Outsourcing driving stock market, not economy

Do you remember the late 1990's? Out-of-this-world salaries. Below full-employment (>5% unemployment). Budget surpluses. Record stock market levels.

Aside from that last part about the stock market, we're looking at a completely different situation today from 15 years ago. You see, in 1998 employers couldn't find enough bodies to fill all of the need they had for regular needs. Then you add on the tech boom, the dot-com boom and Y2K programming on top of day-to-day needs and salaries went through the roof. Increased disposable income led to an inflated economy. There was a compounding effect. And then there was the influence of a Republican Congress forcing spending down, further compounding the economic effect.

Again, today lacks that last part. Although with the present sequester we see an attempt on the part of Republicans in Congress to replicate their role from the 1990's.

But the main difference today is that the jobs are not filled by Americans--we have discovered India! And they just happen to have an incredibly technically-skilled workforce that speaks English and has significant technical skills.

And a billion people willing to work for dimes on the dollar!

The reason for outsourcing is not for the salary implications of reduced expenses. That comes with the corresponding cost of lost customers who had to interact with a call center in some place unpronounceable. Today we even see outsourcing in the employment recruitment industry, with recruiters based in India contacting American workers via Voice-Over Internet Protocol (VOIP) phone lines. These 'sourcers' call and appear on caller ID as being from New Jersey, Pennsylvania or Georgia while they are actually located in India.

And this is standard in IT services, call centers and even accounting operations now as well. Outsourcing American jobs allows the employer to escape the employer's matching of employee withholding taxes, which outweighs salary and regulatory savings. Reduced salaries save money while foreign accents on the phone cost money. Reduced regulations save money while Tonka trucks with lead paint and other such problems cost money. However, withholding savings are a dollar-for-dollar savings for the US employer.

And the impact on the bottom line is noticeable immediately. In fact, it is impossible to ignore!

I have worked in the accounting operations of three major corporations in recent years. And each was going through outsourcing and each was noticing tremendous impact on their bottom line due to outsourcing. One even commented internally on the incredible impact on human resources-related expense savings that outsourcing resulted in. Another actually expanded the scope of their outsourcing initiative upon seeing the initial benefit. The detriment of foreign labor performing US GAAP accounting functions was still outpaced by the impact on the bottom line that the savings produced.

And that is what is driving the present stock market performance. Not tax rates. Not Washington legislation. Even the prospect of Obamacare taking effect has not swayed the stock market's rocketing into record territory yesterday. Profits are everything, as it turns out. And companies that don't hire American workers are simply not worried about such issues, for if they do not hire American workers they are not subject to US employment laws.

The stock market is not being driven by the economy. It is being driven by savings corporations enjoy by sending US jobs overseas. And neither the media, nor the government (currently being run by Democrats), nor Republicans in Congress, nor companies are discussing this matter.

At least not publicly. Openly.

The fact that savings are more important at this stage than revenues, generated by a roaring economy enjoying beyond-full employment, is a problem. It has resulted in a President being re-elected who really, by all historical measurements, should not have been. His policies have not contributed to a better economy. His rhetoric and administration have not instilled confidence in employers that his administration will support policies that will be beneficial to their hiring Americans.

And that is a problem.

Nobody is discussing what is driving this "investor's economy." It is foreign employment. And poor domestic employment policies that make it more conducive for employers to hire in another land than where their revenues come from.

And this is a topic which deserves to be discussed. Unless you are a Democrat. Democratic policies have done this and will continue to do so. For nothing is being proposed to solve the issues since nobody is discussing the problems.

They're blaming it all on George Bush. And Republicans are letting them do so.

On funding and founding...how does one move from "idea machine" to in-business?

I have a very severe problem--my last name.  My first name doesn't help much for that matter.  There are a million David Smith's.  There's even a guy in Britain with the same middle name--same spelling--who is an artist and a sculpter.  He even reserved the domain name.

But where my name is common, I bring a very impressive ability to develop new business strategies.  Electric utilities.  Water utilities.  Freeway transportation policy.  Real estate development.  Media and entertainment.  Diverse industries, all.

