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The Almighty Buck Businesses United States IT

Outsourcing is Good for You 963

Posted by michael
from the suck-it-up dept.
gManZboy writes "Catherine Mann, from the Institute for International Economics, has a look at What Global Outsourcing Means for U.S. IT Workers up over at Queue. She's got an interesting argument: outsourcing means cheaper IT products, meaning businesses will buy more, meaning more products to make & manage = net gain of IT jobs in the US. Ummm, did you follow that?"
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Outsourcing is Good for You

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  • by dazilla (647166) on Friday August 27, 2004 @06:41PM (#10092531)
    On top of that, you can outsource your own job, take up another one, and outsource it too. Basically you can be making way more than you currently are. I think there was a /. story on this a while back.
    • by dogfart (601976) on Friday August 27, 2004 @06:51PM (#10092614) Homepage Journal
      Sounds like you discovered the secret of multi-level marketing. Sssh.. before someone patents your idea.
    • by Anonymous Coward on Friday August 27, 2004 @06:58PM (#10092670)
      It's not that funny. I did this and got two promotions! My old job became the jobs of 3 guys in Taiwan, and I was their boss. Then I gave my _new_ job to another couple guys in Taiwan; and got hired in a different company to help build a team overseas.

      Scary, but it works.

    • On top of that, you can outsource your own job, take up another one, and outsource it too. Basically you can be making way more than you currently are. I think there was a /. story on this a while back.

      Oh, no. It's deja vu, all over again:- Outsource your job to earn more! [indiatimes.com].

    • I guess there's none of them pesky thermodynamics laws in the world of economics huh?
      • by NoMoreNicksLeft (516230) <john.oyler@NOspAm.comcast.net> on Friday August 27, 2004 @07:17PM (#10092809) Journal
        Of course not. You can also give tax breaks to rich people, and it helps you and I because they have more money to spend on hiring us to scrub their mansion floors with toothbrushes!
        • by 0111 1110 (518466) on Friday August 27, 2004 @08:47PM (#10093361)
          Well I for one very much appreciate tax breaks for the poor. When are we going to get a candidate who runs on the platform of eliminating completely all income taxes on anyone who makes less than $40,000 year, while somewhat raising taxes on anyone who makes between 40K and 100K and signifantly raising taxes on anyone who dares to make more than 100K/year.

          Also, lets repeal that stupid gas tax. That's about as regressive as they come and our highways and byways are just fine the way they are.
          • by Chrax (782154) on Friday August 27, 2004 @11:01PM (#10093944)
            Right, because we shouldn't be charging the people that use the roads to maintain them. Believe it or not, roads tend to degrade over time, as well as require more use. Our highways and byways are not fine the way they are. In Missouri, among other places, traffic is increasing so that in some places having a two or four lane road is insufficient. Also no matter where you are, you'll get potholes and cracks that need to be fixed. I just don't see how it's regressive to tax gas. It's just like the electric company charging more than the electricity actually costs so that they can maintain the power lines and generators.
          • by atriusofbricia (686672) on Saturday August 28, 2004 @02:01AM (#10094667) Journal
            Damn, and I was going to use mod points on this topic. Oh well...

            I make around 55K a year (USD) and consider myself very fortunate. However, I'm more than a little tired of watching a huge chunk of my work, IE my money, vaporize in taxes each month.

            I didn't always make this money and even though I knew taxes were high when you got to this point, it's still a shock to be loosing 19,000/year in taxes.

            Raise taxes? I can't believe people put up with taxes as high as they are!!

    • by MooseByte (751829) on Friday August 27, 2004 @07:12PM (#10092767)

      This has to be the first ever economic theory equivalent of the Chewbacca Defense [wikipedia.org].

      • Chewbacca supposedly lives on the planet Endor. Now why would an 8-foot tall wookie live on a planet with a bunch of 3-foot tall Ewoks? Why, I tell you why: because it doesn't make sense.
      • Claiming that outsourcing IT jobs from a country will increase IT employment in that same country doesn't make sense.
      • None of this makes any sense.
      • If it doesn't make sense, there will be more jobs for American IT workers.
      • "None of this makes any sense."

        Oh yes, it does... Labour force is a very limited resource, so with outsourcing those low-grade jobs, you have more people who can concentrate on doing the more profitable (ie. higher added value) jobs. The trick is doing that right and not outsourcing _everything_.
        • by jsebrech (525647) on Friday August 27, 2004 @07:40PM (#10092979)
          Oh yes, it does... Labour force is a very limited resource, so with outsourcing those low-grade jobs, you have more people who can concentrate on doing the more profitable (ie. higher added value) jobs.

          Wait, so you're saying that if we fire people they'll go find better jobs.

          I'm sorry, it still doesn't make any sense. If there really were better jobs, people would already have them.
          • by servognome (738846) on Friday August 27, 2004 @08:20PM (#10093227)
            If there really were better jobs, people would already have them
            The higher paying jobs don't exist yet. In the 80s when electronic manufacturing jobs were outsourced, it freed up capital and intellectual resources to pursue activities that used the more cheaply made components (software, networking, etc).
            As software becomes cheaper it is reasonable to expect people to find ways to better utilize that software, thus creating new industries and expanding existing ones.
            • by Tablizer (95088) on Friday August 27, 2004 @11:51PM (#10094196) Homepage Journal
              That's the thing. In the past there was always a "next big thing" to hop onto. However, as commentator Cringley[*] has also pointed out, the next big thing is late this time.

              Also, factory workers have generally not found "higher paying" jobs to replace those they lost. They usually move into the service sector, such as cash register clerks. Maybe offshoring creates jobs for OTHER industries, but not theirs. If it didn't help factory workers, why should it help IT workers?

              * I will try to find the link
        • by EddWo (180780) <eddwo@@@hotpop...com> on Friday August 27, 2004 @08:19PM (#10093221)
          I'd like to believe you but I don't think it works this way.
          Suppose we can specify a software product to be produced. UML models, use cases etc. Now we can give that to a programmer and they can produce the actual product. The programmer doesn't need to know much about the actual business issues, just follow the spec, so we can get the cheapest programmer from the other side of the world who is capable of following the spec.

