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The changing face of the global business l.jpg

The Changing Face of the Global Business


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What do labor experts agree on?

  • There will be no shortage of opportunities in the knowledge sector for those with the education and intelligence to perform in it

  • All jobs, even the most low-skilled, will require higher levels of basic education, math, communication and technology skills…for survival and growth

    3. Those without some specialized knowledge or skill are likely to suffer declining real wages


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What do experts agree on? (II)

4. The Digital Divide exists and those on the wrong side will have limited hiring and advancement opportunities

5. Jobs requiring “human touch” will continue to be in demand e.g. health services and nursing, construction…no robot plumbers!

6. Workplace settings and business practices and knowledges will change rapidly, making lifelong learning essential e.g. life after “paving the cow path”


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Global Labor Market of the 21st Century and Unfettered Global Capitalism

Creative destruction—The process of simultaneous job creation and job destruction as new skill sets are required and old skills become outdated. The same employers will be both hiring and laying off continually regardless of labor market conditions to enhance productivity and competitive edge. Joseph Schumpeter


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A Changing Texas Labor Market (6)

Globalization is changing economic theory, business practices and labor supply options


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How Globalization Impacts the Labor Market—The Basics

  • Globalization & new digital technology opens producer/consumer markets around the world

  • Increased customer access to producers leads to global price competition, driving employer need for greater productivity, lower prices

  • Increased price competition leads to cost containment pressures

  • Cost containments leads employers to new supply chain practices, concerns over labor costs, alternative labor options


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Everybody’s Talking About IT

"By 2004, more than 80 percent of U.S. executive boardrooms will have discussed offshore sourcing, and more than 40 percent of U.S. enterprises will have completed some type of pilot or will be sourcing IT (information technology) services."

Gartner Inc., a technology consulting firm


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Everybody’s Doin’ IT…

IBM's top employee relations executives said that

three million service jobs were expected to shift to

foreign workers by 2015 and that IBM should move

some of its jobs now done in the U.S., including

software design jobs, to India and other countries.

"Our competitors are doing it and we have to do it,"

Tom Lynch, IBM Director for Global Employee Relations


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An I.T. MegaTrend

"It's a very important, fundamental

transition in the I.T. service industry that's

taking place today," said "It’s a megatrend

in the I.T. services industry."


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Digital Technology Makes it Possible

“Companies are moving more service jobs overseas because trade barriers are falling, because India, Russia and many other countries have technology expertise, and because high-speed digital connections and other new technologies made it far easier to communicate from afar.

Bruce P. Mehlman, Commerce Department assistant secretary for technology policy


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ITAA Notes Demand Changes

“Failing a dramatic turnaround in the national economy a recovery in the IT sector in 2004 will most likely continue to be a “jobless” one.”

ITAA predicted 1.6 million job openings in 2000

ITAA predicted 1.1 million job openings in 2002

ITAA predicts 493,000 job openings in 2003

In May 2003, ITAA survey says 67% of hiring managers thought demand would stay the same or decline over he next 12 months.


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Offshoring Doesn’t Just Affect IT

"Over the next 15 years, 3.3 million U.S. service industry jobs and $136 billion in wages will move offshore to countries like India, Russia, China and the Philippines," Forrester analyst John McCarthy predicted in a report last year. "The IT industry will lead the initial overseas exodus."


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Dilemma for Business…

  • "One of our challenges that we deal with every day is trying to balance what the business needs to do versus impact on people."

  • "This is one of these areas where this challenge hits us squarely between the eyes."

    Tom Lynch, IBM Director for Global Employee Relations


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Business Knows the Consequences

The American economy is in an "anemic" state, the

difficulties and backlash from relocating jobs could

be greater than in the past.

"The economy is certainly less robust than it was a

decade ago and to move jobs in that environment is

going to create more challenges for the re-

absorption of the people who are displaced." Tom Lynch, IBM


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A Slower Growing European Economy


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Business Knows the Consequences (part II)

"Once those jobs leave the country, they will never come back."

"If we continue losing these jobs, our schools will stop producing the computer engineers and programmers we need for the future."

Phil Friedman, chief executive of Computer Generated Solutions, a 1,200-employee computer software company


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Corporate Employment Alternatives

Even When Business Picks up…

  • Work existing workers more hours

  • Employ temporary or leased workers

  • Use contract workers for fixed periods

  • Merge with support services company

  • Outsource all non-core functions

  • Take advantage of H1B and L1 visas

  • Add full-time domestic employees


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“Off-shoring” May Be Short-sighted

“It's a bad thing because high-tech companies like I.B.M., Microsoft, Oracle and Sun, are making the decision to create jobs overseas strictly based on labor costs and cutting positions.” “It can create huge downward wage pressures on the American work force.”

