For CEOs, offshoring pays

Chief executive officers at the companies shipping the most U.S. jobs overseas seem to be pocketing some of the savings, according to a new report.

The study, published by two groups concerned with economic inequality, found that average CEO compensation at the 50 firms outsourcing the most service jobs abroad increased by 46 percent in 2003. CEOs at the 365 large companies surveyed by Business Week only saw an average raise of 9 percent, according to the report from the Institute for Policy Studies and United for a Fair Economy.

CEOs at top offshore outsourcers earned an average of $10.4 million in 2003, while average CEO compensation hit $8.1 million, according to the report. From 2001 to 2003, the top 50 outsourcing CEOs earned $2.2 billion while sending an estimated 200,000 jobs overseas, the report said.

"These 50 CEOs seem to be personally benefiting from a trend that has already cost hundreds of thousands of U.S. jobs and is projected to cost millions more over the next decade," the report said.

...it reveals that these corporations are not struggling--they just want more money available to line their already obese pockets.... This is far away from the the cries of corporate boards that business in the USA is too expensive--if that were the truth, that money would be going back into the company, not fattening salaries.
--Bruce Baxter

Offshore outsourcing, farming out tasks to lower-wage nations, has become a hot-button issue over the past year or so. Defenders of the practice--including President Bush's top economic advisor--say it ultimately assists the U.S. economy. But critics say it costs U.S. workers jobs and threatens the country's long-term tech leadership. The exact scale of the trend remains unclear.

The new report names a number of technology companies in its list of leading offshore outsourcers. IBM is among them. Big Blue has plans to shift about 2,000 U.S. jobs abroad this year, but it also is hiring thousands of employees in the United States. According to Tuesday's report, IBM CEO Sam Palmisano's pay reached $7.7 million in 2003, up 13 percent from 2002.

The report lists a more dramatic increase in pay for Stephen Bennett, CEO of Intuit, which makes personal-finance software. Bennett got a 425 percent pay increase in 2003 to $22.3 million while sending call center jobs to India, the study says.

Neither IBM nor Intuit immediately returned requests for comment.

The study also said the so-called CEO-to-worker wage gap is rising again, after two years of narrowing. The ratio of CEO pay to worker pay reached 301:1 in 2003, up from 282:1 in 2002. If the minimum wage had increased as quickly as CEO pay since 1990, it would be $15.76 per hour, rather than the current $5.15 per hour, according to the study.

[waynehapp]

Adam Smith is Dead Long Live Machiavelli

Do people think the savings from offshoring will go to making the business stronger? Or back to the share holders? Does IBM really need to cut costs.

Nah....

Half for the Republican political du jour and half for the CEO.

Long life to Machiavelli CEO's.

SO that's why they want to save...

In consideration of this information, it reveals that these corporations are no struggling - they just want more money available to line thier already obese pockets. It a shame that so many Americans are reduced to joblessness and homelessness just because some CEO want's an extra billion in his bank account. This is far away from the the crys of corporate boards that business in the USA is too expensive - if that were the truth, that money would be going back into the company - not fattening salaries.

basically, they are happy to pay higher salaries - as long as it's their own. This should be pushed by the media as anti-patriotism and anti-Americanism. i can't stand the current media angle of these stories - as if making working class Americans suffer for the sake of a dollar is the "American Way". The "American Way" is posted on the Statue of Liberty - I think it has something to do with us taking care of each other. Are these Corporations taking care of thier fellow Americans? Are they treating us as first and other countries second??? Come on press, get on them - it's your job as Americans.

Where?

One of these days someone is going to answer me. Where do you think those jobs come from? The statue of Liberty is not an invitation to those who would like to have someone else take care of them. That is what England is for. The message of the Statue of Liberty is for the workers of the world who would like to reap the benefits of their own labor. I.E. the small business owner, or the large business owner. It is a message to those who don't wish to feed everyone in the world, just themselves and their family. It is to the people who do not want to eat the scraps of that which they earned and prepared because they earned and prepared it, and somebody else feels that their needs supersedes the abilities of another. But for now, I just want to know. Where do you think those jobs come from, with their large paychecks or small. Where? Thank you.

