about 60 percent of the Ph.D.s in computer science and engineering coming out of U.S. colleges, according to an analysis of education statistics by the American Association for the Advancement of Science (

Across the tech industry, the inability to hire qualified non-citizens is beginning to pinch. One-third of private, venture capital-backed companies surveyed by the National Foundation for American Policy ( for the National Venture Capital Association ( last November said the lack of visas had influenced their decision to place more personnel in facilities abroad. (the old threat ... but they are going to do this anyway ... why bring the person here if the same person can do the job just as well overseas for 1/3rd the cost ?) Among respondents using H1-B visas, nearly 40 percent said the cap has "negatively impacted their company when competing against other firms globally." (they need some excuse for not succeeding to their own hype )

Hardest hit by the cap may be the nation's small businesses, which often don't have the resources to open up satellite operations in places such as India and China, where they could hire skilled technical workers, says Russell Swapp, a Boston-based partner who heads the national immigration team at law firm Seyfarth Shaw ( "I have smaller clients who have been unable to meet their hiring targets because of the cap and feel they are being competitively crippled," he says. (quoting an immigration lawyer , obviously unbiased . And complaining for the mom-n-pop small businesses , those small 5 person computer firms that need to get overseas people! Why don't they find out how many of these workers are actually working for small businesses now , after the last 15 years of the program)

Foreign-born engineers and computer scientists have been critical to growth and innovation in the U.S., according to a study by The Kauffman Foundation (, Duke University, New York University and Harvard. The study estimates that immigrants founded one in four of the engineering and technology companies created between 1995 and 2005. By 2006, these companies were employing 450,000 workers and generating $52 billion in revenue, according to the researchers. "These [founders] are often true innovators and own the intellectual property on which companies are based," says Swapp. "These aren't fungible positions." ( a net gain for the US ?? ... were these 450,000 workers American ? or more H-1B workers or workers actually working overseas for the parent 'US' firm ? another couple of simple questions to ask ... also there are perhaps a million or more high-tech immigrants in US and they only created 25% of the new companies ? ... the vast majority of these new companies were created not by the workers but by graduate students at universities, not workers brought in via H-1B)

This summer, hope for raising the cap evaporated when Congress failed to enact a comprehensive immigration reform bill in late June, which included a provision to increase the number of H1B visas to 115,000. A senior House aide familiar with the H-1B issue said House leaders are now in the process of "trying to figure out what parts of immigration reform can move forward with support." On the Senate side, Charles Schumer of New York, Maria Cantwell of Washington State and other democrats and republicans "are working on legislation to reform the H1B system," says a spokesperson in Schumer's office. And President Bush has repeatedly said he wants Congress to raise the cap. (George 'open borders' Bush)

But even if Congress does provide more H1B visas, it will not solve the larger problem of a growing skills gap in the U.S. workforce. "It isn't just that there aren't enough Americans graduating in the math and science fields, it's also that there is a need for these people across the globe, and everyone is fighting for them," says Stuart Anderson, executive director of the NFAP and a former staff director of the Senate Immigration Subcommittee ( "The question is whether or not the hiring takes place inside the U.S., keeping growth and innovation here, or someplace else." ( a straw man argument ... most high-tech will be done overseas within 5 years due to the easy ability to do such work anywhere in the world along with the economic incentive to move jobs offshore ... becoming an unemployed engineer in the US doesn't help the person or the economy one whit )

Friday, September 21, 2007

Gov't subsidization of ANY program - Medicare fraud

When the gov't is brought in to subsidize ANY program (e.g. homeowners allowed to reduce their taxes with the interest paid on mortgages ) :

- There is no incentive for the service-sellers to decrease their prices, but just the opposite
they can now increase prices because the customer is paying less (gov't picking up part of tab) .

- Oversight of programs is difficult for a number of reasons, so the opportunity for fraud and corruption increases exponentially.

BTW, how come medicare , a program designed for senior citizens, is being billed so much for HIV/AIDS, which is a younger person's disease in general ?

Article published Sep 21, 2007
South Florida bills billions for HIV

September 21, 2007

By Jim McElhatton - Doctors and clinics in three Southern Florida counties account for most of the billions of dollars charged to Medicare nationwide for HIV and AIDS drugs and services, billing records show.

Federal health care regulators call the lopsided billing patterns "egregious" and warn that South Florida — particularly Broward, Miami-Dade and Palm Beach counties — is a potential hotbed for health care fraud, waste and abuse.

"It"s all ultimately part of the money-driven, underground economy in Miami," said Benson B. Weintraub, a health care fraud lawyer based in Fort Lauderdale.

According to a report this week by the Inspector General for the U.S. Department of Health and Human Services, health care providers in Broward, Miami-Dade and Palm Beach submitted $2.5 billion in claims to Medicare on behalf of HIV/AIDS patients in 2005.

By contrast, providers in the rest of the country submitted less than $1 billion in claims combined.

Suspected scams, which involve the recruitment of patients, kickbacks and unnecessary medical services, aren"t limited to HIV clinics.

In March, federal inspectors found dozens of wheelchair and electric scooter suppliers in Florida that ran afoul of federal rules, including phantom operations that billed the government but had no bricks-and-mortar locations.

"Medicare continues to be highly vulnerable to fraud and abuse and immediate steps must be taken," Inspector General Daniel R. Levinson said of his office"s findings.

Mr. Levinson"s report also found that Medicare officials and contractors could not provide a "clinical explanation" for the high level of billing.

One common HIV/AIDS scam involves doctors and clinics employing "runners" who recruit HIV and AIDS patients, then pay kickbacks if patients get unneeded medical treatment. In turn, crooked providers bill Medicare for the services.

After getting shut down, some providers open different clinics under a new corporate name.

In a written response to Mr. Levinson"s report, Herb B. Kuhn, acting deputy administrator for Centers for Medicare and Medicaid Services (CMS), said Medicare officials have taken "aggressive recent actions" to crack down on fraud.

Though provider billings for HIV/AIDS in Southern Florida have increased from $1.5 billion in 2004 to $3.3 billion in 2006, CMS is getting tougher scrutinizing claims before providing reimbursement, Mr. Kuhn wrote.

In 2004, he wrote, Medicare reimbursed 66 percent of all claims and paid out $1 billion. But in 2006, CMS paid $890 million, approving just 27 percent of all claims submitted.

"In fact, many of the providers with aberrant billing activity ... were referred to law enforcement and are now facing prosecution," Mr. Kuhn wrote.

Mr. Weintraub said the federal court in Southern Florida has a reputation among lawyers as "the health care fraud capital of the United States." He said a host of factors contribute to the problem.

The fraud often happens in disenfranchised communities and sometimes involves "illegal residents because they"re paid cash for virtually no labor, and that in my view is a very degrading and exploitative practice," Mr. Weintraub said.

Federal authorities said they"re increasing efforts to investigate and prosecute fraud. In April, the FBI and U.S. Attorney"s Office for the Southern District of Florida announced the arrests of 10 owners of HIV clinics and medical-equipment dealers on money-laundering charges.

One company, Coral Way Professional Health Services Inc., was charged with giving kickbacks to patients. At the clinics, workers injected the patients with a saline solution but later billed Medicare for actual prescribed drugs, authorities said.

A federal task force aimed at rooting out Medicare fraud has resulted in 34 criminal cases involving a combined $142 million in Medicare bills in Southern Florida, authorities said.

R. Alexander Acosta, U.S. Attorney for the Southern District of Florida, yesterday called the federal task force "a critical part of our continuing resolve to safeguard the Medicare program." He said health care prosecutions have increased nearly 50 percent compared with last year.

