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<p>July 28, 2004<br>
<i>WashTech News</i><br>
<br>
</p>
<h3>Microsoft’s India workforce doubles</h3>
<b>Internal documents detail contract employee work agreements<br>
<br>
By Jeff Nachtigal </b><br>
<br>
Last week Microsoft Corporation announced that it would pay out $30
billion in stock dividends, but the company didn’t bring up the
potentially controversial news that it has twice as many employees in
India as reported in June. <br>
<br>
<span style="text-decoration: underline;">Microsoft now employs nearly
2,000 workers in India</span>, double the 970
number it previously acknowledged, as shown in internal company
documents obtained by WashTech News. Microsoft employs <span
style="text-decoration: underline;">more than 1,000
contractor workers in addition to 900 full-time employees</span>. The
documents suggest that the <span style="text-decoration: underline;">contractors
and employees are involved in
high-level development projects</span> and not just low-level work such
as
call center customer service. <br>
<br>
The documents include detailed lists of Microsoft staff at its
Hyderabad and Bangalore offices, and Master Services Agreements between
Microsoft and multiple Indian vendor agencies, including Wipro, Infosys
and Satyam. <span style="text-decoration: underline;">The agreements
refer to projects such as .Net Application
Security for the company’s developer platform</span>, and the Migration
Guide
and TAPI (Telephony Application Programming Interface), testing for
Longhorn, the successor to Windows XP that is due out in 2006. <br>
<br>
One Master Services Agreement with HCL Technologies in June of 2003
listed a range of job titles including Developer, Hardware Engineer,
Technical Writer, Project Manager and Web Developer. <br>
<br>
In June of this year, the Seattle Times reported that Microsoft is in
the process of <a
href="http://seattletimes.nwsource.com/html/businesstechnology/2001941126_microindia28.html">building
a facility</a>
on 42.5 acres in Hyderabad called the India Development Center campus.
The new office park, which could house as many as several thousand
employees, has aroused suspicion among Microsoft employees in Redmond
that their jobs may someday be threatened by the lower-cost alternative
of offshoring. <br>
<br>
Microsoft has said that it does not send its core-technology work
overseas, and that most development work is done at its Redmond,
Washington. headquarters. But these stories and other documents, as
well as the growing number of workers in India, suggest that
increasingly, higher-level development work is <a
href="http://www.techsunite.org/news/040615_ms_offshore.cfm">being
sent to India</a>. <br>
<br>
Microsoft does not publicly disclose how many contractor workers it
employs, but the company has said in the past that it employs a total
of 970 workers in India.<br>
<br>
Microsoft did not respond immediately to a request for comment about
employee and contractor numbers in India.<br>
<br>
“It provides them with good public relations cover,” said Ron Hira,
Assistant Professor of Public Policy at the Rochester Institute of
Technology. “They can truthfully claim that they are offshoring less
work than they actually are. I don't know if this is their primary
motivation for using contractors, but at the very least it is a
significant secondary benefit.” <br>
<br>
Hira noted that almost all corporations avoid bad publicity by refusing
to speak publicly or off the record about their offshoring plans. <br>
<br>
“What is different is that Microsoft is a software development and not
just a software services company,” said Hira. “That means that even
development, supposedly the high level work that is supposed to remain
in the U.S., is moving offshore.”<br>
<br>
A Microsoft employee who requested anonymity said he thought that the
increasing number of workers at Microsoft’s India offices would
definitely affect how many on-site contractors and vendors are employed
at Microsoft’s Texas offices. <br>
<br>
“Microsoft already outsources much of its service pack testing
overseas; I bet they would love to have their own employees over there
to cut the contractor mark-up and keep Microsoft intellectual property
under tighter wraps,” he said.<br>
<br>
A former Microsoft employee said that Microsoft would ultimately do
what was in its best interest and continue to offshore work as long as
it saw continued benefits. The former product manager said that the
company would continue to offshore to the extent that it could without
creating a community backlash.<br>
<br>
The fact that Microsoft is actively engaged in offshoring creates
doubts about the justification industry analysts often give in defense
of offshoring – that it drives global competition. <br>
<br>
“As we all know, Microsoft has almost no competition, and they are
generating record revenues and profits to the point where they have
billions cash,” Hira said. “It is one more indication that offshoring
is driven to help executives and shareholders.” <br>
<br>
Offshoring labor cost savings to U.S. corporations have been estimated
to be nearly three-to-one for high-tech workers doing development work.
<br>
<br>
One of the major obstacles to solving the offshoring issue in the
high-tech industry, Hira says, is that the analysis about that has been
done about offshoring is woefully incomplete because it ignores the
domestic economic costs for workers. Software professionals and other
tech workers in the U.S. will experience real downward wage pressure
from overseas counterparts. <br>
<br>
“With this downward wage pressure, it is very important for us not only
to examine the number of jobs created in the economy, but also their
quality,” Hira said. “...so it is reasonable to ask whether that new
mix is actually a better one, and who benefits and loses?” <br>
<br>
Forrester Research estimates that the number of U.S. jobs outsourced
will grow from about 400,000 in 2004 to 3.3 million by 2015. If
accurate, this projection means that offshoring will result in roughly
250,000 layoffs a year.<br>
<br>
Public opinion about free trade is declining – especially among the
highly skilled workers who are the latest group to be hit by
offshoring. The University of Maryland's Program on International
Policy Attitudes found that among those in the over 100,000-dollar
bracket, the percentage actively <a
href="http://www.pipa.org/OnlineReports/Globalization/pdf/IntTradePress1_22_04.pdf">supporting
free trade slid</a> from 57 percent in 1999 to 28 percent in January
2004.<br>
<br>
The problem isn't so much that offshoring is happening, but how it is
happening, Hira argues, and right now the only voice that is being
heard is that of the corporations and macro-economists that discount
the reality facing individual U.S. workers as they are replaced in the
name of long-term economic progress. Hira advises U.S. workers to act
like consultants because, by and large, the companies engaged in
offshoring view workers “as merely inputs in the production process and
if they can be interchanged for technology or overseas labor, then they
should be.” <br>
<br>
“Some... would argue that this is what makes American corporations so
competitive. But for the worker, that means you have to manage many
aspects of your career, and have to deal with far greater risks.
Government policy is not going to help you anytime soon.”<br>
<br>
<em>Jeff Nachtigal writes about labor issues for Washtech.org <br>
Contact him at: jnachtigal@washtech.org</em>
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