Home of Dark Fiber MAN,
Defense In Depth (DID) andSecurity and Disaster Recovery.
We are a HIRE AMERICA FIRST company.
NEW YORK - WorldCom's plans to emerge seamlessly from bankruptcy as MCI
appear on hold today as allegations of possibly criminal wrongdoing will be leveled
against the company to a U.S. bankruptcy court, the U.S. General Services Administration
(GSA) and federal prosecutors in New York. The charges involve the rerouting of telephone
calls through Canada as a means to avoid tariffs owed to other telecom companies for use
of their networks.
The practice is said to have been ongoing for ten years, but the charges only surfaced in
the last ten weeks when a former MCI employee alerted the FBI about a company project
known as "Canadian Gateway," according to various reports starting with one in The
New York Times over the weekend. Now MCI's rivals, already indignant about the
company's ability to shed debt in the bankruptcy process, have a club to use against the
company. Many have charged, even before the call-shifting allegations became public, that
bankruptcy gave MCI an unfair advantage and that it should be liquidated rather than
Rerouting calls through Canada allegedly allowed MCI, a unit of WorldCom (otc: WCOEQ - news - people ),
to send them back into the U.S. on AT&T's (nyse: T - news - people )
network, which would mean that AT&T would pay carrying charges that should have been
paid by MCI. Related schemes were said to have laid charges off on Verizon
Communications (nyse: VZ - news - people ).
Some of the rerouted calls may have originated in the State Department and other federal
agencies, adding a potential national security concern to the mix--if sending calls north
of the border made them somehow more susceptible to electronic eavesdropping.
Now Verizon plans to urge the federal government to stop doing business with MCI,
according to The Washington Post. Verizon, along with AT&T, has been asking the
GSA to stop doing business with WorldCom, whose single largest customer is the federal
government. It could receive as much as $800 million for phone services from federal
agencies this year, the Post said. At least seven government agencies, including
the National Transportation Safety Board and the U.S. Postal Service as well as the State
Department, were among the customers.
AT&T, meanwhile, will present evidence of the fraud to the federal bankruptcy court
that appeared poised to clear WorldCom (to be known as MCI) from the final stages of the
reorganization process. The court's acceptance of WorldCom's plan of reorganization was
premised on its finding that the company had purged itself of the massive $9
billion-to-$11 billion accounting fraud that tarred its recent past.
AT&T claims it paid hundreds of millions of dollars in fees that WorldCom should have
paid because calls routed through Canada were made to look like they were placed by
AT&T customers, the Post reported.
MCI said in a statement that "access charges between local and long-distance carriers
have existed for decades and are routine in the industry. As always, we take all inquiries
by the U.S. attorney's office very seriously and will cooperate fully with any
investigation." All phone companies must make use of the networks of other phone
companies so that any phone can ring any other phone. Hashing out who used what is an
important part of the business.
The Post's report, citing unnamed sources, indicates that more than 90 people were
involved in the Canadian scheme, said to be the result of extreme pressure on WorldCom
employees to reduce the access charges. This is a far larger number of employees than is
said to have been involved in the accounting scandal.
But the call-rerouting allegations say that MCI had been engaged in the practices for far
longer than the period of the accounting fraud. There is no indication of why the charges
are just being brought to light now.
Blue-Chip Companies Send More Jobs to India OCN - news
- people ), a mortgage company that sells loan-servicing
software to lenders, hasn't fired workers here to hire people in India. The company still
has more than 1,000 employees in Florida.
Provided By Pinnacor, 08.05.03, 10:58 AM ET
A decade ago, a wag famously warned of the giant sucking sound from Mexico, which
threatened to steal America's working-class jobs.
Today, the giant sucking sound comes from a different spot on the globe, and it menaces a
different type of worker. India increasingly is landing high-skilled, highly paid
positions for engineers, accountants and financial analysts formerly employed in the
West Palm Beach-based Ocwen Financial Corp. offers a case study in how companies
are cashing in on India's allure. Seeking to cut labor costs, Ocwen quietly has hired
hundreds of workers during the past two years in India, where skilled workers are
plentiful and wages are low.