CEOs Don't Deal with Consequences

While hundreds, even thousands of Americans lose their jobs to outsourcing, the greedy executives fat wallets get fatter. It makes me sick. Meanwhile, people in the trenches (like myself) have to deal with these decisions, after friends and co-workers have been laid off.

Execs get rich; meanwhile they don?t give a damn when it turns into a nightmare. My direct and objective experience with IT outsourcing is that it?s a disaster. Tasks are sent overseas after promises are made to execs about the experience and skill of foreign programmers. CEOs and execs take these promises at face value, without looking deeper; they want to hear all of the bullsh*t claims that outsourcing will save millions while ?improving? IT processes. Don?t make me laugh. As someone in-the-real-world, who has to deal with this everyday, it?s a nightmare. A ******* nightmare. When the rubber hits the road, the ?skill? and ?experience? are dramatically lower than advertised. In addition, language and cultural obstacles make the situation even worse. And, to make things even worse, when the execs (who made the outsourcing decision in the first place) hear how bad the situation is going, the assh*les don?t want to hear it. All they want to hear is the good news, not the bad news. Executives turn into the worst kind of selfish and manipulating leaders.

[lingsun]

CEO's don't get the profits, shareholders do

The who emphasis is wrong. The CEO's job is to make money for the company to benefit shareholders. Companies don't exist to employ people. Companies exist to make money. If outsourcing makes economic sense for the companies, it will continue.

OffShore CEO's

When will the Boards of Directors figure out the company savings of OffShoring the CEO position.
Hmmmmmm.....

[lingsun]

Report by group isn't going to conflict with their interests

Wow! A group against outsourcing issues a report that says it's bad! Who would have guessed?

Perhaps You Should Volunteer Your Job For Outsourcing

You actually sound like you?re real excited about the benefits of Outsourcing, Bill. Perhaps you should volunteer you job to be Outsourced. I think that would benefit for us all.

Perhaps You Should Volunteer Your Job For Outsourcing

You actually sound like you?re real excited about the benefits of Outsourcing, Bill. Perhaps you should volunteer you job to be Outsourced. I think that would benefit us all.

[PRT940]

Just like...

You mean like all the "Outsourcing is good for you" propaganda we read from the corporate-funded "global think tanks?"

So, while new jobs added in the U.S. continue to be just a small fraction of what our brilliant economists predict, CEOs of companies that outsource are gorging themselves on the short-term outsourcing savings.

You didn't actually believe that these companies would turn these outsourcing savings back into American jobs did you? Maybe jobs for the people who build the CEOs' yachts and Mercedes....

What can we do?

News stories about the excellent new "Executive Excess" report have unfortunately failed to pay much attention to the report's recommendations.

The first of these: Pass the Income Equity Act introduced by Congressman Martin Sabo. This legislation, H.R. 2888, "would cap the tax deduction for executive pay at 25 times the salary of the lowest-paid full-time worker in a firm."

For more, head to Sabo's Web site at http://sabo.house.gov, then click "Legislation" and "Sponsored Legislation."

disgusting

i'm all for pay-based incentives/motivation.

but this is just disgusting. What can we do? I for one refuse to continue to drive up my credit to buy corporate products that make CEOs adn stockholders wealthy. if that means I go without, then good for me. Money in my bank instead of theirs.

I also refuse to give them 60 hours of work for 40 hours of pay. let them fire me. i don't care any more. i'm not wasting my sweat equity to put money in there pocket.

Once a registered republican, the republican party can go screw. Tax breaks to the rich, trickle down economics my as*. What does Georgie boy, larry ellison, or billy gates need a tax break for when they have millions/billiions? and now, as this study shows, it's not just the shareholders gaining, but the ceo. And i'm sure if you dug a little deeper, it'd be the VPs, C-level executive directors gaining as well.

