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Study Finds Cost Major Factor In Outsourcing Positions

Zonk posted more than 7 years ago | from the they-get-you-coming-and-going dept.

The Almighty Buck 367

theodp writes "Debunking claims to the contrary, a new study from Duke University asserts that it is purely cost savings, and not the education of Indian and Chinese workers, or a shortage of American engineers that has caused offshore outsourcing. 'The key advantage of hiring Chinese entry-level engineers was cost savings, whereas a few respondents cited strong education or training and a willingness to work long hours. Similarly, cost savings were cited as a major advantage of hiring Indian entry-level engineers, whereas other advantages were technical knowledge, English language skills, strong education or training, ability to learn quickly, and a strong work ethic.' The article goes on to point out that despite this, outsourcing will continue to be a problem for US workers in coming decades; new elements of traditional corporations like R&D may in fact be next on the outsourcing chopping block."

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367 comments

Summary of the Corporate Attitudes (3, Insightful)

AKAImBatman (238306) | more than 7 years ago | (#18624989)

new elements of traditional corporations like R&D may in fact be next on the outsourcing chopping block.

Allow me summarize: "It's too expensive to be competitive, and we don't have a vision for being competitive anyway. So we're going to make our shareholders happy and shoot ourselves in the foot. Twice. Just to be certain. But hey, think of all the money we'll be saving!"

Re:Summary of the Corporate Attitudes (3, Insightful)

ccarson (562931) | more than 7 years ago | (#18625069)

Outsourcing R&D is a horrible idea. It's our strong suit not to mention our last line of defense against cheap foreign labor.

Re:Summary of the Corporate Attitudes (1)

Seumas (6865) | more than 7 years ago | (#18625093)

Here is a simple comment I always make on this subject.

Corporations and government refer to outsourcing as being competitive. After all, if an American can do the job just as well or better than someone outside of the country and can do it cheaper, then they can get it. After all, that's capitalism, right?

However, while the corporation can pull from a global pool of employees and pay for those in the cheapest nations where my hourly income covers their entire paycheck and their regulations may be less restrictive, I as a consumer and an employee do not have the same pleasure in my own country. I have to live in the place the employer has built their headquarters which has $1,500/mo crappy apartments, $4/gal fuel and $4.25/gal milk and the guy who pumps gas at the local station earns twice the average tech income in a lot of other outsourced countries.

I've never heard an outsourcing CEO attempt to reconcile this difference in any way.

Re:Summary of the Corporate Attitudes (1)

thePowerOfGrayskull (905905) | more than 7 years ago | (#18625195)

I've never heard an outsourcing CEO attempt to reconcile this difference in any way.
Ah, yes-- but have you ever asked one?

Re:Summary of the Corporate Attitudes (5, Insightful)

voice_of_all_reason (926702) | more than 7 years ago | (#18625227)

If corporations can outsource labor, why can't I outsource purchase?

Software developers put stipulations on resellers that they can't sell to certain countries.
Video games and DVDs are region coded to make foreign-purchases difficult to use
Buying medicine out of the country can get me sent to prison

They have their cake, and eat it too. Then kick us in the balls for good measure.

Re:Summary of the Corporate Attitudes (0)

Anonymous Coward | more than 7 years ago | (#18625359)

Software developers put stipulations on resellers that they can't sell to certain countries.
Video games and DVDs are region coded to make foreign-purchases difficult to use
Buying medicine out of the country can get me sent to prison

They have their cake, and eat it too. Then kick us in the balls for good measure.


Kick them back: don't buy it.

Well, not buying the medicine might be a problem, but the rest of it? Just don't buy it.

Re:Summary of the Corporate Attitudes (1, Funny)

raehl (609729) | more than 7 years ago | (#18625381)

If corporations can outsource labor, why can't I outsource purchase?

Republicans?

Re:Summary of the Corporate Attitudes (0)

Anonymous Coward | more than 7 years ago | (#18625927)

Don't forget the democrats... If its not made with in the US with union labor, you shouldn't be able to buy it from overseas.

Re:Summary of the Corporate Attitudes (1)

hashfunction (861726) | more than 7 years ago | (#18625609)

Actually you can and do in some areas. For instance, if you buy from ebay a lot, you will notice that all the light weight electronics stuff comes directly from Hong Kong, Taiwan or China. I ordered a case for my cell, car charger, memory pro duo card and a book, all of whom came directly from Hong Kong or taiwan, complete with the customs sticker on top!

Re:Summary of the Corporate Attitudes (2, Informative)

canUbeleiveIT (787307) | more than 7 years ago | (#18625623)

If corporations can outsource labor, why can't I outsource purchase?

You can. But when they go to make a purchase, most people make price the priority--just like companies. Boycotting will never get the momentum necessary to change corporate behavior. It didn't with the "buy American" campaign as it pertained to cars and it won't work now.

I honestly don't know what can be done but I'm willing to entertain the idea of the government taking a hand in this.

Re:Summary of the Corporate Attitudes (2, Insightful)

qwijibo (101731) | more than 7 years ago | (#18625371)

Why do they have to reconcile the difference? It's a race to the bottom and worst case scenario for the CEO's is retiring early. What's the worst that can happen for them? More people are willing to work locally for peanuts?

Re:Summary of the Corporate Attitudes (1)

AKAImBatman (238306) | more than 7 years ago | (#18625647)

I think you're missing the point*. I'm perfectly happy with outsourcing jobs as long as the guys over the pond are able to do the job as effectively as U.S. developers. That's how competition works, and I'm all for that. However, TFA shows what I've been saying for a while now: Outsourcing rarely results in high quality work. In fact, many companies are being taken for a ride, because they don't do any of the shopping around and due dilligence that they would normally do with a U.S. company.

Err... scratch that...

They're getting taken for a ride even worse than U.S. consulting companies (very few gems there, either) because there's even less accountability involved. As long as the foreign company can keep stringing along the U.S. company, they keep making money. It doesn't really matter if their "developers" are some guys they just pulled off the street. (Hey, that sounds a lot like Accenture!) They produce something, and the executives on the other side of the pond don't know the difference. For all they know, the entire source base could be:

public class Suresh { public static void main(String[] args) { System.out.println("Suresh is Brilant!");}}}
As long as something keeps coming in, and the PowerPoints show beautiful progress, then the project is on track, right?

* Note to self: Quote TFA next time, because no one reads it anyway.

