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The Almighty Buck

The Price Of Doing Business 797

Posted by michael
from the they're-not-even-a-real-country-anyway dept.
8127972 writes: "It seems that a ton of high tech companies are leaving cities (like San Fran) with high costs of doing business for cheaper cities (Washington DC is mentioned due to new government spending) or even cities in Canada. Sounds like American high tech workers are going to have to learn to say the word "eh?" a lot."
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The Price Of Doing Business

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  • Move to Oklahoma!!! (Score:5, Interesting)

    by TurboRoot (249163) on Friday March 01, 2002 @03:40PM (#3092992)
    The cost of living here is SUPER low.. plus.. you can hire VBscript monkies to work on ASP sites for $8/hour.

    In Oklahoma, you put an add in the paper, and you will have billions of applications and you can pick who ever is willing to take the least amount of pay.

    That is why companies like AOL like to put call centers in Oklahoma cause they can pay a whole $9/hour and people shit themselves about how much money it is. :)

    Unfortuantly, actually SELLING a product in Oklahoma is kind of bleak.. but if your product is nation wide.. then this is the place.

  • by Jaden42 (466735) on Friday March 01, 2002 @03:44PM (#3093041)
    The Bay Area economy has always been like this. Anyone who has been here for more then 10 years will realise that the entire thing is cyclical. Years of boom, then years of bust.

    If you stick around long enough, you'll even see it yourself. Eventually, the next big thing(tm) will make its way back to the Bay Area and everyone will re-locate here again.
  • by Amarok.Org (514102) on Friday March 01, 2002 @03:45PM (#3093057)
    I used to work for a company who did just that... transfered me from San Jose to OKC to work in a call center. That company (and it's call center) is still there. They've systematically eliminated most of the original CA transplants (and their associated CA salaries) after getting local "monkies" (as you call them) trained to do the work at less than half the cost.

    Oklahoma (and similar states) also tend to offer HUGE tax incentives to companies like AOL to open call centers, since it creates lots of jobs for the local populous that would not have otherwise exist.

    Luckily, I escaped the hell that is Oklahoma, and am now living in the hell that is Texas. *grin*

  • What th--?! (Score:4, Interesting)

    by daeley (126313) on Friday March 01, 2002 @03:50PM (#3093109) Homepage
    from the they're-not-even-a-real-country-anyway dept.

    What is this? Editor-troll-and-flamebait day?

    In any case, the movie industry here in sunny SoCal has had this problem for a long time, which is why a lot of productions have been moving up to non-sunny Canada.
  • Interesting (Score:3, Interesting)

    by quantaman (517394) on Friday March 01, 2002 @03:52PM (#3093126)
    Recently in Canada one of the hot topics of discussion is about the "brain drain" to the US, where IT grads were moving to California for employment due to low taxes and a stronger US dollar (although supposedly we're doing quite well with educated immigrants). Still it would be interesting to see how many of these workers (or even companies) are Canadian or have strong Canadian connections already.

  • by linux slacker (124381) on Friday March 01, 2002 @03:53PM (#3093143)
    It's funny that the article mentions Toronto as a viable relocation for high-tech companies - Toronto is generally considered as the most expensive city in Canada, followed by Vancouver.

    Calgary is attractive to employees because unlike most of Canada, there is no provincial sales tax, only federal sales tax (so they end up paying only 7% on everything they buy, as opposed to 15% like Ontario and the eastern provinces).

    One major centre which is not mentioned in Montreal - which is incredibly cheap compared to the other major urban centres in Canada. It's generally cheaper Toronto, Vancouver, Calgary, Ottawa in almost every category for employees (rent, car insurance, food, beer...) Only problem is that Quebec has a high rate of provincial tax, so maybe it factors out a bit in the end.
  • by ffa (104185) on Friday March 01, 2002 @03:55PM (#3093165) Homepage
    Just a quick note: I am from Canada (Vancouver) and right now a US dollar gets you Cdn$1.592, which means company A who would pay employee XX US$70,000, can pay the employee Cdn$70,000 which is US$43,970 and save a grand total of $26,030. The employee would be totally happy, as the cost of living here is almost 1:1 when compared to most high tech centres in the States (ala Seattle, etc...) and the standard of living is just the same, if not higher, less traffic, beautiful nature and so on. As for education level, good universities here have the same level of education as good universities anywhere else, and due to the multicultural nature of Vancouver, there is a lot of talent that migrates here from other countries...

