Tag Archive for Outsourcing

HP Sets Up Training Center In China

RecessionChina Tech News reports that the HP (HPQ) software business group announced cooperation with the municipal government of Neijiang, Sichuan province, China to build an information technology software talent training center.

 Hewlett-Packard logoThe article says the new base aims to give practical software training, IT outsourcing services, and IT resource services to promote the information development of China’s southwestern areas and to stimulate the sustainable development of the regional economy.

The IT software talent base is divided into three centers. The software talent training center will provide HP’s professional training to up to 5,000 university graduates each year. The training content covers IT operations monitoring and analysis, software management, software automation, application testing, and cloud service management.

ChinaThe Chinese economy is currently undergoing a transitional period and the development of information and software industries have become the focus for the strategic development of the country. The blog says Sichuan is an engine area for the western development of China. The HP center will focus on HP’s leading technologies, best practices and integrated cloud strategy according to China Tech News . The article concludes that the new HP IT software talent base is committed to delivering qualified software talents, quality software testing outsourcing services, and IT resource services to various enterprises, helping them improve IT infrastructure capacities.

GreedThe continued abandonment of America by its industrial base. They could build a training center in Detroit whose economy is also currently undergoing a transitional period. One of the biggest excuses used by multi-nationals for off-shoring work is that American workers lack the skills that firms are looking for. This new training center in China says to me that HP just does not want to bother with US workers anymore. 

HP has a long-term contract with the US Navy worth $3 billion, are these Chinese HP staffers supporting our military?

Tech Layoffs Continue to Mount

Tech Layoffs Continue to Mount351,202 families’ lives have been disrupted in the tech sector since October 2008, when the banks lead us into the current depression recession economic downturn.  32,820 lay-offs have been announced in the tech sector during March 2009. The tech layoff leaders for March 2009 are:

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

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

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

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


Time to Rethink Off-Shoring

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

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

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

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