Into Thin Air

With that kind of pressure, even those who keep their jobs are feeling the squeeze: A January 2004 study by Foote Partners shows that IT compensation has fallen for four straight quarters in the areas most vulnerable to outsourcing, dropping an average of 7.6% in 2003 alone. "There's no way to stay competitive, no matter how hard you work, when you can get 8 to 16 heads for the price of one," says Bronstein.

So is there any such thing as a safe refuge? Melissa Charters was a data security administrator in Los Angeles with five kids and a freelancer husband. Her $70,000 job was first outsourced to a local company and then offshored to India in May 2003. It's an increasingly common pattern. Full-time jobs become contract work, without benefits, and then vanish overseas. Thanks to a state-funded program for displaced IT workers, Charters is going back to college--to learn to teach home economics. "I seriously considered going back to school to do data or network security," she says. "But then I thought, how could I invest my own money in a career to have it taken away again? I'm pretty sure teachers can't be offshored, but if I start seeing big-screen TVs in my classes, I am going to be worried."

Charters is lucky to have found some government help. While the Trade Adjustment Assistance Reform Act of 2002 provides federal aid for those whose jobs have moved overseas, it is aimed at manufacturing jobs; most software developers and other white-collar workers aren't eligible. In January, a group of former IBM programmers filed a class action suit against the U.S. government to change that.

Corporations bear some responsibility to the workers they leave behind, argues Ray Lane, the former COO and president of Oracle Corp. and currently a partner at Kleiner Perkins Caufield & Byers. "Take some of your expected profits from offshoring and make your severance packages higher or retrain the employees . . . in known growth industries," he says. "But don't kid them. My cousin worked as a bartender for eight years while he waited for his $22-an-hour steel mill job to 'come back.' These jobs never come back."

In an August 2003 report entitled "Offshoring: Is It a Win-Win Game?" McKinsey Global Institute concludes with great specificity that every dollar of offshoring results in 58 cents of savings to the American economy. But even that report acknowledges that 31% of workers who lost their jobs in earlier waves were never fully reemployed, with 80% taking pay cuts. That's the reality for Clifford Paino, a systems analyst whose job moved to Ireland in December 2002. After six months, he found a new job as a contract worker for the same company--earning 40% less, with no job security. "They can tell me they can get rid of me tomorrow," he says.

The situation is particularly acute in certain cities--often the very ones that were a little slice of heaven in the 1990s. In the Colorado Springs area, a thriving IT industry was powered in part by Agilent, the company that was spun off from HP in 1999. The retrenchment that resulted from the decline of the Internet economy has led to the loss of thousands of jobs in the area, many of which went overseas. Agilent won kudos for handling the difficult process as gracefully as possible. Yet its status as part of the original HP--a place once famous for treating its workers with loyalty and respect and for fostering lifelong careers--makes the human impact all the more poignant.

"I walked to work when I was seven months' pregnant in a blizzard and stayed for three more shifts," says Joan Pounds, an IT representative at Agilent who lost her job in July 2003. "I did that because I cared about the company." Pounds wasn't surprised to get the bad news--she'd already survived seven layoffs--but she was surprised to learn that she had to train her replacements in India via teleconference.

One of the Indian replacement workers did, however, congratulate Pounds on her new job. "I said, 'I don't know where that is,' and he said that they had been told we were going on to much better positions," she remembers. "It was emotional on both sides." Shocked to learn that they were, in fact, putting Pounds out of work, both replacement workers tried to back out of the contract, Pounds says. But their employer, a contractor in India, told them they couldn't. As for Pounds, a single mother, she sent out 25 resumes a week with no luck before taking a 13-hour-a-week job as a senior-citizen caregiver. The pay: $7 an hour. She has no medical benefits and must pay the costs of treatment for a son with bipolar disorder. A few months ago, she sold her house at a loss just two days before it was scheduled to be foreclosed.