Kamal Mustafa said he has the same idea capitalists have had since the Industrial Revolution: find a cheaper source of labour.
“We tend to staff outside of the U.S.” when doing work for foreign clients, he said.
Mustafa, chairman of BlueStone Capital Partners LP in New York, uses U.S. workers when doing work stateside. However, his global finance firm uses local contractors when setting up offices outside the U.S., especially in Asia, he said, because their salaries are lower, they don’t usually demand the perks North American consultants do and they don’t need to sightsee when in exotic locales. They’re there to work and earn money from big international companies, he said, and they’re earning several times what their countrymen might hope for in the local economy.
But the use of foreign IT labour outside the U.S. is limited, said Derek Lacks, a senior consultant at The Delphi Group in Boston, despite the “major cost-saving potential.”
“When you’re looking at the development methodology, the number [of] things that can go wrong is just tremendous,” he said. For instance, in some less developed countries, the copper lines used as the communications backbone are routinely dug up and sold by black market profiteers, Lacks said. “Most companies here in the U.S. wouldn’t be using offshore resources for the [U.S.] market.”
However, the United Nations is planning to change that situation. Last month, U.N. Secretary General Kofi Annan appointed former Costa Rican President Jose Maria Figueres as a special representative to the Information and Communication Technologies (ICT) Advisory Group, a team of technology experts from the private and public sectors in developed and underdeveloped nations.
One of Annan’s and the ITC’s priorities is to bring developing countries up-to-date with technology to partake in the New Economy. Annan has placed an emphasis on education as the key to bringing foreign technology and investments to the Third World.
Already, Lacks said, some companies are installing private, secure lines to run operations in countries like Egypt. Eventually, they could be used to help build the infrastructure as well. How soon that will happen, and how far behind the developing countries will be when that happens, is another question, Lacks said.
Organized labour has also taken an interest in the foreign IT labour pool. Washington-based Communications Workers of America (CWA), part of the AFL-CIO, has begun to reach out to IT workers in India. CWA members teach IT professionals how to avoid firma that are most likely to abuse less expensive, foreign labour.
A case in point is Troy, Mich.-based Syntel Inc., which, because of its contract with New York-based American International Group Inc., was slapped with a hefty fine by the U.S. Department of Labor for paying its computer programmers from India wages 20 per cent below the legal standard.
Not everyone watching the digital labour grab sees a problem for IT workers in relatively poor countries. Though their salaries may be well below what American IT workers earn, that money is still several times what most of their countrymen earn, and it’s a win-win situation, some globalization supporters point out.
J. Bradford DeLong, a professor of economics at the University of California at Berkeley and a member of the U.S. Department of the Treasury in the Clinton administration, said globalization may be the best hope for struggling economies. “A bet on increased international economic integration is our best hope for rapidly moving to a truly human world,” DeLong said. “But I also think that this bet on increased international economic integration is a bet. It is not a sure thing.”