Ocwen, which once had nearly 1,000 employees at its Palm Beach Lakes Boulevard
headquarters, now employs more workers in Bangalore than in West Palm Beach. At the end of
last year, Ocwen had 843 employees in two locations in India, compared with 474 in West
Palm Beach and 534 in Orlando.
The reason, of course, is money. Like many U.S. companies, Ocwen has discovered
well-educated, English-speaking workers come cheaper in India than in the United States.
"We established operations in India to take advantage of a highly skilled but
relatively inexpensive labor force," said Mark Zeidman, Ocwen's chief
These are not sweatshop jobs. Most of Ocwen's Indian employees are college graduates; they
include 80 software developers, along with workers in residential loan servicing, human
resources, accounting and risk management.
Zeidman is quick to point out that Ocwen (nyse:
"We didn't move any positions from the U.S. to India as much as we accommodated the
growth in our business by hiring employees in India rather than increasing staffing in the
U.S.," Zeidman said.
Still, Ocwen plans to add even more employees in India this year and to make "a
modest reduction" in its U.S. work force, according to the company's 2002 annual
report. Meanwhile, its U.S. employment will shift to "a greater concentration of
clerical-level employees," the company said.
Ocwen is far from alone. IBM (nyse: IBM - news
- people ) plans to move some of its software design jobs
to India, The New York Times (nyse: NYT - news
- people ) reported last month.
Big Blue says it's simply following its rivals. Dozens of blue-chip companies, including Microsoft
(nasdaq: MSFT - news - people ), Oracle (nasdaq: ORCL - news - people ), Bank of America (nyse: BAC - news
- people ), JP Morgan Chase and General
Electric (nyse: GE - news
- people ), have set up shop in India. Consulting firm
Forrester Research predicts that 3.3 million service-sector jobs will move from the United
States to India and other nations by 2015.
Siemens Information and Communication Networks (nyse: SI - news
- people ) recently outsourced one job from Boca Raton
and 11 positions from its Lake Mary plant to India. Siemens cut 300 workers in Boca this
year, but a spokesman said there's no direct link between those cuts and its India
Motorola (nyse: MOT - news
- people ) and Pratt & Whitney parent United
Technologies (nyse: UTX - news
- people ) also have employees in India, although both
companies said hiring there was not responsible for job cuts in Palm Beach County in
No CEOs or CFOs have outsourced their own positions to lower-paid executives in India. But
this job shift is striking because it reaches so high up the corporate ladder, hitting the
formerly cushy ranks of white-collar corner offices.
Your job could be next. Among the outsourced are computer programmers, engineers,
accountants and financial analysts, not to mention thousands of less-skilled workers who
answer phones at call centers.
Critics decry the job migration as shortsighted bottom feeding. By moving middle-class
jobs to the Third World, corporate America is abandoning U.S. workers at a time when jobs
are hard to find, said Thea Lee, chief international economist for the AFL-CIO.
"I don't doubt that it's cheaper," Lee said. "But companies need to take a
slightly longer time frame rather than just cutting payroll costs right now."
Sending positions to India undermines the U.S. tax base, she says, and some politicians
agree. A few in Congress have threatened to limit visas for skilled workers from other
countries, and some state legislatures are pushing for limits on companies moving jobs
After a New Jersey lawmaker discovered the state's welfare bureaucracy was administered
partly by workers in India, state lawmakers in New Jersey and Maryland sought to block
public contracts from being serviced outside the country.
But proponents of offshore hiring chant the mantra of free markets. It's pointless to
block corporate capital from flowing where it can be spent most efficiently, the argument
goes. India's supply of skilled workers is abundant, so the job offers naturally follow,
"One thing that has been demonstrated time and again is the futility of adopting
protective economic policies that seek to shelter the domestic economy from the impact of
these changes," Zeidman said. "We are confident that the U.S. economy and work
force is resilient and capable of responding to these changes such that in the long run
economic output and productivity are enhanced."
A similar debate raged in the 1980s and '90s, as employers pulled manufacturing jobs out
of the United States and moved them to Mexico, China, the Dominican Republic and other
countries where workers were cheap and regulations were loose.