The problem is that I was born to a Smith, not a Gates, Perot or Buffett.  Heck, I know guys over ten years my junior who were born to families whose fathers founded a company and sold it for millions who now manage the family's real estate investments.  In their twenties!

I was born in the wrong zip code.  Maybe I was switched at birth?

So where I bring a pronounced talent to the table, I lack the backing to "do" my own deals.  Hundreds of people out there like me, right?  Bill Gates among them.

My problem then becomes more pronounced and more specific--I have a terrible record of securing capital and launching my own deals.

But at least I know what the problem is.  And as was the case with my freeway congestion relief plan, when you identify the true problem it is much easier to attack it by developing a solution to the problem.  And solutions are what I specialize in.

But I think that I am too married to my ideas to be effective at this stage at securing funding for my projects.  Which is where the blogosphere and LinkedIn come into play.  I need some suggestions.  Advice.  Sage counsel from those who have been there, done that and gotten the t-shirts from all over the globe where the wealth their participation has generated, allowing trips to all the places the t-shrits came from.

Phase one, I suspect, is the business plan.  No problem.  I'm good at that.  But within that will be the management team.  I have simply been more junior (i.e. young and inexperienced!) than most qualified managers would be interested in partnering up with.  But I have a record now!  One of my proposals has literally seen six other companies either copy in whole or in part or at the very least launch based on the same ideas.

Phase two will probably be the capital.  I have long heard that the capital follows the management team.  Everyone has ideas.  Ideas, as I have proven, are a dime a dozen.  And the biggest reason I have never proceeded to phase two is that I have not yet completed phase one's requirement for a management team.

That should probably provide some pretty good opportunity for comments.  Anything is fair game.  But please recognize that I'm talking about significant IP, so if questions get too in-depth I may elect to take it to email or phone calls.  Thank you for respecting this from the outset.

HR, hiring managers...get job posts right, please!

Have you ever been on an interview or had your resume presented to a company only to have the job yanked?  Apparently the company didn't know what they were really looking for, they didn't find the right candidates and they wasted everyone's time finding out!

Oops.

I've had some variation of this happen several times.  Hiring manager doesn't know what they need for the new subordinate's role.  HR person doesn't know what questions to ask the hiring manager.  Company paying too little for what they're seeking in knowledge and experience.  A million variations.  Every single one of them drives a dagger through a job hunter's heart, rips it out and shoves a family-sized bottle of lemon juice in right after.  Nasty situation.

I had a situation like this recently where I was actually approached by four recruiters for the same position.  Four!  What's funny?  Two of those were located in India!  I awoke one morning with two voice messages from Karachi via VOIP and Pennsylvania area codes, so eager they were to fill their quota via monster and career builder resumes.  I got a phone call later in the morning from an American recruiter on the East Coast (not even my region, but minus the thick accent), so I returned their call.  They presented me then the cute blonde in my region called two days later.  Oops.

Well, they presented all of their candidates and then the company yanks the job.  I guess they didn't actually know what they were seeking after all.  Never mind all us job seekers and the pain such an event causes us.

There is another position currently listed that is even worse.  You're not typically able to determine if a hiring company is going to go jerk weed on you, but this position is a dead giveaway.

I'm a corporate financial analyst by trade, and a darned good one if I may say so myself.  Not the best at marketing my skills, but skilled nonetheless.  And smart enough to know that the phrases "New Grad," "Financial Analyst, Senior" and "5 years experience" simply do not go together.  Ever.  Toss in, "bachelors required but gee, we sure would prefer if you had a masters" and you're obviously talking about either a hiring manager or an HR generalist who woke up on the wrong side of the bed.  Or got reamed at the mid-morning meeting and decided to take it out on a group of online job seekers unbeknownst to them.

