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By Geoffroy Roux de Bézieux*

October 7, 2005

Original Article (French)

Paris Officials Can do Nothing To Stop Outsourcing

Tony Blair reacted as follows to the announcement that an English insurance company would be outsourcing 2,500 jobs to India: "The best thing a government can do is to avoid giving the impression that we can avoid these changes."

In France, since the announcement that 1,300 employees of the computer hardware group Hewlett Packard in Grenoble would be fired, we see daily calls by politicians to the directors of the company and to the Prime Minister and Brussels. It is of course understandable that, in the face of the immense suffering that this type of decision clearly causes, politicians can't stand there with their arms crossed at the risk of seeming indifferent.

But, still, these statements are all somewhat immoral: in making people believe that the prime minister, the president or the European Union can prevent these firings, while they can do nothing, they give false hope to the employees. They are led to believe that the state can do something about economic phenomena that are dramatic but inevitable. In May 1968, hope shouldn't have been lost for Billancourt; in 2005, hope shouldn't be lost for Grenoble …

What are the facts? Hewlett Packard (HP) plans to fire 6,000 people in Europe, including 1,300 in France, out of a total of 150,000 employees. At the same time, like most technology companies, it has created jobs in India, where 300,000 technology jobs were created in 2004. Seen from Palo Alto, the French reaction to the announcement of this decision seemed surreal at best, and medieval at worst. It is, furthermore, interesting to note that France is the only country in Europe to protest with such vehemence and that our leader is the only one to get so involved in the debate.

The Hewlett-Packard Campus in Granoble, France

What justifies this new French exception? First of all, it is a matter of value added jobs: 80% of the HP employees are executives, and it is the high-tech sector, which our politicians probably thought was safer than textiles. Secondly, because Grenoble is one of the 67 poles of competitiveness recently created by the government specifically to fight outsourcing. Finally, because it is a matter of firings from a company that is turning a profit and that wants to earn more by lowering its costs.

It is clearly a debate on the essence and ethics of capitalism. Let's leave aside the moral debate, even if it must take place sooner or later, and let's dare to make the cynical argument of efficiency: a company whose energy is entirely turned toward the lowering of its costs, rather than toward increasing its profits, is a company in decline.

There are two possibilities: either Hewlett Packard is restructuring to better adjust, and sooner or later jobs will return to France and elsewhere, or this plan is only the beginning of the decline of a company, and thus there is no reason to try and halt the inevitable. In this case, there will one day be a new social plan at HP; whether the firings are financial or not doesn't change much.

Does this mean that nothing should be done and that politicians are powerless in the face of this personal drama that confronts 1,300 people? Not at all. In 1939, Hewlett Packard was created by two engineers at Stanford, Bill Hewlett and Dave Packard in a garage in Palo Alto, California. In 1989, Compaq (since absorbed by Hewlett Packard) was created in a bakery in Houston, Texas.

Grenoble is a formidable oasis of researchers, students and new companies. Rather than making the employees of Hewlett Packard believe that they can avoid the inevitible, why not help them start 10, 20 or even 50 new companies? We have there the ideal population in terms of age, training and experience. It would take only 50 entrepreneurs with 25 employees each to make up for the losses. There would also be the possibility that one of them would become one of the French, or even European, champions that we lack. Because it is not chance that, of the 120 top high-tech industries in the world, only 18 are European, versus 80 American: it is also that for which the employees of Hewlett-Packard are paying dearly today.

If HP helps out, as some are suggesting, or contributes financially, why not create a specific capital risk fund that would allow the company's employees who wish to realize the dream of 21% of French people - to create their own company?

So, goodbye Hewlett and Packard and long live Martin and Dubois, future entrepreneurs of the French Silicon Valley!

*Geoffroy Roux of Bézieux is president of Croissance and founding president of The Phone House.