of the 05-09-04 Meeting of the Rocky Mountain
Internet Users Group
(RMIUG):"Electing With Clicks"
The meeting started at 7:00 with about
3/4 full house in attendance.
Josh ran the meeting again tonight, and
thanked the RMIUG sponsors for their support:
generously provides food and
beverages at the meetings. The company provides
Creative and Technical
Talent for Web, Interactive Media, Marketing
Communications and Software
-- a Colorado-based software company that
provides semi-custom web-based applications,
is the sponsor of the RMIUG
NCAR -- for the use of their wonderful
Copy Diva (http://www.copydiva.com)
- for the audio visual equipment.
Colorado Mobile Developers group, an in
house software developer group First meeting
literature and table in front of the meeting
Colorado Alliance for Immigration Reform
Microstaff job announcements
Doug Hirs, Titanium Ware. Start up company.
Offshoring , The Truth Behind the
Josh asked warm up questions and introduced
the topic and the speakers:
John Leonard, an attorney
& Woods, PC.
Johns practice is concerned primarily with
He assists businesses engaged in all aspects
of software development, and represents
technology companies in property, business
and overseas outsourcing.
Jeff Finkelstein, the
President of Customer
Paradigm, an email marketing and privacy
consultant in Boulder. Jeffs company uses
offshore resources, and he will share his
experience in what types of projects and
talent companies should and shouldn't outsource,
and how cultural issues can affect project
management and communication.
Richard Armstrong, who
HireAmericanCitizens.org in May 2000.
His organization has over 6500 members nationwide
and takes actions designed to eliminate
American worker replacement programs.
Many people work for organizations who
outsource. A few have had their jobs replaced.
In 1999, people in tech couldn't find enough
people to work at tech jobs. Now, the "solution"
has created a problem for American workers.
Legal pitfalls, and how outsourcing may
not be for every or even most companies.
What's being off-shored?
-Software coding and maintenance
Key Areas of Concern
Johns a fiend about contract management.
One also needs to protect intellectual property:
1) Proper Subject Matter:
-Export regulations on encryption software
-Need to be careful about what you are sharing
and with whom.
Privacy concerns: Health, government
-Fast dispute resolution
This is what he will cover.
Contract Management: what to do--
-HAVE an RFP. Please.
-Have a contract
-If it is not in the contract, expect to
pay more -Scope/work orders -Change orders,
extension of time, adjustments of money.
-Clear acceptance criteria
-Payments only upon deliverables
-Point persons, client and vendor -- Specific
people, specific reporting duties -Requirements
regarding vendors employees -- Language
(spoken and computer), no subcontractors,
Confidentiality agreements should be attached
as an exhibit. If companies are using individual
contractors, that is a third source.
For example, say a company will hire an
individual contractor, and that company
has not transferred rights, then the owner
of the rights is the individual contractor.
-Choice of law
-Choice of language
-Process by which work is communicated
2) Intellectual property management &
-Patents - business method patents.
-Copyrights - register them. Even though
we don't have to, it is a good idea. You
don't have to send them to Washington now.
Within 3 months
of creation of code, for example, you need
to register it with the copyright office.
-Trademarks -- $350.00
-Trade Secrets -
Software company's intellectual property
Copyright -- advertising materials, web
site, source, object code Trademarks --
name of a division or software company
United States protections end at waters
edge Each country has its own intellectual
property protection machine
Is Software Protected? It depends on the
3) Proper Subject matter -- ask if this,
whatever this is, is something we should
be sending oversees. Everything needs an
There are civil and criminal penalties that
have changed since 9-11-01.
-type of work
Due Diligence = get references. Get references.
GET REFERENCES. And ask the right questions.
-is it just a store front? (is there an
actual company in India?) -who will do the
-who are the project managers?
4) Practice fast dispute resolution:
-control money and do not get into trouble
-litigate intellectual property issues rather
-Have arbitration for all else
-Where is arbitration?
-Who are the arbitrators?