          So there are fewer low level programming jobs in the US, great lets all become software architects, we are freed from the low level work and have higher valued jobs, Yippee a promotion.

          Except you realise that you don't actually need as many software architects a you had programmers, and not all programmers are capable of becoming software architects, so we keep the best few and drop the rest.

          A problem arises in a few years, where do you find good software architects. Usually you might start out as a programmer and after a few years experience on the job you can understand all the issues to take on the greater challenge. Well how do you get those years of experience if all the low level jobs have been shipped overseas?

          The only people qualified to be software architects are the supposed low level programmers you outsourced the work to. Except now they have enough money to set up their own development shops and can undercut your business in providing software development services.

          This has already happened with Clothing and Electronics, it could easily happen with software too.

          The only jobs that remain here are those that require an on-site presence, cleaning, maintenance, services, shopping and the management who sent the jobs abroad.
      • Theory (Score:3, Insightful)

        by nuggz (69912)
        This isn't that complicated.
        I am a custom programmer, I bill $50/hr.
        I get lots of work, I hire someone to help me.
        I pay them less then I charge, I make money on their work as well as mine.
        I provide the work to them, and supervise, this is how I justify my cut.
        This is how many small business grow, it is called organic growth, and is very common.

        Since programmers don't need to be physically close, why not hire the cheapest capable person? If you only pay $10/hr, you make $40/their hour, of course minus your
        • Re:Theory (Score:5, Insightful)

          by MooseByte (751829) on Friday August 27, 2004 @07:41PM (#10092987)

          "Since programmers don't need to be physically close, why not hire the cheapest capable person? If you only pay $10/hr, you make $40/their hour, of course minus your management work."

          Works fine until people wonder why they're paying the middleman $50 at all when they can turn around and hire the $10/hour worker directly. And that is exactly the situation here.

          IT staff aren't getting magically "promoted" into "higher value added positions" when their jobs are outsourced. Their actual job is leaving the country, and they're being laid off. Whether that's better or worse is a relative viewpoint. Regardless, there aren't any equal-paying (much less better-paying) jobs replacing them.

          " What about this doesn't make sense, when I was 14, I worked for a guy cutting lawns doing almost exactly this."

          Yeah that's great, except you can't offshore outsource lawn mowing. Going offshore you can exploit a completely different tier of societies that aren't tied to the ecomonic regulations and expenses of the corporation's home country. You can't live on $3/day here in the States.

          Completely different situations.

          • Middle man (Score:4, Insightful)

            by nuggz (69912) on Friday August 27, 2004 @08:01PM (#10093120) Homepage
            Well if you want to skim off money you have to add value somehow.
            Supervision, hiring good people, project management, ensure quality, provide customer support, all those things customers want.

            You know all that stuff Redhat is doing with Linux.
    • by LiquidMind (150126) on Friday August 27, 2004 @07:32PM (#10092923)
      this reminds me of a lil joke i heard some years ago (so the wording might be a bit off)....

      "I just hired a person that takes care of all my worries for me"
      "that's great. how much does he charge?"
      "$200 the hour"
      "how are you gonna afford that?"
      "i have no idea. let him worry about that"
  • by linuxwrangler (582055) on Friday August 27, 2004 @06:42PM (#10092539)
    Should have read:
    a net gain of _outsourced_ jobs in the US
  • More IT jobs? (Score:5, Insightful)

    by MrDiablerie (533142) on Friday August 27, 2004 @06:43PM (#10092542) Homepage
    No I think it means more outsourced. IT jobs in Asia and India. And larger bonuses for american executives.
    • Re:More IT jobs? (Score:5, Insightful)

      by Anonymous Coward on Friday August 27, 2004 @06:54PM (#10092640)
      The point is that the people whose jobs are outsourced are not competitive. Whether you like it or not, it IS a global economy and when somebody else will do your job for less money, employing you instead puts your employer in a disadvantageous position. The competition will exploit this and drive your employer out of the market. The effect is the same: You're out of a job.

      The question is not if outsourcing creates more jobs than an isolated domestic economy would. The question is: Does outsourcing save the jobs which are hard to outsource? Pretending to be in a non-global economy would drive these jobs away too in the long run.
      • The point is that the people whose jobs are outsourced are not competitive. ... when somebody else will do your job for less money, employing you instead puts your employer in a disadvantageous position. ... The question is: Does outsourcing save the jobs which are hard to outsource? emphasis added.

        I would like to disagree that the cost of employees alone isn't the driving factor. Others include the number of defects, quality of work, oversight, and responsiveness.

        I've recently been to two hardware com

      • Re:More IT jobs? (Score:5, Insightful)

        by kcbrown (7426) <slashdot@sysexperts.com> on Friday August 27, 2004 @07:52PM (#10093065)
        The point is that the people whose jobs are outsourced are not competitive. Whether you like it or not, it IS a global economy and when somebody else will do your job for less money, employing you instead puts your employer in a disadvantageous position. The competition will exploit this and drive your employer out of the market. The effect is the same: You're out of a job.

        Yep. And the cheapest labor is that of a slave or prisoner who is being given barely enough to eat. Once you know that, you know that's exactly where the global job market is headed, as long as those countries that use slave/prison labor (China?) are allowed to participate in the competition.

        That is why offshoring must be limited: the competition doesn't have to follow the same rules you do, and that inherently makes for a tilted playing field. The competition has no incentive to change their ways (they're more "competitive" than you, after all), so you're forced to adopt their ways. That means other countries that wish to compete in the global market must start making use of slave/prison labor, and that puts pressure on the governments to increase the size of their prison labor pool, which puts pressure on them to put more people in prison.

        No, offshoring is acceptable only when the target countries have the same labor laws on the books that you have. Otherwise you may as well throw out 100+ years of economic and labor progress (what, you think the middle class just magically appeared? It came about as a direct result of sane labor laws, because the use of automation virtually guarantees that there is more human labor available than work to do).

