BusinessWeek on Outsourcing 681
hotsauce writes "BusinessWeek has a couple of stories on the outsourcing of white collar jobs to India. One is a cover story on GE's fundamental research lab in Bangalore where scientists work on everything from the aerodynamics of turbines to plastics' molecular structure. The other is commentary on "America's worst-kept secret", and the effects of the upcoming elections on it."
But how? (Score:4, Funny)
And whos fault is it (Score:4, Interesting)
Stop laying there on your collective asses and do something about it. Contact your congress critter in your home state and bitch until ledgislation so that state and federal contracts can't be giving to companies that outsource overseas.
Re:And whos fault is it (Score:4, Insightful)
Re:And whos fault is it (Score:4, Interesting)
Yes, exactlly. My tax dollars should be staying at home to keep Americans employed instead of going to paying for social programs in India. Americans are overpaid by the standards of other countrys only. The cost of living over here is much more expensive than it is in 3rd world countrys.
Re:And whos fault is it (Score:5, Insightful)
Unless you write your letter on the back of a $500 check, it won't do any good. They are better paid by lobbyists.
Re:You train them, then they take over your job. (Score:3, Interesting)
Re:But how? (Score:3, Interesting)
Natural step. (Score:5, Interesting)
When the price drops on, for example, software is has to be done by a lot cheaper labour.
There will not be many software engineering or consulting jobs in the US in ten years or so.
This can't be a surprise to anyone knowing what open source is all about.
RTFM (Score:5, Insightful)
Re:RTFM (Score:3, Insightful)
What has caused this? My guess: Companies lobbying congress for student visas. While the students are doing research at the university, they earn a salary, part of which they can send back home to improve the standard of living of their family. At the same time, the companies are seeding their applicant pool, and at the university the research is getting done and being published, thereby justifying professors' existence and grant money inflow.
So that's anothe
Re:Natural step. (Score:5, Insightful)
I am not a protectionist/communist/anti-freetrade person. I actually think capitolism is the way to go, but unless we get our act together and start inventing new technologies and exploiting them here, we are in for some rough times ahead.
Re:Natural step. (Score:4, Insightful)
And what happens when a good portion of the workforce ends up like that? Who is going to buy your products? Outsourcing comes across to me as the current equivalent of the dot-com pseudo-boom. At first people are making money, but after a while reality starts catching up.
I'd like to propose a few changes to the corporate tax structure.
No investment or R&D tax credits for offshore work.
No dividend tax exclusion for profits earned offshore.
A return to the 90% marginal tax rates for offshore profits.
Henry Ford was able to make money by paying his workers much higher than the average salaries and at the same time, he increased the market for his cars because more people could afford them.
Re:Natural step. (Score:4, Insightful)
It also opens the door to currency speculation (see the 30-40% devaluation if the baht for a case study or Britain's Black Wednesday [bbc.co.uk]).
-50% inflation would seriously harm the USA's balance of trade as foreign currency would suddenly be able buy twice as many US dollars.
I'm sure any president would shit his pants if suddenly the national debt doubled, oh wait, increasing the national debt by lowering taxes to win votes seems to have been US domestic policy for years, as well as plenty of other 'conservative' nations. Conservative, what a joke!
Let's blame Thatcher & Reagan, they started it!
Re:Natural step. (Score:3, Funny)
Gollum? Are those nasty Hobbitses Sam and Frodo not inviting you to join them for dinner again?
They gladly eats the raw fishes that should be Gollum's?
Getting out of IT... (Score:5, Interesting)
This will not stop until we have leadership in this country that actually seems to care. Until then, I am leaving IT professionally and making a career switch into one of my hobbies, which is something that cannot be outsourced to India.
The U.S. is heading straight towards becoming a land of a permanent serf class, a sort of neo-fascist aristocracy ruling body over a nation of paupers.
