Week 11-12: Employer/Employee issue

Aj. Thoranin Intarajak

Agenda

Use of nontraditional workers. Contingent workers. H1-B workers. Offshore Outsourcing. Whistle-Blowing.

Use of nontraditional workers. Every 2 years, the Bureau of Statistics

(BLS) develops 10 years projections of economic growth, employment by industry and occupation, and the composition of the labor force.

According to BLS, the number of declared computer science majors and master’s candidates has drop 33% and 25%, respectively, since 2002, in spite of the forecast for an increased need for workers in this field.

Use of nontraditional workers (cont). As the result, IT firms and organizations that

use IT products and services are concerned about a shortfall in the number of U.S. workers fill these positions.

Employers will increasingly turn to nontraditional sources to fine IT workers with skills that meet their needs.

This source include contingent workers, H-1B workers, and outsourced offshore workers.

Use of nontraditional workers (cont). Employers will have to make ethical

decisions about whether to recruit new and more skilled workers from these sources or to spend the time and money to develop their own staff to meet the needs of their business.

The workers affected by these decision will demand to be treated fairly and equitably.

Contingent workers. The contingent workforce include

independent contractors, workers brought in through employment agencies, on-call or day laborers, and on-site workers whose services are provided by contract firms.

The total of contingent workers is unknown, but it probably represents 4 to 7 percent o the U.S. workforce, a total of 6 to 10 million people.

Contingent workers (cont). An organization typically obtains

contingent workers in two ways: Through temporary help Employee leasing

Contingent workers (cont). Temporary working arrangements

might appeal to people who want maximum flexibility in their work schedule and a variety of work experience. Because temporary workers do not receive additional compensation through company benefits, they are often paid a higher wage than full-time employee doing equivalent work.

Contingent workers (cont). Employee leasing, a business

outsources all or part of its workforce to a professional employer organization.

The goal is to outsource human resource activities and associate costs, such as payroll, training, and the administration of employee benefits, to the employee leasing company.

Advantage of using contingent workers

Does not pay for benefits such as retirement, medical costs, and vacation time.

A company can continually adjust the number of contingent workers to stay consistent with its business need. On the other hand can lay off when they no needs.

Advantage of using contingent workers (cont)

Contingent workers already specialist in a particular task, the firm does not customarily incur training costs.

The use of contingent workers enables the firm to meet its staffing needs more efficiently, lower its labor costs, and respond more quickly to changing market conditions.

Disadvantage of using contingent workers

Contingent workers may lack of a strong relationship with the firm.

Contingent workers do gain valuable practical experience working within a particular company’s structure and culture, which is lost when the workers depart at the project’s completion.

Deciding when to use contingent workers When management decides to use

contingent workers for a project, it should recognize the trade-off it is making between completing a single project quickly and cheaply versus developing people in its own organization.

If the project requires unique skills that are probably not necessary for future projects, there is little reason to invest the additional time and costs required to develop those skills in full-time employees.

H-1B Workers. An H-1B is a temporary working visa

granted by the U.S. Citizenship and Immigration Services (USCIS) for people who work in specialty occupations- jobs that require a four-year bachelor’s degree or higher in a specific field.

A key requirement is that employers must pay H-1B workers the prevailing wage for U.S. workers to do equivalent jobs.

H-1B Workers (cont). People can work for a U.S. employer as

H-1B employees for a maximum continuous period of six years.

After the H-1B expires, the foreign worker must remain outside the US for one years before another H-1B petition can be approved.

The top five source countries for H-1B workers are India, China, Canada, the United Kingdom, and the Philippines.

H-1B Workers (cont).

Fiscal year (oct 1 – sep 30)

H-1B visas cap

1998 65,000

1999 115,000

2000 115,000

2001 195,000

2002 195,000

2003 195,000

2004 65,000

2005 65,000

* Granted by USCIS

H-1B Workers (cont). H-1B application process

Most ethical companies make hiring decisions based on how well an applicant fulfills the job qualifications.

To receive an H-1B visa, the person must have a job offer from an employer who is also willing to offer sponsorship.

There are two application stages: the Labor Condition Attestation (LCA) and the H-1B visa application.

H-1B Workers (cont). The company files an LCA with the Department of

Labor (DOL), starting the job title, geographic area in which the worker is needed, and salary to be paid.

The DOL’s Wage and Hour Division administers LCAs to ensure that the foreign worker’s wages will not undercut those of an American worker.

After the LCA is approved, the employer may then apply to the USCIS for the H-1B visa candidate, identifying who will fill the position and stating the person’s skills and qualifications for the job.

A candidate cannot be hired until the USCIS has processed the application, which can take several days or several months.

Offshore Outsourcing Offshore outsourcing is a variation of

outsourcing in which work is done by an organization whose employees are in foreign country.

On a company’s premises or thousands of miles away in a foreign country.

In addition, companies can save to 70 percent on some projects by reducing labor costs through offshore outsourcing.

Offshore Outsourcing (cont)

American Express, Aetna U.S. Healthcare, Compaq, General Electric, IBM, Microsoft, Motorola, Shell, Sprint, and 3M are examples of big companies that employ offshore outsourcing for functions such as help desk support, network management, and information systems development.

Offshore Outsourcing (cont) A 2004 survey

estimated that 104000 U.S. software and service jobs were moved overseas in 2003, but that’s only 1 percent of the estimated 10.5 million IT jobs in the U.S.

