Let's do a little math on off-shoring, the practice of moving jobs currently in the US to cheaper locations. One investment bank refuses to use the word "off-shoring;" they prefer the euphemism "wage arbitrage!"
The investment bank in question has announced it is moving 2,000 operations jobs off-shore in the next 5 years, primarily to India. This represents almost all their domestic operations positions. In India, the average comparable worker is younger, better educated and works harder. I have a lot of respect for these people. Generally, I have found them equal or better than the people they replace in terms of raw ability.
However; did I mention the jobs being moved are currently in New York City, a high-cost environment for this company to work in? The average position being "arbitraged" pays $200,000 in total compensation; it's replacement position in India pays just $20,000. The savings to the investment bank; $360 million per year when the transition is complete.
To sum up: 2,000 high-paying jobs lost, 2,000 families disrupted, $160 million lost from the federal treasury, $40 million lost from the state and city, and 2,000 residences in the tri-state area abandoned, putting downward pressure on prices and property taxes. Plus, I am not counting increased unemployment, crime or relocation costs. Nor am I factoring in the other jobs lost as the firms that support the domestic operations have to follow their customers to India.
Hundreds of millions, if not billions, in annual tax revenues will be lost so that the bank can make an additional $360 million, on which, by the way, it will pay no taxes due to the increased profits being invested in a series of trading partnerships. Who will make up the tax shortfall? Why us, the few remaining employed. Don't expect a "Thank you" card from the Managing Directors.
Financial services are one of the few businesses left where the US has a competitive advantage due to its free, open and broad capital markets. Eventually, these benefits will accrue to a select few, while the majority of the work is done offshore. Sound familiar?
Will the last operations professional in New York City please shut down the mainframes and servers? They won't be needed here anymore either.
Can you take a loan to make an offshore investment??so many people do want to make offshore investment but are concerned if they can make it on a loan.
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Sara Lee
http://www.loan-digger.co.uk/
Posted by: sara lee | June 27, 2008 at 05:06 AM