Investigators are largely focusing on infusion therapy and medical equipment dealing schemes, Jonathan I. Solomon, special agent in charge of the FBI"s Miami field office, said yesterday. Infusion therapy mostly deals with medication given intravenously or through a feeding tube.

HIV/AIDS billing scams have been occurring for years in Southern Florida. In 2005, the state Board of Medicine convened a meeting to discuss the problem.

Meeting minutes show that officials learned of one clinic that had been treating automobile injuries but switched to HIV/AIDS cases because of the potential for high billing. The owner had no medical license and paid patients up to $500 to visit the clinic.

Mattel , a US firm ?

Extraordinary ...

Chinese subcontracted firms substitute lead paint because it is significantly cheaper, thereby endangering the health of children world-wide and breaking US laws, and Mattel apologizes to them !?

A 'design flaw' ? Mattel 'designed' the toy to use lead paint ?

US firms can get so beholden to cheap labor and high profits that they will cede control of their corporations to their overseas subcontractors. So who's in charge of the company? What US firm apologizes to it's US subcontractor when that subcontractor makes a mistake ?

What does this mean for Boeing and the other significantly large 'US firms' now subcontracting large parts of their manufacturing, design and test in China and elsewhere?

Large profit margins are as addictive as crack, and an addict soon loses all self-respect in pursuing his addiction.

Mattel apologizes to China for toy recalls

Toy manufacturer takes 'full responsibility' for three worldwide recalls involving more than 21 million toys, citing design flaws.

BEIJING (AP) -- U.S.-based toy giant Mattel issued an extraordinary apology to China on Friday over the recall of Chinese-made toys, taking the blame for design flaws and saying it had recalled more lead-tainted toys than justified.

The gesture by Thomas A. Debrowski, Mattel's executive vice president for worldwide operations, came in a meeting with Chinese product safety chief Li Changjiang, at which Li upbraided the company for maintaining weak safety controls.

"Our reputation has been damaged lately by these recalls," Debrowski told Li in a meeting at Li's office at which reporters were allowed to be present.

"And Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," Debrowski said.

Mattel (Charts, Fortune 500) ordered three high-profile recalls this summer involving more than 21 million Chinese-made toys, including Barbie doll accessories and toy cars because of concerns about lead paint and tiny magnets that could be swallowed.

The recalls have prompted complaints from China that manufacturers were being blamed for design faults introduced by Mattel.

On Friday, Debrowski acknowledged that "vast majority of those products that were recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in China's manufacturers."

Lead-tainted toys accounted for only a small percentage of all toys recalled, he said, adding that: "We understand and appreciate deeply the issues that this has caused for the reputation of Chinese manufacturers."

In a statement issued by the company, Mattel said its lead-related recalls were "overly inclusive, including toys that may not have had lead in paint in excess of the U.S. standards.

"The follow-up inspections also confirmed that part of the recalled toys complied with the U.S. standards," the statement said.

Li reminded Debrowski that "a large part of your annual profit... comes from your factories in China.

"This shows that our cooperation is in the interests of Mattel, and both parties should value our cooperation. I really hope that Mattel can learn lessons and gain experience from these incidents," Li said, adding that Mattel should "improve their control measures."

Since this summer's recall, Mattel has announced plans to upgrade its safety system by certifying suppliers and increasing the frequency of random, unannounced inspections. It has fired several manufacturers.

Tests had found that lead levels in paint in recalled toys were as high as 110,000 parts per million, or nearly 200 times higher than the accepted safety ceiling of 600 parts per million.

China has become a center for the world's toy-making industry, exporting $7.5 billion worth of toys last year.

Oracle had good quarter, so did it's Execs

When is $1.25 billion considered a tremendous cost? When it is the cost of 12,000 employee's wages and benefits.

When is a $1.25 billion cost not even worth mentioning? When it is the cost of stock options given to a handful of execs who are already earning millions without it.

'The Redwood Shores-based company said Thursday it earned $840 million, or 16 cents per share, for the three months ended Aug. 31. ..... If not for stock-option expenses, Oracle (Charts, Fortune 500) said it would have made 22 cents per share .... '

Do a little math on this :

$840million / .16 = 5.25 billion shares
5.25 billion shares x .06 cents (cost of options per share) = $315 million in options , for just one quarter !!!

That's about $1.25 billion in option costs for a year , the vast majority of it going to just a few top execs, as is the case in most corporations ... money taken from shareholders and company re-investments , eliciting barely a yawn.

Starts adding up to real money ... let's turn this around ... if they were struggling and announced that they were laying off 12,000 workers to save $1.25 billion, this would be considered a giant number and a great savings, and the stock would undoubtedly rise ... but spending the majority of this large number on a handful of execs and it's not significant . Wall Street considers it a good investment to retain 'top people' .

Oracle profits beat expectations

Business software maker reports earnings of 22 cents per share before a charge, beating analysts' estimates by a penny per share.

SAN FRANCISCO (AP) -- Oracle Corp. kicked off its new fiscal year with its biggest increase in software sales since the dot-com boom and bust - highlighting a first-quarter performance that topped analysts' and its own expectations.

The Redwood Shores-based company said Thursday it earned $840 million, or 16 cents per share, for the three months ended Aug. 31. That represented a 25 percent improvement from net income of $670 million, or 13 cents per share, at the same time last year.

If not for stock-option expenses, Oracle (Charts, Fortune 500) said it would have made 22 cents per share - a penny above the average estimate among analysts polled by Thomson Financial.

Revenue for the period totaled $4.53 billion, 26 percent above last year's $3.59 billion and well above the average analyst estimate of $4.34 billion. If not for a weak dollar that bolstered international sales, Oracle said its first-quarter revenue would have been up by 22 percent.

Perhaps most important to investors, Oracle's sales of new software licenses climbed 35 percent to $1.09 billion, soaring past both management and analysts' projections. Analysts had been anticipating an improvement in the mid-20 percent range.

The spike was the largest in Oracle's first-quarter software sales since free-spending Internet startups were driving demand in 2000, said Safra Catz, the company's chief financial officer.

The first-quarter gains included about $87 million in sales from two recently acquired companies, Hyperion Corp. and Agile Software Corp., whose products weren't sold by Oracle last year.

Wall Street focuses on software sales because the new licenses establish a pipeline for future revenue from product upgrades and maintenance.

Oracle shares reached a new 52-week high of $21.31 Thursday before falling back to finish the regular session at $21.04. The stock surged by 43 cents in extended trading after the company released its first-quarter report.

Catz predicted Oracle's momentum will continue in the current quarter. She forecast the company's software sale will rise by 15 percent to 25 percent in the three months ending in November to produce earnings of 26 cents or 27 cents per share, excluding stock option expenses.

The first quarter is usually Oracle's weakest sales period because so many key decision-makers take summer vacations.

"If things weren't going well, this is where you would see it," Catz told analysts during a Thursday conference call.

August looked like it might be even more challenging this year as a worsening credit crunch triggered by the slumping real estate market roiled the stock market and raised concerns about both consumers and businesses curtailing their spending.

But the worries apparently didn't stop companies, schools and government agencies from buying Oracle's software.

The first-quarter performance extended a prosperous stretch that has justified an expensive expansion launched in 2004.

Hoping to build upon the company's dominance in database software, Oracle has spent about $25 billion on more than 30 acquisitions in the past three years. The shopping spree has primarily been aimed at luring customers away from SAP AG, the leading seller of business-applications software that helps companies manage their operations.

During the first quarter, Oracle's sales of applications software rose 65 percent to $376 million.

Oracle also is making significant inroads in middleware software - coding that helps the applications to work more effectively with the database software. The company's sales of database and middleware software increased 23 percent during the first quarter to $711 million.

