×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Outsourcing Growing Beyond India

kdawson posted more than 7 years ago | from the ho-ho-ho-chi-minh dept.

Businesses 374

PreacherTom writes "One of the most controversial aspects of the global economy has been the newfound enthusiasm of companies, freed from the constraints of physical location, to outsource jobs. No country had embraced tech outsourcing with more passion than India. Of late, problems are beginning to arise in Indian outsourcing: engineers will start a project, get a few months' experience, and then bolt for greener pastures. The level of attrition can cause the turnover of a project's entire staff within the course of a year. Combine this with salaries in Bangalore that are rising at 12% to 14% per year and it is no surprise that companies are looking beyond India to a slew of emerging hotspots for IT, such as Brazil, China, and Vietnam. Will Ho Chi Minh City be the new Bangalore?" From the article: "India remains an IT outsourcing powerhouse, with $17.7 billion in software and IT services exports in 2005, compared with $3.6 billion for China and $1 billion for Russia... India's outsourcing industry is still growing at a faster pace than that of... other wannabe Bangalores... By the third year of an outsourcing deal, after all the costs have been squeezed out, companies get antsy to find a new locale with an even lower overhead."

cancel ×
This is a preview of your comment

No Comment Title Entered

Anonymous Coward 1 minute ago

No Comment Entered

374 comments

What did they expect? (5, Insightful)

dctoastman (995251) | more than 7 years ago | (#17199830)

When people find out what they are worth, they start demanding it. Pretty soon, the entire world's IT population will be high-salaried, no matter where you go.

Re:What did they expect? (0)

Anonymous Coward | more than 7 years ago | (#17199968)

The new Bangalore - wherever it is - will be the the home of native DBCS code monkeys.

Supply.... (-1, Redundant)

Anonymous Coward | more than 7 years ago | (#17200136)

There's will come a time when the supply of IT workers will match or exceed the demand.

And as technology improves, the run of the mill business programming will become so easy (adding, updating, deleting data from RDMSs, biz logic, etc...) that the only need for real programmers will be for systems and development software (reason why MS Office is soooo popular! You wouldn't believe how many VBA apps I've seen on Excel!!! And all you need is the office developers to support ALL of those biz "programmers".). And that will be a much smaller labor market (hence plenty of supply) for programmers.

Even now, the number of people who are capable of doing IT work, let's say 70th percentile of the population, means there are over a billion people on this planet with the brains to do the run of the mill programming.

I say there's plenty of supply and salaries will always get lower - overall - regional differences may apply.

Re:Supply.... (-1, Troll)

Anonymous Coward | more than 7 years ago | (#17200214)

Dumbest comment ever, FTW!

Re:Supply.... (0)

Anonymous Coward | more than 7 years ago | (#17200452)

WTF? Are you retarded?

The average (and even the above average) office drone couldn't program a microwave, let alone a computer.

Re:Supply.... (0)

Anonymous Coward | more than 7 years ago | (#17200894)

I think you are missing the point he/she was making.

"Programming" has been evolving towards higher and higher levels of abstraction. At some point a business analyst will be able to simply ask for what they need and a system will auto-magically analyze the request, write the code and execute it.

It won't be a question of who is an office drone and who is god's gift to syntactic sugar. You just won't need that many engineers/programmers at that point.

The fact that sales and marketing drones can whip up MEANINGFUL Excel spread sheets that do calculations that once only programmers did is but a glimpse of what will be possible in 10 or 20 years.

I think a lot of people in tech are going to have to get over their egos when the excrement hits the rotating blades.

Re:Supply.... (4, Insightful)

Duhavid (677874) | more than 7 years ago | (#17201120)

They said that about COBOL as well.

You may be right, but the "higher levels of abstraction" will,
in my opinion, call for more knowledge, not less, requiring
more skilled persons, not less.

Until the point that we have true AI, that is. ( And it will
still be true, but handled by the AI. )

Re:Supply.... (2, Insightful)

Dasein (6110) | more than 7 years ago | (#17200806)


There's will come a time when the supply of IT workers will match or exceed the demand.


Take an econ class. You don't even know how to use the terminology right.


And as technology improves, the run of the mill business programming will become so easy (adding, updating, deleting data from RDMSs, biz logic, etc...) that the only need for real programmers will be for systems and development software (reason why MS Office is soooo popular! You wouldn't believe how many VBA apps I've seen on Excel!!! And all you need is the office developers to support ALL of those biz "programmers".). And that will be a much smaller labor market (hence plenty of supply) for programmers.


In my experience, the number of professionals who want to learn anything about IT besides "type it in here and press this button." is exceedingly small.


Even now, the number of people who are capable of doing IT work, let's say 70th percentile of the population, means there are over a billion people on this planet with the brains to do the run of the mill programming.


There's about 3 Million people in the US and about 800,000 people working as software developers. That means, in the US. about 0.267% of the population is a software developer. I doubt that we'll see drastically higher worldwide programmer/population rates any time soon.

However, I do thing that the vast majority of human activities can be made more efficient through software. So as the world's population becomes more computer-using I'd expect the market for software to expand greatly.


I say there's plenty of supply and salaries will always get lower - overall - regional differences may apply.


There were certain countries that had a waiting, highly-trained work force but they couldn't get the work because of high transaction costs. The internet drastically lowered the transaction costs but did not eliminate them. During the time when those costs were plummeting, we saw a massive influx of new developers into the market. So, the countries that had highly trained workforces sitting on the sidelines are all now pretty much in the game, So, I wouldn't expect to see another influx like that unless there's another radical change in the transaction costs.

The problem is that the remaining transaction costs are pretty hard -- mostly organization and physical.

In other words, the "damage" is pretty much done. Frankly, I think the world as a whole is better off due to outsourcing.

Re:What did they expect? (1)

mi (197448) | more than 7 years ago | (#17200690)

Don't know about the mysterious "they" (as in "what did they expect"), but I expected exactly this. Free market at work. Supply and demand, etc.

Re:What did they expect? (4, Interesting)

spun (1352) | more than 7 years ago | (#17200716)

As long as money, products, and information are free to traverse national borders but people aren't, tehn as soon as one region wises up and starts demanding what they are worth, the megacorps will simply move on to the next desperate region. They will let the uppity region become poor again before moving back in.

Re:What did they expect? (1)

SeaFox (739806) | more than 7 years ago | (#17201140)

Yes, that entirely explains the level of wages in the retail sector. If the group you have starts demanding higher wages, most companies look for a different group with lower expectations. Hence the workforce will begin to be made up of less skilled individuals, those with poor attendance/performance ethics, and people in areas where the job is more likely to attract a larger base of applicants (like overseas) due to local economic factors.

Outsourcing is bad (5, Insightful)

Marxist Hacker 42 (638312) | more than 7 years ago | (#17199832)

But turnover is the real project killer. But what did they expect? Worker Loyalty after they proved that they had no loyalty? The strange part though is how this infects EVERYTHING- I moved to government for stability, but my sub-sub-department of application developers has a 26% annual turnover rate; for the simple reason that in America we've destroyed the loyalty of the workforce! Now we're doing the same in India. If you treat people like widgets, expect them to act like widgets- and move to the most ecconomically efficient place for them to be.

Re:Outsourcing is bad (0)

Anonymous Coward | more than 7 years ago | (#17200016)

I just find it amazing in this day and age how corporate America has killed the working man. How can you expect a worker to be 100% loyal when you, as the company, won't be loyal to the worker. Granted there are may companies still out there in America who provide a good working environment. But I think that's a minority.