I run across other job posts all the time that have been taken down.  I'm not talking about Doostang.com, where I have not once applied for a job that was actually a job.  That's simply a scam--haven't figured out what their "game" is yet.  We're talking about every tenth job listed on CyberCoders being yanked.  "We're sorry, that job appears to be no longer available or has been filled."  At least they've added the "or has been filled" part, although I'm relatively certain the previous part about "no longer exists" is closer to the truth.

HR generalists.  Hiring managers.  I hope that you are never in a position of being out-of-work and have to experience this first-hand.  Sincerely.  Take my word for it--when you shove that lemon juice bottle in?  Yeah.  Boy, that sure does leave a lasting impression.

I hope that you have been employed continuously over the last 5+ years.  But please, take pity on those of us who have been in job hunt mode at some point over that time frame.  The economy has been miserable.  Pervasively so.  Not your fault.  Not ours.  But please--make the process easier for us.  You never know when the tables will be reversed in the future, and stranger things have happened than one of you submitting your resume to me at my whoop-d-do start-up, Inc. asking for a job and my doing a little bit of research when "that" company's name pops up on your resume and I say, "I wonder?"  Be nice.

Hiring managers, you ought to know well enough what the role entails to fill out an accurate job posting.  I'm sure you'll include the, "bright, intelligent, analytical and easy to get along with" stuff typical to just about every job posting ever.  We're talking about the points specific to a Financial Analyst role or an IT or administrator role, as I'm sure that sector has seen a lot of the same problems.  Get it right.  If you need to get an HR generalist or manager involved to ensure you get it right, do so.

If you are working with a recruiter, are you working with an IT professional trying to fill an accounting department role?  If so, might I suggest you need to get another recruiter.  If the person doesn't understand the difference in their elbow and your cash flow, you've got the wrong person trying to staff your department.  Get another one.

If you are the HR department, good luck!  I realize you have to staff up with marketing, accounting, IT and other completely unrelated professionals.  Again, perhaps you should get with the department manager and also an outside recruiting company.  There are no shortages in recruiters or companies.  Interview several.  Find one that fits your needs, even if that means you use one for the accounting department and another for IT.  Again, there are many.  No need to compromise on quality or qualifications.  And no need to do it yourself and have the same resulting compromised staff.

This job posting thing should be old hat to hiring managers, HR and staffing firms alike.  Geez, I've interviewed with so many over the years it has been insane the tidbits I've picked up.  Observations of their hop-scotch skipping between companies.  Did you know the staffing industry basically runs the same from company to company?  Get in a certain number of potential interviewees, certain activities during different times of the day, etc.  I've never heard from a recruiter at certain times of the day.  If I call, I get voice mail.  Period.  It's almost formulaic except I think that industry is completely fly by the seat of your pants when it boils right down to it.

I would expect a greater sense of professionalism all the way around.  We interviewees are expected to wear suit and tie, "tell you about ourselves" and every other thing entailed in an interview.  Do us the courtesy of at least posting a job you are actually intending on hiring someone for.

And get the bloody JOB POSTING right!  That's pretty basic.  Don't waste my time.

Clean up operations to be more profitable coming out of 'Great Recession'

Texas has the decided benefit of being among the first to emerge from the worst economy in our lifetimes.  But regardless of where your company's operations are located, now is the best time to clean up problems, inefficiencies and other surprises you may not know about so that when things get going really hot in the next couple of years you are better positioned to be that much more profitable.

For example, if you operate real estate assets which many companies do, when was the last time you had an outside auditor or even internal analyst review leases and other contracts to see if you are billing tenants correctly for common area maintenance fees (if applicable)?  Some companies I have seen have literally had accounting clerk-level staff managing ongoing operations of said leases for the better part of 40 years.  And with, for example, the 1986 tax law changes, which were now a lifetime ago, are you certain that you are operating at peak efficiency in this area?

We're not talking about strategic-level issues here.  Do we outsource?  Do we move manufacturing to Mexico?  Do we lease or purchase?  We're talking about ongoing operations.  And it applies to large companies and small alike.