  • It IS good for us. (Score:3, Insightful)

    by Stegersaurus2686 (780094) on Friday August 27, 2004 @06:43PM (#10092546)
    Outsourcing also raises the amount of money third world countries have. As they get richer, they start buying more expensive luxuries made in the industrialized nations. In the end, it will help our economy. Also, it is true that we do lose jobs to outsourcing. Like the article mentioned, however, we gain new skilled labor positions that are better paying than the manual labor positions that were eliminated.
    • by Marxist Hacker 42 (638312) <seebert42@gmail.com> on Friday August 27, 2004 @06:48PM (#10092587) Homepage Journal
      One slight problem with that theory- we don't make anything in the United States anymore, we're a POST-industrialized nation. So while this will help China, what new skilled labor positions are we going to get here? Especially since any Indian can supposedly do any skilled labor position just as well as any American and for 10% cheaper under the H-1b regulations?
    • by kevinatilusa (620125) <kcostell AT gmail DOT com> on Friday August 27, 2004 @06:49PM (#10092603)
      So outsourcing is a labor market version of trickle-down economics?
      • by jsebrech (525647)
        So outsourcing is a labor market version of trickle-down economics?

        Exactly, which is why despite all its rabid proponents it has as little credible real world evidence to support its validity as an economic theory.
    • by Kenja (541830)
      "Outsourcing also raises the amount of money third world countries have. As they get richer, they start buying more expensive luxuries made in the industrialized nations."

      No they dont. They buy stuff made in India, China nad Taiwan.

      "In the end, it will help our economy. Also, it is true that we do lose jobs to outsourcing. Like the article mentioned, however, we gain new skilled labor positions that are better paying than the manual labor positions that were eliminated."

      Realy? Name them. If outsourcing j

    • by BerntB (584621) on Friday August 27, 2004 @07:31PM (#10092914)
      In the end, [outsorcing] will help our economy.
      That might be true.

      But consider when industrialization became big in the 19th century (at least where I live). It was hell on the little people then. Mass unemployment and lots of suffering.

      It was a good thing in the long run, though. The world is much better for it:
      Infancy/child death rates where around 20-30% before industrialization. The rest of our quality of living has been raised similarly; to be able to study is half of life's meaning to me. Lots of people had brain damage because of bad harvests when they were children. Etc, etc.

      This outsorcing trend will (almost) certainly be a Good Thing for the third world and all humanity in a few decades.

      It just sucks to be us -- that has to live through the changes in the wrong place. Like the unemployed and workers of the early industrialization.

      I find this whoring by spokespeople to claim otherwise disgusting.

  • Something Similar (Score:5, Interesting)

    by xeon4life (668430) <devin@devinto[ ]s.com ['rre' in gap]> on Friday August 27, 2004 @06:43PM (#10092550) Homepage Journal
    I've been hearing more and more often about something similar. While not the same idea, it's the idea that America "recycles" (to be put in an Economists terms) jobs every year, something in the order of 50 million or so if I'm not mistaken, and that outsourcing somehow is just a natural process of this recycling...

    If you ask me, I think Economists have it tougher than Computer Scientists, but that's just my opinion. :-P

    -Devin Torres
  • by YankeeInExile (577704) * on Friday August 27, 2004 @06:43PM (#10092551) Homepage Journal

    Since not all jobs can be efficiently outsourced, a company that raises their productivity by outsourcing the jobs that can be will have more resources to devote to those that can't be

    • by haruchai (17472) on Friday August 27, 2004 @06:58PM (#10092668)
      EXACTLY!! Unfortunately, the only jobs they don't try to outsource are the executives ( honestly, they should try harder) and, those newly-freed up resources - usually cash - go into the bigwigs pockets in one of two ways.
      First, they get bigger raises, expense accounts, golden parachutes for reducing the company payroll. Second, the stock exchanges usually reward the newly productive company with an increase in share price, making those executive stock options more valuable.
      It's win-win if you have the key to the big boys' bathroom.

      • how do you figure that the guy making the decision to outsource is going to decide to eliminate his/her own job? I'm 100 percent with on you ship the exec jobs overseas.

        How do *we* the average person make that happen?
  • by tekiegreg (674773) * <tekieg1-slashdot@yahoo.com> on Friday August 27, 2004 @06:44PM (#10092554) Homepage Journal
    ...and it appears valid at first bite. Ultimately the corporate motive is to make more profit however, so money saved by outsourcing probably wouldn't drain into more programmers (or whatever position abroad) more likely into the bottom line for the shareholders...not an entirely bad thing if you're a shareholder but if you're an employee...
  • OK, first of all, where is the evidence outsourcing jobs overseas makes anything cheaper?

    Last time I checked the market set the price (with obvious unnamed monopoly exceptions *coughMicrosoftcough*). The price the company pays for the production of the item has negligable impact on price--and that's fine. The price people are willing to pay for something has a much bigger impact on the price. All outsourcing overseas does is fatten the profit margin for the sales of these IT projects. So right there, her basic premise is crap.

    I mean, is she REALLY saying that companies will have more money to pay you with, because they don't have to pay you? WTF.

    • by enjo13 (444114) on Friday August 27, 2004 @06:51PM (#10092615) Homepage
      No, her basic premise is sound economics. What outsourcing really does is grow the economies of those other countries. The money going into those economies results in higher economic spending power among the outsourcees. They in turn buy more goods, which employs more people in their local economy. This causes economic growth... at the same time it provides the ability for people in these countries to start their own business, utilizing cheaper local professionals, to produce products and outcompete the American companies. That sounds scary... but the net gain is cheaper goods and services for US as well. This in turn enables all of us to have more spending power and allows OUR economy to grow as well. This creates more jobs.. etc.. etc..

      It's the concept of competitive advantage. The workers in India have a competitive advantage as they can do the IT jobs cheaper, and ostensibly at or near the same quality level. By allowing them to take that advantage they win (their economy grows), but they also begin producing products that out-compete the more expensive American products. This is the exact same cycle we saw with Japanese cars (which has come full circle with those companies opening up manufacturing plants in the United States).
      • Competitive Advantage is Crap unless YOU personally have a job.
      • you wrote:
        " No, her basic premise is sound economics.


        Economics is nothing more than a science of how to fuck over the working citizen and benefit the investor. Anytime I hear someone talk about "economics", I know they are either callow and ignorant or an evil greedhead. Guess which one I think you are....

        you also wrote:

        What outsourcing really does is grow the economies of those other countries.