It seems the attitude of upper mgt, is ANYONE is replaceable. Which is true, but a little ruthless. Outsourcing just added gasoline to the already growing fire.

When I got out of college, software companies wanted to groom people to keep them within the company. If they wanted to change jobs, mgt would help them find a position within the company. This doesn't seem to be the case anymore.

Re:Outsourcing is bad (1)

itsNothing (761293) | more than 7 years ago | (#17200028)

If a company's PHB outsources development (and fires employees) to save money, why should it be a surprise when employees leave a company for higher wages?

It's all about "the benjamins". Too bad.

Outsourcing is good, loyalty is bad (4, Insightful)

Colin Smith (2679) | more than 7 years ago | (#17200370)

Loyalty is and always has been a fairy story told to you by people in power to get you to do things for them cheaply.

Oh yeah, that includes patriotism as well btw. Typically they want you to die for their benefit.

 

Re:Outsourcing is good, loyalty is bad (4, Insightful)

mi (197448) | more than 7 years ago | (#17200670)

Oh yeah, that includes patriotism as well btw. Typically they want you to die for their benefit.

Err, no, "they" don't: "Now I want you to remember that no bastard ever won a war by dying for his country. He won it by making the other poor dumb bastard die for his country." (General Patton)

Re:Outsourcing is good, loyalty is bad (0)

Anonymous Coward | more than 7 years ago | (#17200852)

Err, no, "they" don't: "Now I want you to remember that no bastard ever won a war by dying for his country. He won it by making the other poor dumb bastard die for his country." (General Patton)

The good general would have liked the Vietnam war then. The Americans made enormous numbers of Vietnamese die for their country but in the end they still lost.

Re:Outsourcing is good, loyalty is bad (2, Insightful)

Marxist Hacker 42 (638312) | more than 7 years ago | (#17201016)

Not enough- we failed to leave nukes behind. And so now every piss-poor terrorist thinks we're soft. If we had left Vietnam a smoking ruin instead of a functional government, we wouldn't have to compete with them now AND we would have had a precident for any other revolution.

Re:Outsourcing is good, loyalty is bad (2, Insightful)

itsNothing (761293) | more than 7 years ago | (#17200914)

Reminds me of the Goering quote:

Of course the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece? ... But after all, it's the leaders of the country who determine the policy, and it's always a simple matter to drag the people along whether it's a democracy, a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism, and exposing the country to greater danger."

-- Herman Goering at the Nuremberg trials
http://www.snopes.com/quotes/goering.htm [snopes.com]

Re:Outsourcing is good, loyalty is bad (1)

drinkypoo (153816) | more than 7 years ago | (#17201084)

That's a bunch of crap. We knowingly send people to die all the time. They die so that some other operation can succeed. That's war, baby. It's hell. But that's reality. As Voltaire said, A Witty Quote Proves Nothing. Meanwhile, Patton was a racist wingnut.

Loyalty is good if reciprocated (1)

Harmonious Botch (921977) | more than 7 years ago | (#17200676)

"Loyalty is and always has been a fairy story told to you by people in power to get you to do things for them cheaply

Always? Sorry, I disagree. Loyalty goes both ways. Yes, some people abuse it to get things done cheaply - and those are often the most memorable or newsworthy ones. But less newsworthy are the people in power who show loyalty to their underlings.
I'll bet if the Indian management simply paid their people what they were worth - and added an occasional attaboy - the engineers would stay.

Re:Outsourcing is bad (0)

Anonymous Coward | more than 7 years ago | (#17200168)

The strange part though is how this infects EVERYTHING- I moved to government for stability,


Me too..

but my sub-sub-department of application developers has a 26% annual turnover rate;


Well, I find that odd because where I live it's about impossible to get a civil service position due to good bennies.. but I don't doubt you.

If you treat people like widgets, expect them to act like widgets- and move to the most ecconomically efficient place for them to be.


And this is the place where I go "awwwwwwwww.. those poor employers! *evil snicker*".

Seriously, when some governments actually give tax incentives to screw over local employees and do this sort of thing I yearn for somebody more musically inclined than I am to do a rewrite of "Fuck Tha Police" (coming straight from the cubicle) with Dilbertish outsourcing themes.

Some good things did come of the outsourcing trend though: most of my private sector amigos keep more money in the bank, live within their means more, and are prepared to fuck their employers over in a fraction of a second if something better comes along. It also weeded out quite a few folks who don't need to be in the field. Big biz created the situation, now they can deal with it.

Re:Outsourcing is bad (1)

Marxist Hacker 42 (638312) | more than 7 years ago | (#17200200)

Well, I find that odd because where I live it's about impossible to get a civil service position due to good bennies.. but I don't doubt you.

Good bennies- but I can see their point about the rest of the compensation being pretty rotten- especially since (I'm the new guy so I didn't have to go through this) they had a wage step freeze for the past 4 years.

Re:Outsourcing is bad (1)

Xtravar (725372) | more than 7 years ago | (#17200436)

I've been dying to cover a hard rap song, and I love fuck tha police, and I happen to be a white boi software developer. Maybe I should look into this.

Re:Outsourcing is bad (1, Insightful)

Anonymous Coward | more than 7 years ago | (#17200408)

The example was set by Management, who first showed no loyalty to the company, jumping from position to position to ratchet up their pay. And, perhaps not so incidentally, out run the consequences of their decisions.

Re:Outsourcing is bad (2, Insightful)

TheUglyAmerican (767829) | more than 7 years ago | (#17200580)

I maintain a development team in Bangalore. If a candidate has been with his or her previous employer for less than a year, they better have a good reason or I'll pass. If they've jumped to a couple jobs are more in the last year, forget it. I won't waste my time.

Re:Outsourcing is bad (1)

partenon (749418) | more than 7 years ago | (#17200866)

Things are different here in Brazil. I *never* worked more than one year in the same company. The reason? Everytime I try to stay a long time in a company, other company calls me desperate because there's an urgent position who pays better than the "current" one. In the last two jobs, it was american companies calling me (including my current one). American companies are paying about twice as the local market is paying (because there are few brazilians who speak english w/ the required fluency) and don't mind that much about "how many time you were in the last company". They do mind about the experience ;-)

Re:Outsourcing is bad (0, Troll)

Marxist Hacker 42 (638312) | more than 7 years ago | (#17200922)

I maintain a development team in Bangalore.

Then you've got the wrong login name. It should be The Ugly Free Traitor, as you've given up on being American.

If a candidate has been with his or her previous employer for less than a year, they better have a good reason or I'll pass.

And you think "You pay more" is not a good reason, despite the fact that by going to Bangalore you obviously think that profit means more than loyalty? How incredibly hypocritical.

If they've jumped to a couple jobs are more in the last year, forget it. I won't waste my time.

So, to sum it up, you want the cheapest costs you can get (else you wouldn't be bothering with Bangalore in the first place) but if the stupid dot heads actually try to stick up for themselves and jump jobs to get better pay, you'll dump them like a hot potato. Actually, I take it back- you're completely consistent in your own self-interest.

Re:Outsourcing is bad (0)

Anonymous Coward | more than 7 years ago | (#17201204)

Parent deserves a ( -5 asshole ) mod.