You're not alone (Score:4, Insightful)
Although the tech people I know that have been on the bench a while do eventually seem to fall into another tech job. But it's different. Contract work instead of perm and there's a lot more bench time between jobs.
Bank cash and keep your bills down when you're working. Maybe one of these days we'll have a story on /. about the worlds longest chain of wi-fi connected latte' carts.
Re:Getting out of IT... (Score:5, Interesting)
I'm staying in IT, because as an academic sysadmin with a Unix specialty, my job can only be done by someone in the building. I can manipulate my servers and some of the workstations from home -- but that's only about 1/4 of the job. The rest involves face-to-face support of the users, which cannot be done by someone who doesn't show up. The last guy who had my position didn't bother to show up, and so I now have what I think is my idea job.
Sure, and Indian could do my job. And since many of the professors, students, and members of my community are Indian, it wouldn't surprise me if an Indian were hired in a similar capacity as myself. But, he or she would have to work at our location -- not from India.
We do have a source of cheap high-skilled labor here, though. I get a "grown up" salary, but when we need extra help, we can hire students for a few dollars an hour. The students who are working for us now are extremely good, and more than earn their wages. Unfortunately for my department, they will both be graduating and moving on to real jobs with real pay soon -- but that's the deal for both of us, and I hope that the experience they get while working for me serves them well when they move on.
Re:Getting out of IT... (Score:5, Insightful)
A year ago I got laid off from my high-tech job -- not because it got outsourced, but due to industry consolidation. Many of the headquarters strategy jobs ARE redundent when two large companies merge. Fortunately, I was in a position to retire and am back in graduate school, studying economics this time. There's a fascinating long-term economic question implicit in your situation, and mine.
Your job, you say, can't be offshored because you have to be present to do it. However, the students that are the root source for your job have to have enough money that they can afford to be there (your description is almost certainly college of some sort, not K-12). In many cases Mom and Dad are paying some or all of the tuition bills. If Mom's high-paying research job goes to India, they will have a harder time paying those bills. Fewer students at school, fewer sysadmin jobs. Presumably the Indian researcher can now afford to send their kids to college (in India, they're not being paid enough to send them to the US), where there will be increased demand for your type of sysadmin. Indirectly, your job can be sent offshore.
When a big multinational corporation moves jobs from one location to another, the demand for goods and services at the first location must decrease. We have seen this operate on a small scale -- the big factory that employed many of the townsfolk closes, and soon after that other businesses start to close or scale back because demand decreased. Now we get to see if it is possible for it to happen on a national scale -- if enough companies send enough jobs to India and China, can they cause significant decreases in demand for goods and services in the US?
I think it was Keynes who first described "the corporate paradox of thrift." While a move that lowers costs may be good for an individual firm, if all firms make similar moves it may be bad for all the firms collectively IF the cost savings is translated into decreased demand for goods and services. TTBOMK, this has never actually happened. Improved productivity eliminated an enormous number of farm jobs 100 years ago -- they were replaced by manufacturing (and yes, I'm sure there were people who really wanted to be farmers who permenantly lost that type of job). Cheap overseas labor and improved technology eliminated a lot of manufacturing jobs -- they were replaced by jobs in growth fields such as IT. Will there be new growth areas this time, or will we see permenantly higher unemployment and lower incomes?
Re:Getting out of IT... (Score:3, Interesting)
The problem is that there just aren't enough people to fill all these jobs. Countries like India and China just don't have the infrastructure to handle them. Unlike here in the US, education is carefully rationed since there isn't enough money o
Re:Getting out of IT... (Score:3, Interesting)
Dear Modern American Capitalist:
I am one pauper, busily attaching thorns to my body to provide the poison pill effect. Try to swallow me alive, and I will stick in your throat.
Once I became re-employed (after 3 years of un- and under-employment, which as you can imagine produced some severe effects) I took to saving as much as I could. Now I have reached 5 figures. And you are getting next to nothing from it.