I hope one day for an insurrection against all corporate greed. There IS a point at which one person has MORE THAN HIS SHARE. Poverty is on the rise, according to an MSNBC article, the rich really are getting richer.

and you know what? SHame on all american workers for passively allowing it to happen.

shame shame shame.

Those who don't learn their history.....

Shame on American Workers? They should what? Overthrow the Bourgeois, Long live the Proletariat? Are we just going to keep doing the same thing over and over again? Do we ever learn a trick or two? Perhaps you've heard the news, a few years ago Soviet Russia tried that, it is now what is known as a failed experiment. What, if I may, is the precise cut off for a mans earned wealth? Who makes these determinations? What standards would they use?

[Chris9750]

And this is a surprise?

Anybody who has been affected by outsourcing already knew this. Sometimes it is not so apparent as these CEO's don't take a large raise but instead get outrageous bonuses. And even when they aren't outsourcing, they're demanding that their lower paid workers take cuts in pay and pay more towards benefits all the time crying about how costs are up and profits are down. Of course none of this effects their pay and bonuses.

Think Global and Think Capitalism

I believe this article is intentionally spreading a biased view. If the article heading was "Succesful companies reward CEOs", the response would be different.

The American Corporations are more succesful (look at F2000 list) than the rest of the world because they think global - not just US. Most of the corporations have done a fantastic job of getting more than 50% of their revenues from international regions (and replacing jobs and local businesses in other countries - but that's another topic). The corporations that think global and look at the world as one big pool of resources and one big pool of customers, without boundaries, will be the more successful ones remaining on this highly connected planet.

The second reason American Corporations are successful is because they reward capitalism. American Corporations truly capitalize on ideas and opportunities and reward individuals purely on achievement (with some exceptions like Enron). CEOs that show results by growing revenue during economic growth and by cutting costs during recession should, indeed, be rewarded more than CEOs that don't produce results. A CEO's role is to improve the company's bottom line, and the company's (or the board's) job is to reward the CEO.

I, for one American, would not want American Corporations to stop thinking global and stop applying capitalism principles.

I believe a truly neutral article would have investigated into what results those CEOs acheived for their corporations. I think the CEO to Worker is something to be concerned of, but is nothing related to offshoring. With this disturbing trend of articles, should I expect a News.com article linking terrorism and war on offshoring? I hope the readers are more savvy than the writers of this article and not believing that every written word is correct.

[Big Tsunami]

RE:Think Global and Think Capitalism

Also, you may want to get some feedback in how these corporations are re-investing in their communities and trying to foster a greater productivity standard within the communities in which they are located.

They want all the tax breaks and incentives without helping the community.

If these corporations want to go global then they should no longer be considered American companies and should not be afforded the benefits they get from the American system. Instead they should be governed by laws imposed by the United Nations and subject to their taxation and regulation.

[Razzl]

End Capitalism now

Everyone knows that free market economies and Capitalism are 2 different things. These persistant misuses of the wealth created by the efforts of all the people by the small class which controls the movement of vast portions of these resources (Capitalists) makes it clear that Capitalism must be brought to an end in its present form. Free market economies can only benefit from that.

[Big Tsunami]

Sorry, that doesn't work

You are trying to legislate morality. Experiments in socialism and communism have not worked. There must be an incentive for folks to excel. The problem is that this lust for riches always ends up at a brick wall for all those who try to pursue it.

This is a moral issue and the right policeman should be our consciences. Until the time comes when there is public outrage for this kind of behavior and it supersedes our desire for the company's goods will any change--of any magnitude--take place.

Capitalism is like technology. It is morally neutral. It is how it is applied that makes it either good or evil.

Wait!!

Actually, True Capitalism and Free Market Trade are the same thing. This should explain why the attack on one has the nasty result of spilling over onto the other. They are the same thing. We do not exist within a true Capitalist system. Please find out what Capitalism really is before you decide to prematurely end it. Thank you.