    So all in all, it would be a win-win situation for them... and it has the same time-zone as LA, Seattle, San Fran and so on (as opposed to going over seas which makes for a development nightmare! I have been through it, working with UK/Ireland - from Vancouver, and let me tell you it is NOT my idea of fun :)

    peace.

    -farshad
  • by cswiii (11061) on Friday March 01, 2002 @03:59PM (#3093204)
    ...the fact that trying to actually get in to Canada "sucks [cbc.ca]".

    If all the high tech jobs move up that way, most Slashdot readers are gonna be working behind the counters at 7-11, unless Canada loosens its new immigration restrictions a bit.
  • by TurboRoot (249163) on Friday March 01, 2002 @04:03PM (#3093263)
    Haha, I so know what you are talking about. Most of my friends, family, and ex-girlfriends have all escaped to Texas!

    The few of us left here in Oklahoma, we refer to ourselves as "refuges", are too lazy to get off our asses and actually move to a state where we can get paid well.

    But! the advantage is, I don't really have to work hard and get a ton of free time. Plus, my true love besides computers is cars (hence my nick of TurboRoot). In Oklahoma, we have no vehicle inspections anymore. That means you can take all that emission crap off your car (all the polution blows northwest and ends up in Denver) and you can't get in trouble. The only restriction is that your car isn't too loud. Other then that, modify your vehicle at will.

    Of course, don't forget the joke "Why is Oklahoma so windy? Because Kansas blows and Texas sucks."
  • by yomahz (35486) on Friday March 01, 2002 @04:08PM (#3093314)
    The cost of living here is SUPER low..

    As someone who spent the first 21 years of his life there (OKC), I can tell you that there is a reason for that. I think anyone would be crazy to move there seeing that all I ever wanted to do was get out.
  • Re:What th--?! (Score:3, Interesting)

    by Glytch (4881) on Friday March 01, 2002 @04:09PM (#3093319)
    And even more specifically, it's a phrase spouted by a seperatist politician in Quebec, shortly before the South Park movie was finished. I think Matt and Trey did careful research.
  • Re:I can't wait (Score:5, Interesting)

    by Lemmy Caution (8378) on Friday March 01, 2002 @04:11PM (#3093340) Homepage
    What's revealing is that people like me aren't saying "oh boy, I can't wait to leave California and move to Kansas," they are saying "oh boy, I can't wait until everyone else leaves California and moves to Kansas." I live in the Bay Area, have a secure job, and have that feeling - I'm glad that the bubble is over, glad that costs are coming down, still think the cost of living is very high, and have no intention of leaving.
  • by Embedded Geek (532893) on Friday March 01, 2002 @04:13PM (#3093361) Homepage
    Back in '90, I remember hearing that there were only a half dozen SEI level 5 software shops in the world. One of them was an IBM lab in India. That blew me away, so I did a bit of research.

    It turns out that due to the caste system, there has always been a surplus of highly educated, underemployed workers. It used to be that they emigrated to other countries, becoming doctors, lawyers, or engineers. With the telecommunications revolution, that is no longer the case.

    Today, there are literally thousands of offshore developers and IT workers who are rented out in large blocks for U.S. and European projects. I know that Best Buy and Target do at least some IT this way and have heard of others. At my workplace, every desk that was vacated in the layoff after 9/11 (including my wife's) has been reoccupied by an engineer from our new strategic partner [hcltechnologies.com]. Under the visa laws, they have to make comparable wages to a U.S. worker while here. When they go home (or work is shipped offshore to awaiting engineers), though, they make a quarter our hourly rate. With the cost of living offshore, this is still enough to be a king's ransom.

    On the whole, they seem like good people. It can be awkward at times, but I work well with them. Still, for the first time in my life, I understand the anger that Detroit autoworkers felt towards the Japanese back in the '70s. They found themselves out of work through no fault of their own, priced out because of international forces and the shenanigans of their employers and unions.

    Truth is, this is the new reality that IT workers in the "developed world" must face. We have to find our niches, clean up our processes, and find a way to make our labor worth four times the cost of sending our jobs overseas. Heck, that's basically what the guys in Detroit did. At least, the ones that are left...

  • by ChiChiCuervo (2445) on Friday March 01, 2002 @04:16PM (#3093392) Homepage
    That's exactly what we did. The whole company up and moved from DC to Portland, Maine last December. Real Estate's ALOT cheaper, the people are ALOT nicer, and the traffic is ALOT better.
  • Re:Amazing. (Score:3, Interesting)

    by buckeyeguy (525140) on Friday March 01, 2002 @04:39PM (#3093614) Homepage Journal
    The article doesn't say that a bunch of companies are moving to Canada, only that the cost benefits might be there.

