‘Red-Handed’: How Microsoft Promised to Outsource American Jobs to China

Tyrone Siu, China Photos/Getty Images

Less than two decades ago, Microsoft co-founder Bill Gates explicitly promised to begin outsourcing the tech conglomerate’s workforce from the United States to China, Peter Schweizer’s new book Red-Handed: How American Elites Get Rich Helping China Win details.

While Gates, then-chairman of Microsoft’s board of directors, appeased the Chinese Communist Party’s (CCP) censorship of the internet, he went a step further — promising the regime that Microsoft would outsource American jobs to China, Schweizer writes.

Chinese Communist Party leader Xi Jinping (right) speaks during a meeting with Microsoft founder Bill Gates during the Boao Forum for Asia (BFA) annual conference on the southern Chinese resort island of Hainan on April 8, 2013. (TYRONE SIU/AFP via Getty Images)

Gates’ Chinese outsourcing scheme was only the start of a lucrative future for Microsoft that would eventually work closely with the CCP and the People’s Liberation Army (PLA).

Red-Handed recounts:

Beyond the issue of apologizing for Beijing’s censorship, Gates continued to appease the Chinese government. Microsoft promised Beijing that it would begin outsourcing jobs from the United States to China — it was an explicit promise. By the early 2000s, Microsoft was on track to have outsourced a thousand jobs. When the Chinese government criticized the company for not keeping pace, Microsoft said they would work harder to ship more jobs more quickly to the Chinese mainland.

The relationship between Microsoft and Beijing improved. By 2010, Microsoft had taken another step in its tightening association with the Chinese government. The company set up a research laboratory in China to work on artificial intelligence (AI) with a Chinese military university, an essential area of research that would have huge implications for the economy and on the battlefield. Microsoft even started taking in interns from the People’s Liberation Army at its Asian research facility.

In 2005, the Seattle Times detailed in length Microsoft’s outsourcing American jobs to China. At the time, Microsoft had continued hiring in the United States but its hiring in China, India, and other foreign countries outpaced that.

The Times reported:

Chief Executive Steve Ballmer visited China in 2003 and promised to step up the pace, from $33 million worth of work a year to $55 million a year, according to a statement by Kai-Fu Lee, a former vice president who left to work for Google in July. Lee was charged with smoothing over relations with China and finding jobs that could be shifted to Chinese contract workers. [Emphasis added]

“At the time of my departure, [Microsoft] was on track to outsource over 1,000 jobs a year to China,” he said in a court declaration. A Microsoft spokeswoman said the company has transferred some projects to China “in order to free up teams here for other work.” [Emphasis added]

In 2010, reports revealed that Microsoft had been contracting with KYE Systems in China to manufacture its webcams and tech accessories. Employed at KYE Systems were teenage girls and young women who were made to work 15-hour shifts for six to seven days a week.

The employees earned just 55 cents an hour and were forced to live in crowded dorm-like rooms with 10 to 14 other employees. Tech corporations like Hewlett-Packard, Foxconn, Samsung, Foxconn, Acer, Asus, and Logitech also contracted with KYE Systems to manufacture their products in China.

“I know that I can choose not to work overtime, but if I don’t work overtime, then I am stuck with only 770 RMB [$112.67 per month] in base wages,” a KYE Systems employee told a U.S.-based human rights organization at the time. “This is not nearly enough to support a family. My parents are farmers without jobs. They also do not have pensions. I also need to worry about getting married which requires a lot of money. Therefore, I still push myself to continue working in spite of my exhaustion.”

Microsoft chief executive Steve Ballmer speaks at a seminar in Beijing on June 30, 2005. Microsoft. (STR/AFP via Getty Images)

Microsoft’s outsourcing American jobs to China has only increased in recent years.

In 2017, Microsoft laid off its nearly 130 employees at its Wilsonville, Oregon, factory to send the jobs to China. In 2020, Microsoft executives said they hope to directly employ about 10,000 workers in China by June 2022.

The outsourcing is part of a larger blueprint among multinational corporations to cut American manufacturing jobs and send them overseas for the sake of growing profit margins by employing cheap foreign labor while reducing the quality of its product lines. In 1970, for instance, manufacturing made up 25 percent of all U.S. employment. Today, manufacturing accounts for only 8.5 percent of all U.S. employment.

John Binder is a reporter for Breitbart News. Email him at jbinder@breitbart.com. Follow him on Twitter here


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