Re:Summary of the Corporate Attitudes (1)

Azarael (896715) | more than 7 years ago | (#18625973)

It doesn't really matter if their "developers" are some guys they just pulled off the street. (Hey, that sounds a lot like Accenture!)
I got a laugh out of that one. The funniest part is that Accenture could practically do that because of how screwed up, inefficient and wasteful their clients are. Personally, I work in the logistics industry and you can pretty much look at anyone's shipping data and with a minimum of effort, point out hundreds of thousands of dollars (at least!) that is just flying out a window. Maybe in the future we'll be outsourcing to get a Clue(tm).

Re:Summary of the Corporate Attitudes (3, Insightful)

yams69 (986130) | more than 7 years ago | (#18625113)

If the Chinese and Indians are smart enough to deliver the quality of R&D American companies are expecting, they're also probably smart enough to set up their own companies and keep the profits for themselves. This could be a good thing, though, since it would lead to the extinction of the American executive dinosaurs who plan to outsource every job but their own.

Re:Summary of the Corporate Attitudes (4, Interesting)

AKAImBatman (238306) | more than 7 years ago | (#18625413)

From TFA:

[The study] asserts that the United States is risking losing its global edge by outsourcing critical R&D and India is falling behind by playing politics with education.

Duke's 2005 study reported serious problems with the quality of Indian and Chinese bachelor-level engineering graduates, and predicted both shortages in India and unemployment in China. The current report finds these predictions to be accurate, with China's National Reform Commission reporting that the majority of its 2006 graduates will not find work. There are also oft-heard whisperings of a engineering shortage in India, though private colleges and "finishing schools" are going far to make up for the Indian deficiencies, the report said.

"Respondents said the advantages of hiring U.S. engineers were strong communication skills, an understanding of U.S. industry, superior business acumen, strong education or training, strong technical skills, proximity to work centers, lack of cultural issues, and a sense of creativity and desire to challenge the status quo," wrote Wadhwa in the 2007 report.


Thus the basic issue is that you're giving up your best and your brightest who are ALREADY familiar with your business and the local marketplace, and you're replacing them with cheap "yes-men" who have no concept of your business, cultural barriers, aren't even in the same time zone, run effectively unchecked by the corporation, and have little chance of being India or China's "best and brightest". (As you say, those people are making their money elsewhere.)

For a good feel for what's happening with outsourcing, check out these horror stories:

http://img.worsethanfailure.com/Comments/Discount_ Enterprise.aspx [worsethanfailure.com]

http://worsethanfailure.com/Articles/Of_Course_We_ Tested_It__0x2e__0x2e__0x2e_.aspx [worsethanfailure.com]

While not every company sees results this bad, I've heard very few positive reports. And more of those were before the outsourcing "craze", when it was easier to find the competent developers overseas.

Shades of the tech bubble? Yeah. I'm glad we learned so much from that debacle. :-/

Re:Summary of the Corporate Attitudes (1, Insightful)

Proudrooster (580120) | more than 7 years ago | (#18625277)

You are correct! We are also going to shoot our country in the foot and one day wake up to the realization that a country of mere consumers can not survive without decent jobs. Our government is corporately owned and operated so the options for change are most likely 1) revolution or 2) foreign invasion (Mexico, China). It's all too sad to think about.

Re:Summary of the Corporate Attitudes (3, Interesting)

maxume (22995) | more than 7 years ago | (#18625411)

The US has 5% of the worlds population and 20% of the worlds economic activity(by GDP). The decrease in US economic activity as a percentage of the global total is nothing other than normalization. Movement of money elsewhere is basically unsurprising when you consider the relative ease of technology transfer vs technology development.

Re:Summary of the Corporate Attitudes (1)

MenAtWork (614753) | more than 7 years ago | (#18625461)

hmm! i miss the point here, they are outsourcing to be ecnomically (that is price wise) competitive and they are mostly on-shoring research to be technologically competitive. As with natural selection markets work better when there is freedom to try/fail/relocate/die/exist and in the short term be successful at surviving - no real different that what we went through since the time of the one celled bacteria. Money incidentally is one of the criteria of success for the organism called company in a ecosystem called markets. my two bits at an analogy, sk

Labeling laws and taxes (1)

goombah99 (560566) | more than 7 years ago | (#18625499)

Many products in the US must be marked "made in china" or where ever and some even have to give percentage breakdown of the parts by country of origin. If this is valuable for components and assembly perhaps it should also be valuable to other costs of producing a product. E.g. total up the pro-rated cost of back-office, R&D, and tech support, that is outsourced and report that too.

Next consider policy based taxes. If country X is competing on wages well perhaps that's okay as long as he playing field is level. For example, if Country X, has no social security or OSHA laws that drive up the cost of doing business then a tariff should be applied to level the playing field. If they have child labor or lack family leave or have no environmental compliance costs then a tariff should be applied.

Otherwise any time we try to upgrade our social standards in the US, it costs jobs.

Wage competition on a level playing field is fine. If an CS graduate in India can do your job for less, then you are paid too much apparently. But if he's doing if for less because there's no OSHA laws then that undermines the OSHA laws. Need to fix that.

THe converse of this happens all the time. Some counties put tarriffs on wheat from countries that subsidize their farmers or their steel producers.

It's not "protectionist". Protectionist would be raising the tarrif's above the unpaid social costs to protect wages and jobs.

MOD up (0)

Anonymous Coward | more than 7 years ago | (#18625675)

Insight mixed with controversy is unusual for slashdot

No Shit Cost is a (the) Factor (2, Funny)

alcmaeon (684971) | more than 7 years ago | (#18625507)

In other news: water runs downhill, the air is full of colorless gasses, and the sun is a big ball of fire.

CORPORATE EXECUTIVES ARE BRAINLESS FUCKWADS (0)

Anonymous Coward | more than 7 years ago | (#18625555)

Yes, no brains, engineers do all the work, they sit back playing solitare all day long. fire 10000 people to get a 10 million dollar bonus.. get millions of dollars of subsidies from the government, and lay off 10000 workers. America is nothing to be patriotic about anymore. We are no longer "America". We are a notion that outsources all of "americas" jobs. leaving only buger king and mcdonalds. Oh wait, we gave all those jobs to the Illegals! We are a nation that welcomes millions of illegal residents. Its like adding water to a fire, we are slowing becoming so saturated with water that we will soon be extinguished. There is no middle class anymore. middle class is 40,000 a year? come on now, thats the low end of the spectrum and you cannot even think about buying a house without making an income of at least 80,000 a year. (unless you want the financial mess we have now in the housing market...)

