The handwriting is on the wall,' writes an IT specialist at the Bank of America. Until recently the bank needed talent so badly it had to outbid rivals. But last fall, his entire 15-engineer team was told their jobs were redundant. Bank of America has already slashed 3,700 of its 25,000 technical and back-office jobs and more are to follow.
Corporate downsizings are nothing new. These layoffs, though, aren't just happening because demand has dried up; one-third of those jobs are headed to India, where work that costs $100 an hour in the US gets done for $20. At Infosys Technologies Ltd. in Bangalore, India, 250 engineers are developing computer applications for Bank of America. About 1,600km north, at Wipro Spectramind Ltd., 2,500 young college-educated men and women are checking accident reports for an insurance company and providing help-desk support for a big internet service provider - all at a cost up to 60% lower than in the USA.
It's globalization's next phase - and one of the biggest trends reshaping the global economy. The first phase started two decades ago with the transfer of manufacturing jobs to economically developing countries. After that, simple service work, like processing credit card receipts, and digital labor, like writing software code, began fleeing high-cost countries.
Now, all kinds of knowledge work can be done almost anywhere. The driving forces are digitization, the internet, and high-speed data networks that circle the globe. By mining databases over the internet, offshore staff can check individuals' credit records, analyse corporate financial information, and search through oceans of economic statistics.
The impact of offshore hiring is hard to measure, since so far a tiny portion of US white-collar work has jumped overseas. Indeed, a case can be made that the US will see a net gain from this shift. In the 1990s, the USA had to import hundreds of thousands of immigrants to ease engineering shortages. Now, by sending routine service and engineering tasks to nations with a surplus of educated workers, the US labor force and capital can be redeployed to higher-value industries.
Globalization should also keep service prices in check, just as it did when manufacturing went offshore. Companies will be able to reduce overheads and improve efficiency. 'Our comparative advantage may shift to other fields,' says economist Robert Lipsey, 'and if productivity is high, then the US will maintain a high standard of living.' By encouraging economic development in nations such as India, meanwhile, US companies will have expanded foreign markets for their goods and services.
Outsourcing experts say the big job migration has only just begun. Frances Karamouzis, research director at Gartner Inc., expects 40% of the USA's top 1,000 companies to have an overseas pilot project under way within two years. The really big offshore push won't be until 2010 or so, she predicts. But if big layoffs result at home, corporations and the US government will face a backlash. Some states are already pushing for legislation to stop public jobs from being transfered overseas and now the unions are moving into the fight to keep jobs at home.
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The truth is, the rise of the global knowledge industry is so recent that most economists haven't begun to understand the implications. For developing nations, the big beneficiaries will be those offering the speediest and cheapest telecom links, investor- friendly policies, and ample college graduates. In the West, it's far less clear who will be the big winners and losers. But we'll soon find out.
Keynotes
Globalisation is forcing businesses to make cost savings by reducing operating costs.
One way to do this is by outsourcing - transferring business processes such as order processing or call centre management to outside suppliers and service providers. Offshoring is a new form of outsourcing where businesses relocate back-office operations in overseas facilities where labour costs are lower.
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Complete the wordmap with the following words and phrases.
credit records
layoffs
overheads
high-speed data networks
backlash
labour costs
job creation
foreign markets
economic development
investor-friendly
efficiency
corporate financial information
internet
databases
demand
cheap telecoms
wordmap .
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1 develop computer applications adapt software for new uses
2 deal with insurance payments
3 give customers assistance
4 record bank transactions
5 write in computer language
6 exploit data stored electronically
7 evaluate company results
1
2
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4
5
6
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Conditionals 1 and 2
Look at the following conditional sentences and complete the explanations below.
Type 1: If big layoffs result at home, the US government will face a backlash. Type 2: If US salaries were lower, companies wouldn't transfer work overseas.
unlikely to happen may possibly happen unreal modal
present tense past tense present tense would/could + verb
- In type 1 conditionals the if-clause refers to a situation that
Type 1 conditionals are formed with if + * and the
or a verb in the other half of the sentence.
- In type 2 conditionals the ij-clause refers to a situation that is either
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or. Type 2 conditionals are formed with if +
and in the other half of the sentence.
jjj
Although some modals are possible in an i/clause, do not use will
For more information, see page 160.