"I would say that in the last 12 months, Oracle has certainly established itself as a much more viable software provider," said AMR Research analyst Bruce Richardson. Top of page

Tuesday, September 18, 2007

Lotus Symphony vs Microsoft Office

The NYTimes always writes positive articles about IBM, both being NY State (really, NYC) firms.

It's hard to see how this helps IBM as far as revenue since it's free .... if it makes a dent , large or small, in Office , this just hits Microsoft's bottom-line and doesn't enhance IBM's at all ... A weaker Microsoft is less able to compete in other software/hardware areas where perhaps IBM could gain market-share and revenues .

This is also another example of IBM no longer offering it's own software alternatives in the marketplace, which takes a lot of time and money to develop and maintain, but instead offers open-source freeware which requires a significantly smaller cost and takes advantage of the output of developers who work for free .

It's hard to see how the LINUX push has been that much of a success . IBM started to back it seven years ago and while it has gained market share from Microsoft it is still a small piece of the market at this point in time . If this was a proprietary OS, after seven years it might not be offered anymore. OS/2 didn't survive 7 years in the market .

September 18, 2007

I.B.M. to Offer Office Software Free in Challenge to Microsoft’s Line

I.B.M. plans to mount its most ambitious challenge in years to Microsoft’s dominance of personal computer software, by offering free programs for word processing, spreadsheets and presentations.

The company is announcing the desktop software, called I.B.M. Lotus Symphony, at an event today in New York. The programs will be available as free downloads from the I.B.M. Web site.

I.B.M.’s Lotus-branded proprietary programs already compete with Microsoft products for e-mail, messaging and work group collaboration. But the Symphony software is a free alternative to Microsoft’s mainstay Office programs — Word, Excel and PowerPoint. The Office business is huge and lucrative for Microsoft, second only to its Windows operating system as a profit maker.

In the 1990s, I.B.M. failed in an effort to compete head-on with Microsoft in personal computer software with its OS/2 operating system and its SmartSuite office productivity programs.

But I.B.M. is taking a different approach this time. Its offerings are versions of open-source software developed in a consortium called The original code traces its origins to a German company, Star Division, which Sun Microsystems bought in 1999. Sun later made the desktop software, now called StarOffice, an open-source project, in which work and code are freely shared.

I.B.M.’s engineers have been working with OpenOffice technology for some time. But last week, I.B.M. declared that it was formally joining the open-source group, had dedicated 35 full-time programmers to the project and would contribute code to the initiative.

Free office productivity software has long been available from, and the open-source alternative has not yet made much progress against Microsoft’s Office.

But I.B.M., analysts note, has such reach and stature with corporate customers that its endorsement could be significant.

“I.B.M. is jumping in with products that are backed by I.B.M., with the I.B.M. brand and I.B.M. service,” said Melissa Webster, an analyst for IDC, a research firm. “This is a major boost for open source on the desktop.”

I.B.M. executives compare this move with the push it gave Linux, the open-source operating system, into corporate data centers. In 2000, I.B.M. declared that it would forcefully back Linux with its engineers, its marketing and its dollars. The support from I.B.M. helped make Linux a mainstream technology in corporations, where it competes with Microsoft’s Windows server software.

I.B.M. is also joining forces with Google, which offers the open-source desktop productivity programs as part of its Google Pack of software. Google supports the same document formats in its online word processor and spreadsheet service.

I.B.M. views its Symphony desktop offerings as part of a broader technology trend that will open the door to faster, more automated movement of information within and between organizations.

A crucial technical ingredient, they say, is the document format used in the open-source desktop software, called the OpenDocument Format. It makes digital information independent of the program, like a word processor or spreadsheet, that is used to create and edit a document. OpenDocument Format is based on an Internet-era protocol called XML, short for Extensible Markup Language, which enables automated machine-to-machine communication.

For example, an individual investor might create a spreadsheet with automated links to market information, and prices at which he or she wants to buy or sell shares in particular stocks. The person would get an alert by e-mail or cellphone message of price swings, and could create the document for a buy or sell order with a keystroke.

Or, in a doctor’s office, patient records could be linked to hospital, clinic and other databases and updated automatically.

Microsoft has the same vision of software automation, but it champions its own document format, called Office Open XML. Earlier this month, Microsoft failed in its initial effort to have Office Open XML ratified as a global technical standard by the International Organization for Standardization in Geneva. The OpenDocument Format, backed by I.B.M., Google, Sun and others, was approved by the standards organization last year.

I.B.M. clearly regards its open-source desktop offerings as a strategic move in the document format battle. “There is nothing that advances a standard like a product that uses it,” said Steven A. Mills, senior vice president of I.B.M.’s software group.

The Lotus Symphony products will support the Microsoft Office formats as well as the OpenDocument Format. But analysts note that technical translators are not entirely foolproof; Symphony software may easily translate the words from a Microsoft Word document, but some of the fonts and formatting may be lost. For many users, that may not matter, they say, but for others it might.

Betsy Frost, a general manager in Microsoft’s Office business, said users valued “full compatibility” with previous versions of their Office documents as well as the ease of use and familiarity of Microsoft products. And she noted that there are 500 million Office users worldwide.

Any inroads I.B.M. and its allies make against Microsoft, analysts say, will not come easily. “Three major players — I.B.M., Google and Sun — are now solidly behind a potential competing standard to Office,” said Rob Koplowitz, an analyst at Forrester Research. “But it’s a tough road. Office is very entrenched.”

Monday, September 17, 2007

Reading into 'standard' layoff announce - EDS

Announcements like these are pretty blatant... laying off high-cost US workers while retaining (and continuing to hire like mad) workers overseas . I would imagine that these workers should be eligible for special re-training Federal programs for those affected when their jobs go overseas, but I would doubt they are classified this way.

When the gov't announces it's numbers of US jobs affected by offshoring of work they will NOT include these numbers (and many thousands more from other such corporate programs), and economists and high gov't officials (Sec'y of Labor and the multitude of other high gov't officials are short-termers recruited from Corporations) will claim that offshoring is not affecting US workers. Indeed they will claim that the American worker actually benefits from globalization.

Offering early retirement is usually a harbinger to actual layoffs depending upon how many accept a package, and a voluntary 'offering' sometimes means 'take it or get nothing when the layoffs come next month'.

An interesting side-note ... EDS is an American company originally founded by Ross Perot, still doing much of it it's business with gov't agencies within the US. Note that US workers are now a minority in the firm and this next round will make them a smaller minority still, 38,000 out of 124,000 total .

EDS, which has about 136,000 employees worldwide and 50,000 in the United States ...

12 September 2007
12:52 pm GMT
Reuters News
(c) 2007 Reuters Limited
(Recasts, adds details)
NEW YORK, Sept 12 (Reuters) - Technology services company Electronic Data Systems Corp , on Wednesday said it offered early retirement to about 12,000 U.S. employees, nearly a quarter of the U.S. work force, and expected a charge of $70 million to $130 million in the fourth quarter.
EDS, which ranks second by revenue after International Business Machines Corp among U.S.-based technology-services companies, has been boosting profit by cutting costs (a euphemism for laying off US workers) , including 5,000 jobs last year, and generating revenue from contracts including a $3.9 billion deal from the U.S. Navy (gov't and military contracts being handled by offshore workers) last year.
"It's an initiative as part of EDS's ongoing plan to improve our cost structure (cost = people) and competitiveness," a spokesman said of the new plan.
Earlier this month, Ronald Rittenmeyer assumed the role of chief executive, succeeding Michael Jordan, who during his four-year tenure helped EDS overcome weak technology demand and market share losses to IBM.
EDS, which has about 136,000 employees worldwide and 50,000 in the United States, said the size of the final charge might be greater or lesser than its estimate, depending on the number of employees who accept the offer. (currently 37% of it's employees are US workers .. if 12,000 leave with this package they will have 31%)
The company said it announced the offer to its staff on Sept. 11 after the board authorized it on Sept. 7. It gave employees until Oct. 30 to accept the offer, according to a filing with the U.S. Securities and Exchange Commission.
EDS plans to offer eligible employees an "enhanced" benefit equal to five times the allotted annual funds made to their company retirement plan, excluding interest credits. If applicable, EDS will also offer a benefit to the employees' Benefit Restoration Plan on their behalf, plus $10,000 from the EDS Retirement Plan.
Jordan continues to serve as chairman and executive officer of the Plano, Texas, company.
Shares of EDS slipped 2.3 percent to $21.86 on the New York Stock Exchange. The stock is off about 22 percent since Rittenmeyer was named CEO in July. (Reporting by Franklin Paul and Sinead Carew in New York and Peter Henderson in Los Angeles)

Thursday, September 13, 2007

IT Outsourcing - SMB in the US

They define basic operational tasks as '... making data backups, running e-mail networks and maintaining computer servers ... ' , and then declare that '...operations typically accounted for 70 percent of a company's I.T. budget.'