Re:Summary of the Corporate Attitudes (0)

Anonymous Coward | more than 7 years ago | (#18625801)

There is another name for this. It's called the "Demise of the Middle Class". Today's corporate profit taking and outsourcing for the sake of lower costs and being "cash flow positive", will ultimately translate into lowered salaries, fewer high skilled jobs, and a dumbing down of American. We will become a predominantly service oriented society. This will translate into poorer quality blue collar jobs, lower need for skill or education, and lower consumer spending power, And this will
come back and bite these same businesses tomorrow as your average worker will afford and buy less goods and services. America will be the India of tomorrow. A few rich people, and a large number or majority of poor people. There will, however, be one major difference between the USA and India. We will continue to worship our celebrities and athletes, and will continue to pay ridiculous compensation packages to our beloved CEOs regardless of their performance or company performance.
The employees, shareholders, pensioners, and customers get shafted, as we see, time and time again.
But salaries and the cost of living in India is going up, which is good for us. China, on the other hand, artifically keeps their currency devalued. As a result we import far more manufactured goods than we sell. There is a trade imbalance and we, as consumers, lose in all respects except "Everyday low prices". Our industries are leaving, our jobs are leaving, and our raw resources are leaving. In return we get Walmart type monopolies and a world that is "Made In China". And we get a bunch of senators and congress who pollutes our minds with stupidities such as "flag burning", "global warming" and "abortion" while they sell the country, our consumer rights, and our souls to the banks, credit card companies, big oil, predatory lenders, the insurance companies and anyone else that's willing to pay big bucks for their almighty election campaigns.

Ah, the power of big business, their lobbyists, and a congress that only cares about election contributions and the quest for power. We are slowly trading places with India. India, China, Vietnam etc will be designing the technology of tomorrow and they will sell to anyone willing to pay.
Why study science or math here in the USA - unless, of course, your goal is to understand baseball statistics?

Re:Summary of the Corporate Attitudes (0)

Anonymous Coward | more than 7 years ago | (#18625851)

And, as with everything (yes, including OS's), you get what you pay for (...grammatically frustrating, but common saying.).

This is no more wrong than destroying our economy with free software and free operating systems. We all know, but maybe unwilling to admit, that outsourcing IT jobs to other countries does in fact devalue all of the IT positions in the US. The same is true for software and OS's. It is just a matter of time before free software and free OS's cripple the US economy much like the durable-goods crisis of the last century (The Great Depression) did. But, that is the design, isn't it Mr. Stallman and followers?

Duh. (1)

cyphercell (843398) | more than 7 years ago | (#18625007)

Well it's official I'm smart enough for a job, but it's not going to happen.

Re:Duh. (1)

Paracelcus (151056) | more than 7 years ago | (#18625939)

Yeah, 5 years and thousands of resumes later, I gave up, screw it! I really feel for the younger American workers, I'm not optimistic at all! Whats holding the economy together? It's based on shuffling paper, MBA chuzpa and equitys fraud.

Wasting money proving the obvious (3, Insightful)

Marxist Hacker 42 (638312) | more than 7 years ago | (#18625039)

Gee, American corporations put profit above every other consideration- call the evening news.

The sad part is it took an actual university study to reveal the lie.

Re:Wasting money proving the obvious (2, Insightful)

Seumas (6865) | more than 7 years ago | (#18625119)

For the longest time, we were all force fed the myth that money had nothing to do with outsourcing and that it was simply due to some non-existent lack of skilled American employees.

And really, even if that were the case, doesn't capitalism demand that you pay those employees what the demand is worth rather than stabbing them in the back and going elsewhere or importing tens of thousands?

Re:Wasting money proving the obvious (1)

Marxist Hacker 42 (638312) | more than 7 years ago | (#18625243)

Yep- it was so obvious that this was a myth and a lie to begin with. It's very sad that resarch dollars had to be wasted on this.

Re:Wasting money proving the obvious (2, Insightful)

qwijibo (101731) | more than 7 years ago | (#18625429)

Capitalism demands that the employer try to screw the employee by giving them as little as possible. What an employee is worth is set as an agreement between the employer and employee. If an employer isn't willing to pay what an employee wants, one side has to give in. Finding an employee somewhere with dirt floors who will take less is pretty easy in a global economy.

Re:Wasting money proving the obvious (2, Interesting)

Ihlosi (895663) | more than 7 years ago | (#18625691)

Capitalism demands that the employer try to screw the employee by giving them as little as possible.



"There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. " - Henry Ford.


However, blind greed is much more in style nowadays.

Re:Wasting money proving the obvious (3, Insightful)

qwijibo (101731) | more than 7 years ago | (#18625865)

Sure, that's a business model that might work if you want to have long term, loyal customers and employees who work for you until they retire, keeping the cost of training new people down. However, Henry would not make it past middle management in any decent sized company these days without being about to demonstrate how his plans will save money this quarter, while increasing productivity and cutting costs next quarter. The current theme is infinite production at zero cost, and if you don't have a story that leads to that goal, you're going nowhere. Us technical people have it the worst, blathering some nonsense (from an MBA's perspective) of that being impossible.

Re:Wasting money proving the obvious (0)

Anonymous Coward | more than 7 years ago | (#18625423)

There is another name for this. It's called the "Demise of the Middle Class". Today's corporate profit taking and outsourcing for the sake of lower costs, will translate into lowered salaries, fewer high skilled jobs, and a dumbing down of Americans. This will translate into lower consumer spending power tomorrow, which will hurt these same businesses tomorrow. America will be the India of tomorrow. A few rich people, and a large number or majority of poor people. There will, however, be one major difference. We will continue to worship our celebrities and athletes, and will continue to pay ridiculous compensation packages to our CEOs regardless of their performance. Ah, the power of big business, their lobbyists, and a congress that only cares about election contributions and the quest for power.

Re:Wasting money proving the obvious (1)

Marxist Hacker 42 (638312) | more than 7 years ago | (#18625597)

A potential [slashdot.org] loophole [slashdot.org] in the system has been found- at least for those who are still middle class. Globalization or automation, either way basing life on the scarcity of labor is a doomed concept, so it's time to start preparing for the next stage, by pooling our resources now to buy up resources to live on when labor cost descends to zero.

Re:Wasting money proving the obvious (1)

Esion Modnar (632431) | more than 7 years ago | (#18625673)

to reveal the lie.

It's the lie that's right up there with "I'm resigning to spend more time with my family" not "...because I got caught with my pecker in the snack machine."

Stupid study (-1)

Anonymous Coward | more than 7 years ago | (#18625057)

Should I be disgusted that my tax dollars were spent on something this simplistic and obvious? I don't like beating a dead horse.