This money is not in a bank; fuck your banks and their
Re:Getting out of IT... (Score:5, Informative)
This is an American expression from the past racist days, yes, but the previous writer used it in reference to a false sense of wealth engendered by current American automobile marketing practices.
The origin of the expression is the still-continuing practice of offering deals to undereducated working-class minorities that seem spectacular at first but turn out to be financial disasters later. At the time that these expressions were used in the USA, the better-educated white majority was expected to be aware enough not make such mistakes. Using these 'Jim Crow' expressions in the current politically-correct environment serves to give the writer the ability to extraordinaryly accentuate a point at the cost of being labeled a 'backward racist' by his audience.
For example, in the case referred to by the writer, a car company will make a giant bloated Sport Utility Vehicle from an old truck design for $15,000. Then they will market it people with misleading television satuation ads for $30,000 - $35,000. People are offered $4000 cash back immediately and no interest payments for a year.
What happens is that people buy these things to get the cash now and the low payments for a year. Then they find that the vehicle depreciates at a much faster rate than the payment schedule for the vehicle.
In a few years they have a giant gas-guzzler that is worth $18,000 in trade but for which they still owe $26,000. When it starts to break down, they get stuck with huge repair bills. If they go to trade it in, they find they must pay the difference between the cost and the current worth with a loan with very-high interest rates.
I believe that this is what the writer means by "n****r rich".
Americans are a bit too quick to dump their colorful but nasty expressions, and a bit too slow to dump the underlining racist attitudes that created them. But they are nowhere near a racist as they were only a generation ago.
Blaming poor quality of Indian education (Score:5, Interesting)
Historical precedents (Score:4, Interesting)
(* Too lazy to look up which century it was !)
Re:Historical precedents (Score:4, Interesting)
There is always a bunch of economists that beleive that their company can live on because of trademarks and so on without actually doing anything but history has shown that sooner or later the producer will start directly to the customers.
IT is being outsource because there is no value in, well, anything. Software is cheap or nearly free. Site-contents are cheap or in most cases free. It's simply not possible to pay western level salaries when the end-product is free or very cheap.
There is only one way to stop the current trend of outsourcing and that is to bring up the value. We all depend on that software is sold for a sum that covers western level salaries.
Re:Historical precedents (Score:2, Insightful)
And this shows what is behind the US (corporations) effort to force US-like laws about patents and copyrights down the throat of the other countries. They want to detain the *rights* about something. They want to be able to enforce these rights everywhere (and if a co
Re:Historical precedents (Score:2, Interesting)
I"P" is selling your children's future down the drain.
Re:Historical precedents (Score:2)
Re:Historical precedents (Score:3, Insightful)
A long time before then. It's called imperialism, where a country takes advantage of lower living standards elsewhere to maintain an artificially high standard back home. In the long run, though, it exhausts the resources without adequately putting back or compensating. Sure, the Indians might think they're getting a good deal right now, but it's draining away their best resources from improving their own country, and the
Re:Historical precedents (Score:5, Insightful)
How?
There is a differance between textiles, which has raw materials, and the service sector which just requires people.
In India call centre workers get paid more than fully qualified doctors. Most of this money will find it's way into the local economy. If anything can be said of this outsourcing trend it's that it's going to bring India kicking and screaming into the First World.
Re:Historical precedents (Score:3, Insightful)
If anything can be said of this outsourcing trend it's that it's going to bring India kicking and screaming into the First World.
They may wait a long while. Even with this boom they have with the outsourcing trend their HUGE population (more than 1.05 billion) means that it will be very hard to lift the country into the standards of the First World.
Re:Historical precedents (Score:3, Insightful)
The "resource drain" is that fewer Indians will train to become doctors. In the long run, it will hurt them due to fewer doctors.
Whether this "resource drain" is a significant problem remains to be seen. It might not be. It might be vastly outweighed by the benefits of all the work coming in. But it is there.