Re:Outsourcing is bad (1)

phaggood (690955) | more than 7 years ago | (#17201198)

> I moved to government for stability, but my sub-sub-department of application developers has a 26% annual turnover rate;

I've been contemplating a move to DC (from MI); if I went it would be in the gov IT arena (I'm a java jockey). I've been reading how the "greying" of the gov workforce and the perceived dis-advantages of gov employment (lack of interesting projects and lower pay) trump the advantages (stability and um, stability) will exacerbate efforts to compete against the private sector for brains.

Then again, it was probably a slow news day and some cub reporter was just regurgitating what he'd read on ./

Perusing usajobs.gov and Avue it appears that IT pay is quite competitive (not including web masters who are paid like mail room clerks) - tho the run up in the cost of living in and around the capital in the last 5yrs has probably nullified any recent gov pay gains. How soon will the middle class all be commuting to DC from KY?

We've had this discussion before. (4, Insightful)

khasim (1285) | more than 7 years ago | (#17199834)

So you see high staff turn-over in India. The "solution"? Move the project to a different country.

But why would that country's people be any different?

The fact is, once the outsourcing staff has the knowledge and experience that was previously YOUR expertise, there is no reason for them to keep working for you. Eventually, they start their own companies in your market and replace you.

Don't focus on short term profits at the expense of long term survivability.

Re:We've had this discussion before. (0)

Anonymous Coward | more than 7 years ago | (#17199886)

And big business will keep doing this until they either run out of countries, or discover the mythical land of Outsourcistan where people consider it the highest honor to be shat upon by rich white men for money.

Re:We've had this discussion before. (4, Insightful)

shawb (16347) | more than 7 years ago | (#17200470)

To be precise, big businesses will keep doing this until the savings no longer justifies the inconvenience. One of the biggest barriers to outsourcing that most countries have is language. As a long time British colony, many Indians speak relatively fluent English. The problem will be finding another country with a significantly large English speaking population that is affluent and educated enough to learn the white collar jobs, yet not so affluent that they want/need to get paid a lot of money to continue working. True, there are probably going to be people who know English in every country, but not in the same numbers as India. Most of the other countries with English as a primary language have economies that are too strong to outsource white collar jobs to, or at the very least are like South Africa and have divided economies with a wealthy English speaking population alongside a population that is impoverished enough to make outsourcing profitable for both parties, but doesn't speak English fluently enough to converse with the standard U.S. (or other English speaking) office-worker or customer. I'm sure a similar problem exists to more or less extent in developed nations that natively speak a language other than English... Japan being the first to come to mind. If there are developing nations with a significant population that speaks the native language of a developed nation, it will simply not take very long for the developing nation to develop a strong enough middle class that outsourcing to that country becomes less and less cost effective.

In all reality, this is a significant part of what globalization was supposed to do... improve the economy of the nations that are the worst off economically. There was only a small window of time where the megacorps could make the insane profits off trade disparities. That window is closing as trade gaps begin to narrow between countries that have products or services to trade and the supply and demand begin to equalize.

Re:We've had this discussion before. (4, Insightful)

theshowmecanuck (703852) | more than 7 years ago | (#17199930)

This will keep happening until companies stop paying huge bonuses to senior executives for short term profits.

That's a discussion we need to have. (4, Insightful)

khasim (1285) | more than 7 years ago | (#17200204)

How can you structure a CEO's (or other CxO's) salary/bonus plan so that their incentive is to keep the company productive and viable instead of "shedding" all the "unprofitable" sections (such as IT) and outsourcing them to raise short term revenues, cash in the bonus and leave for another company?

It is far more profitable for a CEO to wreck and sell the company than it is for him/her to actually spend time running the company.

Re:That's a discussion we need to have. (0)

Anonymous Coward | more than 7 years ago | (#17200414)

Pay them in stock that doesn't vest for 10 years. Allow them to borrow against that stock at an interest rate that is close to the expected company growth rate. If the company grows faster than expected then they get a bonus, because the eventual value of the stock will exceed the cost of the loan, if the company fails to grow (or shrinks) then they end up with a shortfall when they finally sell the stock.

Re:That's a discussion we need to have. (3, Interesting)

theshowmecanuck (703852) | more than 7 years ago | (#17200640)

Simple, do the same as they do for the IT staff already: Pay them what they are worth in a salary, and if they do a good job, they get to keep working there. Others have some good suggestions too on this. If you don't do something about this though don't expect stupid actions that generate short term profits but long term mediocrity to end.

To put it in slashdot parlance:

1) The senior executives come in, make their short term profit for the company and collect their bonuses,
2) Things go to shit (since their short term plans don't work for the long term... they don't care anyway, their eye is on the bonus) and they get fired,
3) Take a huge severance and... profit!! (well except for the shareholders)

Re:That's a discussion we need to have. (1)

vertinox (846076) | more than 7 years ago | (#17200752)

How can you structure a CEO's (or other CxO's) salary/bonus plan so that their incentive is to keep the company productive and viable instead of "shedding" all the "unprofitable" sections (such as IT) and outsourcing them to raise short term revenues, cash in the bonus and leave for another company?

Tie the CEO's yearly salary/bonus plan to a stock option plan they can't sell until 10 years from that date. Make it pretty lethal and impossible to sell or get any benefits until then.

Perhaps, make it worth their time by giving them a normal yearly salary, but the big bucks don't come until long term.

Hence, giving them a strong desire for long term growth rather than short term.

Re:That's a discussion we need to have. (4, Insightful)

mutterc (828335) | more than 7 years ago | (#17200766)

A former manager of mine had an insightful take on this:

Back in The Good Old Days(tm), employees (including top execs) would work for a single company for many years, then retire, drawing a pension. Because of that, there was built-in incentive to make sure the company had long-term stability.

Nowadays, executives are disposable employees like you and me. Therefore, they have no reason to care whether the company is long-term profitable. They know they'll be elsewhere in a few years, so why not plunder the company in the meantime?

Re:We've had this discussion before. (3, Interesting)

partenon (749418) | more than 7 years ago | (#17200738)

Not true. The real value for a software isn't the code itself. It's the business logic behind the code. And companies only outsources tech jobs, not their business knowledge. As a brazilian who speaks a bit of english, I work (and worked in past jobs) for american companies as outsourced programmer and I can tell you: we have *no* business knowledge nor people w/ this kind of knowledge here in outsourced jobs (but, of course, we have our own IT marked).

Re:We've had this discussion before. (0)

Anonymous Coward | more than 7 years ago | (#17200934)

So you see high staff turn-over in India. The "solution"? Move the project to a different country.

But why would that country's people be any different?

Culture.

I have experienced Wood's complaints: Indian developers are, for the most part, very reluctant to say no or to bring up problems. Also, they are far more likely to jump ship if a better opportunity comes along. I've experienced both of these issues numerous times with different Indian personnel on different projects.

The article points out that in Russia, you may be less likely to experience turnover because Russians believe in "working hard", whatever that means. Also, you may be less likely to experience the "running off of a cliff" effect because Russians believe in speaking up -- which I find surprising, considering Russia's history.

Anyway, I'm posting this anonymous because if my corporate owner gets the idea that I'm actually saying people are different, I'll get sent to sensitivity training or something.

Get over it. NOW. (1, Flamebait)

Cybert4 (994278) | more than 7 years ago | (#17199852)

zo'o nai cai

Look, if you are GOOD AT WHAT YOU DO, YOU WILL NOT BE OUTSOURCED. Start your own company. Get some gosh darned CONFIDENCE.