They state '....''It can free up internal resources for more important activities,'' .... then , as usual they never define those activities .... but it appears that it is what remains after operational or steady-state work is taken out of the IT dept's role .... this would probably be things like

1) development of new applications , or upgrading current application's functionality
2) upgrading hardware --> servers, network, devices , etc .
3) planning and architect work

But if steady-state can be out-sourced, then 2) above can also go to outsourcers ... 3) might be a little more difficult because the outsourcer becomes 'part' of the company, but certainly this can be done also .... even 1) can be outsourced or worked with an outsourcing firm ... the company knows it's own business and where it is going .. they can put together their future requirements ... for this they'll need to retain a core team of application developers and architects who will do high-level design work ....but then they can collaborate with an outsourcer to deliver the new application ...

This is just a staged approach to the old outsourcing model which takes over the whole IT area for a company in one fell swoop ...

And ALL the IT can be done out-of-house ... eventually because of costs, out-of-house will become out-of-country ....

Outsourcing I.T. To Unlikely Places, Like America
1,078 words
12 September 2007
The New York Times
Late Edition - Final
Copyright 2007 The New York Times Company. All Rights Reserved.
BUSINESSES, especially big ones, began outsourcing information-technology operations nearly a decade ago. But compared with the earliest efforts, corporate I.T. outsourcing today is far more precisely calibrated.
Where outsourcing once meant transferring departments to Bangalore, India, or Riga, Latvia, it now usually involves assigning specific, basic operational tasks like making data backups, running e-mail networks and maintaining computer servers. As a result, outsourcing has become more attractive to smaller businesses that in the past might not have had the resources to hire a full tech-support team to do the work.
The vendors supplying this new generation of outsourcing services are called managed service providers, or M.S.P.'s. They come in all shapes and sizes, from I.B.M. down. Some operate their own large data centers. They have emerged in unexpected places -- American cities like Portland, Ore.; Little Rock, Ark.; and Madison, Wis., where there is enough skilled labor for the tasks , and the expenses are less than in bigger cities. (young people, college grads , in college-dominated , i.e. 'cheap' towns)
Using these companies can offer big payoffs for businesses with I.T. departments that are stretched thin.
''It can free up internal resources for more important activities,'' says Lloyd Hession, chief security officer of BT Radianz, which provides services to brokerages and other financial firms.
Mark E. Bakken, chief executive of Bedrock Managed Services and Consulting in Madison, Wis., said that operations typically accounted for 70 percent of a company's I.T. budget. ''If we can cut that by a third, they can pocket the money or use it to grow,'' he said.
The changes reflect a shift in the scale of information-technology outsourcing, said Richard Ruiz, the general manager of the small- and medium-business services unit at I.B.M. Global Technology Services.
''Ten years ago, I.T. was more of an expense,'' Mr. Ruiz said. ''Back then we did big, complex and expensive outsourcing deals. Now I.B.M. has a more diversified outsourcing product portfolio and can approach smaller customers, too.''
M.S.P.'s are thriving because of several trends. First, Internet connectivity is cheap and getting cheaper.
Corporations can expect more flexibility in Internet capacity, paying for what they use, rather than for extra capacity they may need only at peak times.
''The real driver was the ability to provide a flexible bandwidth model to cater to unpredictable demands on our Web servers from the general public looking for information,'' said Aaron Bazler, the network and infrastructure manager for the Manchester Airport Authority in Britain. When the airport outsourced its parking-reservations system, it freed up bandwidth for its own needs.
Falling Internet connectivity prices, in turn, make it easier for the M.S.P.'s to access the Internet bandwidth they need to ensure reliable operations and prevent a failure. ''We have four upstream Internet providers coming into our place,'' said Rich Bader, the chief executive of EasyStreet Online Services in Beaverton, Ore., outside Portland. Among the three very high-speed lines, he said, usually one goes down once a month. ''The trick is that we have enough spare bandwidth on the other lines to handle any outage.''
Second, the Internet is playing a larger, more integral role in many corporations' collections of computing applications. Take e-mail: it is hard to find any major company that doesn't have an Internet connection for its employees' e-mail.
''E-mail is now about external communications, and we sell Microsoft Exchange by the mailbox at $15 per month each,'' Mr. Bader said. ''Exchange is very picky to run properly, and a lot of companies just don't want to devote the necessary resources to get the kind of reliability that the business requires.''
Having more Internet-connected applications requires more skill in running the applications and the broadband connection to these servers.
''The amount of expertise needed to keep Internet applications running and secure continues to increase,'' Mr. Bader said. ''Before we just had stand-alone Web servers. Now they are integrated into various other internal corporate applications, which means that businesses are even more dependent on their availability.''
Moreover, Internet connections mean data and network security considerations are critical, said Mr. Ruiz of I.B.M. ''The Web drives a lot of security issues for our customers, and they need help managing and containing these issues,'' he said.
And as the size of a typical I.T. staff continues to decrease, there is great importance in shifting responsibility for maintaining these critical servers to an outside provider who can monitor and manage them nonstop.
''We have had no major outages in the past year except for routine maintenance,'' Mr. Bazler of Manchester airport said. ''Having an M.S.P. manage our servers has made a huge positive difference in their availability.''
Third, the software tools that are needed to monitor and manage computer servers remotely are cheaper and more reliable than they used to be. Both I.B.M. and Microsoft, among others, have deepened and broadened their management-tools products, making it easier for engineers to keep machines running and updated, and foster certain economies of scale for M.S.P.'s that are handling multiple customers.
''I call Dell or H.P. and wait on hold and tell them what they need to fix so my customers don't have to waste their time,'' said Bob Longo, the director of ClearPointe Technology, an M.S.P. in Little Rock, Ark.
ClearPointe has a minimum of three engineers on duty at all times. The company monitors more than 25,000 devices, and does routine maintenance on 700 servers for customers all over the United States for an average monthly cost of $700 a server.
Fourth, even the smaller corporations are motivated to do a better job with disaster recovery and off-site data protection as a result of the Sarbanes-Oxley law, which set new financial reporting and auditing rules for businesses and other legislation. In the past, only the largest corporate data centers made off-site plans; now it is more common for smaller ones to do so. M.S.P.'s have tailored their offerings and sell less expensive solutions for this market.
''Legal compliance complexity is really driving more business to M.S.P.'s,'' said Charles Weaver, president of MSPAlliance, an association of managed-service providers based in Chico, Calif.

Wednesday, September 12, 2007

Harvard riches

Speaking of big endowments .... a 23% increase, up to $35 billion ....

Also, the rare world of fund/financial managers ... where $5-10 million a year is a major decrease in compensation ... a compensation that is hard to live on and hard to find 'qualified' candidates for ...