Re:Historical precedents (Score:3, Insightful)
Unlikely. You're forgetting that there's a big boom in the Indian healthcare industry as well.
Business Week might hype the Great Indian Outsourcing "boom", and for sure, it is indeed very promising for my country, but the reality is that it still is barely a blip in terms of numbers. A greater percent of
Re:Historical precedents (Score:3, Insightful)
American companies are diverting billions of dollars that are being pumped straight into the Indian economy -- giving jobs, money, and hi-tech experience to tens of millions who would otherwise have had to do with much less in a country that has epitomized "poverty" for the last hundred years.
What resources are being "exhausted"?
I lived in India before the real boom started to happen, and I maintain friends
Re:Historical precedents (Score:2, Interesting)
*YOU* can go sacrifice everything for future generations, thanks.
Re:Historical precedents (Score:2, Insightful)
At that time those bad jobs was going and was replace by better jobs further up the chain.
These days the jobs being outsource are the jobs at the top of the chain.
It's research and development; it's financial services and so on. There are no jobs further up the chain.
This is not going to go well.
Unemployment... (Score:4, Insightful)
What I find funny is when I hear people complain about this shift off shore. Its the old story, when your neighbour loses their job it is called a recession, when you lose your job it is called a depression.
Manufacturing Editorials (Score:2)
The China Conundrum: How the pursuit of free trade with China has compromised American Manufacturing
http://www.machiningmagazine.com/China.pdf [machiningmagazine.com]
What are you doing about China: An open letter to Congress
http://www.machiningmagazine.com/ToughQuestions.pd f [machiningmagazine.com]
Can Phil English fix free trade: Closing the loopholes in free trade
http://www.machiningmagazine.com/PhilEnglish.pdf [machiningmagazine.com]
The New Military-Industrial Complex: Are we sacrificing our security on the Alter of Free Trade?
http://www.machin [machiningmagazine.com]
How do you define "forward progress"? (Score:3, Insightful)
Are you saying that it is more important for BigCompany to make money than you? BigCompany needs the money more than you do, so it can invest the R&D dollars to improve our society, because you can't?
The death of optimism (Score:5, Insightful)
Yes, it was part selfishness. It was also part optimism. The general story used to sell these sorts of policie is the old: "some jobs will be lost, but in the long run we'll all gain-- all you have to do is retrain for a more cutting edge area."
It was easy enough to believe this was true when manufacturing jobs were going overseas. It was a terrible thing for the peope losing their job, but we sincerely believed that new opportunities would open up for those with a forward-thinking attitude, because we were Americans and that's the natural order of the world. You'll see many Slashdot posters taking that line even today-- comparing the current loss of jobs to the industrial revolution, etc., admonishing us all not to worry, we just have to wait for all the great new even-higher-level jobs that are due to us now that we've offshored those pesky coding duties to foreigners.
Problem is, it's increasingly difficult to see where these new opportunities are going to open up. In the past we had the advantage of a) having more natural resources (coal/steel/etc), and b) being one of the most educated countries in the world. But in a global economy, natural resources don't matter, and we're fast losing our advantage in education, now that India and China are producing thousands of brilliant students (with enough highly-educated people that GE can open a pure research lab over there). Note that India and China are smart enough to adopt national policy to educate their people, while America is allowing its educational system to go to the wolves.
So when this new opportunity comes along-- be it nanotech, biotech, whatever is next-- what insures that Americans won't lose it to foreigners? Unless it's something that by nature can only be done by US workers (and what would that be??), we're screwed. So I think the reason people are panicking now has something to do with the realization that there is nowhere to go from here-- that we've finally been pushed into the ceiling of our own capabilities, and the magical "retrain and retool" approach pro-globalization folks have advocated is not going to carry us when foreign workers can do the same and cost 1/50th as much to feed and house.