Stop celebrating your weaknesses! Do it only if you are GOOD at it, not if you are just interested. If you can't hack it, do incoming calls. Enough said.

fa'o

Re:Get over it. NOW. (3, Interesting)

NorbrookC (674063) | more than 7 years ago | (#17200534)

Look, if you are GOOD AT WHAT YOU DO, YOU WILL NOT BE OUTSOURCED.

My, aren't you naive! No need to shout, because life will soon smack you upside the head. A little reality check - Competence does not equal immunity. You can be the among the best, even the best in the industry, or the world at what you do, and some bean counter will outsource you in a heartbeat if they think they can get it done cheaper elsewhere.

Consider that almost half (47%)of the IT outsourcing contracts are cancelled due to non-performance. The sad truth is that the people who make the decisions to outsource are several layers removed from the people who actually perform the work, or work with the customers. Which frequently means that cost trumps quality or competence. The person making the decision doesn't know (or even care) that the people that are being outsourced are good or the best. All that manager knows is that they cost too much.

Re:Get over it. NOW. (0)

Anonymous Coward | more than 7 years ago | (#17200998)

i suspect there are other reasons IT shops get outsourced. i call them "klingons". they cling on projects. i have worked both contract and permanent in the USA for many years and have never had problems finding a job. but the klingons...jesus...i was in a meeting a few weeks ago that lasted 2 hours and was mostly bullshit...nothing to do with the actual engineering of the product. there were 20 people in the meeting and just four of us (the engineers doing the system). to me, it's the massive overhead costs, all the non-performing people, that are killing engineering in the united states. that, and the many hours in meetings that make the klingons feel good about actually producing nothing. i'm guessing all the worthless oversight and management costs inflate the R&D cost by about 2-3X what it really should be. not sure but i am guessing india, china, etc. get klingons at a fraction of the cost of engineers, and most likely have far fewer on a given project. BTW i've seen this phenomenon in both the private sector and the government sector. there are other types of klingons...engineers who cant produce anything...but i am seeing fewer of them nowadays...just can't get away with it so much any more in the USA.

Why not? (0, Offtopic)

gwayne (306174) | more than 7 years ago | (#17199862)

The Brazilians, Chinese, and Vietnamese haven't had a whack at my personal information yet!

offshoring to viet nam (0)

Anonymous Coward | more than 7 years ago | (#17199878)

My company has been offshoring small jobs to viet nam lately. They are actually much better than India in my opinion. They listen to what we say and act on it fully, rather than just doing the least amount of work they can get away with before moving on to some other project. I suspect that will change as demand for their services increases, then they will become another India.

Why prolong the inevitable (2, Insightful)

theshowmecanuck (703852) | more than 7 years ago | (#17199890)

Logic says the same thing is going to happen in every place that is outsourced to. Maybe that is the point to make to the CIOs. Just keep projects where you can control it in the first place, and it will save money in the long run. Lack of control on a project and high personnel turn over can be more expensive and deleterious to a project than keeping things close to home and paying a reasonable salary to begin with.

Re:Why prolong the inevitable (0)

Anonymous Coward | more than 7 years ago | (#17201032)

When it comes to outsourcing, there is no 'long run'. Most companies want to make profit NOW, and by outsourcing they are doing just that. Maybe in a few years, companies won't benefit as much from outsourcing as they are now and they'll change strategies but as long as they're making money now off of it, they're happy.

"Just keep projects where you can control it in the first place, and it will save money in the long run."
You really think so? How long do you think software projects last? 10 years? Most of them last maybe from a few months to maybe a year or a bit more. If they can hire people to get the projects done, even on a per-project basis and profit from it, good for them, that's all they're after, the money.

"Lack of control on a project and high personnel turn over can be more expensive and deleterious to a project than keeping things close to home and paying a reasonable salary to begin with."
Again, do you really think that companies are just jumping on the outsourcing bandwagon without doing any financial homework? Do you think they are oblivious to the risks of outsourcing? Of course, not.

Why outsourcing is bad (4, Interesting)

zappepcs (820751) | more than 7 years ago | (#17199914)

While its true that it helps to 'flatten the world' into a large community, it harms our own communities when we outsource. Sure there is that short term bottom line issue of money, but you don't have to go much beyond 'short term' to see that the cost of wages is hardly the big cost in outsourcing. Before this story came out there were many others telling us how good outsourcing is and those that told how bad it is. The indicators have been there all along as to why it is bad.

Big indicators have been the outsourcing of work from India to China! The fact that customer service companies in India cannot communicate with the average person in western English speaking countries on a level that is equitable. The high turnover rates have always been there as a problem that was politely ignored in favor of lower initial labor costs.

Any project manager can tell you that trying to lead a project of software engineers that is not only geographically separate, but separated by as much as 12 hours from the part of the company that needs the software.

All of that is not news, or shouldn't be. What is news is that more and more companies are finally realizing this. There will be companies that continually hunt to find short term savings, like gold rush miners, but in the end, customer service and ease of development will drive down the desire to outsource work.

Yes, I know that Bill et al have proclaimed that there is a shortage of IT workers in the US, and apparently there is a glut of degreed IT workers in India. The trouble with such claims is that those Indian IT workers (no matter how many degrees they have) do not have any kind of realistic understanding of the western world's business environment, and often I swear that they really have no idea about software either, but I suppose that is borne from not understanding the business culture as well.

This story is really about how outsourcing work to foreign countries is coming back to bite the people that thought outsourcing was a good idea to start with.

Those who won't learn from history .... and all those nice cliche's

Re:Why outsourcing is bad (1)

stastuffis (632932) | more than 7 years ago | (#17200218)

The fact that customer service companies in India cannot communicate with the average person in western English speaking countries on a level that is equitable.

I agree completely.

It greatly annoys me to contact a place in hope of help to receive someone who is obviously reading from a script or can't understand more complex questions. Of course, I don't fault the person on the other end, but that's all the more reason to use my money elsewhere. So not only will their lack of respect to their employees become apparent over time (higher turnover rates), their lack of respect to their customers will also have an impact as well.

Re:Why outsourcing is bad (1)

coldsleep (1037374) | more than 7 years ago | (#17200262)

It's not all not (or mis-) understanding the business culture. Some of it is language and dialect barriers as well. Having worked with Indian developers and support staff for nearly 10 years, I've noticed a tendency for some of them to say "sure, sure" or "okay" if you repeat a question, even if they are unclear on the question asked. That said, there are definitely exceptions, but it's most frequently the ones that have been working on one project or with one group for more than a year. Sadly, the people who thought outsourcing was a really good idea are probably already beyond reach, having either secured their legacy at their respective companies, and shifted the blame to the current mid-level management that is struggling with their earlier decisions, or they've moved on from the company altogether. That being said, I don't think that outsourcing is bad in and of itself, but the implementation usually leaves a lot to be desired.

Re:Why outsourcing is bad (0)

Anonymous Coward | more than 7 years ago | (#17200284)

Well, your entire premise depends on the Idea that the next big market is in the western world. Many big corporations are outsourcing their development work to India and China to get closer to their future markets, to be efficient. It's an inevitability..maybe call it the cycle of civilizations.