September 12, 2007

Fund Chief at Harvard Will Depart

The manager of Harvard’s endowment fund for almost two years, Mohamed A. El-Erian, announced unexpectedly yesterday that he was leaving to return to the Pacific Investment Management Company, where he had worked for seven years.

In a long, if cryptic, statement, Mr. El-Erian said that he was returning to Southern California at the end of the year to be “closer to our family.” His wife and young daughter moved to Boston with him when he joined Harvard. He declined to comment further yesterday.

At Pimco, Mr. El-Erian, 49, will step into the newly created position of managing director, co-chief executive and co-chief investment officer in January. In that post he will join the founder, William H. Gross, 63, and the chief executive and chief investment officer, William S. Thompson Jr., 62, as a member of the senior management team.

When he left for Harvard, Mr. El-Erian had been managing director and senior portfolio manager, overseeing the $28 billion emerging markets bond fund. He will have broader responsibilities in his new role. But Pimco said in a statement that neither Mr. Gross nor Mr. Thompson planned to step down.

Mr. Gross’s statement was particularly enthusiastic about Mr. El-Erian’s return. “I am ecstatic,” he said. “to have him join Bill Thompson and me.”

Pimco manages more than $690 billion, which includes the $103 billion Pimco Total Return bond fund.

The news surprised Harvard insiders and fund managers alike. Winning the plum job as head of the Harvard Management Company, the nation’s largest university endowment, had been considered a coup for Mr. El-Erian in October 2005. Harvard officials said at the time that he was chosen because his broad views on global economies would be useful in managing a diverse portfolio.

Moreover just last month, Harvard reported its results for fiscal 2007, ended June 30. The endowment had a 23 percent return, which took the fund’s total to $34.9 billion. That was considered a strong performance, particularly because the size of the endowment presents unusual challenges and because Mr. El-Erian had to rebuild much of the fund’s team after the former head, Jack R. Meyer, took several people with him when he left to start a hedge fund, Convexity Capital Management.

Certainly Mr. El-Erian’s abrupt announcement will raise questions about his decision to leave.

At Pimco, Mr. El-Erian made tens of millions, according to several people who know him. Though he was only at Harvard for half of fiscal 2006, he earned $2.3 million. The fiscal 2007 figures are not yet available.

An associate who did not want to be identified because he had not been authorized to discuss the matter said yesterday that Mr. El-Erian’s wife and daughter were not happy in Boston.

Jay O. Light, dean of the Harvard Business School and a board member of the Harvard Management Company, said that he had known of Mr. El-Erian’s plan for several weeks and that “Mohamed has been thinking about this long and hard.”

Mr. Light said that Mr. El-Erian “has done a great job of building the internal and external platforms; I think he has put in place great people.”

Harvard’s performance was crucial in August, a tumultuous month for the markets, because it had an investment in Sowood Capital Management, a hedge fund that lost half its value. Under Mr. Meyer, Harvard had invested $500 million in 2004.

Despite the Sowood loss, which cost Harvard $350 million, the endowment was up marginally in July. A money manager close to Harvard said that some people were concerned that Mr. El-Erian had not seen the Sowood losses coming, especially since it involved bonds, which is his area of expertise. But Mr. Light said, in relation to Mr. El-Erian’s record that “Sowood was a nonevent.”

And Byron Wien, chief investment strategist at Pequot Capital Management and a Harvard alumnus contributor and fund-raiser, said: “In my encounters with Mohamed I was very impressed with his breadth of insight into what was going on in the world and its impact on the financial markets.”

Certainly more instability is not welcome news at Harvard, which faces the challenge of finding another leader for the management company. Mr. Meyer left in 2005 after 15 years, partly out of exasperation over criticism of a compensation program that paid some of his top managers $17 million or more.

Finding a leader with enough experience who is willing to work for less than the huge pay that one can make on Wall Street is not easy. And it could mean restructuring much of the management team again if a newcomer has an approach that differs from Mr. El-Erian’s.

Already yesterday there was speculation about the successor. One name mentioned was Steve Galbraith of Maverick Capital, who was mentioned during the last search. He could not be reached for comment yesterday.

Still Mr. Light sounded positive. “We are in good shape,” he said. ”There is no doubt about it. The numbers are clear.”

The Business of Universities is Business

Look at all the places where they couch business-type terms like 'market' or 'revenue' or 'investment' in this NYTimes article about higher education .... no need to mention that Universities are first and foremost a BUSINESS enterprise ...

You would expect most Universities to be very concerned about costs, revenues and balancing their books ... but the higher, elite institutions ? where they have very deep pockets due to very large endowments endowments and active fund-raising ?

This was a very telling and I would imagine embarrassing quote , in hindsight, for the guy from the California system:

“And because M.B.A.’s can offer tremendous salary boosts down the road, we can charge higher tuitions to students.”

I've heard this is now the case for certain majors at some colleges at the undergrad level ... because the students earn more upon graduation , they are now charging them more for their education .... if this trend holds and becomes a standard then colleges will be a vastly different place in a few short years ... a much more explicit multi-tiered social environment than now ...

Pre-med and pre-law will pay significantly extra for their tuition .... along with some science and engineering majors ... you would think that liberal arts students tuition would then decrease, but nothing ever goes down in price .... the increases may just be proportionally smaller ...

September 12, 2007
Master’s Degrees Abound as Universities and Students See a Windfall
The number of students in the University of Chicago program that bestows a Master of Arts degree in social sciences has quadrupled since 1989, jumping to 160 from 40, and despite a tuition price tag of $37,000, every year more students clamor for admittance.
“It’s an expensive degree, but students have calculated how fast they get their investment back,” said John J. MacAloon, an associate dean at the University of Chicago and director of the program. “And it is beneficial for the university because there is a lot of tuition income to be had.”
More students than ever have started master’s programs this fall, and universities are seeing those programs as potentially lucrative sources of revenue. The number of students earning these degrees around the country has nearly doubled since 1980. Since 1970, the growth is 150 percent, more than twice as fast as bachelor and doctorate programs.
“Master’s programs are the most obvious targets of opportunity,” said George L. Mehaffy, a vice president of the American Association of State Colleges and Universities. “The degrees are in high demand, and this is an optimal time to enter or expand the market.”
For students, the degrees are often expensive; at private universities, many students take out $50,000 in loans for every year of school. And scholarships and fellowships are rare, unlike doctoral programs, which are usually fully financed by universities.
Still, many say the price is worth it. In his two-year master’s program in science technology and environmental policy from the University of Minnesota Craig Nelson had $35,000 in loans. Now, he works in regulatory affairs at the 3M Company.
“Without the degree, I wouldn’t have the job,” he said. “So even though I’ll be paying the loan for 10 years, it was a good move for me.”
Getting into the business of offering these degrees can be a good move for universities, too, with some that have traditionally focused only on undergraduate students now entering the master’s market. The California State University system, for example, has introduced many new applied master’s degrees and is expanding its master’s of business administration programs.
“We are really conscious of the fact that master’s degrees are becoming the coin of the realm,” said Gary W. Reichard, the executive vice chancellor and chief academic officer for the California system. “And because M.B.A.’s can offer tremendous salary boosts down the road, we can charge higher tuitions to students.”
Universities also do not have to provide dormitory rooms and dining halls for master’s candidates, because graduate students typically do not live on campus.
Some university officials say the explosion of these programs has less to do with revenue than it does with the marketplace pressures on students to get higher degrees and credentials.
Thomas Ehrlich, a senior scholar at the Carnegie Foundation for the Advancement of Teaching and a former president of Indiana University, said that although many master’s programs could be good revenue streams for universities, “We’re not in the business of making money.” He added, “We’re in the business of educating students.”
But some schools are in the business of both. The University of Phoenix, a commercial institution with 60 branch campuses and around 200,000 students, awarded 24,788 master’s degrees last year, mostly for work completed online in business and education. That was at least a thousand more than the number of bachelor’s degrees it awarded.
Many university provosts say a graduate education can be more expensive to provide than an undergraduate degree, merely because class sizes are usually smaller in graduate courses. But for universities that already have established doctoral programs, adding paying master’s students to the mix means they get a bump in tuition dollars without a heavy outlay of resources.
“Sometimes there is unused capacity in graduate classrooms,” Mr. Mehaffy said. “If there are 10 people in a graduate course one year and 15 the next, there is a 50 percent growth but no real drain on the institution.”
Universities are also luring master’s students into staying for multiple years by offering dual-degree programs: two master’s degrees at twice the cost. Some programs join international affairs and journalism, science and public policy, business and education. Other schools extend programs; for example, the University of Wisconsin’s two-year master’s degree in anthropology can be lengthened to three years if students want to add a museum studies concentration.
And many students believe that these multiple degrees are highly valuable in today’s competitive job market.
Rey A. Phillips Santos has three graduate degrees gracing his résumé: two master’s and one in law. After completing the master’s of arts program in the social sciences from the University of Chicago, he decided to go on to the Chicago-Kent College of Law, in a joint-degree program in environmental management with the Stuart Graduate School of Business.
“There is a huge demand for credentials in high-level jobs now,” said Mr. Phillips, who is a lawyer for the Chicago city government. “Each of my degrees helped me to get a leg up in the job market, and earn higher salaries than I would have otherwise. They were great investments.