Cost of living (4, Interesting)

geek (5680) | more than 7 years ago | (#18625065)

Until we reduce the cost of living in this country companies will continue to outsource. It's all about money. I can't possibly earn less than 4k a month due to bills, rent, etc. Less than that and I am in serious doo doo (I live in California where prices do nothing but sky rocket every year).

Maybe it's me being paranoid but how in the world are jobs leaving this country they way they are and yet the cost of living goes up every single year? Housing prices are seemingly out of reach to everyone yet they keep selling. A recent report on the news here in CA was that fewer than 9% of the CA population can afford to buy a house in CA.

Until we can make it affordable to live here we'll never be able to hold on to the jobs.

Re:Cost of living (1, Informative)

Anonymous Coward | more than 7 years ago | (#18625203)

Maybe it's me being paranoid but how in the world are jobs leaving this country they way they are and yet the cost of living goes up every single year? Housing prices are seemingly out of reach to everyone yet they keep selling. A recent report on the news here in CA was that fewer than 9% of the CA population can afford to buy a house in CA.


Psst.. hey bud.. here's a hint: it's called "The Midwest".. and.. keep this under your hat.. you can get jobs there.

Cost of living will freeze soon (3, Insightful)

ObiWonKanblomi (320618) | more than 7 years ago | (#18625251)

I was hearing a report on the parent's topic yesterday on NPR. It turns out homes are not selling as much as before due to a couple factors. First is the number of people who were purchasing via insane ARMs are drying up. This is why we now see a number of lenders filing for bankruptcy. Secondly, there is still a large insane population of people who are selling their homes but will not lower the prices, hoping they will be able to sell at a price that would have worked a year ago.

Despite the comment about 9% qualifying for home ownership, a number of people have applied in the past few years for insane ARMs to buy a home and purchase that dream SUV. However, it's because they truly can't afford a home the number foreclosures are starting to drastically increase. It's only a matter of time before all those homes are sold at much lower prices.

On the way to work today, I was hearing another NPR report (yeah I listen to it a lot) stating that the apartment market is about to boom....

Re:Cost of living will freeze soon (1)

CyberSnyder (8122) | more than 7 years ago | (#18625883)

| On the way to work today, I was hearing another NPR report (yeah I listen to it a lot)
| stating that the apartment market is about to boom....

Which is going to put a big hurt on lower income people.

I'm glad I bought my house 10 years ago. I can't imagine being just out of college and trying to buy your first home today.

Re:Cost of living (3, Insightful)

99BottlesOfBeerInMyF (813746) | more than 7 years ago | (#18625329)

Until we reduce the cost of living in this country companies will continue to outsource. It's all about money.

Actually more and more companies are looking not to outsourced Indian developers and support staff, but to outsourced and even satellite office US developers and supports staff. The problem is not that housing and cost of living is too high in the US. The problem is the housing and cost of living is too high in expensive areas of California and that is what most Slashdot readers pay attention to.

This is interesting because I was in a meeting this morning with our director of engineering where this exact issue was discussed. Some places in San Francisco a medium sized house costs you 5 million and 60K in taxes a year. My medium sized house in a normal part of the US cost about 120K and I pay a few grand in taxes on it a year. There are places in the midwest where amidst the corn fields you'll come upon an island formed by a university, a small town, and support facilities for a dozen major international corporations.

My advice to you, if you live in CA, move somewhere affordable. If you are looking to hire talent, look to a satellite office somewhere that is not crazily expensive. If you're looking to outsource development or support, there are cost competitive American companies with a lot smaller risk and cheaper travel expenses that Indian companies.

Re:Cost of living (1)

stevesliva (648202) | more than 7 years ago | (#18625603)

Maybe it's me being paranoid but how in the world are jobs leaving this country they way they are and yet the cost of living goes up every single year?
You mean, how is it that we're spending more every year while wages are going up? Excess liquidity and a credit bubble and a negative savings rate...

Inflating/devaluing (0)

Colin Smith (2679) | more than 7 years ago | (#18625653)

OK. Your problem is oil. That's what's causing you to be expensive compared to the rest of the world.

In 1971 the US government managed to make the US dollar the sole currency for oil transactions. This resulted in every other oil consuming country in the world buying lots of dollars to hold in their strategic reserves. The result is that the dollar became very expensive and gained huge buying power, imports began flooding into the US and Americans became expensive to employ.

If you want to stop the flood of jobs out of the country and the flood of imports in to the country you're going to have to break the oil/dollar link. Unfortunately that would prevent the US government from printing and spending money with abandon on it's pet projects so I don't see it happening until there's some kind of a crisis. It would also cause the dollar to devalue significantly and generate large amounts of inflation in the US, it would however make Americans much cheaper to employ and given a few years the import/export balance would be restored.

 

I find that.. (2, Informative)

C_Kode (102755) | more than 7 years ago | (#18625079)

I find that it's outsourcing the reason I don't buy support contracts anymore...

Simple solution (1)

Anonymous Coward | more than 7 years ago | (#18625095)

Illegalize outsourcing beyond borders. Unfortunately, some of the money saved in outsourcing likely pads the pockets of politicians, so the average American worker might as well just bend over and get it done with.

where's the "Duh!" tag? (1)

night_flyer (453866) | more than 7 years ago | (#18625105)

well?

Sad. (1)

Rob T Firefly (844560) | more than 7 years ago | (#18625115)

Rob T Firefly wants me to tell you, as I type on his behalf from my firm's office in a dark corner of a cramped and humid barn on the outskirts of the Duchy of Grand Fenwick for pennies a week, that he is shocked and saddened by this news.

work ethic my eye (-1, Flamebait)

davek (18465) | more than 7 years ago | (#18625117)

cost savings were cited as a major advantage of hiring Indian entry-level engineers, whereas other advantages were technical knowledge, English language skills, strong education or training, ability to learn quickly, and a strong work ethic
Perhaps this is true in China, but I just found out that my India developers are refusing to work tomorrow because of the Good Friday holiday. Turns out that just about every Christian, Hindu, and Muslim holiday is nationally considered a day off. This bones me supremely, because I've got stuff due at the end of the week, and my developers are on vacation starting this morning (thursday) until monday.

Similar thing with European socialists. They must get about 50% of the workdays in the year off as vacation. Then they wonder why their economy sucks and unemployment is so high.

Call us fat and lazy, but we Americans work every day but Christmas and Thanksgiving (new year's day too, if you have a nice employer).

Re:work ethic my eye (0, Offtopic)

Marxist Hacker 42 (638312) | more than 7 years ago | (#18625189)

Perhaps this is true in China, but I just found out that my India developers are refusing to work tomorrow because of the Good Friday holiday. Turns out that just about every Christian, Hindu, and Muslim holiday is nationally considered a day off. This bones me supremely, because I've got stuff due at the end of the week, and my developers are on vacation starting this morning (thursday) until monday.