Re:Why outsourcing is bad (1)

danpsmith (922127) | more than 7 years ago | (#17200300)

Big indicators have been the outsourcing of work from India to China! The fact that customer service companies in India cannot communicate with the average person in western English speaking countries on a level that is equitable. The high turnover rates have always been there as a problem that was politely ignored in favor of lower initial labor costs.

When I bought my last computer, I was offered a service package and the package contained in no uncertain terms, explicitly "non-outsourced customer support." At least some companies (save for the telecommunications companies) are finding they are losing customers when they have a person who can barely speak the language on the other end of the phone. The customers get irritated and go looking elsewhere for support. For computer resellers, at least, service is a big part of their profit. So when people go third party for help or upgrades and no longer are buying their stuff, that's a hit. In the end the market determines that outsourcing is a bad idea in most cases. And that's before you factor in this fact, putting companies in will raise the average salary level. Then they need to find a new country to run through. After a while maybe they'll just go through the complete cycle and have to come back to the US.

Goes to show that the market will solve some things on its own. That doesn't mean that we should give tax breaks to those outsourcing, as some in government like to do, but I digress.

I disagree (3, Insightful)

2nd Post! (213333) | more than 7 years ago | (#17200418)

I disagree that outsourcing is bad. Generically that is like saying hiring a babysitter or a neighbor or anyone other than yourself is bad. So what are the indicators that outsourcing is bad? Just saying there are indicators is not the same as showing that the indicators are bad.

1) If you hire your son to mow your lawn, there is nothing stopping him from hiring his friend in turn... ala Tom Sawyer. If the job is unacceptable, make the terms part of the contract.
2) Customer service is not a function of outsourcing, it is a function of cost. You can have equally horrible customer service inside the US itself.
3) High turnover is also not a function of outsourcing, it is a function of management. If an employee has no training and advancement path then it is up to the employee to figure out their own. This is true of any company in any country.

All these problems would exist if the companies in question practiced homesourcing, where a company like IBM hired a temp agency in Alabama to support their developers in San Jose.

Again, why give work to a neighbor or a friend when you can do it yourself?
Answer: Because division of labor and speciality encourages increased productivity when both parties can do separate things more effectively than both parties replicating work.

In this case the flaw with outsourcing is that there was not a good reason or a good implementation for the division of labor.

Re:I disagree (1)

drinkypoo (153816) | more than 7 years ago | (#17201156)

Global outsourcing harms everyone except those to whom the work was outsourced. When I move the work to another country, I help that country and its inhabitants, but I harm my own. I make those other people more competent by paying them to learn - since you can't really help but learn as you work. I'm not paying people in MY country to learn. In addition, the money is leaving the country, so it cannot be used here any more until it is used to buy more goods/services. Because we are helping train the workers in another country, we are improving their ability to work and decreasing the likelihood that they will need OUR goods or services, thus decreasing the chance that the money will return to do work here.

Thus, not ALL of the problems with global outsourcing occur with so-called "homesourcing".

Re:Why outsourcing is bad (0)

Anonymous Coward | more than 7 years ago | (#17200420)


The trouble with such claims is that those Indian IT workers (no matter how many degrees they have) do not have any kind of realistic understanding of the western world's business environment, and often I swear that they really have no idea about software either


Yeah, but neither does the wet behind the ears US college grad, and, given enough time, that sorts itself out.

Why do you assume that folks in the US can learn, but folks in other countries can't?

Re:Why outsourcing is bad (1)

zappepcs (820751) | more than 7 years ago | (#17200732)

I don't assume people of any country cannot learn, but for 12 rupees/hour what do you expect? The value proposition of outsourcing is initially very low wage costs. This low wage set point is what causes lack of loyalty, and also lack of real caring whether there is good service or not in the eyes of the customer. If an extra 7 rupees/hour will cause them to leave one job and go to another, your project, company, customers are less than important or anything resembling important. (note that the numbers are made up for the sakes of understanding)

WRT learning, it is much easier for those of a common culture and language to learn culturally anchored ideas. What customers expect is surprisingly different from one culture to another. The ideas and concepts of western business ethos is lost on some cultures where nothing like it exists in their own culture.

I'm not assuming anything, never mind that some people cannot learn. That would be simply stupid.

Re:Why outsourcing is bad (0)

Anonymous Coward | more than 7 years ago | (#17200916)

>> The trouble with such claims is that those Indian IT workers (no matter how many degrees they have) do not have any kind of realistic understanding of the western world's business environment, and often I swear that they really have no idea about software either, but I suppose that is borne from not understanding the business culture as well.

Well, verizon service reps were not Indian. Yeah right.

Go on. Why don't you just say that Americal graduates are the best? Go ahead. please.

Give me a fucking break here. US grads are more fucked up then the Indian of Chinese ones, because they are always looking for the next best thing. Indians and Chineses are ready to do the job a dood would not do.

separated project managers (0)

Anonymous Coward | more than 7 years ago | (#17201068)

Any project manager can tell you that trying to lead a project of software engineers that is not only geographically separate, but separated by as much as 12 hours from the part of the company that needs the software.

Any stoned project manager can tell you that.

I.T. workforce from the stars! (3, Funny)

creimer (824291) | more than 7 years ago | (#17199942)

Will Ho Chi Minh City be the new Bangalore?

After those workers start demanding higher wages, an alien slave trader will set up a trading post to provide cheap labor and the Men in Black (MiB) will be put out of business after the industry lobbies the government not enforced the alien immigration laws.

pointy heads (1, Funny)

Anonymous Coward | more than 7 years ago | (#17199962)

No big deal because, as any good PHB knows:

* IT work is, across-the-board, easy and something that can be learned in 21 days.
* IT workers are interchangeable.
* The amount of work that can be done on a project is directly proportional to the number of interchangeable resources devoted to it.

See? No problem! :)

Reap what you sow, suckaz (1)

gelfling (6534) | more than 7 years ago | (#17200022)

We all know that the CIO responses to this will be to spend a billion dollars in an even more backwards country, hire thousands of people who are even cheaper, figuring that even if turnover is 200% they can break even on the lower headcount cost. Pretty soon we'll be building data centers in Angola & Bangladesh paying those people half of what we pay them in India and in 3 years we'll be wandering aroung dazed at the absolute sucknocitude of everything. I don't who we'll get to work at that point, maybe Chinese convicts.

You reap what you sow CIassholes. I have zero empathy for your plight. You killed the industry in the US and now it's crap everywhere. I'd be cheering for your failure except we know you all lavished millions of dollars on yourselves just in time to run out of the burning buildings. So screw you.

Re:Reap what you sow, suckaz (1)

NDPTAL85 (260093) | more than 7 years ago | (#17200788)

Classholes? Are you for real?

Like seriously?

Alternatively do you think people in the US are willing to pay more for software in the US in order to employ US workers?

Will this make Sea-Code more viable? (3, Funny)

isdale (40622) | more than 7 years ago | (#17200032)

Sea-Code [sea-code.com] has a former cruise ship they plan to station off the coast of So. Cal (San Diego) and staff with programmers, etc. The idea is to make the staff closer to US based clients, who wont have to travel days for meetings. Having staff stuck on a ship might also keep them from 'jumping ship'?

Re:Will this make Sea-Code more viable? (0)

Anonymous Coward | more than 7 years ago | (#17200160)

Having staff stuck on a ship might also keep them from 'jumping ship'?

Perhaps, but it will also make it easier for the local unemployed programmers to sink their competition. Literally.

It's also far too easy for the executives to liquidate staff that way.