Tuesday, September 11, 2007

What is a 'US' firm ?

Interesting side=point in this article concerns the question, 'what is an American company' ? (It is AT LEAST one that pays taxes, or is supposed to have some tax bill depending on write-offs and loopholes, in the US) .

The article states:

Covansys, which was headquartered in the US but had some 7,000 of its 9,000 employees based in low-cost Indian centers, immediately doubled CSC's Indian headcount to 14,000.

If the vast majority of workers are not US-based for many corporations, as is becoming more common, are they still US-based companies ?

And , are there financial or tax incentives for a company to be headquartered in the US but have most of it's employees overseas ?

When and if these incentives cease-to-be, will these companies change their headquarters elsewhere, becoming 'foreign' companies ? What effect will this have on tax revenues in the US and the ability of the various levels of gov't to maintain budgets and services at the same levels?

CSC gets serious about offshore strategy

503 words
10 September 2007
09:48 am GMT
Datamonitor News and Comment
(c) 2007 Datamonitor plc. All rights reserved

IT services giant CSC has recently made moves aimed at boosting its offshore presence, the most notable being its $1.3bn acquisition of Covansys earlier this year.

Covansys, which was headquartered in the US but had some 7,000 of its 9,000 employees based in low-cost Indian centers, immediately doubled CSC's Indian headcount to 14,000. This put the company roughly on par with fellow outsourcer EDS in terms of Indian numbers, although still far behind rivals Accenture and IBM.

Last month, CSC announced a new business group called "world sourcing services" to oversee global delivery and expansion into new geographic markets. The company appointed Mary Jo Morris, a longtime CSC manager, to become president of the new unit.

Morris told Computer Business Review that the Covansys deal rounded out CSC's offshore strategy in several ways. First, Covansys had a well defined sales channel to take its Indian services to the market. "We had the capacity to compete with the top Indian competitors, we just needed the front end for sales," Morris said. "Covansys was a perfect fit. We got our direct market channel and doubled our capacity in India with a complement of services and location."

She said Covansys brought with it a strong background in applications development and maintenance, while CSC was not only strong in applications but also in legacy outsourcing engagements. "Covansys had more of an on-demand, project-based environment and they brought testing capabilities and some complementary technology that we didn't really have," said Morris. Plus, its industry focus coincided with CSC's, including financial services, technology and consumer goods, health care, and manufacturing.

JJ Foster, vice president and CTO of world sourcing services for CSC, said that in the applications market, CSC's offshore work started with basic outsourcing services. But over the last two or three years, the company has moved much more advanced work offshore, to the point where it now has high-level architects working in India. He said that Covansys, on the other hand, actually started out with onsite project work and then moved to offshore delivery. Now CSC's offshore portfolio is split evenly between project work and annuity work under longer contracts.

Like most big outsourcers, CSC is moving more of its work to offshore centers. "There's nothing we're not putting offshore if we can," Morris said. "Anything to do with applications, including systems integration work, and anything to do with remote infrastructure. Plus all types of BPO work, especially in financial services. Now Covansys brings us capacity in claims BPO."

But she said a good part of CSC's business simply isn't eligible for offshore delivery, referring to the company's substantial work in the federal, defense, and aerospace industries. "That takes us down to about half of the company's total revenue," she said. "Of that, about 30% is done offshore, and 80% of that amount is applications work."

Monday, September 10, 2007

Standard Economist's view of Jobs and Globalization - maufacturing jobs not lost

Quoting Economists from a Libertarian thinktank and from academia ....

We have not lost manufacturing jobs , the US is just 3 million jobs more efficient in 3 years !!

Even if this ludicrous conclusion was taken at face value, this means that economic output is the same , perhaps higher BUT 3 million people have lost jobs in manufacturing and cannot find equivalent work... perhaps good in a macroeconomic , global sense, but a devastating event to several million families ... and a continuation of this has to lead to significant deleterious economic issues for any society experiencing it.

Three obvious questions:

1) If our exports are thriving , how come our trade inbalance is stuck at historic highs, i.e. our imports have increased at a much greater rate than our exports for the past several years, mostly due to Chinese imports.

2) How much of our exports are big ticket items like Boeing jets, Caterpillar land-movers and Defense dept arms ?

3) And how much of the work at Boeing and Caterpillar and like companies is now actually being done overseas, even if final assembly is done in US ? What is the growth in overseas jobs for these American firms, versus American job growth at these corporations?

Article published Sep 10, 2007
U.S. manufacturing alive and well

September 10, 2007

Donald Lambro - "Reports of the death of U.S. manufacturing have been greatly exaggerated." This is the opening line in a revealing and timely economic analysis aptly titled "Thriving in a Global Economy — The Truth About U.S. Manufacturing and Trade."

At a time when much of the American electorate is sour on trade and wrongly believes America doesn't make much of anything anymore, this report by Daniel Ikenson, a top analyst at the Cato Institute's Center for Trade Policy Studies, comes as breath of fresh air on a subject poisoned by political demagogues, union leaders and uninformed partisans posing as broadcast journalists.

The latter group of course is led by CNN's Lou Dobbs, who each week spreads more disinformation about U.S. manufacturing than a convention of AFL-CIO members. Mr. Dobbs wants us to believe our factories are all moving overseas; U.S. manufacturing is in deep decline; pay and benefits in factory jobs are at record lows; competitors like China are beating us in manufacturing; we are losing our competitive edge; and imports are killing us.

But the facts about U.S. manufacturing tell a much different story in this valuable study that starts off saying 2006 "was a record year for output, revenues, profits, profit rates, and return on investment in the manufacturing sector." (none of these indicators speak to the health of manufacturing jobs) Indeed, "despite all the stories about the erosion of U.S. manufacturing primacy, the United States remains the world's most prolific manufacturer — producing 2½ times more output than those vaunted Chinese factories in 2006," (Chinese workers average $1/hr ... if American workers average $20/hr with benefits, then 2.5 times output pales in a 20-fold cost savings) Mr. Ikenson reports. The unvarnished truth is that we are manufacturing more, selling more and exporting more abroad than at any time in our history. (with significant 'value-add' from foreign off-shoots of US firms) .