Did you remind them that Good Friday, by ancient Christian tradition, does not start until 3pm?

Re:work ethic my eye (1)

Archangel Michael (180766) | more than 7 years ago | (#18625263)

And it wasn't really a Friday either.

Re:work ethic my eye (5, Insightful)

geek (5680) | more than 7 years ago | (#18625201)

And as a result we're over worked, under paid and have a greater than 50% divorce rate while our kids are left with a TV screen as a babysitter and our family structure is collapsing in favor of a nation of single people too self absorbed to take time off to form some basic social connections.

I'm sorry but "work work work" isn't what I would call a great existence. If you want it fine, but don't call me lazy for actually wanting to live a life I only get once chance to live.

Re:work ethic my eye (1)

cyphercell (843398) | more than 7 years ago | (#18625717)

You think Americans would watch less tv without work or that unemployment would reduce divorce rates? I don't get it. Personally, I prefer work a bit more than just having a bunch of free time, if I had the time I would just go to school more.

Re:work ethic my eye (1)

Duhavid (677874) | more than 7 years ago | (#18625935)

You are assuming that there is no middle ground between
"work work work" and unemployment.

Re:work ethic my eye (1)

cyphercell (843398) | more than 7 years ago | (#18625207)

And here I was wondering why these countries let us hire off their entire work force, effectively undermining their chance at building a place in industry.

Re:work ethic my eye (2, Interesting)

Raistlin77 (754120) | more than 7 years ago | (#18625231)

What I find funny though is that all the Hindu/Muslin owned/operated gas stations and convenience stores in the US remain open every day of the year, including Christmas, Thanksgiving, and New Years Day.

Re:work ethic my eye (1)

siufish (814496) | more than 7 years ago | (#18625775)

Perhaps because all of these are not Hindu/Islamic holidays? They do not celebrate Gregorian new years because they have different calendars.

Re:work ethic my eye (1, Funny)

Anonymous Coward | more than 7 years ago | (#18625337)

Whew, and I was afraid that I was being let go because I was on slashdot all day.

Re:work ethic my eye (1)

tsm_sf (545316) | more than 7 years ago | (#18625341)

The 'work ethic' smokescreen has always baffled me. Americans work more days and longer hours than workers in any other developed nation. I guess if you're going to compare us to conscripted "employees" in third-world labor camps then, yes, our "work ethic" might be a little lower.

Re:work ethic my eye (0)

Anonymous Coward | more than 7 years ago | (#18625419)

What are you paying your Indian developers? I'll bet 1/10 of what you pay for a US worker. You can't have your cake and eat it too. If you pay them the US salary, I'll bet you they will be willing to work everyday, including the Christmas day!

Re:work ethic my eye (3, Informative)

slmdmd (769525) | more than 7 years ago | (#18625525)

The indians in cities like mumbai work for 13 hours a day on an average, also in the south indian cities like Chennai & Hyderabad the bosses like you are worshipped as God. So there are about 2000 small companies who give jobs but instead of paying salary they ask money from the candidate. The candidate doesn't mind because that will give him a head start into IT industry where every one wants to hire an experienced developer.
The next goal(dream) for every Indian developer is to get h1b visa into usa.

Bosses like you make them report status on a project at unearthly hours like 2:00 am(4:30 pm EST, yeah you just wanted to check the status before going home, don't you). Imagine doing that with Tim here.

If a job vacancy ad mentions the word "fresh" then there will be 6000 applications with at least Master's degree in Computer Application.(10+2+3+3 yrs education).

where is original data (1)

cinnamon colbert (732724) | more than 7 years ago | (#18625125)

here we have a comment about a press release about a study
why on earth are people so lazy they can't provide a citation to the exact original study, so you can actually see what the authors found out - not what they said, or the press release said, or the/. editor or submittor said, but what was found
sloppy, lazy , stupid - no wonder people off shore

Wow! (0)

Anonymous Coward | more than 7 years ago | (#18625145)

Wow, what a discovery! This is as significant as the discovery of the electron itself! Why did it took this long to figure this out??? I guess some one had to get a PHD before they could figure out this well known fact, eh?

Re:Wow! (0)

Anonymous Coward | more than 7 years ago | (#18625427)

Well, they have the funding to do the research. Most of us peons who suspected this the whole time don't have the ability to stop working to look up facts and figures long enough to make a report like this. Plus we don't have any free time.

And this is a suprise, how? (1)

insanemime (985459) | more than 7 years ago | (#18625175)

Was this article anything but a big "duh!" for anyone else but me? If you have ever had to deal with a support rep from any major computer maker (when they require to troubleshoot with one of their "techs" before you can send someting in for warranty repair/replacement) you know that these people have no clue and are following a troubleshooting flowchart. There are no engineers or tech experts on that phone line. My favorite thing is when they answer with their barely understandable english and say "Tank eu for cauling (name of place) my naam iz Steve".

Duh (0)

Anonymous Coward | more than 7 years ago | (#18625535)

Was this article anything but a big "duh!" for anyone else but me?

Yes. In fact that was more-or-less everyone's response.

Additionally... (0, Flamebait)

Anonymous Coward | more than 7 years ago | (#18625181)

Those who work, learn how things work. Bad news for Americans who won't lower their salary to compete.

Thats a problem with the winner of a job position. Not only did they beat you getting the job but now they're going to get more experience then you now having the job.

I like to call this the cascading winner effect.

Counter strike makes a perfect example. The winners of each match get more money and thus can buy better equipment ( better rifles, grenades etc.) Thus the losers lose even more. As far as I can tell, the best way out if you're a loser is to not have children. Phase yourself out if you're a loser, teams are going to be stacked against your kids.

Re:Additionally... (1)

voice_of_all_reason (926702) | more than 7 years ago | (#18625287)

As far as I can tell, the best way out if you're a loser is to not have children. Phase yourself out if you're a loser, teams are going to be stacked against your kids.

I've always wondered why no one ever tried this in the numerous examples of slavery in history. I mean, it's not like the plantation owner was holding a gun to your head demanding heirs. At what point did it occur that the kid was going to end up enthralled just like you for the rest of his life?

Re:Additionally... (1, Informative)

Anonymous Coward | more than 7 years ago | (#18625473)

Actually slave owners did force breed their slaves.

Re:Additionally... (0)

Anonymous Coward | more than 7 years ago | (#18625517)

At what point did it occur that the kid was going to end up enthralled just like you for the rest of his life?