-Ad hoc vs. administered arbitration
He is sharing his companies successes and
failures in outsourcing. And how HE decides
whether/when to outsource.
Why do businesses want to outsource? Its
not just money.
How many people have purchased a drill
bit? But do they really want holes? (i.e.,
focus on the end result)
Customers are in control.
Globalization has impacted outsourcing
tremendously in the last 5 years.
So has deregulation, for example in package
delivery, airline prices, and utilities.
The focus of the US government has been
Digitalization has changed things, too.
Open standards have decreased unit transaction
For example, WellsFargo.com uses HTTPS,
EFT protocols to exponentially decrease
the cost per banking transaction.
Reasons to outsource:
-better pricing for your customers
-reliable technical skills
-24 hour coverage for customer service
-Ability to work on projects two shifts
Hidden costs of outsourcing:
-project management -- time lag, detailed
requirements -trusting time sheets -it can
degrade domestic morale -project size issues
(too small, too big?)
-India's economy is booming
Tips for doing it:
-have a trusted relationship
-have detailed technical requirements
-don't ask somebody to read your mind (i.e.,
have it all spelled out) -avoid using offshore
talent for design jobs it [the end product]
might not work consistently -be sure to
measure the true cost of the outsourcing
effort what it costs for/to morale, what
it costs in other [non financial] ways
To protect your job:
-Measure and track the ROI [return on investment]
of the revenue stream
-Focus on the needs of the customer, and
the needs of your employer (not on what's
in it for you)
-make all of your interactions relevant
- make sure the interactions add value every
time - personalized, and anticipated they
should not be a surprise.
This organization has over 6500 members
Started in 2000. Was written up in Denver
Post this weekend. Perhaps we saw it. He
has been replaced by cheaper foreign labor
It is a national non-profit organization
based in Colorado, with members in 50 states.
American Worker Replacement Programs:
-non immigrant visas
(Richard showed clips of protest and CNN
piece, etc., and told the story of a guy
from Bank of America killing himself after
training his replacement. He was at the
No Cal protest)
They are not a union, not anti India,
or anti foreigner. Just pro America. Practicing
what they call economic patriotism.
-Eliminate American worker replacement programs.
-Pass legislative protections for American
Why is this important?
-These [American worker replacement] programs
are not accidental, they are "pre-meditated
policy errors that were masterfully lobbied
and orchestrated to obtain the cheapest
labor on Earth at the expense of the American
All Americans are negatively affected somehow.
Doing what is right for American workers,
consumers, and for America.
Each are dependent upon the other. Its not
possible for one entity to abandon another
without harm resulting to all entities.
Why is this important?
-Reliance upon these programs will result
in us losing the ability to provide for
-15 million Americans can't find a full
-2.7 million jobs have been slashed since
March 2001 -Unemployment rate over 6% (in
IT), there are 1 million IT workers on the
-9 million Americans unemployed
-Almost 50% of our black American males
Taxes that really sting
Taxpayer dollars should never be used to
displace American workers.
Did we know that the State of Colorado is
a "lowest bid wins the contract"
What state projects are going offshore?
How do we change this?
His organization is working to get a measure
on the Colorado statewide ballot this year.
Because we (Colorado) have ballot initiative,
which, unlike many states, allows us to
put the issue in front of the voter's)
Colorado Ballot Initiative #139 = Colorado
constitutional amendment, if it passes.
Its not a statute, so it can't be reversed
the next day by legislature.
(1) "the people of the State of Colorado
hereby find and declare that state funds
should be used to employ people permanently
residing in the US and to prevent the loss
of jobs to foreign countries and temporary
foreign workers with non-immigrant visas.
(2) [see the web site, www.hireamericancitizens.org]
How can you help?
Sign petitions (there are some here at
the meeting) Join teams of signature gathering
teams and get signatures. It needs 68,000
signatures to get it on the ballot.
Colorado will be/would be the first state
where the voter will decide/participate
in the off-shoring decision.