Presidential candidate Ross Perot warned in 1992 of the "giant sucking sound" of
jobs that would move to Mexico as a result of the North American Free Trade Agreement.
The pain of those job losses eased with the economic boom of the late '90s. These days,
the movement of low-skill jobs is so commonplace it barely sparks an argument.
The latest migration of jobs overseas is more stark because it takes the most desirable
positions out of the U.S. economy.
"It's the quality of the jobs," the AFL-CIO's Lee said. "In the past, we
were always told that when factories close, that was no big deal. Manufacturing workers
were told they should just get some more education."
Now, skilled workers are finding that education isn't enough, not when an Indian worker is
just as educated and is willing to do the same job for a fraction of the pay. A microchip
designer or financial analyst makes $7,000 a month in the United States. The same worker
in India earns $1,000 a month, BusinessWeek reported this year.
Eyeing those sorts of numbers, Ocwen began hiring Indian employees in 2001. They work from
Ocwen's facilities in Bangalore and Mumbai (formerly known as Bombay).
Ocwen wouldn't say how much it pays workers in India, but it boasted in a recent
regulatory filing that the move has let it add workers while cutting payroll. Ocwen's
salary expense fell to $17.7 million in the first quarter of 2003, down from $21.1 million
a year ago. Overall, the company lost $8.4 million in the quarter, continuing a pattern of
red ink in recent years.
Ocwen sees additional opportunity in its foray into India. The company has set up a new
division to offer its employees to U.S. companies that are outsourcing work to India. So
far, Ocwen has signed two clients, whose names it won't divulge.
The attraction of cheap labor is so strong that Ocwen and other U.S. companies can
overlook India's poor roads and decrepit power grid, not to mention the looming threat of
nuclear war between India and Pakistan. In one of its few public pronouncements on its
India presence, Ocwen issued a news release last year assuring investors the conflict
between India and Pakistan wouldn't affect Ocwen's bottom line.
As jobs move to India, area economic developers can do little more than shrug. While
county commissions dangle tax incentives to keep an employer from moving elsewhere in the
state or country, little can counter the major wage cuts that come with moving jobs to
"It's certainly formidable competition," said Gary Hines, senior vice president
for development at the Business Development Board of Palm Beach County. "It's a
bottom-line cost decision."
Hines noted that Ocwen once leased three office towers on Palm Beach Lakes Boulevard. As
it has moved jobs to Orlando and India, it now occupies only a fraction of that space.
Meanwhile, Florida economic developers might worry whether they'll lose call center jobs
-- a linchpin of local economic development -- to India. Thanks to cheap international
phone connections, many U.S. call centers have moved to India. Call the 800 number for
companies such as Delta Air Lines (nyse: DAL - news
- people ), Dell Computer (nasdaq: DELL - news - people ) and American Express (nyse: AXP - news
- people ), and you just might reach a customer service
representative in Bangalore or New Delhi.
Last year, Broward County call center The Answer Group said it would cut up to 1,200 jobs
in North Lauderdale because Hewlett-Packard (nyse: HPQ - news
- people ) decided to outsource customer support jobs to
India. Plantation-based Precision Response Corp., another call-center operator, has
expanded to India.
St. Lucie County alone has 4,000-plus call-center jobs, while Applied Card Systems in Boca
Raton runs a 1,600-worker call center and payment-processing operation.
Applied Card has no intention of moving jobs to India, a spokesman said. Nor does QVC, the
shopping network that runs a 1,000-worker call center in Port St. Lucie, the general
manager there said.
Cincinnati-based Convergys (nyse: CVG) has almost 1,000 people working at its Fort Pierce
call center. Convergys has several call centers throughout Florida, and it employs 3,000
at one call center in India and plans to hire thousands more in India and the Philippines.
A Convergys spokeswoman wouldn't say whether the company plans to move jobs from the
United States to India. But Don Root, executive director of the Economic Development
Council of St. Lucie County, acknowledged the Convergys jobs are "probably
vulnerable" to a move overseas.
(c) 2003, The Palm Beach Post, Fla. Distributed by Knight Ridder/Tribune Business News.