Date: Wed, 17 May 2006 10:08:37 -0700 From: Norm Matloff To: Norm Matloff Subject: Microsoft claim belied by internal documents To: H-1B/L-1/offshoring e-newsletter The industry lobbyists are masters of their craft. The industry may or may not know how to hire "the best and the brightest" engineers, but they sure know how to get "the best and the brightest" PR people. They know how to hit all of America's emotional buttons, and one of those buttons, going way back to the time that much of the auto industry became Japanese, is offshoring. So, ever since the first H-1B expansion legislation in 1998, one of the most effective industry propaganda points has been, "If Congress doesn't give us enough H-1Bs to work here, we'll have to ship the work overseas." This has been extremely effective. Never mind that if a foreign worker is doing the job, that's a job not open to Americans, regardless of whether the foreign worker is here or there. Never mind that right after Congress acquiesced to the industry's threats in 1998 and 2000 by expanding the H-1B program, the industry ramped up its offshoring operations anyway. Never mind that the H-1B program is actually used to FACILITATE offshoring (an academic study, confirmed by the offshoring firms, found that offshoring projects typically station one H-1B onshore for every two offshore workers). And...never mind that Microsoft, which is now saying that it won't offshore its development unless it can't get H-1Bs, told quite a different story in an internal slide presentation last year. The presentation, obtained by WashTech News last year, featured a slide which made Microsoft's intentions quite clear: "Pick something to move offshore today." The full presentation, available at http://washtech.org/news/documents/valentine/ makes it even clearer that the issue is NOT lack of qualified Americans but is instead good old Scottish thrift, i.e. access to India's cheap labor. Phrases like " quality work at 50-60% of the cost, 2 heads for the price of one," " cost advantage of adding offshore talent," "leverage the Indian economy's lower cost structure," "good fiscal decisions are mandatory ," etc. are sprinkled throughout the presentation. And though it is stated that some work needs to be done in Redmond, "outsourcing is not just for noncritical work." But all a lobbyist has to do with a member of Congress is whisper, "We all know what happened to the consumer electronics industry--all shipped abroad" and the congressperson will obediently agree that we "need" H-1Bs to prevent a similar calamity in IT. All this is bunk. What the industry really wants with the H-1Bs is cheap labor. As I've shown elsewhere, the overall cost savings in hiring H-1Bs is almost as much as one attains by offshoring, and the quality one gets by having the work done onsite more than makes up for the small discrepancy. Norm Microsoft, Intel Push U.S. to Welcome More Skilled Immigrants By Nicholas Johnston The Bloomberg News, May 15, 2006 http://quote.bloomberg.com/apps/news?pid=10000103&sid=aZM1MDJr4Bio&refer=new Microsoft Corp. currently does almost all its product-development work at its Redmond, Washington, headquarters. That may change if Congress doesn't make it easier to hire skilled immigrants, company officials say. Microsoft, Intel Corp. and other technology companies are warning that they may be forced to move more work overseas unless Congress increases the number of U.S. visas available for such workers. ``We have a couple thousand open technical spots that we cannot find people to fill,'' says Jack Krumholtz, managing director of federal government affairs for Microsoft, the world's largest software maker. If that situation persists, he says, ``we're going to have to do more of our development work abroad.'' The Senate resumes debate today on a broad overhaul of immigration legislation that includes a proposal to raise the annual cap on so-called H-1B visas for skilled workers to 115,000 -- a 77 percent increase -- and make it easier for such workers to gain permanent residency. While lobbying efforts for these provisions have been publicly overshadowed by the intense debate over how to handle a flood of unskilled, undocumented immigrants, corporate officials have quietly continued to press their case. Microsoft Chairman Bill Gates met in March with congressional leaders, including Senate Judiciary Committee Chairman Arlen Specter, to discuss the company's ``top legislative priority,'' Krumholtz says. Intel, Oracle Craig Barrett, chairman of Santa Clara, California-based Intel, the world's biggest semiconductor maker, says he has spent almost 10 years pressing for changes to the H-1B program. ``These people are the people that can help drive U.S. competitiveness and our economy,'' he says. ``Let's make the U.S. the place where they want to come by choice. Let's welcome them with open arms.'' Because of the visa cap, Intel has begun placing some foreign engineers in countries with more lenient immigration rules, such as Canada, Ireland and Israel, says Jenny Verdery, director of workforce policy. ``That trend will continue until Congress fixes the problem,'' she says. The need for more skilled immigrants is also a top issue of discussion whenever executives from Redwood City, California- based Oracle Corp. meet with members of Congress, says Robert Hoffman, vice president of government and public affairs for the world's third-largest