        WHo cares? America is my business. I own it jointly with all my fellow citizens. They are my partners. I
      • by zogger (617870) on Friday August 27, 2004 @08:31PM (#10093287) Homepage Journal
        Stop calling assembly manufacturing please, some of the biggest FUD out there now. Use the correct terms. Picky point but it's true. We used to manufacture cars, now we do not, we put together car kits.

        And how is it "all of us" when it's not "all of us" who can get these cheaper goods and services? Aren't you leaving out the ones displaced, out of work, rehired at less wages, etc? That means it's not "all" of us, correct? Seems like you are assuming two things at the same time, that outsourced jobs result in zero loss of jobs here, and that they make more jobs at the same time. Say whut? How are people who have now much less money or no money supposed to take advantage of just cheaper trinkets, when basic bills and utilities aren't even being met?

        Sorry, it ain't working, been hearing this scam pushed for over 20 years now. Stuff in general costs more, and good well paying jobs are much harder to come by, you can't just pick and choose a few selected entries like CPU chips or something and call it the total economy. Got the personal memory, don't need an article to tell me that. Stuff costs more now, not less, generally speaking.Yes, there are new products on the market, but in general, nope, stuff costs more. Food, energy, housing,clothing, all costs more. People have lost purchaising power, not gained. Bankruptcies are at record levels-why if these games are making the economy so good? Why is that? Really, why? Savings at all time historic lows-why is that? if we are all so better off, wouldn't it be trivially easy to sock away more now? But it's not happening. House notes are now common at 30 years, I can remember when 10 was common. Why are they at 30 now, is it because houses cost more, or less? and yes, I even mean the same excact size houses in the same areas. And interest only loans? Excuse me? WTF is that noise? People are getting so desparate to hang onto their houses-just a place to live- they basically agree to rent them forever? That's simply...weird, but I'm seeing the ads now on Tv and such, never used to be that way. Car notes are at 60 months now, I remember 12 month loans, and any random middle of the road joe normal blue collar paycheck could pay them off to boot, let alone a white collar at 2x the average wage. And some people are being forced to a perpetual lease, they can never really own a car (that runs and ain't beat to snot) now, it's turned into an expected monthly utility bill because the lease is all that's affordable. I remember when leasing was extremely uncommon for joe sixpack, now they push those magic cheaper numbers because outright purchase is so hig-where's the cheaper cars at? I remember a ton of cars brand new at under 2 grand when I first started driving, where are they now?

        Less people have jobs with full benefits now. More people have lost their primary jobs and have been forced to take lesser paying jobs with less or zero benefits, sometimes not even getting a full work week. They just screwed people over on overtime this week with that new law to boot. More households require two checks to function, when one used to cut it easily.

        How is this "better"?

        Nope, the US did well when we pushed a full, completely diverse, vertically integrated and protected economy, the whole magilla, manufacturing, agriculture, energy production, etc, all of the above. It went downhill when they pushed swapping the cow-working- for the magic beans of get rich quick "investing" in whoknowswhereistan and making millionaires into billionaires. The only servicing I am seeing is the US middle class getting "serviced" right up the tuchus by the same old slick snakeoil guys.

        The better era with a better styled economy would have been the 50's to late 60's. Since then, coincidentaly with allowing dumping of autos and the start of offshoring,and allowing huge tariff imbalances, and also giving TAX BREAKS to offshore, we've gone steadily down hill. Just because we have some shinier stuff now doesn't mean we have a bette
    • I don't believe it reduces prices but it does delay some price increases. The market is pretty competitive across the board and pressures on this market prevent any real changes in the costs of most goods. So what is a company to do? Try to do the same for less. This allows some, not all, companies to be able to forgo raising their prices.

      Of course its all a vicous circle. Eventually one of the companies succumbs to the fact it will have to raise prices... and they lose a little marketshare but it ev
  • it sure is (Score:5, Funny)

    by ch-chuck (9622) on Friday August 27, 2004 @06:45PM (#10092565) Homepage
    Thanks to outsourcing, everything I buy at WalMart with my unemployment check is cheaper!

  • CEOs (Score:4, Insightful)

    by savagedome (742194) on Friday August 27, 2004 @06:45PM (#10092566)
    Well, nice arguments and all. But fuck that. They can say all they want but before we stop paying multi-multi-millions to these greedy ass CEOs/CTOs and such, I don't want to listen to nothing. Do they have any answer to "If the CEO took a 50% pay cut, we could add another 2000 jobs in my company right now. So, why doesn't he?"

    I guess I am just a little bitter but since they have announced 'massive' layoffs mid-sept, I can't do nothing but rant...
  • Executive Summary (Score:5, Insightful)

    by Lord Grey (463613) * on Friday August 27, 2004 @06:48PM (#10092585)
    1. The .com bubble bursts, causing employees working for firms whose primary business is selling IT products to lose their jobs.
    2. Bigger IT companies that didn't actually fold outsource some work to reduce expenses.
    3. Due to public demand and reduced expenses, non-IT companies buy more computer crap.
    4. Non-IT companies have to hire the old IT employees to run the new computers.
    Net result: Those employees eventually have jobs in computers, just not with computer companies.

    This actually makes sense, and I've seen it here locally. A lot of people I know who were laid off from startups are now working for their old customers. The problem is, this trend can take years. The number of businesses that totally went under put a ton of IT talent out of work. Compensating for that will take some time. That's not good news for the employees who haven't landed a job yet.