Re:Will this make Sea-Code more viable? (1)

ultimate_moksha (894781) | more than 7 years ago | (#17200736)

Depends on the quantity of Sea-Men.

Pun intended.

Please, pun intended, please.

Here's a hint to the joke: Rhymes with semen...

Poor Companies (2)

BlackIcejane (1004346) | more than 7 years ago | (#17200066)

I don't understand why companies complain about there workers not having any loyalty to them. Why should we be loyal to a company who will drop you like a bad date when that are tired of paying for you.

We haven't figure out how to make India work... (5, Interesting)

loony (37622) | more than 7 years ago | (#17200092)

So, now that management has run out of ways to prove that their plans work they will find a new, even cheaper place... good luck with that.

So far I have not come across many Fortune 500s where outsourcing actually worked in the end - that means not just a lower rate but comparable quality. There are plenty of CxOs that announce how much money they saved and all, but if you talk to the techs they almost consistently have another story to tell. For each 100 hours of outsourced work I estimate the average will be about 40 hours of US time to review and fix the programs... And those 40 hours will eat up all the cost savings you had in the original 100 hours. Its sad - but in the end for a million line codebase that has a certain quality, it doesn't really matter where you do it - the cost will be the same... The only ones that have a big advantage there is the russians. No idea why but their quality is usually better than you find anywhere else and the prices are reasonable too.

Before outsourcing, look beyond the hourly rate and consider skills. Then analyze your savings after the project has been in production for a while - and check if your expectations actually came true.

Peter.

Re:We haven't figure out how to make India work... (1)

Dance_Dance_Karnov (793804) | more than 7 years ago | (#17200572)

"The only ones that have a big advantage there is the russians. No idea why but their quality is usually better than you find anywhere else and the prices are reasonable too." The Soviets provided free secondary education to anyone who could pass an entrance exam. 20% of russians aged 30-60 have 6 year degrees, twice the amount than in the United States. The education system also has a very strong emphasis on technology and science.

Add Canada to that list. (3, Interesting)

Anonymous Coward | more than 7 years ago | (#17200110)

I'll happily work for $3-4 US per hour, as I'm sure many other Canadians will.

As a university graduate with 15 years professional experience and zero current domestic employment prospects, no unemployment insurance or welfare, a few dollars an hour that the tax man does not know about is most welcome.

I can make enough to survive on for rates similar to impoverished Indians. Its all in your standard of living.

The benefit to my clients is mainly fluency in English (UK spelling) and ease of communication.
They get superior service at rates comparable to outsourcing to the east. And I get to eat, and buy the odd package of cigarettes.

Re:Add Canada to that list. (1)

Kazrath (822492) | more than 7 years ago | (#17200358)

You do realize the canadian dollar is very close to = to american dollar now. It has made about a 50% increase against the dollar in the last few years. 3-4 dollars US is probably less than your minimum highering wage.

Re:Add Canada to that list. (0)

Anonymous Coward | more than 7 years ago | (#17200644)

You do realize the canadian dollar is very close to = to american dollar now. It has made about a 50% increase against the dollar in the last few years. 3-4 dollars US is probably less than your minimum highering wage.


Yup, I'm well aware of the exchange rate as I am paid in US dollars. (which is why I quoted a wage in US dollars). Today, $1 US = $1.14 CAN. So they are pretty comparable in value

The minimum wage in my province is $6.50/hr right now I think, so yes, earning $4/hr US ($4.56/hr CAN) is less than our minimum wage. However that $6.50 is heavily taxed, netting probably less than $4.50/hr.

Additionally, its pretty much impossible for a university grad with 15 years professional experience to get a minimum wage job. Employers expect that you won't stay and leave for the first better paying job that comes along, so they simply do not hire you. Straight to the round file, no interview. The best luck I've had in a domestic employment job search is with a fake resume and cover letter that says I've been in jail for the last 12 years - I got three interviews this way, unfortunately each prospective employer wanted to speak to my non-existent parole officer... oh well, it was worth a try.

Re:Add Canada to that list. (1)

RajivSLK (398494) | more than 7 years ago | (#17200430)

Umm, where in Canada do you live? I have been hiring in Victoria BC and it is very hard to find good prospects.

Re:Add Canada to that list. (0)

Anonymous Coward | more than 7 years ago | (#17201066)

Umm, where in Canada do you live? I have been hiring in Victoria BC and it is very hard to find good prospects.


I live in the Maritimes.

I'd guess that your problem is your location. The cost of living in BC is insane, particularly so in Vancouver and Victoria. Rents are probably 3-5 times what they are here. I can still rent a (non-slum) one bedroom apartment in my area for $300-400 dollars monthly. An apartment that meets the same standards in BC urban areas is going to cost $1200-2100 monthly. With the cost of living the way it is in BC you have to offer huge salaries. Perhaps you should consider moving your business east?

I used to be in central Canada but I returned to the Maritimes to be able to rent a place to live for a reasonable rate, so I could eat better and afford a few luxuries occasionally.

The call centers that keep opening here in the Maritimes are generally offering $10/hr as a starting wage, and that is considered really good money out here. Unfortunately they seem unwilling to hire people of my age and experience.

P.S. apologies for the late reply - slashdot's flood control is more than a little excessive:

Slow Down Cowboy!

Slashdot requires you to wait between each successful posting of a comment to allow everyone a fair chance at posting a comment.

It's been 26 minutes since you last successfully posted a comment


I had to change my IP address to make this reply. (disconnect and re-connect my dial-up)

Re:Add Canada to that list. (1)

joe 155 (937621) | more than 7 years ago | (#17200758)

You should come to England, here you'll earn £5.10 an hour (going up soon), about $9something off the top of my head, for any job you take. If you have a degree you'd easily get a job paying more than that. But it sounds like you could have a better standard of living working in Tesco than you have there... It would probably even be pretty easy for you to get permission to work

Re:Add Canada to that list. (0)

Anonymous Coward | more than 7 years ago | (#17200874)

Well, it might help your cause to provide some contact information. What are your skills? Are you looking to flip burgers, write code, or what? And are you in jail?

Abu (0, Troll)

Sho KIlla (1033932) | more than 7 years ago | (#17200128)

I overheard something interesting right before I hung up the phone with Dell the other day... "Thank you, call again"

I've known a lot of Vietnamese people (1)

sesshomaru (173381) | more than 7 years ago | (#17200196)

I've know a lot of Vietnamese people, and I know even more Thais. Their grasp of the English language is generally not as good as most of the Indian people I've know. They are sincere, hardworking and intelligent, but there are large numbers of them that won't be able to communicate with the home office. (Mind you, if the French wanted to outsource, they'd have it made in the shade.)

The alternative would be to find other third world countries that used to be crushed under Albion's heel. I can think of Burma off hand, but I'm not sure if they are a viable option. I'm not sure what other countries fall into this category.

Re:I've known a lot of Vietnamese people (0)

Anonymous Coward | more than 7 years ago | (#17200870)

Vietnam has one of the highest literacy rates in the world, and the quality of talent is rising every day. To say that the Vietnamese you know don't have a grasp of the English language, and that by extension the rest of the country doesn't is just wrong.

Increase your sample size to get a more valid statistic.