    As for the coasts vs. the world, I think it's more of a media bias, reflected in the graph shown in the article, where almost all the cities mentioned are on or near the East or West coasts. Plus, not *all* of a company has to move; example: Boeing moving their headquarters to Chicago while manufacturing stays in Washington State.

    I *should* stay out of that whole Oklahoma thread at the top, but it calls to mind what college football star (and failed actor) Brian Bosworth once said, that Big 12 towns like Norman, Oklahoma and Lincoln, Nebraska were akin to the worst of what the Soviet Union had to offer.

  • by Anonymous Coward on Friday March 01, 2002 @04:42PM (#3093643)
    one thing that many have noticed is the very large number of employees that are unhappy with many locations of IT companies. While telecommuting has provided a very good solution to some of these, the issue has not been addressed for the company at large, and appears as if many decision makers are afraid of finding out the true number of unhappy employers. (Note that this does include those who want to telecommute but can't because of the company's limit or lack of telecommuting slots, or perhaps a technological issue (connectivity, security, etc))

    The question that needs to be asked is: "Why does an entire company need to be 'near the business'?" I have personally never heard a good answer to this, considering the facts presented. Many 'reasons' too be located in the center of activity are not mutually exclusive with reasons not to be, or perhaps are simply overruled by basic givens of the situation at large and past performance. As an example, take a large IT company that claims that they must be in the center of the business, like in the DC area, more specifically in a dense concrete jungle of bad traffic and long commutes to work (long time, not really distance) because of COL prices in the area. In reality, that IT company most likely does more work outside the area it is housed in (perhaps most of it international). Perhaps even there are other of that company's locations that are distant, yet those distant locations often are the ones with the business that is in the same area as this business location. That makes no sense really, but it does happen quite frequently. When you look at government contracts (the stated reason for a DC location normally) you find that the actual work is done far away and with DoD often overseas. You end up with the realization soon that it apparently does not matter at all where you are located on the actual productivity side of things. However, there is a need for marketing types and liason types to be near the equivelent customer types like that. Yet again, reality is much different then this, as most companies house a significant portion of customer interaction personnel in locations far away from the customer.

    Perhaps it is just another example of an initial good idea not having critical thought applied to it (not thought through) coupled with inefficient processes, incompetent decision makers and confused middle management.

    So the real lessons... the long term lessons should be looked at here in detail. Moving a large company to another location is not cheap by any means. Add to that the initial cost that drove them away, and sprinkle on top the very real possibility that the same situation will happen again in the new location, and you are left with a nice recipe for disaster. No number of degrees, powerpoint slides, meetings, fancy talking, buzz words or that typical management pseudo-busy pacing is going to change that. (pseudo-busy pacing referring to when they think that ANY work, regardless of efficiency and relevancy to the needed work is performed just to say 'yeah we did something', much like a mouse in a wheel)

    A smart business person will not get so wrapped up in desires that they only look at red tape policies and not real results. Company picnics and cool looking golf shirts will not keep employees happy, especially if they feel that their decision makers are more interested in tricking and manipulating their employees (through picnics, shirts and other false moral raisers). Most employees at non management levels I have ever interacted with where indeed interested in moving forward and producing good work. It is only when treated like thieves and criminals that they began to exhibit the complacent and lackadasical attitude that the managers seemed to 'expect'. I am thinking that decision makers need to stop following the crowd so much. If a company decides to make a medium sized campus out in 'the boonies' and it works well, I fully expect that the brainless sheep of many other companies would mimic this, while not trully understanding the real reasons, motivations and desires of the remote location move in the first place. next thing you see will be a very popular trend to open up massive campuses in the middle of farm country, and added to that you will find they stupidly flock together (like sheep) in the same locations, creating more big cities and the same problem that caused the employees to leave in the first place. (thus resulting in the 'new move')

    its not that hard people, you just gotta stop worshiping processes and use your brain.

  • COst of business (Score:2, Interesting)

    by Anonymous Coward on Friday March 01, 2002 @04:45PM (#3093671)
    You diseased creatures are so obvlivious to the truth, you can't even see the folly of your own unsustainable lifestyle.