software maker. ``It's in our mutual interests, company and country, to change our immigration laws to be much more conducive to our economic growth,'' he says. House Opposition Increasing visas for skilled workers faces opposition in the House of Representatives, where lawmakers favor enforcing current immigration laws and tightening border security before creating new ways for more immigrants to enter the country. The changes are also opposed by the Washington-based public-policy arm of the 365,000-member Institute of Electrical and Electronics Engineers. Paul Kostek, the group's former president and current chairman of its committee on workplace issues, says an increase in the visa cap would cost American workers jobs and wages. Technology companies, he says, could fill their skilled-worker needs by paying higher salaries. ``There are some companies that may not be able to find people if they're not willing to pay more,'' he says. ``It's a supply-and-demand market.'' Rise and Fall U.S. companies are now limited to hiring 65,000 skilled immigrant workers annually under the H-1B program. The cap rose to 195,000 per year in 2001 after Congress responded to increased demand from technology companies. It was lowered to 65,000 in 2004 after the technology economy slowed. Demand for the visas exhausted the 2006 supply two months before the year began. ``We are critically dependent on foreign talent to fill the jobs we generate in the United States,'' says William Brody, president of Johns Hopkins University in Baltimore. ``To the extent to which we don't have the talented people here, the Intels of the world are going to go find the talent wherever they can.'' Companies are also seeking changes that would make it easier to apply for and renew the work permits and qualify for legal U.S. permanent residency. Getting legal residency, and the certificate of proof known as a ``green card,'' can now cost thousands of dollars and take more than a decade to complete. Shreyas Desai, a software engineer who came to the U.S. from India on a student visa in 2000 and got an H-1B visa two years later, can't apply for permanent residency because of limits on the number given to Indians. He says he can't be promoted or get a new job because changes to his employment status would require him to resubmit his application for a green card, sending him to the back of the line. `Literally Suffering' ``We're just suffering, literally suffering,'' said Desai, 27, of Lafayette Hill, Pennsylvania, who is one of the founders of Immigration Voice, a five-month-old, 3,500-member advocacy group for skilled immigrants, based in Dayton, New Jersey. Congressional debate has focused on illegal immigration and a guest-worker program for unskilled workers, spurred in part by street protests across the U.S. on April 10 and May 1 in which hundreds of thousands of demonstrators demanded legal status for undocumented immigrants. A guest-worker program would have no effect on skilled workers. ``Most of the media attention is on the illegal aliens,'' says Desai. ``We just feel like we have been legal, we have been paying our taxes, we've been playing by the book. We've just been ignored.'' Presidential Support President George W. Bush, who will speak to the nation tonight on immigration, supports raising the cap on skilled visas as part of a broader legal overhaul. ``I think it's a mistake not to encourage more really bright folks who can fill the jobs that are having trouble being filled here in America,'' Bush said in a February visit to 3M Co.'s headquarters in Maplewood, Minnesota. The provision increasing H-1B visas is part of immigration legislation on which the Senate will resume debate today after resolving a procedural dispute over amendments. Senate Majority Leader Bill Frist has pledged to finish the measure by the end of the month. The Senate proposal raises the visa cap to 115,000 and allows further increases of 20 percent each year based on demand. It also temporarily increases the number of green cards available to 450,000 per year to clear out a backlog of applications, while streamlining the application process. ``There is a tremendous demand for technology workers,'' says Republican Senator George Allen of Virginia. If employers ``don't have the talent to do that work, the research and development could be off-shored to other countries.'' Companies Cope The costs borne by companies because of visa problems and jobs unfilled is difficult to quantify because companies have been coping by delaying some projects or shifting work overseas, says Stuart Anderson, executive director of the National Foundation for American Policy, a group based in Arlington, Virginia, that researches trade and immigration issues. ``The continuing problems, because of congressional inaction, are going to further accelerate that,'' says Anderson, who advocates restoring the old 195,000 limit. Employers ``end up taking their next best option, which is to do more of the work outside the United States.'' http://www.washtech.org/news/labor/display.php?ID_Content=4981 Washington Alliance of Technology Workers, Communications Workers of America, Local 37083, AFL-CIO A Voice for the Digital Workforce WashTech News: Labor News July 28, 2005 WashTech News Deep Throat Move Over: Disgruntled IT Employees Expose All "Fair Globalization" May Be the Answer to Offshoring By Roberta L. Wilson Secret Another day, another