Mod me down for being unpopular (3, Informative)

Daishiman (698845) | more than 7 years ago | (#17200208)

But I frankly don't see any reversal of the outsourcing trend

As foreign workers acquire more and more skills, the gap between them and the first-worlders being replaced diminshes. Already we are seeing this: instead of outsourcing to places like India or China, many companies are turning to not-so-poor but cheap places like Easter Europe, Brazil, or Argentina. Countries where technically skilled people exist but were in low demand, but most importantly where the culture is extremely compatible with their clients'.

(Brazilians or Argentines DO have a language barrier, but their culture is much more similar to that of the US than other people in the globe, which makes their skill acquisition faster).

The problem clients have with outsourcing isn't about foreigners or incompetence. It's about managing a herd of cats through virtual teams and bonding with people with the same accent and interests as yours. I know that personally I've had much more success with my customers due to my American accent than my less linguistically skilled co-workers.

sig: Cosas de un sysadmin argentino: http://aosinski.phpnet.us/ [phpnet.us]

Re:Mod me down for being unpopular (1)

Dasein (6110) | more than 7 years ago | (#17200952)

I think that the amount of software to be developed is positively correlated to the computer-using population. As that population increases, there will be far more work for smart developers of any nationality than we can handle.

Relax.

The major cause for the big outsourcing boom was that some countries (like India) had large, highly educated workforces that couldn't get at the work due to high transaction costs.

The internet drastically lowered the transaction costs and we say these workers flood into the market. However, the portion of the transaction costs which remain are the really hard stuff -- clutural and organizational issues.

Further, almost evey place that had such an under-utilized workforce is now in the game.

So, don't worry, there's plenty of work to go around in the future. In the short-term there will be little fads (china might get hot) etc. but the fundamentals, I think, are strong.

Has anybody heard of Agile methodologies? (1)

ph1ll (587130) | more than 7 years ago | (#17201006)

"But I frankly don't see any reversal of the outsourcing trend"

I do. I'm having my most profitable year ever. It seems as if a lot of work has come back to the UK.

Hiring outsiders from half way around the World just doesn't work. If it does, why are companies not boasting about the latest successful product that cost 75% less to make than in previous years? Why are the PR spin machines strangely silent?

All we hear is that some company decided to offshore and hopes to make tens of millions of dollars in savings. Then it all goes eerily quiet. Then I get a call from an agent asking whether I am in the market for some maintenance work at a large blue chip.

The mistake these companies keep making is that it's the same PHBs running the shop (yes, they're not being offshored...). Not a single mother's-son of 'em ever thinks of asking a software engineer how to do, er, software engineering...

I'm currently working with a large European Telecommunication company who have shipped in two plane-loads of Indians. Man, you should see these white boys strut around the office. It's the last days of the British Raj all over again! I almost expect them to walk in with a pith-helmet some mornings. Now, as a result, they won't listen to the advice of their brown-skinned subordinates (though, to be fair, these young boys fresh from college need a lot of guidance too...).

"The problem clients have with outsourcing isn't about foreigners or incompetence. It's about managing a herd of cats through virtual teams and bonding with people with the same accent"

Agreed. I had a helluva job integrating with a team in Sweden. I learned the hard way that Swedish business culture is very different to the Anglo-Saxon model, despite the fact that their English was as good as (better?) than mine. They were great coders but you just can't say to a Swede: "Dude, this code's a bit crufty. Can we refactor it please?" - something you could say to any UK programmer that you quoff beers with. Cultural faux-pas like that (yes, I know, I was a compleat tit) resulted in a large loss of productivity.

The following is a long diatribe.... (4, Insightful)

Bright Apollo (988736) | more than 7 years ago | (#17200216)

...for which I offer no apology.

Outsourcing is neither good nor evil, but the motivation behind outsourcing tends to be overwhelmingly merciless and short-term. Taking a knowledge activity and attempting to turn it into a commodity or near-assembly line function is, I suppose, a managerial Holy Grail worth undertaking in different guises each decade.

Consider H1B visas. Is there a shortage of IT workers in the US, or a shortage of *cheap* IT workers in the US? Most major media publications are overwhelmingly guilty of dropping the telling adjective, and the quotes they gather all support a lack of IT talent, no qualifiers added.

We who work in this space, live in the space, can confirm some of this. It *is* hard to find a superior talent for an IT position above entry level. However, it's not impossible if you have a salary and excellent position to offer.

So, when I read about outsourcing arbitrage and the chase for ever-cheaper talent, I just wait it out. Eventually, all of the talent, cheap or not, will come to fore and then the real shoot-out over quality and reliability can begin. Does anyone truly believe there's a hidden cachet of Polish supercoders who haven't been discovered because they lack the Internet connectivity? Does anyone see the inherent flaw in that premise, and by extension, any argument like it?

I'm not overly impressed with a single outsourced individual or group in my eleven pro years of IT, and that includes old Anderson Consulting of 1995 up to Patel Consulting of 2006. The prestige of the firm should only get them an interview: talent and not cost is what you'll need to survive.

As a final note, what, if anything, will the US do if it successfully outsources all of its IT functions? Does anyone expect anyone to major in CS in this country, knowing that electricians make far more and took less formal schooling? I think not. You can't outsource a physical service.

-BA

IT Turnover (1)

mandelbr0t (1015855) | more than 7 years ago | (#17200242)

It's good to see that it didn't take India long to start turning over IT staff at an alarming rate. I was a sucker for a good 2 years before realizing that loyalty to any company or employment agency just limited my chances, and clearly reputation means nothing in a disloyal, mercenary environment (since any given company will attempt to destroy it when you leave, regardless of how good your work was). I really don't care where the IT work ends up; I just want a company that pays a reasonable wage for work done, or a contract that doesn't blatantly favour my client.

The solution to the problem is probably one of education. My experience is that the business community fosters this disloyal, mercenary environment because they want to reinforce the idea in the IT contractor's head that they are replaceable, and not worth that much. However, if the business community is saying that India isn't viable for the same reasons that North America isn't viable for software development, maybe a reality check has hit home. I suppose it's possible that China might be filled with people that respond to these incredibly negative business practices, but my guess is not. I hope your average CIO learns very soon that 1) he needs to more clearly understand the skills of the people he employs and 2) no matter where he employs them, a fair rate for the expertise needs to be paid.

mandelbr0t

Wow...irony (5, Informative)

Shoten (260439) | more than 7 years ago | (#17200246)

I'm in China at the moment, actually, about to go to a second site here. My purpose? I'm looking at the security of two vendors who are competing for a financial BPO (Business Process Outsourcing) contract with a major corporation. This is my first look at outsourcing up close, and I can see why companies examine the option. Yesterday I looked at a BS 17799 and SAS 70-certified facility, with smart people who cost far less than their counterparts. Also, there was discussion about turnover in India.

Outsourcing is definitely here to stay, but from what I have seen, cost is not the only factor that gets considered these days. (At least, not by the client I'm working for.) They're looking at the whole package, but the biggest thing that has mattered so far are the tools and functionality that the outsourcing provider can bring to bear. At the end of the day, it'll be functionality that matters the most, especially as labor costs in markets like India and China grow. But don't make the mistake of thinking that in such countries lower cost is all they have to offer, because that's not necessarily the case; the provider I visited yesterday had a hell of a great system for handling the complex financial functions that are a main pain point for my client.

Woo Hoo! Globalisation is good. (0, Flamebait)

Colin Smith (2679) | more than 7 years ago | (#17200260)

Greediest bastards helping the poor and the needy more effectively than Mr Geldof in his wildest dreams. Who'd have thought? Mr Smith I salute you.