Marcus Courtney, president of an affiliate of the Communications Workers of America.


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It’s Largely About the Money…

Another important reason for moving jobs abroad is lower wages. “You can get crackerjack Java programmers in India right out of college for $5,000 a year versus $60,000 here." "The technology is such, why be in New York City when you can be 9,000 miles away with far less expense?"

Stephanie Moore, vice president for outsourcing at Forrester Research


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But Also About a New Business Model

“The expansion of operations in India was "additive" and was not resulting in any jobs losses in the United States. Our aim here is not cost-driven, [it’s] to build a 24/7 follow-the-sun model for development and support. When a software engineer goes to bed at night in the U.S., his or her colleague in India picks up development when they get into work. They're able to continually develop products." David Samson, an Oracle spokesman


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And Getting Value in Return

A February survey of 145 U.S. companies by consultant Forrester Research found that 88 percent of the firms that look overseas for services claimed to get better value for their money offshore while 71 percent said offshore workers did better quality work.


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U.S has not been creating jobs between 2000 and 2003

  • -624,900 total payroll jobs were lost between January 2000 and March 2003

  • Of 258 industry sectors, 164 (63.5%) lost a total of 4.71 million jobs. “Bottom 10” lost 2.2 million jobs

  • Of 258 industry sectors, 93 (36.0%) gained a total of 4.09 million jobs. “Top 10” added 2.4 million. “Top 5” added 1.64 million new jobs


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Employment Services -508,767

Cut and Sew Apparel -151,567

Grocery Stores -150,667

Semiconductor Mfg. -149,267

Motor Vehicle Parts -129,400

Comptr Equip Whlsalrs -84,200

Plastics Products Mfg -81,533

Wired Telecom Carriers -77,467

Aerospace Product Mfg -75,700

Computer Equip Mfg -72,900

Print Publishing -71,400

Others of Note:

Machinery Whlsalrs

Computer System Design

Air Transportation

Communications Equip Manufacturing

Electric/Electronic Goods Wholesalers

Advertising Services

Fabric Mills

U.S. Industries as Job Losers 2000-03


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Local Government 753,000

General Hospitals 239,933

Full-service Restaurant 237,700

Offices of Physicians 211,767

State Government 201,333

Colleges/Universities 199,433

Family Social Services 124,667

Limited-service Eatery 105,333

K-12 Schools 90,900

Accounting Services 80,300

Nursing Care Facilities 76,100

Others of Note:

Mortgage Financing

Eldercare Facilities

Amusemnt/Recreation

Commercial Banking

Home Health Care

Legal Services

General Merchandise Stores

Offices of Dentists

Mgmt Consult Srvcs

U.S. Industries as Job Gainers 2000-03


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Opportunities: More Jobs in Services…

Expected Job Growth in 2003-2004

  • Educational Services

  • Food Services/Drinking Places

  • Ambulatory Health Care Services

  • Professional and Technical Services

  • Local Government

  • Specialty Trade Contractors

  • General Merchandise Stores

  • Hospitals

  • Heavy and Civil Construction

  • Motor Vehicle and Parts Dealers


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Job Declines in Goods Producing Sectors

Expected Job Losses in 2003-2004

  • Agriculture/Forestry Support

  • Computer/Electronic Manufacturing

  • Apparel Manufacturing

  • Transportation Equip Manufacturing

  • Fabricated Metal Manufacturing

  • Chemical Manufacturing

  • Oil & Gas Extraction

  • Food & Beverage Stores

  • Administrative Support Services

  • Federal Government


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1. Computer Support Specialists

2. Computer Software Engineers, Apps

3. Network & Systems Administrators

4. Desktop Publishers

5. Computer Software Engineers, Systems

6. Network & Data Communications Analysts

7. Computer Specialist, NEC

8. Database Administrators

9. Medical Records Technician

10. Social Services Assistants

11. Special Education Teachers

12. Computer Systems Analysts

13. Medical Assistants

14. Physician Assistants

15. Information Systems Mgrs.

Occupational Growth in USA:fastest Growing 2000-2010


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1. Customer Service Representatives

2. Food Prep and Serving Workers, Fast Food

3. Child Care Workers

4. Retail Salespersons

5. Registered Nurses

6. Cashiers

7. Computer Support Specialists

8. Office Clerks, General

9. Waiters & Waitresses

10. General and Operations Managers

11. Elementary School Teacher

12. Teacher Assistants

13. Secondary School Teacher

14. Janitors and Cleaners

15. Truck Drivers, Heavy and Tractor Trailer

Occupational Growth: Most Jobs Created 2000-2010


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