Obviously it occurred well after "I'm a slave and everything about my life sucks but at least I can have some sex" occurred. Kinda hard to worry about how it'll be for your kids when you're just hoping to get through the day without being lashed.

Re:Additionally... (2, Insightful)

cyphercell (843398) | more than 7 years ago | (#18625399)

Bad news for Americans who won't lower their salary to compete.

Lower your salary enough and people will think you're incompetant, when asked why your willing to work for so little all you can really say is that you need the experience, because to get a job you really have to be twice as qualified as you should be. So, if you have an AAS and want a job you're qualified for, you need to have 2yrs experience too, because the guy (B.S.) that you're competing with just lost his job to some guy (B.S.) recently graduating in India.

Have I been living in a cave? (3, Interesting)

Zadaz (950521) | more than 7 years ago | (#18625197)

Um... The only reason I've ever heard given for outsourcing was money. When the hell did they invent this other bullshit, spread it and have people buy into it, and then do a study debunking it?

Was I too busy working?

Re:Have I been living in a cave? (3, Insightful)

99BottlesOfBeerInMyF (813746) | more than 7 years ago | (#18625455)

Um... The only reason I've ever heard given for outsourcing was money. When the hell did they invent this other bullshit, spread it and have people buy into it, and then do a study debunking it?

In business, it's always about money. This study was debunking the fact that some businesses were claiming it was not about lower salaries, which is somewhat different. In truth, I've worked on a few projects that involved outsourcing both in the US and overseas and while it was always about money, relative salaries was a pretty small concern. We outsourced because we had trouble finding enough local talent and because we had short term needs that required expertise we did not have in house, but which would have cost a lot unnecessarily to do ourselves.

In contrast, I know of several cases where companies outsourced core parts of their business, resulting in a short term benefit on paper, but a long term loss. Once an outsourced company has expertise in what you do (on your dime) they will raise prices or they will stop working for you and start competing with you. Of course by then the executive who made the decision already took his big bonus home and moved on to another company to repeat the process.

Re:Have I been living in a cave? (1)

nine-times (778537) | more than 7 years ago | (#18625585)

Was I too busy working?

Yes, apparently you were. You missed various people trying to make various arguments about what "outsourcing" was really about. Often, the arguments were from someone with an agenda, and sometimes arguing, essentially, that there just weren't enough Americans who needed jobs.

The obligatory car analogy (2, Interesting)

blindd0t (855876) | more than 7 years ago | (#18625247)

Here it is. Sometimes you'll see some really cheap "car mods" on ebay that advertise they could give you an additional 20hp while only costing you $5.00. Let's be real here - we all know that's a load of crap, and that you get what you pay for 99.9% of the time.

Recently, we had one of our customers outsource the implementation of our SDK to another company (this happened to be outsourced to an Indian company, though we've seen this same type of thing happen with domestic companies as well, of course). Our customer contacted us complaining his software was behaving quite strangely. Of course, our reply was that we didn't do the implementation, and we had never heard of that kind of behavior before (and the software has been in the market for about 15 years now and we have thousands of customers). So we offered to look at his source code, and of course, we found some horribly atrocious code which was the root of the problem - not our SDK, of course. The point is; any time you outsource a project to anybody, you need to be extraordinarily careful that the job is done correctly, and that you have everything you need to pick up where the company you outsourced to left off (coughs Mack-Truck syndrome under breath). That's just my $0.02, and it seems like common sense to me...

Cost would be my guess (4, Insightful)

starseeker (141897) | more than 7 years ago | (#18625253)

Cost is the direct driver for most businesses, because it always yields a short term benefit. Most companies do not have either the resources, interest, or patience to work for long term benefits.

That said, I would think R&D would be the LAST thing we would want to outsource, simply because if we do that the next generation of companies will develop not in the US but everywhere else. We cannot become a nation of businessmen/women and lawyers, because the world will quickly wake up to the fact that they already have all the smarts and physical resources to make whatever they need and can provide their own businessfolk and legal team. If the US makes too much trouble, we can be safely ignored because we won't be producing anything any more except hot air.

When it comes down to bare knuckles, US labor costs too much. Period. We don't have some "magical" quality that makes us better, we just happen to have a large number of well educated people in the US at the moment. The rest of the world can also be educated, and for cheaper than it costs to hire US labor. Businesses are finding that out - train the folks overseas, and guess what - they can do it too! Today, that lines the pocketbooks of those with control of the companies. What they aren't thinking about or don't care about is that tomorrow those folks will be making their own companies and coming right back at us, and we will no longer have the technological chops to keep up because the only money to be had in the US was by going into business or law.

Hopefully, we will retain our education and knowledge edge. We need to keep investing in education and keep ahead of the pack, however - the game is getting rougher and it will mean either a lower standard of living or harder work for us. There is no magic here, and in the end all competitive edges not based on natural resource advantage are short term.

Re:Cost would be my guess (0)

Anonymous Coward | more than 7 years ago | (#18625485)

Actually, natural resource advantages are also short term. The Saudi oil situation comes to mind...

Re:Cost would be my guess (1)

maxume (22995) | more than 7 years ago | (#18625795)

The US economy is still growing, so if what you are talking about is happening, the effects haven't showed up yet.

Re:Cost would be my guess (1)

Code Master (164951) | more than 7 years ago | (#18625817)

Perhaps many of these people who 'control the companies' don't really care if the US is doing well in a fwe years. They can probably live quite happily in any other nation where everything is cheaper (and perhaps the laws can be boughten).

I'm not convinced America's national pride really matters to these people. If another country becomes the next world power and they're in on that, what's it to them?

Disclaimer: I'm Canadian

Re:Cost would be my guess (1)

stewbee (1019450) | more than 7 years ago | (#18625907)

We cannot become a nation of businessmen/women and lawyers, because the world will quickly wake up to the fact that they already have all the smarts and physical resources to make whatever they need and can provide their own businessfolk and legal team.

I couldn't agree with you more. It is actually pretty close to some of the things that I am pondering now. I currently hold an MSEE and am pondering going back to school for either my PhD or an MBA. The hardest part is deciding whether to follow my true desires (the PhD) and potentially have diminished future prospects in employment due to the trend in outsourcing of engineering/R&D, or do I sell out and get my MBA to 'be closer to the money' and try to be higher in the production chain?

The company that I work for has already said that they are trying to remove themselves from circuit design engineering (my current job) and would like to become a more systems oriented. This follows about 2 years after we outsourced our PWB manufacturing. Seeing this trend continue in all hardware companies is a little disconcerting. 'Being closer to the money' sounds like a way to ensure future employment in today's culture of outsourcing.