  • by zippo01 (688802) on Friday August 27, 2004 @06:48PM (#10092589)
    I outsouced my /. reading to India, i pay 4 dollars a day. They even make quality posts about random topics on it.
  • by dogfart (601976) on Friday August 27, 2004 @06:48PM (#10092591) Homepage Journal
    But as the economist John Maynard Keynes said, "In the long run, we will all be dead."
  • Yes, but how long? (Score:3, Insightful)

    by gargonia (798684) on Friday August 27, 2004 @06:49PM (#10092597)
    I keep hearing this argument made in favor of outsourcing jobs, but what I never hear is a realistic estimate of the amount of time that has to pass before the good stuff comes back our way. If there's a fairly quick turnaround on work returning to the country of origin then it's a good argument, but I suspect that the amount of time that has to elapse in order for the jobs to start coming back is more likely to be measured in decades than years.
  • Hello Catharine. (Score:5, Interesting)

    by Dark Lord Seth (584963) on Friday August 27, 2004 @06:51PM (#10092612) Journal
    • But in those terms, protectionists are like the little boy in the parable, ensuring visible jobs for workers in protected industries at the cost of the invisible benefits that would come from being able to hire the lowest bidder.
    • Re:Hello Catharine. (Score:3, Interesting)

      by lawpoop (604919)
      Thanks for the link. I've been bouncing that idea around in my head, but I never could express it so precisely.

      However, can you explain how outsourcing is an example of the broken window parable?

      • sure, that's easy. (Score:4, Informative)

        by twitter (104583) on Friday August 27, 2004 @09:32PM (#10093551) Homepage Journal
        However, can you explain how outsourcing is an example of the broken window parable?

        Outsourcing is vandalism, like breaking glass, that ends up costing everyone. Caroline argues that outsourcing (dollars spent somewhere else) benefits everyone, including the programmer who's picking his nose and filling out resumes instead of being paid for the same work. It is clear that the programmer would differ. The programmer would also argue that the outsourced work is inferior in quality and that he's not allowed to compete effectively due to further government vandalism though insane IP laws. The supposed work that's created is click and drool upkeep of Winblows, which pays very poorly, while others do the brain work. Everyone pays the price for this, if they are not sensible enough to use free software, by paying monopoly fees for software that could and does cost much less. These hidden costs are carried by all in the form of higher general costs lower efficiency and inconvenience. The situation with non free software is much closer to the case of the boy who's paid by the glazier to break windows. That's what the upgrade train is.

  • by Naum (166466) on Friday August 27, 2004 @06:52PM (#10092628) Homepage Journal
    From 1999 to 2002 (last available data), the number of "programming" jobs in the U.S. earning on average $64,000 fell by some 71,000. But jobs held by application and system software engineers earning on average $74,000 increased by 115,000. Thus, even as it increases the number of IT jobs, global sourcing of software and services changes the nature of IT jobs, moving them up the skills ladder and diffusing them throughout the U.S. economy.

    First, basing conclusions on an incomplete dataset is foolhardy. The quoted numbers do not capture the complete status of affairs. Much work in IT is done via contract/consultancy and those job losses arn't reflected in the numbers listed. If Fortune 500 companies replace domestic consultants with those working for offshore vendors, it really won't register in those quoted statistics. But it's been happening on a grand scale - as I type this, I am surrounded by ~500 offshore visa workers.

    Numbers aside, there is a larger theme that Ms. Mann and others of her ilk neglect - if lower end "grunt" positions are being snuffed out in lieu of higher, "up the skills ladder" posts, then shortly, in a few years, both ends will inevitably be filled in such capacity. Where, pray tell, do qualified IT "engineers" earn the experience and prove their mettle? By toiling on systems bottom-up and then gaining an appreciation and understanding of complex system underpinnings. Or am I to understand that these ranks are now to be filled entirely by MBAs and sociology majors? Young folks are choosing alternate career paths, heeding the alarms that the parents and older friends send their way.

  • One more time (Score:3, Interesting)

    by Nuttles (625038) on Friday August 27, 2004 @06:52PM (#10092632)
    I am a programmer, I make my money from making programs. I expect to get paid very well for what I do. I have spent thousands of dollars in not only college expenses, but also other training and materials. If x number of programming jobs are exported to another country because U.S. coorporations don't want to pay what I expect how does that benifit me the programmer? The economy as a whole 'may' not be hurt, but actually helped, but in the end there are less programming jobs out there than if there weren't outsourcing programming jobs. The big picture doesn't make me feel better.

    Nuttles
    Saved By Grace
    • Re:One more time (Score:5, Insightful)

      by gofreemarket (783820) on Friday August 27, 2004 @06:56PM (#10092655)
      I'm sorry, in the short term it might not benefit you as the programmer. But you were the one that chose to do programming and because of your choice, you have to face the fact that thousands of people overseas whose families earn 1/10th of your income also need to eat. They'll be asking the question how come they can do similar work as you and me and are willing to be paid 1/5 to 1/10th of what people in the US earn, but they shouldn't get the jobs?
    • Re:One more time (Score:5, Insightful)

      by sabat (23293) on Friday August 27, 2004 @06:58PM (#10092669) Journal
      Well, slow down a little -- the world doesn't owe you anything because you made all that effort. Whether it's fair or not, it's up to each of us to find a way to be valuable to a company.

      If they export our jobs, they'll get what they pay for (and usually do -- witness the failure that is outsourcing).

      The only bad part of that situation is that it takes CEOs and boards a few years to figure out that they're not getting what they pay for when they outsource (shoddy code, slow response time, lack of understanding of American business, ad nauseum).

      The reason outsourcing fails is that you can't easily just cut off one part of an organization and throw it across the world. To make that really work, you'd need to move the entire organization to that country -- and now you've just outsourced everyone except the board. Oops.

  • by Inthewire (521207) on Friday August 27, 2004 @06:57PM (#10092663)
    Become a security guard for rich people.
    Build trust over a decade or so.
    When the upcoming collapse is in full swing, abuse that trust by handing the boss over to the tar-n-feathers brigade.
    Ya gotta think long term.

  • Basic economics (Score:5, Interesting)

    by gmhowell (26755) <gmhowell@gmail.com> on Friday August 27, 2004 @06:58PM (#10092673) Homepage Journal
    It's basic economics. What is described is how it works in theory. However, the theory requires perfect knowledge for all parties involved, zero costs for movement of capital (human and otherwise). I'm also unsure how comparative advantage [google.com] (Google and David Ricardo are your friends) works in a market that is essentially saturated.