set of corporate slides arrives in the WashTech/CWA Local 37083 office in Seattle. "We don't go looking for these slides," said Marcus Courtney, President of WashTech. "But disgruntled employees continue to send evidence of their companies' offshoring plans to us through anonymous phone calls, faxes, emails and even brown paper envelopes." Indeed, in 2001, an employee at Microsoft broke silence and sent WashTech evidence from Brian Valentine's PowerPoint presentation in which the corporate vice president clearly articulated corporate plans: "Pick something to move offshore today." Although Microsoft denied that U.S. employees would lose jobs at the time, Microsoft has gone on to make major investments in both call center and software research and development infrastructure in India, China and elsewhere. Then came the Honeywell International slides in 2004, which also clearly outlined the company's global development strategy. Those slides showed the plan to move 5,000 aerospace division jobs offshore over the next five years. Secret "The most recent batch of slides comes," said Courtney, "from Merck & Company (pharmaceuticals). The Merck slides are, well, murky. The 43 slides are difficult to decipher, but one intent is evident-"to offshore almost all its IT jobs. The anonymous employee who provided these slides noted that while Merck fought U.S. customers' ability to buy cheaper Canadian drugs, they have been planning to send U.S. jobs offshore. Merck, the second-biggest U.S. drug maker, recently shut off sales to Canadian pharmacies exporting drugs to American patients. The often-cited argument-"that free-trade globalization will benefit U.S. customers-"does not seem to. Another recent slide faxed to WashTech offices comes from IBM. It shows IBM's recent offshoring numbers from 2002 to 2005, confirming our August 2003 story about IBM's plans to accelerate offshoring. Total headcount in India in 2002 was 6,070. In 2005 it grew to 38,196. At the same time, thousands of IBM workers are losing their jobs in the U.S. and U.K. These batches of slides, along with other evidence of offshoring-"for example, the many e-mails WashTech receives to update our Offshore Tracker-"point to continued and accelerated offshoring of jobs in many job categories. As Courtney says, "Every company seems to have the same strategy: offshore jobs, increase work hours, provide fewer benefits." Meanwhile, according to a June 3, 2005, Reuters story, the Indian government, in service to their free marketers, has noted the continued backlash against free-trade globalization (fromWashTech, IBM Alliance and other organizations). They are petitioning the World Trade Organization (WTO) to prevent the U.S. and other countries from taking steps to ban companies from outsourcing jobs. See this link for more. We wonder if the Indian government and corporate free traders will meet with much opposition, given that both Republican and Democratic parties in the U.S. have promoted free-trade globalization to the detriment of their own citizens and residents working in both the manufacturing and the services industries. Although there are bills that have passed in a few state legislatures to curtail offshoring of government jobs, little has been done by either party to address outsource offshoring in the private sector. Nor has there been much movement to protect workers from the effects of these tax-subsidized, government-supported trade policies. What is clearly missing is a broad debate in the U.S. and elsewhere about free-trade globalization and its pros and cons. We believe the reason this broad debate has not taken place is that the few potential winners in free-trade globalization want to make sure that the large numbers of losers don't know what hit them. The losers will be workers everywhere, who will be pitted against one another in a race to the bottom. In reaction to free-trade problems, many groups are calling for "fair trade." Fair trade is a useful, now-voluntary approach to help indigenous communities compete in the world market. Fair trade favors labor and the environment by organizing workers in locally owned cooperatives to raise coffee and other crops with sustainable methods. However, fair trade ideas do not address the realities of billions of urban workers, including our own high-tech sector. What urban workers need is good-paying, environmentally responsible jobs that sustain their families and communities. A powerful and comprehensive UN report titled A Fair Globalization puts job creation and economic security at the center of economic planning. According to the report, outsourcing would not be a problem if there were enough decent jobs. However, a global jobs deficit allows companies to move work wherever labor is cheapest-"and where governments are most desperate, therefore providing the highest subsidies with the lowest environmental and social protections. The task is to address the jobs deficit with strategies to create enough decent jobs for everyone. You can read more about this report in a paper located at FairJobs.org: http://www.fairjobs.org/fairjobs/reports/ See "Outsource This: American Workers, the Jobs Deficit and Fair Globalization." Meanwhile, we're depending on our deep throat contacts in the high-tech sector to keep us reporting on the facts and consequences of free-trade globalization. See the documents WashTech has obtained: Corporate Secrets Exposed