Conflicting reports. (1)

Rotten168 (104565) | more than 7 years ago | (#18625267)

Half of all news reports say that companies are becoming disillusioned with outsourcing and the other half say it's going to increase, I wish we could get a clear, honest, rational assessment of the situation so we can find out what to do about it.

Outsourcing is great for empire building (2, Insightful)

qwijibo (101731) | more than 7 years ago | (#18625271)

This has always been the lure of outsourcing. Costs are increased, which increases the size of the manager's empire, while being able to point to someone and show how much money is being saved.

For example, instead of paying one programmer $80k, they have:
2 programmers offshore - $20k each
system architect - $130k
technical writer - $60k
project manager - $70k
team manager - $100k

Instead of spending $80k/year, they are spending $400k/year. However, they claim a savings of $120k using management-math by multiplying the number of programmers they have times the salary of one programmer if hired locally, minus the actual cost of the offshore programmers. You can claim a 75% cost savings on the programmers, even though you're spending 500% of what you need to. It's a great way to fluff out budgets and org charts.

This strategy is stupid, eventuallyEVERYONE LOSES. (5, Informative)

plasmacutter (901737) | more than 7 years ago | (#18625351)

this is typpical supply side strategy, the problem is when you attack wages rather than other inputs as cost, it also attacks the biggest contributor to both profits and GDP, consumption!

2 basic economic equations are in play here:

gdp = C+I+G+NX = (income - savings)+I+G+NX

profits = costs - revenue = (wages + other costs) - (wages + other income such as capital gains)

when you kill wages/income, you kill your own profits as well as us gdp.
there is a time lag involved in this, but it comes back to bite you pretty quickly.
this is reflected whenever Reagan style policies (not exclusive to the republican party) are put into effect... there is always a recession a short time later, which is alleviated once the policies are countered/rolled back.

right now congress is STILL operating on the myth that there are short supplies of labor in "X" sector, which is bull, what there is is a shortage of cheap labor who dont care about long term benefits or retirement in sector "X"

plenty of on the ground info on this here [dice.com]

DOH! (miswrote an equation!) (1)

plasmacutter (901737) | more than 7 years ago | (#18625379)

oops!

it's profit = revenue - costs!

DOH!

That's wrong. (1, Insightful)

raehl (609729) | more than 7 years ago | (#18625559)

Your first problem is your focusing on the number of dollars spent. The number of dollars spent is only partially relevant. The other part is HOW MUCH CAN YOU BUY WITH A DOLLAR.

If a company reduces the amount of money paid in wages, one of three things (or a combination) happens:

1) The make a larger profit, and the people who earn that profit spend it on other things.
2) They invest that saved money in more production or more production efficiency (buy technology, spend on research, build another factory)
3) They lower the price of the product, so the consumer then spends their money on something else.

The important thing here is that previously idle people in India or China are now no longer idle. They're making things. And when they make things, *WE* in the US get a cut of it.

Outsourcing turns a guy in India who wasn't doing shit into a guy in India who makes, say, $100 worth of stuff, and keeps $80 of it and we get $20 'for free'. That's good for him and good for us.

That does eliminate a job in the US that may have paid $200 for the same stuff. But that's OK, because the stuff costs $100 less, and the person who would have had that job can now work on something else.

Also keep in mind that depressed wages are the only way that the free market can move around workers. Just because we all want high paid jobs in a certain field doesn't mean the economy can support allocating workers that way.

But in the end, we want to export as many jobs as we can and replace as many workers as possible with machines. If we do this to perfection, none of us will have to work anymore, because machines and people in India will be doing all our work for us, and we'll still have the same amount of stuff.

Or at least, we'll have freed up enough of our labor force to provide the universal healthcare everyone seems to want.

Re:That's wrong. (1)

plasmacutter (901737) | more than 7 years ago | (#18625749)

If a company reduces the amount of money paid in wages, one of three things (or a combination) happens:

1) The make a larger profit, and the people who earn that profit spend it on other things.
2) They invest that saved money in more production or more production efficiency (buy technology, spend on research, build another factory)
3) They lower the price of the product, so the consumer then spends their money on something else


you ignore the concept of moral hazard, which gives rise to option 4.

4) greedy ceo's absorb it into their already inflated incomes and expense accounts, and give much less than the company's profit gains to the rest of the workers.

option 4 is what is going on, you can see it in the news and store shelves yourself in rampant inflation and rampantly out of control upper managment wages.

Also keep in mind that depressed wages are the only way that the free market can move around workers.


moving them to lower paying jobs which wont support their cost of living or families, and have inadequate medical benefits.

Just because we all want high paid jobs in a certain field doesn't mean the economy can support allocating workers that way.


yes it can, otherwise they'd be decreasing the overall workforce in that sector rather than offshoring them.

Ironic (0)

Anonymous Coward | more than 7 years ago | (#18625439)

Every real-world instance of outsourcing that I've seen has always increased total costs.

Either the real goal is to simplify management and reduce responsibility or a lot of people are bad at accounting.

More, from Booz-Allen and Duke News (3, Informative)

ebusinessmedia1 (561777) | more than 7 years ago | (#18625501)

http://dukenews.duke.edu/2006/10/outsourcing.html [duke.edu] here's the study http://www.boozallen.com/media/file/Globalization_ White_Collar_Work_v3.pdf [boozallen.com] This new information should be a wakeup call for policy-makers. The irony is that corporate profits no longer know national boundaries. Solutions are going to take political leadership, and real committment. If no solutions are forthcoming, we will continue to see significant employment displacement here, with all the social problems that that implies.

What I never understood (3, Insightful)

night_flyer (453866) | more than 7 years ago | (#18625685)

why go overseas? middle america has THOUSANDS of unemployed people that would gladly do the work and a wage that is far less that the coasts thanks to the cost of living.

Granted this has to do more with call centers and the like. But I would much rather talk to Bubba Anne than Apu

So where can I... (2, Insightful)

jbarr (2233) | more than 7 years ago | (#18625689)

...get a job that does nothing more than publish studies that point out the obvious? I really can't believe money was spent to determine this.

Anecdotal evidence (3, Interesting)

ObiWanStevobi (1030352) | more than 7 years ago | (#18625707)

My anecdotal evidence suggests that offshoring adds alot of costs that don't really show up without further analysis. In other words, it looks like you are saving money, but you are not. Luckily, we haven't tried to offshore our R&D (which includes software development), but based on our experiences with offshoring production, I don't think we would try.