    Perhaps the thing that really needs to be looked at is that IT support is viewed as a commodity. Support offered in India or Russia is viewed as the same quality product as that offered in the US. If this is the case, quitcherbitchin. I doubt you are buy American in other walks of life. If there is a difference in quality, it's time to express that. Was it Dell who found that their business customers wanted US tech support instead of Indian tech support? (or HP?) The product wasn't a commodity, so it couldn't be switched.

    Rather than gripe about losing your job, explain why it's better that you have it than someone in another hemisphere.

    And if you made it this far, here's a link to a non unreadable article [slashdot.org]. Will Taco et al. ever admit they are wrong with this color choice?
  • sounds like..... (Score:3, Insightful)

    by nuintari (47926) on Friday August 27, 2004 @07:00PM (#10092691) Homepage
    sounds about as likely as trickle down economics.

    ya, know, not at all.
  • by madro (221107) * on Friday August 27, 2004 @07:03PM (#10092715)
    is that economics is a zero-sum game. Lower costs supposedly means more profit to executives, but no increase in jobs. Higher overall demand supposedly means higher demand for outsourced workers.

    What the author is trying to point out is that whole new markets of opportunity will open once the cost of basic programming activities is low enough. One of the benefits of open source software is that poorer countries can now obtain technology that before was out of their reach (or they can at least extract higher discounts from proprietary vendors).

    I have a friend who works as a software consultant customizing proprietary accounting software for small/medium enterprises like those described by the author. That's the basic outline of the future -- smaller companies could benefit from technology that goes beyond office applications, but to more backroom ops, or e-commerce opportunities, or whatever. You won't get paid based on your ability to write something that can be written cheaply overseas to target a generic problem -- you'll be paid to tweak that piece into something that gives a competitive advantage to your customer ... or you'll be paid to integrate that piece with other pieces that can be picked up cheap as open source software or as cheaply developed components.

    Many industries assemble cheaper components into an overall design that delivers a value greater than the cost of the parts. Software, as an intangible good, provides some interesting (perhaps worrying?) differences that make economic analogies a little tricker to apply.

    But I think while some components are open to a research/science approach (algorithms, maybe frameworks) I think the majority of software is close to manufactured goods in that customer requirements drive a solution that isn't generically applicable or saleable (a problem for Microsoft-ish companies that try to sell the same thing to everybody). The world of de facto standard products gets a lot of press because it's typically winner-take-all (google, MS Office, MS IE), but the growth in demand and in jobs will be in the world of tweaked software.
  • by mc6809e (214243) on Friday August 27, 2004 @07:04PM (#10092717)
    I just recently came across this site. [kasamba.com]

    Some of these guys are charging $0.16/minute for programming help ( $9.60/hour). Hell, the 976-HOTT girls make much more than that.

    I should have gone into the sex-talk business instead of programming.

  • by Serveert (102805) on Friday August 27, 2004 @07:06PM (#10092727)
    Wages in IT have remained flat in the US/gone down whereas for execs it has gained at least 20% just in the last year and that is average for the last few years.

    That is what outsourcing gives us. So get to the top while you still can, you're either at the top outsourcing or you are outsourced.
  • by erroneus (253617) on Friday August 27, 2004 @07:11PM (#10092761) Homepage
    I kinda have to disagree with all of that. Current trends is not that business uses the money it saves to buy new stuff, it's that the money they save, they tend to apply to top executive bonuses and salaries. The trickle stops at the top, generally speaking.
  • by carcass (115042) on Friday August 27, 2004 @07:13PM (#10092771) Journal
    I just love it when you IT people get all pompous about economists. Of course you're all the smartest people on the face of the earth, so people who've actually STUDIED economics can't possibly be right about anything, especially when you disagree with it on a visceral level.

    You guys sound as pathetic as the steel workers and miners where I grew up, compaining about how the corporate "man" keeps you down. Get with the times: many IT people were the first to say that to the "old economy" manufacturing employees back when getting an IT degree meant a paycheck that was completely outsized compared to your actual skills.

    Now that you're not making mad money right out of college, you're all more than willing to join up with the Union and be protectionists.

    It's a known economic fact that lower labor costs translate to lower finished goods costs. You think you'd be able to afford the latest graphics hardware and a new box everytime the next killer FPS came out if they weren't being manufactured overseas for way less than they could be made in the U.S.? You all benefit from outsourcing and globalization, but you're too fixated on your own careers to see the benefits.
  • Lou Dobbs Says No (Score:5, Interesting)

    by mankey wanker (673345) on Friday August 27, 2004 @07:14PM (#10092780)
    See:
    "Exporting America : Why Corporate Greed Is Shipping American Jobs Overseas"
    by Lou Dobbs

    "The power of big business over our national life has never been greater. Never have there been fewer business leaders willing to commit to the national interest over the selfish interest, to the good of the company over that of the company's they head."

    See also:
    http://www.pbs.org/now/transcript/transcript334_fu ll.html

    DOBBS: I want to hear one of these candidates sharply and clearly say this country is about the people who live in it.

    ...

    DOBBS: You have a responsibility not only to your investors, you have a responsibility to the marketplace, you have a responsibility to your customers, to the community in which you work. You have a responsibility to the country that makes your business possible in the first place.

    MOYERS: Heresy. Are you a traitor to your class? The investor class.

    DOBBS: Well, I'm, you know, I think most of us are investors. And I hardly think I'm a traitor. I think it's traitorous and treasonous and absolutely ignorant for these people to be out ballyhooing double-digit returns on equities when first we have to get our house in order in this country. And bring back integrity, principle, leadership to our business enterprises, to our markets. And try to do a lot better for the people who count. That is the middle class.

    ...

    MOYERS: You begin with a stunning quote. I'll read it. Quote, "The 20th century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power and the growth of corporate propaganda as a means of protecting corporate power against democracy."

    DOBBS: Absolutely. Corporate America has at this time controls the national media. It controls nearly every avenue of an American citizen's access to information about the way he or she lives, about those forces that are influencing our lives.

    And corporate America is protected in Washington by the dollars it spends. It is protected in the media by some virtue of ownership.
  • by reallocate (142797) on Friday August 27, 2004 @07:14PM (#10092781)
    Outsourcing is bad for the person whose job goes elsewhere.

    But the job goes elsewhere because someone else can do it cheaper.