True, critics can point to the loss of 3 million manufacturing jobs largely between 2000 and 2003 (and millions more over the last two to three decades). But that downsizing has more to do with our ability to make more with fewer workers as a result of technological advances that have kept us competitive in the global economy. (an astonishing assessment... this would indicate an unbelievable productivity rate, to displace millions of jobs) .

Sad to say, the Lou Dobbs disinformation campaign has been swallowed hook, line and sinker by many politicians on Capitol Hill, where more than a dozen protectionist, trade-related bills are floating around, based on the premise that manufacturing is going down the tubes and free-trade pacts are the principal culprits.

Quite the contrary, says Mr. Ikenson, "The totality of evidence points to a robust manufacturing sector that has thrived on account of greater international trade." We need more, not fewer, free-trade agreements to open more foreign markets to U.S.-made goods and services, he says. (big exporters may be doing well, but this says nothing about manufacturing jobs) .

Mr. Ikenson does not dismiss the decline in manufacturing employment, or the sector's smaller share in U.S. gross domestic product, which he acknowledges "are important statistics which should be considered." But we need to consider them in the context of other relevant data "if informed conclusions are to be reached and bad policy choices avoided."

So he offers these underreported manufacturing facts from 2006 when the United States was experiencing record imports of manufactured products:

c Real U.S. manufacturing output reached an all-time high.

c Real manufacturing revenues reached an all-time high.

c Real manufacturing operating profits reached an all-time high.

c After-tax profit rates for manufacturing corporations reached an all-time high.

c Return on equity for manufacturing corporations reached an all-time high.

c The value of U.S. manufacturing exports reached an all-time high.

c U.S. factories remained the world's most prolific, accounting for more than one-fifth of world manufacturing value added. Free-trade critics never mention any of these statistics, focusing almost entirely on the decline in manufacturing employment and their belief that if we raise the costs of imports through tariff/taxes and other regulations, we can boost factory jobs.

But higher tariffs would raise consumer prices that would especially hurt middle- to lower-income Americans; undermine those sectors in our economy that buy, distribute and sell imported products; and lead to trade retaliation against us abroad. All of which would destroy jobs. (at some point American workers cannot buy bigger ticket items that are imported; at that time foreign middle-classes will have be consume the output of global manufacturing) .

Producing more with fewer workers at less cost is "something to cheer about," because it leads to long-term increases in our living standards. "When manufacturers can produce more output with fewer and less costly inputs, that's called progress," Mr. Ikenson says.

He quotes from Harvard business professor Michael Porter's influential book, "The Competitive Advantage of Nations": "A nation's standard of living in the long term depends on its ability to attain a high and rising level of productivity in the industries in which its firms compete."

Still, the economic myth persists that trade and the global economy is the cause of manufacturing decline, a contention that Mr. Ikenson says "is all but moot. What is perhaps most surprising about the data, given the antitrade rhetoric so popular in Washington, is that [U.S.] export growth was evident for all but one of the 18 [manufacturing industries.]"

Indeed, double-digit export growth "was the case for 16 of 18 industries. Export growth has been an important part of manufacturing's strong revenue and profit growth." In short, there is abundant evidence that U.S. manufacturing is alive and well and prospering in a thriving global economy.

Back to you, Lou Dobbs.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

Intel in China

It's not clear from the article whether the $2.5bln is in addition to the $4 bln mentioned later in the article .... $2.5bln is a VERY large investment for a single plant, considering the currency exchange, dollars-to-yuan ....

Interesting comment from Intel CEO (Barrett) about India's losing out on this semiconductor investment ... sounds like the standard game of playing off one country against the other for a better deal for investing there ... similar to what non-US companies do when setting up plants here, playing one state off another to locate their new plant (e.g. BMW in Alabama), getting tremendous tax breaks, sometimes actually getting paid to relocate, i.e. the state pays for the plant, infrastructure (add'l roads, schools, etc.) and also 'forgives' all taxes for many years ...

Developing local talent ... and already having more than 2 'research and development' sites there ... not low-level work but research ...

I wonder how much investment Intel is making in the US, colleges, or plants ... meanwhile it is one of the loudest voices for opening up H-1B visa programs to bring global 'talent' here (for training and then sending back to run shops overseas? ) ...

UPDATE: Intel Breaks Ground On $2.5 Bln Chip Plant In China

September 09, 2007: 08:46 PM EST

SAN FRANCISCO (Dow Jones) - Intel Corp., the world's largest chipmaker, said Saturday that construction work is underway at its $2.5 billion chip manufacturing plant in China.
The Dalian, China facility will be Intel's first manufacturing plant in Asia, and is expected to be in operation in 2010.
Intel, which has been in a heated battle for market share against rival Advanced Micro Devices Inc. (AMD) , has invested roughly $4 billion in China.
The Santa Clara, Calif.-based company already has two assembly and test plants in Shanghai and Chengdu. It also has research and development centers in Beijing, Shanghai and other areas in China.
Named Fab 68, the plant will "be an integral part of our global manufacturing network while bringing us closer to our customers and partners in China," said Intel Chairman Craig Barrett in a statement.
Barrett this past week said that the company is still interested in building a chip-manufacturing plant in India, though the government "has been a bit slow in coming out with a semiconductor policy and missed the window" on its manufacturing facility "for now."
Intel also said it's working to develop local talent through partnerships with Dalian University of Technology and its establishment of the Semiconductor Technology Institute with the municipal government.

Thursday, September 6, 2007


They always talk about the 2 systems of justice here in the US ... one for the rich and powerful and one for the rest of us ...

I experienced a bit of this recently when I got a parking ticket in D.C. when my father-in-law died in June .... winds up that the CT DMV cooperates with all other states , sharing information , even for parking tickets (!!) ... if I didn't pay the fine then the CT DMV would revoke my license and impound my car (that's cooperation !!) ... anyway, it winds up that the parking law in D.C. specifically exempts the D.C. city council and mayor from having to abide by parking rules or having to pay fines ... this is actually written into the law ....

Interesting how gov't can quickly share information for parking tickets , and act on this information , forcefully , but they can't track illegal aliens or terrorists ... I think we need to hire the DMV database people for Homeland Security or the Immigration service .....

Anyway , in South Korea they are even more blatant about the '2-laws' rule ... too important to go to jail !!

How does this differ from the way they do things in North Korea ? not by very much, at least in this case ...

Hyundai chairman to avoid prison
Three-judge panel decides that 69-year-old head of automaker is too important to Korea's economy to go to jail despite being convicted of embezzlement.
September 6 2007: 6:41 AM EDT