Sorry, is this news? This is simply economics in action...

p.s. The US is still fubar, but that's due to Mr Bush's excessive spending.
 

Ricardo was right. (0, Interesting)

Anonymous Coward | more than 7 years ago | (#17200294)

Trade liberalization works. Free(r) trade agreements like NAFTA and WTO dealings are helping to drive economies from Asia to Africa. Of course, since labor is just another commodity whose costs the import/export wizards can minimize, free(r) trade means that most of those economic gains are going into the bank accounts of a few. Thus, the rich get richer and the poor stay poor.

The funny part is most people are too stupid to figure this out (cf. Dobbs, Lou), so they bitch about illegal immigration and outsourcing instead of demanding more equitable wealth distribution. Oh well, good thing I've got that trust fund to fall back on.

Re:Ricardo was right. (1)

Erixxxxx (920617) | more than 7 years ago | (#17200498)

Seems to me the obvious economics of the article is that, well, Indians are becoming less poor and more rich, thus driving the move to outsource to other countries.

There will equitable wealth distribution when there is equitable effort and equitable ability and equitable initiative. Until then, it would be the height of unfairness for there to be 'equitable' wealth distribution.

The Philippines (1)

astrotek (132325) | more than 7 years ago | (#17200320)

The Philippines are the 3rd largest english speaking country. I wouldn't discount them, probably a better choice to outsource American work.

Keep those record CEO bonus/salaries coming (1)

Thundercleets (942968) | more than 7 years ago | (#17200382)

You knew it was coming, once the slaves in India started to relise that even imaginary skill sets were valuable. Big.com execs were going to need newer and cheaper slaves. Enter our dear President and his Vietnam trade bill. It helps that another Bill of the billwg@microsoft.com variety has already spent millions to build call centers and whatever else in the nam. I think the problem the top 3% are going to have is the lnaguage barrier. The Indian slaves were already trained to speak English after a fashon during there little stint with the British. No so for the occupants of the various Peoples Republics.

Leave all the goat ropers where they belong... (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#17200434)

...and return our rightful jobs to us!

sounds like desk side IT in the late 90's (1)

teh_chrizzle (963897) | more than 7 years ago | (#17200500)

i got into IT in the late 90's when companies were changing from win3x/win9x/novell to nt/2k/active directory, and leading up to y2k you could make $15 an hour just knowing how to turn on a computer. following y2k and into the dotcom bubble, many companies were desperate to import tech workers and there was all that drama over visas.

after the dot com bust a lot of work got offshored and moved the indian tech sector into y2k/dot com mode. i would imagine that if you offshore again, to some poorer country, it will start all over again. perhaps this time, it will only take 4 years instead of 8, you know, efficiency and all.

perhaps on the third or fourth iteration the US dollar will be so worthless that the work will be cheaper to source labour in the US, and the new economies of brazil, russia, india, and china will outsource their work back to us :-)

Calling Outsourcing "Bad" (4, Interesting)

mpapet (761907) | more than 7 years ago | (#17200508)

Is suspect 98% of the time.

1. Workers who lost really well-paying jobs to outsourcing:
I'm sorry no one informed you, but one of the economic reasons you were paid so well was that your job was coming to an end. It was always a temporary state. Consider the extra wages a "retraining allowance" paid in advance.

2. Shareholder Demands:
Clearly outsourcing is a cost-reducing effort. As long as those costs are measured in dollars and cents your job is on the chopping block on a quarterly basis. Unless every business owner/shareholder in every country in the world becomes simultaneously enlightened, this is the benchmark.

The new american worker rules are:
There is no such thing as job stability.
Get paid for today's work because there is no promise tomorrow. e.g. retirement and vesting options are mostly vaporware.
If you are lucky enough to be near the top of your wage curve, live at or about the middle of the wage range for your industry if at all possible. This gives you a nice F.U. fund if there's a sudden change in your employment circumstances.

The race to the bottom (3, Insightful)

why-is-it (318134) | more than 7 years ago | (#17200524)

By the third year of an outsourcing deal, after all the costs have been squeezed out, companies get antsy to find a new locale with an even lower overhead

This is the biggest problem I have with globalization: we have removed all constraints from capital and freed it from all other considerations. It is truly a race to the bottom - who has the lowest labour costs, who has the fewest environmental restrictions "wins" some starvation wage jobs until we can find someone else who can be exploited even more.

The fear used to be that jobs were being sent south to Mexico. But when Mexicans workers start demanding fair wages, we sent the work to Viet Nam, where people earn $2 per day. But even that looks pretty expensive when there are people in China willing to work for $.50 a day.

It's exploitation plain and simple, and we don't care because we are insulated from the uglier aspects of it. Of course, we are getting screwed too - those over-priced sneakers are now manufactured for a fraction of what they used to cost, but we still pay roughly the same price at retail. At least the shareholders are happy, but if they could find someone who would work for $.25 a day, they would be even happier.

Whenever someone argues in favour of a living wage, we are told it is too expensive. What a shame that poverty has become an official requirement of our economic system.

If we found ourselves working in the sweatshops for less than a buck a day, I wonder if we would be grateful...

India is alive and doing well (1)

Blue6 (975702) | more than 7 years ago | (#17200552)

Just got this on our team blog at Ford Motor on Friday: Rumors and the Future of the NOC There have been many rumors going around about the future of the NOC. I want you to know that some final decisions have been made this week and contracts have been signed - Vijay announced yesterday that the NOC, the SOC, and Mainframe Scheduling will be moving to India in the 1st Qtr of next year - by the end of February is the plan for the NOC and the SOC. This is part of the Way Forward efforts that the company have been looking at that are impacting all of us. There are going to be reductions for both Ford and agency personnel as a result. Please feel free to schedule a meeting with me if you have any questions or concerns. Merry Christmas lol

Very interesting article here - (2, Informative)

Anonymous Coward | more than 7 years ago | (#17200560)

just a nod to this insightful look at the Economics of Offshore Outsourcing [led-digest.com] I found recently via Reddit or somewhere. Bottom line for me is that there are levels of quality in all things, and this is no exception. Do your due diligence and expect to pay more for quality work. Just like anything else outsourcing work is demanding more moo-lah.

bonus in the article cited above - a discussion on coding and the communications barrier. And i quote:

I spent a year in China teaching C++ to college students. Although C++ is a fairly straight forward programming language if you are fluent in English, it becomes ridiculous to the Chinese due to the language / culture barriers. Out of 35 students only 7 actually passed the course and the headmaster told me that this was a wonderful record as usually in a class of 35 only one or two will get a passing grade.

Outsourcing is Ok... (1)

entropy123 (660150) | more than 7 years ago | (#17200714)

....because I cannot communicate with my CEO. Me: We cannot layoff the tech support staff just because it is technically possible to outsource their labor. They have worked here for 10 years and, along with everyone, helped to build this company. CEO: We don't owe our workers anything. The shareholders expect bigger and bigger profits. Go with your tech workers and find another job. I am on the board of all the local employers telling them the vast advantages of outsourcing your kind... This conversation has demonstrated your sincere lack of communication skills and will be noted in any recommendation. Thank you for working for .
Load More Comments
Slashdot Account

Need an Account?

Forgot your password?

Don't worry, we never post anything without your permission.

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>
Sign up for Slashdot Newsletters
Create a Slashdot Account

Loading...