    It happens all the time. Sooner or later, all those guys in India will price themselves out of the market and lose their jobs to people in China or Africa.

    I have sympathy for people who lose their jobs. I have no sympathy for people who want government to distort economics.

    • by Tony (765) on Friday August 27, 2004 @07:45PM (#10093013) Journal
      I have no sympathy for people who want government to distort economics.

      Well, considering that economics is poorly-understood to start with, I find it hard to imagine how governments can distort economics worse than corporations distort economics.

      The "free market" concept which is so prevalent among libertarians and corporatists is based upon an ideal model, in which everyone in the model is a free agent. Unfortunately, that's not a true model.

      In the corporate model, a select few in charge get to make up the wages paid. Now, this is somewhat constrained by the market availability, but as we discovered with outsourcing, there is no lack of people willing to work at pretty much anything, for almost nothing (comparatively speaking). Meanwhile, those who fix the game (upper management) ensure their own positions are not outsourced, while paying very little to everyone else.

      Meanwhile, those with the money are able to influence government policy to a much greater degree than those without much money. This also shifts the balance of power just a little more to those running corporations. Whether the DMCA, the INDUCE act, or the consolidation of giant media, the individual loses out, while the corporations gain.

      Economics in the US is warped. There is no such thing as a free market. Nor is there any indication that the free market is a good model to start with, let alone the best model. The only thing we've discovered so far is that empirically is better than fuedalism, socialism, monocracies (including monarchies, dictatorships, etc), hegemonies, and bozocracies (in which clowns run the show, like in the US).
    • by r00t (33219)
      People can't easily switch careers. I have a family
      to feed, so I can't just go back to school. I made
      my investment in education. Somebody going into IT
      today would be stupid of course, but some of us
      started long ago. We're stuck. I need to keep this
      career until I die.

      The feds muck with interest rates all the time.
      Sometimes they break up monopolies. They dish out
      artificial monopolies to your local phone company,
      patent holders, copyright holders, TV stations,
      and so on. Market distortion is the norm.
  • Inevitable (Score:5, Insightful)

    by loqi (754476) on Friday August 27, 2004 @07:16PM (#10092798)
    Bitch and moan as we may, this ridiculous imbalance in world wealth doesn't look very stable to me. Outsourcing this kind of stuff had to happen.

    There are masses of very poor people out there now able to afford a computer and internet access. Their disadvantages are many, their only advantage is that they're poor. So of course they will work for less. Suck-it-up dept is right.

    I don't support the exploitation of workers in poor countries, but it's hardly exploitation if these people are making a living doing what they do.
  • Shh! (Score:3, Funny)

    by nwbvt (768631) on Friday August 27, 2004 @07:20PM (#10092827)
    Don't apply reason or actual economics to the outsourcing debate on slashdot! You will be modded down -1 Troll!

    Remember the following 5 slashdot offshoring axioms:

    • Indians, Chinese, Japanese, and anyone else who may take a US job are the spawn of Satan
    • Americans have an inalienable right to overpaid jobs
    • Anything under 100% employment represents a failure of the US economy
    • Bush is responsible for every job that leaves the US
    • John Kerry will fly in and save the world from the evil "Benedict Arnold CEOs"
  • by cmholm (69081) <cmholm&mauiholm,org> on Friday August 27, 2004 @07:28PM (#10092889) Homepage Journal
    I'll give credit to our dear analyst for actually trying to reason thru why offshoring everything in sight is a good thing, rather than just waving her hands. However, this just makes it clearer than she's full of shit.

    Example #1:
    Design and interface must be done together with the customer, but coding and maintenance do not require close proximity with customers and can be done by less costly programmers abroad. The higher-wage jobs, involving design and interface, must still be performed in the U.S.

    Good try, but wrong. There are times when the designer and the coding monkey can be safely separated, but in general you're asking for trouble. Prepare to be IMing a lot. The offshore outfits are becoming better designers in any case, and soon the US designer's employer is going to be shipping his/her job out to be where the code is written.

    Example #2:
    The value to the U.S. economy of cheaper outsourced software and IT services is that it reduces the price of customized software. Econometric estimates are that, to an even greater degree than IT hardware, demand for software and services increases more than one-for-one with reductions in price. Therefore, as prices fall, demand for services and software rises more than one-for-one, diffusing IT into the lagging sectors and deepening the use of IT in the leading sectors, thus increasing demand for workers with IT skills in all sectors.

    So with cheap custom software, more businesses will use it and the user employees become computer skilled. The first assumption I'll buy into, assuming that an easy and cheap local consultant is available at the start of the coding chain. If this plays out to the scale she thinks, therein lies the benefit to US IT workers. The second assumption is complete crap. Someone using a customized Access database front end is no more "computer literate" than someone using Word, all else being equal.

    Example #3:
    Meanwhile, U.S. IT jobs continue to move up the IT skills ladder. Demand increases for workers with the skills needed to design, customize, and utilize IT applications...

    Nope. This assumes the US always holds the high ground. However, as more development and design occurs overseas, and the host countries become ever more developed and self-sufficient, this falls apart. They sell to us, and by and large don't need anything back... except our increasingly worthless dollars.

  • by buss_error (142273) on Friday August 27, 2004 @07:37PM (#10092962) Homepage Journal
    She's got an interesting argument: outsourcing means cheaper IT products, meaning businesses will buy more, meaning more products to make & manage = net gain of IT jobs in the US. Ummm, did you follow that?"

    Yeah, I follow that arguement...all the way to the unemployment line.

    First, all tech is crap. Let me repeat that. Our careers are based on crap. First, for any non-tech company, computers are a support accounting item. This means that computers are not in the business of making money for the company, they are an expense. (Get over it, I'm not done yet, so hold the flames til you see where I'm going.)

    Let's look at the grocery store. It's full of tech in my area. PCs on the check out lines. PCs to weigh and print tickets for fruit and veggies, computers to check the temps in the coolers, computers to do the accounting, timeclocks that are really T104 form factor motherboards with full computers, hell, almost every isle has a computer. (I understand that some stores are replacing the security camera VCRs with computers now.)