SEOUL, South Korea (AP) -- An appeals court suspended on Thursday a three-year prison term handed to Hyundai Chairman Chung Mong-koo for embezzlement, saying the tycoon is too important to South Korea's economy to go to jail.
A three-judge panel at the Seoul High Court suspended the sentence for five years, meaning that the 69-year-old head of the world's sixth-largest automaker will avoid prison as long as he keeps a clean record during that period.
A lower court had sentenced Chung in February to three years for embezzling more than $100 million in company money to set up a slush fund. Prosecutors say the fund was used to pay lobbyists to gain government favors and for personal use.
Presiding Judge Lee Jae-hong told the packed courtroom that Hyundai Motor has great influence over the nation's economy and Chung, its hands-on leader, is the symbol of the company.
"I am also a citizen of the Republic of Korea," Lee said. "I was unwilling to engage in a gamble that would put the nation's economy at risk."
Chung, free on bail after spending two months in jail for questioning after his arrest in April last year, has been actively running the company, which has ambitions to become the work's fifth-largest automaker by 2010.
Lee said he struggled with the decision, originally set for July 10, and postponed it twice, saying the court needed more time. He said he sought the views of various people, including other judges, prosecutors, lawyers, journalists and "even taxi drivers and restaurant employees."
In his appeal, Chung asked the court to be allowed to avoid prison to devote his energies to South Korea's biggest automaker to contribute to the country's economy.
Prosecutors sought a six-year prison term, the same as their original demand, saying the original decision was not harsh enough for the crime.
It was not immediately clear whether prosecutors planned to appeal to the Supreme Court. A lawyer for Chung said earlier Thursday that the top court only hears cases involving guilt or innocence, suggesting that an appeal regarding the sentencing would be unlikely.
Kim Kyung-soo, a spokesman for the Supreme Public Prosecutors' Office, said Chung remains guilty.
"It's not that he was found innocent," Kim said. "Therefore, it is not appropriate for us to comment on the weight of the sentence."
Chung has pushed Hyundai Motor to expand aggressively overseas, building factories in China, India, Turkey and the United States, with another one currently under construction in the Czech Republic.
Hyundai Motor affiliate Kia has done the same, manufacturing cars in China and Slovakia and building another plant in Georgia, near Hyundai Motor's factory in Alabama.
Last year, Hyundai Motor and Kia Motors accounted for about 72 percent of South Korea's automobile exports. Autos account for 13 percent of the country's total exports.
Chung, one of South Korea's richest people, is known as a micro-manager with a top-down operating style. Hyundai Motor, along with Kia Motors, floundered during his jailing last year, with key decisions related to overseas plants and other issues delayed.
Park Wan-gi, deputy director of civic activist group Citizens' Coalition for Economic Justice, said the ruling could be controversial by encouraging the perception that the rich can avoid jail.
"The suspension of the prison term could have negative implications," Park said, saying crimes committed by South Korea's family-run conglomerates aren't likely to be halted.
In a similar case involving another tycoon, the Seoul High Court in 2005 suspended a three-year prison term for accounting irregularities handed to Chey Tae-won, CEO and chairman of South Korea's leading oil refiner, SK Corp., now known as SK Energy.
Hyundai Motor welcomed the decision.
"We are greatly relieved that this matter is finally over," the company said in a statement. "We can now devote our full energies to addressing the numerous challenges that face us and building a global brand."
The court also ordered Chung to fulfill a promise he made to donate $1.1 billion (1 trillion won) of his personal assets to society.
Chung was also ordered to do community service - giving business organizations lectures about lawful management and contributing articles to magazines and daily newspapers on the same topic.
Chung made the donation pledge last year before his arrest as the slush fund scandal was developing. It came as part of a public apology he issued and was seen as an attempt to earn leniency.
Hyundai Motor shares rose as much as 2.2 percent after the verdict was announced about 10 minutes before the close of trading. They fell back, however, to finish 0.6 percent higher at 71,800 won ($76). The company's share price has risen 6.5 percent this year.

Wednesday, September 5, 2007

Standard Economist's view of Jobs and Globalization

The vast majority of economists , whether conservative or liberal, are for the globalization of work, so the following is the standard party line ...

Article published Sep 4, 2007
What to study

September 4, 2007

Richard W. Rahn - Students the world over have always asked their elders, what should I study in order to get a good job? In this age of globalization and the Internet, the question involves a whole new dimension. Students in rich countries, such as the United States and Germany, fear their chosen trade or profession might be outsourced to a low-wage country. Students in developing countries, such as Mongolia and Paraguay, understand that globalization and the Internet may give them access to jobs never before available.

Those on both the left and right who can only see dangers and misery from any new technological advance argue that huge quantities of jobs will be transferred to the developing world, resulting in big drops in income in the developed countries. We have seen low-skill, manufacturing jobs, where machines have not yet been created to do the work, migrate to low-wage countries. (This has been a net benefit to both developed and undeveloped countries as I and many others have extensively written about — but that is another topic.) Over time, as technology develops, virtually all manufacturing will be done by machines, so aspiring to be an assembly line worker is probably not a good strategy, in a rich or a poor country.

Low-wage jobs that can easily be served over the Internet or phone, such as "call centers," can also be successfully shifted to low-wage countries, particularly those with many English speakers. One generalization, which is very likely to hold up, is that learning English, wherever you live on the planet, is likely to be an economic plus.

English is rapidly becoming the global language, not only of business and particularly finance, but also of travel, science, and many other professions and fields of interest. That is why countries as diverse as Mongolia and Montenegro are seriously considering making English their second official language. Almost everything is translated into English and most of that is put on the Web. Thus, if you can read, write and speak English, for all intents and purposes, you have access to all of the world's knowledge and have a global competitive advantage.

Despite the fears of some and the hopes of others, there are definite limits to the jobs that can be outsourced to low-wage countries. If one actually looks at the data, it is obvious almost all the highest-paying jobs in the U.S. (and also other developed countries) that do not require a college degree cannot be easily outsourced. (why not?) Most of these jobs are in the construction trades, such as electricians, plumbers and masons, or such jobs as firefighters, policeman or truck drivers.(but cheaper labor can be brought in to take these jobs... illegal aliens do much of construction nowadays) Likewise, few of the highest-paying jobs requiring a two-year degree cannot be outsourced, such as nurses, dental hygienists, technicians and mechanics. (ditto here , due to the 'nurse shortage', they are importing nurses)

For the high-paying jobs that normally require a college degree, such as airline pilots, business managers, engineers, actuaries, accountants, teachers and computer programmers, there is a global market but, still, most of their work does and will continue to require interaction with customers in specific locales.( they have been importing teachers, engineers and programmers, etc ... for many years now) Clearly, some of the product of accountants, engineers and computer programmers can be sent and sold over the Internet, but not all.

Many of the highest-paying jobs that require a graduate degree have the greatest flexibility as to the worker's home country and primary residence. Most physicians and lawyers are tied to a specific geographical area, but not all. Some medical services can be provided over the Internet, and we are seeing, in the age of low-cost air fares, people traveling great distances for low-cost dental services or plastic surgery. For many highly priced specialists and consultants, the ability to travel to meet clients and high-speed Internet access are more important than home country location.

The educational establishment (particularly the highly priced part of it in the U.S.) has reason to fear the new technologies. Much of what one needs to know, but not all, can be taught over the Internet at low cost, so there is a great opportunity for educational entrepreneurs in low-wage countries to teach their own students and also those in more developed countries, if they are price-competitive. ( most degrees and certificates need to be accredited , so people can not just create a school or training program without getting accreditation ... the currently accredited institutions will fight this tooth and nail ... it may eventually happen but not quickly) .

Governments are poor at forecasting future educational needs, but markets are good at doing so. Governments are better at funding than delivering education. Governments have coercive tax powers, but because of their bureaucratic natures are not good at supplying goods and services, which can almost always be provided better and more cheaply by the private sector.

A student with a good grasp of language, particularly English, and a basic understanding and facility with mathematics, can learn much of what he or she needs to know for most jobs anywhere in the world — and, increasingly, much of this additional knowledge can be conveyed over the Internet at very low cost. Governments, through their funding mechanisms, should endeavor to make sure their citizens have these basic skills, rather than try to outguess markets as to what these jobs will be and how these job skills should be taught.

For students both in developed and developing countries, increasing globalization and its attendant global prosperity mean more high-paying jobs for everyone, everywhere. (from what empirical data can such an all-inclusive statement come from --- 'for everyone, everywhere' --- ... sounds more like a hope , which is must be ... he is talking about the future , and no one knows what the future will bring .... except Economists ! ... in this they resemble clergy, who tell us what God wants and what heaven/afterlife awaits us , without an ounce of empirical evidence) .

Richard W. Rahn is the chairman of the Institute for Global Economic Growth.