India Low cost, highly skilled labor pools

Canada Close to us, no language barrier, highly skilled labor pool

China Low cost, large pool of skilled labor, lack of English-language proficiency

Poland Low overall costs of business operations

Czech republic An emerging contender

Russia Unpredictable political and business climate

Partial list of offshore IT outsourcing firmsFirm No. of

Employees

Headquarter

Recent annual revenues

Key clients

Tata Consultancy Group

49,00 India >$ 2 billion

Infosys Technologies

49,000 Bangalore, India

$ 2.1 billion

Wipro 42,000 Bangalore, India

$ 1.9 billion

Satyam Computer Services, Ltd

Hyderabad, India

$800 million Texas Instruments

HCL Infosystems

30,000 New Delhi, India

Partial list of offshore IT outsourcing firmsFirm No. of

Employees

Headquarter

Recent annual revenues

Key clients

EPAM systems

1,000 Princeton, NJ, and Budapest, Hungary

NA Empire Blue Cross Blue Shield, Mandalay Resort Group, Visa International

Luxoft 1,400 Moscow, Russia

$ 25 million

Boeing Dell, Caterpillar, IBM

Aplana 200 Moscow, Russia

NA General Electric, Procter & Gamble

Hubport Interactive

NA Davao City, Philippines

NA Rancho Palos Verdes Golf and Country Club

Partial list of offshore IT outsourcing firmsFirm No. of

Employees

Headquarter

Recent annual revenues

Key clients

Outsourcing Solutions, Inc

NA Cebu City, Philippines

NA Kauai Publishing Company, Mother Earth News, and Sound Choice

Interxion 170 Amsterdam, The Nethelands

NA Coca Cola, IBM, Siemens

Delphi Technologies

NA Dublin, Ireland NA IBM, Siebel Systems

Advantage of offshore outsourcing Advantage

Wages that an American worker would consider low represent and excellent salary in other parts of the world, and some companies feel they would be foolish not to exploit such an opportunity.

Why pay a U.S. IT worker a six-figure salary, they reason, when they can use offshore outsourcing to hire four Indian-based workers for the same cost?

Another benefit of offshore outsourcing is its potential to dramatically speed up development efforts.

Advantage of offshore outsourcing The use of offshore outsourcing does not lack

for supporters. The following list provides several tips for

companies that are considering offshore outsourcing:

Set clear, firm business specifications for the work to be done.

Assess the probability of political upheavals or factors that might interfere with information flow and ensure that the risks are acceptable.

Assess the basic stability and economic soundness of the outsourcing vendor and what might occur if the vendor encounters a severe financial downturn.

Advantage of offshore outsourcing

Establish reliable satellite or broadband communications between your site and the outsourcer’s location.

Implement a formal version-control process, coordinated through a quality assurance person.

Develop and use a dictionary of terms to encourage a common understanding of technical jargon.

Require vendors to supply project managers at the client site to overcome cultural barriers and facilitate communication with offshore programmers.

Require a network manager at the vendor site to coordinate the logistics of using several communications providers around the world.

Obtain advance agreement on the structure and content of documentation to avoid manuals that explain how the system was built, not how to maintain it.

Advantage of offshore outsourcing

Carefully review a current copy of the outsourcing firm’s SAS 70 audit report to ascertain its level of control over information technology and related processess.

Whistle-blowing Whistle-blowing is a significant topic in any

discussion of ethics in IT. Whistle-blowing is an effort to attract public

attention to a negligent, illegal, unethical, abusive, or dangerous act by a company that threatens the public interest.

In some case, whistle-blowers are employees who act as informants on their company, revealing information to enrich themselves or to gain revenge for some perceived wrong.

However, whistle-blowers act ethically in an attempt to correct what they think is a major wrongdoing, often at great personal risk.

Whistle-blowing (con’t) Sometimes, the whistle-blower is not an employee but a

person with special knowledge gained from reliable source. For example, Bev Harris is a literary publicist and writer whose book Black Box Voting: Ballot Tampering in the 21st Century is highly critical of modern election equipment.

Diebold Election Systems, which provides systems that tally votes and register voters in many countries around the country, has been the target of her wrath for several years.

A whistle=blower suit filed by Harris alleged that Diebold:

Engaged in unfair business practices Made false claims about its product Used uncertified software in elections in California Sold systems that are capable of being easily hacked

Whistle-blowing (con’t) Protection for Whistle-Blowing

Whistle-blower protection laws allow employees to alert the proper authorities to employer actions that are unethical, illegal, or unsafe, or that violate specific public policies. Unfortunately, no comprehensive federal law protects all whistle-blowing.

To make things even more complicated, each law has different filing provisions, administrative and judicial remedies, and statutes of limitations.

Thus, the first step is reviewing a whistle-blower’s claim of retaliation is for an experienced attorney to analyze the various laws and determine if and how the employee is protected, and then determine what procedures to follow in filing a claim.

Whistle-blowing (con’t) Dealing with a Whistle-Blowing Situation.

Each potential whistle-blowing case involves different circumstances, issues, and personalities. Two people in the same company and the same situation may have different values and concerns that cause them to react differently, and both reactions might be ethical.

Therefore, it is impossible to outline a definitive step-by-step procedure of how to behave in a whistle-blowing situation.

A general sequence of events and highlights key issues that the potential whistle-blower should consider.

1. Assess the seriousness of the situation 2. Begin documentation 3. Attempt to address the situation internally 4. consider escalation within the company 5. assess the implications of becoming a whistle-blower 6. use experienced resources to develop an action plan 7. execute the action plan 8. live with consequences