    It doesn't matter where you relocate, if all you do once you get there is build build build, grow grow grow. You have the same effect on the local enonomy, no matter what part of the world you are in. An influx of highly paid workers causes the existing local markets to realize they can demand and get higher prices for what they are selling - be it houses, rent, gasoline, groceries, you name it. Yeah I just paid 450 thousand for a house that would sell for 95 thousand tops in Tucumare NM. So what. THe company I work at pays me enough to afford it. The (former) owner of the house knows this, so he asks as much as possible for the place, knowing I have no choice but to pay it. What else is he going to do, give me a break and let me have it for $1.98 just because I'm such a nice guy? That's not the way you creatures operate. It's not in your nature. It's not the way your brains work.

    Meanwhile, there aren't enough existing houses to support the mass migration into the area, so local landowners and developers take advantage of the situation by doing what they do best: raping the land, building condo's and townhouses piled on top of each other so closely you can hear your neighbors chewing their Wheaties at the breakfast table in the morning. But does the expansion of available housing cause prices to fall? Nope! The rest of the community hops on board, riding on the coattails, milking it for all it's worth.

    So where does it end, guys? WHen there is absolutely NO MORE LAND available to build new houses and Big Box malls? When we all make 6 million dollars a year, and cracker-box houses cost 4.5 million each, and cars cost 125 thousand used, and your cable TV/broadband bill is 3000 dollars a month?

    Cost of business, indeed.
    You figure it out.
  • by TurboRoot (249163) on Friday March 01, 2002 @04:51PM (#3093718)
    For all intents and purposes Norman does not exist as a city past E 24th or past W 48th which is exactly 8 miles. Main street itself is only about 6 miles long. Also.. for all intents and purposes Norman does not exist south of Imhoff road, or north past Rock Creek Road.. Which is 4 miles. Keep in mind the city is kind of on a slant going from northwest to southeast... The city is growing fast tho, it used to not exist north of Robinson.

    Just because other areas are labled as a city doesn't mean a lot if no one actually lives out there. Oklahoma City is the second largest city land wise in the nation if you look at that type of figure. (If you actually look at the populated areas of Oklahoma City, it isn't very big).

    I never said it was crowded. I just used to deliver flowers for a flower shop in Norman when I was 17, "The Norman Floral and Gift Gallery" across the street from Norman High.

    The city planners who worked on Norman are total morans. It is insane to try and make deliveries through the city. Seriously, we had to turn down deliveries any time there was a game day. Even on a normal day, it takes HOURS to make a few deliviers mixed in that 8x4 mile city. Most streets are 25mph, traffic lights are placed every 20 feet down lindsey, pedestrian traffic gets in the way (especially down by OU).

    My argument is simple, even tho Norman is small, hardly populated, and not well known. It really feels like you are in a big crowded city due to the lack of planning.

    It took me just as long to travel to my girlfriends house that was 3 miles away from my work in Norman.. as it currently takes me to travel the 10 miles to work I drive in Oklahoma City, no highway just city streets.

    Ohh, and don't call people names when you are logged in as an AC. :)
  • Re:Interesting (Score:1, Interesting)

    by Anonymous Coward on Friday March 01, 2002 @04:57PM (#3093787)
    Up here in Vancouver the "reverse brain drain" is already happening. It is really hard to find a tech job here due to all the Americans moving here to work. We have better weather than most of the US, better scenery, better health care, and now lower taxes. I just hope our government makes it just as hard for americans to come here and take our jobs as it has been for me to go down to the US in the last few years.
  • by Mittermeyer (195358) on Friday March 01, 2002 @05:10PM (#3093924) Homepage
    A lot of the high-tech growth in the DFW area has been fueled by cheap land and a corresponding cheap workforce. A $300,000 two-bedroom cramped house in CA gets you near mansions here. In addition there are quite a few workers here dumped by the dotcom/telecom bust that drive hiring prices down. Plenty of electrical power here. There is no personal income tax in Texas, a real selling point for a million-plus executive looking to shelter his nest egg. Finally Texas cities often give tax breaks like depressed Southern states to lure business here.

    That's not to say that price is the only factor. For instance until the last fifteen years DFW didn't really have enough of the highly specialized building contractors that make computer room sites. That's something you're not going to get everywhere.

    Also proximity to what counts drives many location moves. DFW probably lost getting the Boeing HQ because it was not as close to Washington DC as Chicago (since Boeing business is largely driven by what happens with the DOD and FAA), and I suspect because of the lack of world-class four-year colleges and cultural opportunities.

    For folks who live for SanFran it will be irreplacable. But for bottom-line folks other locales beckon.

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