I have quite literally seen companies with billions of dollars in revenue that needed to completely blow up the real estate and accounting departments.  Not necessarily outsource or offshore anything.  Just simply change who is over which departments, run a full top-to-bottom audit of operations and go three levels deep into "what we've always done."  Just because you've always done it does not mean it has ever been done right.

Then there are duplication of efforts issues that can be reduced by simply taking advantage of technology tools and even online accounting services or tools that were not available just a few years ago.  It is almost unnecessary to have your accounting data stored in your own IT department.  And the thought of having a Plant Accountant or Club Accountant at a golf course as well as a corporate accountant can be significantly reduced with tech tools the market is just itching to get real estate property managers to pay attention to.  Save yourself money--request a proposal from a suitable software provider if you manage multiple locations with accounting staff both on-site and at the corporate office.  Where a couple of tenths of a percentage mean the difference between a successful investment or disappointment, this can be a very beneficial tool to consider.

The strategy a company deploys can, of course, be the source of sustainability or bankruptcy.  That's a topic for another day.  We're just talking about ongoing operations.  And with the market coming around--finally!--it is prime time for businesses to ensure they are prepared to duel with the big boys in the percentages and ratios.

Create and Innovate to Perpetuate

A recent IBM survey of CEO's worldwide revealed that executives preferred one trait over any other:  CREATIVITY!!

This should surprise nobody who has been around business terribly long.  After all, the most successful corporations in the Fortune 500 and worldwide are driven by Intellectual Property developed by some of the greatest minds and most CREATIVE thinkers the world has ever known.

Granted, a few are driven by the greatest IP thieves in history, but we won't dwell on those details for purpose of this blog!  Others have made low-budget movies and write gossip columns about these individuals.

Companies are simply driven by CREATIVITY and innovation.  One statistic I remember from grad school, for example, detailed that 3M, Corp. (that's Minnesota Manufacturing and Mining) relies on something like 40% of its revenues from new products, new being defined as developed in the last 3 years.  Other great examples abound in literally every sector.

And as the economy continues to rebound from the worst economic recession in (most of) our lives, a company's talent now takes on even more importance.  For as the economy recovers, more and more people will be re-entering the workforce, further invigorating that economy with additional cash flowing around.  And companies that are well-placed to be first or second in line for incremental consumer dollars will be the hot performers of the next several years.

And so the "stocking up" on additional talent NOW becomes paramount.  Next year may be too late, or that talent too expensive to "rob" from your competition's cradle.  Even if an "investment" in additional talent this year is necessary, though the new or expanding initiatives they will be a part of will not begin or grow until next year, it is best to bring that talent in-house now.  If nothing else, they can rotate through various departments for a year, learning the complete business model so they are that much better capable of jumping into their eventual permanent role.

And obviously, companies with talented, innovative staff position themselves better than the competition.  It doesn't matter if you consider companies that develop their own IP like google or companies that develop new products by employee-driven initiatives like 3M.  Companies that develop such cash flows generate inflows that lend to their own perpetuation as well as engendering a culture of innovation that leads to the same in the future.  Either way, creativity and innovation go hand-in-hand with perpetuation of a venture, big or small.

Now, that all sounds good, but here's where the self-promotion and blowing my own horn begins!

I find myself in a career search at an exciting time, one which actually has me considering different avenues in order to both grow my own skill set as well as more effectively (and lucratively!) benefit from my already existing talents and skills.  I have Intellectual Property I am looking for capital to bring to market.  I have expertise developed in public policy and political activism I am seeking a way to adequately bring to the fore to benefit others' situations and my pocket book.  And I have professional expertise gained from both ongoing operations of area corporations as well as the unfortunate instance of having discovered boo-boo's in the books of one such company locally--boo-boo's of the 40-year historical variety!  And I just can't see that being the only instance of such boo-boo's, given the sector they took place in.

So as year-end close wraps up and February 1st budgets begin to be spent just around the corner, start looking for those additions for the department and company that will put you in a better competitive position in your sector and industry for years to come.  You can be sure I and thousands of other talented professionals are looking for the same for ourselves!

See you at the negotiating table!