Decide which of these things may happen or are unlikely to happen. Write complete sentences using the appropriate verb forms.
1 if we / reduce / labour costs / be / more efficient
If we reduce labour costs, we'll be more efficient.
We'll be more efficient if we reduce labour costs.
2 if I / have / bigger salary / be / more motivated
3 if I / speak Chinese / need / translator
4 if I / have enough money / retire now
5 if I / meet / objectives / get / bonus
6 if I / see supervisor / I ask her a day off
7 if I / have / phone number / call / him
8 if I / work / this weekend / get / overtime
Q Work in pairs. Find out what your partner would do in three of the following situations. Then answer your partner's questions.
1 your company asks you to work abroad for six months
2 you find out a colleague is selling copies of company software
3 you find out that you are being paid less than your colleagues
4 you realise that your credit card is missing
5 a colleague is criticising the quality of your work
6 your company asks you to go on a six-week intensive Chinese course
Listening 2 Working in India
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Regis Sultan is a French computer engineer working in India. Listen to him talk about his job and choose the best option for questions 1-6.
1) Regis is working in a
a research centre.
b customer support service, production department.
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2 It is difficult to recruit locally because there are
a not enough technically-qualified people.
b too many similar companies in the area,
few candidates with good language skills.
3 How many hours a day does he work?
a six
b eight ten
4 When did he attend training courses?
a every evening
b at weekends every morning
5 Regis describes his colleagues as mostly
a male and female language graduates,
b men from non-technical professions.
untrained female university graduates.
6 Where is he living?
a with an Indian family
b in a local hotel
in a rented apartment
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Speaking In the second part of the interview Regis talks about offshoring. What does he say about the following things?
1 why it is happening
2 the jobs offshoring creates
3 the future for Indian companies
Would you be interested in working in India? What terms and conditions would make you accept a job there?
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Making and responding to suggestions
Choosing the right way to phrase suggestions depends on the context of the conversation. Being able to give an opinion about the best course of action or to advise someone about what you think they should do means using the appropriate language. You can do this by using the following phrases.
How/What about...? Couldn't you / we...? Why don't you...? If I were you...
I suggest / think you should... It might be better to...
OK, let's do / try that.
Sounds good to me.
But whatif...?
The only thing / problem is.
It's a good idea, but...
You're right.
Listening 3 ()
phrases
but what if...?
il Listen to six short dialogues in which people make suggestions. Match the dialogues with the topics a-f.
responses
a □ being late for work
b □ work scheduling
a job interview
d □ choosing a venue
e □ performance
f □ the agenda
Well, if I were you...
Listen again. Which phrases do the speakers use to make and respond to suggestions?
Speaking Work in pairs. Think of a difficult situation that you have had to face recently. Explain the problem to your partner and ask them to make suggestions about what to do.
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Culture at work Decision-making
In some cultures senior managers make decisions and others carry out their instructions. In other cultures decisions are made by consensus after everyone contributes suggestions and opinions. What is common in your country? How might this difference cause misunderstanding in multicultural teams?
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Brief
Interstate, Inc. is a New York based company specialised in providing domestic insurance for private individuals and small corporations. Interstate is currently considering outsourcing all or part of its 150- person call centre to an overseas location in order to reduce its operating costs. The call centre currently processes calls from both insurance agents and enquiries from members of the public within the USA. Several groups of managers have been asked to research different host countries in order to evaluate their potential to host a pilot project which should be operational within the next six months. If successful, the centre would take over full responsibility for all call centre operations within twelve months. The management teams will be meeting later in the day to present their recommendations. The following countries have been selected as potential hosts.
Dilip Patel is an economic analyst at the Institute for Labour Studies in London. Listen to him talk about the Interstate situation and find out what he would recommend.
Task 1
Work in groups. Read the fact file and compare the advantages and disadvantages of each country as a call centre location.
Why don't we...?
I think we should...
It might be better if we
I suggest we...
Task 2
Prepare the recommendations that your group will make at the meeting.
Task 3
Present your findings to the group. Listen to the presentations made by the other groups. Discuss the recommendations together and reach a final decision about where to host the pilot project.
Write it up
Write a formal report to the management board. Compare your own country with your chosen offshore location and recommend what action Interstate should take. (See Style guide, page 28.)
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