Myths of Off-shoring =
-If its more profitable, it's got to be
Not all costs are counted. Economic "externalities"
-Eliminating off-shoring would hurt innovation--
Wrong. It increases the Governmental budget
Security Risks =
-critical information leaks
-can identify in a second where a VISA card
holder is spending
-change our tax codes
-help fix the problem by supporting Colorado
Ballot Initiative #139
Questions for the panel:
Q [statement] Colorado is sending personal
Prisons. Did not pass an identity theft
A [Jeff] His company does privacy consulting.
They counsel businesses and organizations
to watch what happens with databases. Especially
before the Do Not Call list. In other countries,
these same kinds of databases are used for
things like ethnic cleansing.
concerned with the US Patriot Act.
Q Josh - Is there any sense if we're in
a blip or a longer term thing?
A Richard - They believe it's urgent and
needs to be taken care of right away. Our
own government is sending our info overseas
Comment Jeff if a company is pocketing
the difference .
Comment - Richards partner if a company
sends money offshore, there is a law that
allows them to keep that money offshore
indefinitely so the US doesn't benefit from
it. A law before congress is being negotiated
to stop that, because its [the amount kept
in offshore accounts for these purposes]
in the trillions.
Comment John - on same if a business can
make more money offshore, via protectionism,
Comment - Richard the only time he sees
it as okay is if you are trying to open
or enter a new market in another country.
Q as an employee, what particular areas
should you move into? Or do you see?
A John he is seeing more due diligence on
He sees a pick
up in our local economy. A guy was talking
about a fuel plant in Commerce City
Q (to all) He thought the impact of NAFTA
on him in CA at the time was pretty nil.
He thinks this has really happened rapidly
so if it isn't a blip, what is going to
continue to fuel that?
A Jeff - I think it is really challenging
to move an auto plant to a foreign country.
But not so, software or information.
Q [Richards partner to Jeff] if you could
abandon America for India, would you?
A I think that is a politically unbalanced
Q [Richard] - so if competitive business
forced you to move your business, would
you do it?
A [Jeff] - probably not.
Q (to Jeff) second part level of profitability?
A web development, web marketing, permission
based email marketing -- Had email marketing
developed overseas when his staff
was swamped. Can
be 1/2 to 1/4 cheaper to send it overseas.
Q [statement] - He is concerned that it
is being presenting as a one way street.
We export 18% of the world services. So
the US also benefits more from off-shoring,
much more than any country in the world.
And US workers -- is it wise for us to be
raising the call when in fact Americans
benefit more from this?
A - Richard India does not export anything
There are commerce
figure departments on jobs
Comment [Richard partner] H-1 Vs, fill
those jobs. Visas. Not American workers.
And each one of those manages 5 more people
Comment - Richard the trade agreements
are working, in the countries in which we
have them. But we have no trade agreement
Q - Comment Chairman of Masterlock Masterlock
chairman said we are shopping ourselves
out of jobs. The 9$ lock is Masters, the
$6 lock is India. He thinks it is a social
problem, and that is feeding the cheaper
offshore product (the 6$ lock)
Comment - John he would like to see retraining
of American workers, absolutely. But our
country is extremely productive.
His clients, if
they can get a machine to do what a man
would have, yes, they will do it.
But we have always shown that productivity
is one way we get ourselves out of it.
Q assuming that this trend accelerates,
what are the IT functions/jobs that are
resistant to offshoring?
A (Richard) none, in IT.
A - (Jeff) Design maybe, but no jobs being
safe is just a product of the information-based
society we're in. But certain things become
Comment one way to keep the off-shoring
down is to deal with smaller businesses
to medium sized businesses, because off-shore
management is just too expensive for the
More comments on microeconomics. But is
anyone looking at this from a macroeconomic
standpoint? (Yeah, Richard is!)
Richards partner gave example of externality.
Cancer victims downstream are the ones that
bear the brunt.
Q Comment outsourcing is benefiting American
corps/stockowners, and foreign everything
appreciates the sponsorship of
and Copy Diva (http://www.copydiva.com).