    Second, when these devices are first installed, there is some sort of cost/benifit study, both before and after they buy it. (If they are a cluefull company. Uncluefull don't do them, simi-clued do one before. Only fully clued do both.)

    Third, after a few years, these productivity gaining devices stop being seen as something that saved them money, but just another expense. They forget they replaced things that cost even more, or the savings they got from installing them.

    Now comes the down cycle (remember when all the wall street anaylists said we beat the down cycle markets? Cheap talk, and while I never believed it, many did.) and busineses have to cut expenses.

    Gee, where do we cut? Almost always the answer is IT, because IT is seen as an expense. They almost always forget the productivity gains they get from the use of technology, they only see that line item cost IT people are on the balance sheet.

    As for tech companies, very clued know that IT keeps the plates spinning and productivity high. They may cut a few in IT, but mostly by quietly asking "who are the bottom 10% we can do without best?" and those hit the bricks.

    Simiclued tech companies just cut the last hired.

    Unclued cut a lot of IT, regardless of why.

    Likewise, consertives say "outsourcing is GOOD for jobs!". Look at thier reasoning, folks. If you believe it, then outsourcing is good all the way up the chain of command, yet you don't see CFOs and CEOs being outsourced. Oh, no! What you do see is that they get multi-million dollar bonuses and raises for cutting 2,000 jobs here, 5,000 there.

    This is why I say IT workers are the modern black gang of the world. We stoke the boilers, fire the engines, make the computers run. But are we asked our opinions on all the jimcrack geegaws PHBs demand? Hell no! Most of the time we are accused of "slacking off", "being uncooperative", "geeks" with a roll of the eyes and shake of the head, and the only respect we get is when we save their ass and the empty mouthings of praise during those "all hands" meetings where the bosses give each other awards.

    (OK, so I'm bitter right now. I'm miffed because I just came from one of those all hands meetings, and it was a complete waste of THREE FREAKIN' HOURS.)

    But let the pager go off at two in the morning, and we are there. Someone has spyware on their system? We are there. Virus? Ditto, gritting our teeth all the while they regale us with how smart they are about technology or how absolutely they can't do a thing with a computer. Thinking how this person makes twice what I do, with an IQ measured in irrational numbers....

    But what really gets me is the number of times when the very people that depend on IT to get their computers working bypass IT, and go spec out and order servers and software and then expect us to keep it running, or second guess us the rare times we are asked our opinion.

    You know, I'd never dream of tryi

  • by EXTomar (78739) on Friday August 27, 2004 @07:38PM (#10092963)
    The problem with outsourcing is that it isn't a buisness move that creates growth. You remove a job here and create it over there. Profit is generated but no real change has happened so there is little modivation to create new jobs.

    Yes its true the new job over there creates higher standard of living and wealth over there but at the cost of the standard of living and wealth over here you really haven't gained anything but CEOs with larger wallets.
  • Sour Grapes (Score:4, Insightful)

    by isa-kuruption (317695) <kuruption@[ ]uption.net ['kur' in gap]> on Friday August 27, 2004 @07:47PM (#10093022) Homepage
    Call me a troll, fine... but it seems to me that most of the responses of negativity towards the article is with the reasoning, "I'm not employed, so therefore IT jobs arent being created."

    However, I must say, as I am currently looking for alternate employment, I have had several opprotunities for job interviews (about 10). And these jobs range from technical support at 30k/yr through Sr Network Engineer and Security Analysts at 100k/yr and more.

    The jobs are out there, people... however (here's the troll) whether you're qualified for them is another thing altogether. Whether you want to be a tech support guy is yet another... It also depends on where you live (I happen to live in the NYC area and there are plenty of IT jobs around). Yes, my current company is outsourcing to India, but we're still hiring IT people... just not the same group of IT people.

    Oh and one other thing... most of the people that were laid off here in the US due to my company's outsourcing have been Indians who are here on work visas.... so if you're going to get the same people at 1/2 the price because they are 6000 miles away, then why wouldn't a company do that?
  • insecure (Score:3, Insightful)

    by PsiPsiStar (95676) on Friday August 27, 2004 @08:01PM (#10093122)
    Bear in mind, foreign countries, particularly China, tend to do economic espionage. I wouldn't reccomend moving your R&D lab there.

    Also, I knew a lot of Chinese folks who wanted to get their educations overseas.

    For the moment, at least, the west has a good lead in terms of R&D and education.

    Of course, we'd be more competitive if we copied China's lead and forced some farmers to produce food for our country for near-slave wages. ... I suppose we could just our crops from south of the border, though. Right?

  • by Pushnell (204514) on Friday August 27, 2004 @08:08PM (#10093164)
    This all seems to be pretty simple to me, and fits into "the big picture" quite firmly.

    From 1999 to 2002 (last available data), the number of "programming" jobs in the U.S. earning on average $64,000 fell by some 71,000. But jobs held by application and system software engineers earning on average $74,000 increased by 115,000.

    So, programmers overseas are now writing the programs that businesses depend on, and we're hiring more people (44,000 more people in 3 years) to try to implement / support that software. Makes sense to me.

    There's been lots of discussion on /. about how overseas programmers are less "in tune" with the business problems that the software is to provide the solution for, and how in some cases the programmers are not as well-trained.

    Therefore, it should be no suprise that it takes that much more work(ers) to crowbar this software into place & pound it into submission so that it does the job, and to keep it doing so every day. Additionally, when you consider that the personnel doing the implementation/support are that much further disconnected (language barriers & such) from those who actually built it, this becomes a no-brainer.

    The real question is, is the trend of software requiring more and more maintenance & support year after year for myriad reasons a good thing? This article claims that it is in the short-term (more jobs), but what about when the whole card house tumbles?
  • by Anonymous Writer (746272) on Friday August 27, 2004 @11:06PM (#10093983)

    Catherine Mann, from the Institute for International Economics, has a look at What Global Outsourcing Means for U.S. IT Workers up over at Queue. She's got an interesting argument: outsourcing means cheaper IT products, meaning businesses will buy more, meaning more products to make & manage = net gain of IT jobs in the US.

    I say outsource her job, then see what she has to say about it.

You know, the difference between this company and the Titanic is that the Titanic had paying customers.

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