From what I have seen, offshoring does save alot of money that shows up directly on the bottom line. You are paying much less for employees and benefits, so your overhead costs look much lower. However, we have seen quality suffer. The costs from that don't get reported as labor costs, and often don't show up until some time later, so it is hard to see a real correlation between these costs and offshore labor. So upper management, who are often somewhat removed from what actually occurs within the company do not notice the problem.

One of the biggest problems with offshoring is communication. When all the people in charge speak english, and the people doing the work can only speak marginal engrish, problems occur. Specs are not relayed properly or take much more time to communicate than they normally would. The problem is that even seemingly trivial specs are important, and they can mean a costly product return. We have seen one product return that costs as much as the employee saving for an entire year.

There are also overhead costs involved in setting up the offshore operation. I'd imaginge even moreso with engineering or R&D. Files and data must be able to relayed quickly and securely. With an oufit overseas you have little control over, this is can be very difficult. And if something goes wrong and important information doesn't make it, or doesn't make it in time, that can also mean costly losses.

The whole point is that while offshoring saves on employee costs, those savings can be quickly erased by communications or quality errors. In my experience, the cost savings just aren't all they are cracked up to be, although you wouldn't notice by looking at the accounting reports.

Not really "News" (1)

airhed13 (732958) | more than 7 years ago | (#18625719)

This isn't really news. My company [abb.com] reported near record profits [yahoo.com] in the fourth quarter last year. How did that affect R&D (where I work)? It resulted in layoffs, cancelled projects, and further outsourcing of development efforts to India in early March.

I would propose that the primary source of this outsourcing is businesses who don't recognize software development as a core business, and so don't care so much about quality engineering practices or products that work. There are exceptions, of course, but I know that my company doesn't consider software to be essential to their profit model. As long as the software isn't losing money, they really don't care. They sure aren't willing to make the investment to really generate money with quality software.

And it doesn't save any money at all (1)

a1mint (1021941) | more than 7 years ago | (#18625725)

You end up with a bunch of gobblegook crap code, I've seen it happen. Communication is key. Video conferencing doesn't work. Very low quality at a low price. Not worth it, waste of time, money.

The economic shortage of engineers (1)

sean_ex_machina (1026748) | more than 7 years ago | (#18625747)

There really is a shortage of engineers, but it's only because companies are too cheap to offer decent salaries. Offer better salaries and you can hire more/better people. It's not at all complicated, but good luck explaining that to the drones in HR.

It's all cost of course (1)

sholden (12227) | more than 7 years ago | (#18625789)

The key advantage of hiring Chinese entry-level engineers was cost savings, whereas a few respondents cited strong education or training and a willingness to work long hours. Similarly, cost savings were cited as a major advantage of hiring Indian entry-level engineers, whereas other advantages were technical knowledge, English language skills, strong education or training, ability to learn quickly, and a strong work ethic.


Surely "strong education or training" really means "stronger education or training than a similarly paid American worker", I really doubt you can't find anyone in the US with the required education/training.

"work long hours" realy means "we need fewer and hence the cost is lower".

"English language skills" I really doubt the average Indian engineer has better English than the average American engineer.

"learn quickly and work ethic" maybe those count, but again I suspect it's just a price point difference.

Hence it's all about cost.

But when the US dollar devalues to a more reasonable level Indian and Chinese labour won't be cheaper anymore so the problem will go away - to be replaced by a few other more serious ones...

outsourcing R&D (1)

krakround (1065064) | more than 7 years ago | (#18625861)

It's one thing, in the software industry say, to outsource the grindhouse work like installers, black box testing and the nth maintenance release of Boring Software 2007, but when creative, innovative jobs like R&D go overseas, then local workers are truly screwed. Even if you've kept yourself up to date, flexible and on the leading edge you still won't find work!

Even Medical Billing is going that way! (0)

Anonymous Coward | more than 7 years ago | (#18625875)

American Benefit Plan Administrators is planing on outsourcing 90%+ of their jobs just to save a few dollars. This worries me, not only for those who are losing their jobs, but for the fact that such sensitive data (SSN's and personal medical data) is being put into outside hands. This alone will increase the risk of identity theft, blackmail, and loss of privacy.

My experiences (1)

DaveV1.0 (203135) | more than 7 years ago | (#18625921)

I am a contractor at a major telecom company. As it happens, my contracting company is an Indian company. Over half the people I work with are Indian.

One of my co-workers is Indian and in India. But, he does nothing because of legal restrictions. He is hardly ever around because he gets so many vacations, holidays, and training days. He can only work a 40 hour week and can not work on the weekends, which is when he is actually needed.

He gets paid a salary to do nothing, my team is down a member, and we three on-shore people are doing the work of 4 ( actually more as we are understaffed ).

I am looking for a new career.

Labor in the US (2, Interesting)

cdrguru (88047) | more than 7 years ago | (#18625949)

Labor in the US is certainly one of the most expensive in the world. As a direct result of this it should be obvious that any technique that will move the work elsewhere where labor is cheaper is going to be done. Any technique.

Outsourcing will continue because it is at least on the surface cost effective. It will displace higher paid American labor in favor of lower paid labor elsewhere. It does not seem reasonable to assume that at some point all foreign labor will become as expensive as American labor is today. At least not for a long, long time.

Many people in the US are under some kind of illusion that we can be a country of "knowledge workers" where everyone is above average and college educated. We can simply export work or import labor for anything that is not covered by this. There is a false assumption here that everyone in the US is capable of being trained as a "knowledge worker". We are reforming the economy such that there are no jobs in the US which someone of more modest intelligence and capabilities can perform. This is a mistake on several levels.

Obviously, we can move work offshore to cheaper labor but we will then be dependent on a longer supply chain and whatever occurs in these foreign locations. This means that an earthquake in India can wipe out a company in the US. Does not sound like a good plan.

It also means that it is possible to seriously damage the US ability to compete in the world by attacking non-US facilities. If a majority of consumer electronics devices are made in Indonesia, burning down a factory there may prevent a US competitor from entering the market and preserve the market dominance of other countries.

Certainly when all our military equipment is made overseas, as will soon be the case, it will be nearly impossible to use the military against foreign enemies in league with producing countries. We can also expect complex military hardware to be dependent on foreign powers continued good will to keep it operating. Logic bombs in such equipment can be expected.

The Step After Outsourcing R&D (0)

Anonymous Coward | more than 7 years ago | (#18625965)

The step after outsourcing R&D won't be taken by US companies. It will be taken by the folks that we have outsourced our R&D and support to. The folks that are doing those jobs will think to themselves:

"You know, we research, develop, and support this product. Why don't we just market it ourselves and cut out the American middle-men?"

The step after that, for the US at least, will be more like a long fall.
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