Re:The death of optimism (Score:3, Insightful)
The difference today (Score:3, Insightful)
Now our corporations are selling us out. If a factory in the US comes up with a revolutionary new way to do something, resulting in a 50% drop in costs, the global corporation says "Great! We'll implement that in China and save 90%!"
The battle is now the corporation vs. the
Re:Unemployment.. was...Made in Japan (Score:5, Interesting)
Perhaps India will enjoy the same evolution. Maybe in ten years well-engineered software, etc. from India will have the same esteem which we hold Japanese products. Every industrial toddler country entering the world of business has to find its feet. Japan did--so will India
Just Not Thinking (Score:5, Insightful)
1) You lay someone off here in the U.S. as an example. Guess what, that is money that is not going to be used to buy products that most likely the parent company makes to some degree. Does someone in India buy dishwashers, tablesaw, etc. Not to be mean but not in the volume as here.
2) Tribal knowledge that is desperately needed to stay within a company for future development. That is all gone, and personally the quality that comes from an outsourced job is short of atrocious. That comes from watching quite a few projects at two different companies go completey down in flames.
Sorry, outsourcing is going to tear this economy in the U.S. to pieces. Quick short-term gain for a long-term failure!!!!
Why do you buy offshore goods? (Score:5, Insightful)
Re:Why do you buy offshore goods? (Score:5, Insightful)
I normally don't shop at Walmart, precisely because I know it's mostly crap. Of late, I hardly even shop locally for anything besides clothing and really large unshippable items. I just can't find the precise thing I want for a reasonable price. So I end up doing what I've always done, shop mailorder--now streamlined by the internet. But the local outlets stay busy and the Walmarts thrive. Why? Because most folks will buy the cheapest crap they can find and will settle for something other than what they really want. Somewhere in here is the root of the problem, and that seems to have more to do with the perception that the cheapest is somehow always the best deal. I had a friend who had a degree in economics and even he couldn't get past the silly concept that cheaper was somehow better.
Until people stop settling for Windows and shoes that fall apart in six months nothing will change except the nature of the item being outsourced. I wish I had an answer to this, but I don't. Short of a wholesale shift in mindset it's not going to happen.
The only thing I can even imagine is to establish a second numerical "value" to a particular good beyond its price. Perhaps some quantifiable value assigned to it that would include such things as a Consumer-Reports-like rating, a length of warrantee figure, a guaranteed trade-in value, an ease of repair value, and the like would have the ability to draw the consumers attention away from the base price. Again, I don't see any short-term obvious solution other than to do what my great uncles did and go from being a blacksmith to being a machinist or a scrap iron dealer. In other words, you gotta go with the flow.
Re:Why do you buy offshore goods? (Score:2, Insightful)
It's naive to think we can impose long-term thinking on millions of people, most of whom are living in debt and barely making ends meet, as it is.
The responsibility is in the companies, then, to give the people what's best for them in the mid and long term. Cheap outsourcing only helps companies in
Re:Why do you buy offshore goods? (Score:5, Insightful)
My question is what jobs will be left except for burger flipping, construction (can't very well move pouring concrete offshore), and senior management munch butts. Take a woman from North Carolina who was an excellent seamstress who's out of work because almost no clothing is produced in the U.S. these days. She isn't going to go to Wharton for her MBA and become a manager; she's gonna end up flipping burgers if she's lucky! Free trade is fine, but when countries abandon a balanced economy where there is adequate opportunity for people of all levels of skill and education you wipe out the middle class. This has happened to farmers overseas when cheap U.S. food flowed in, and it's happening here as we exploit cheap manufacturing and now white collar labor overseas. So what is the middle class supposed to do for a living in 20 years. I have never heard a good answer for this from any of the 'free traders', just the same old babble about productivity, innovation, blah, blah, blah. The sad fact is that economic activity just can't grow fast enough to offset job losses like we've seen in the U.S. in manufacturing--Best Buy only needs so many washing machine salesmen.
Free markets can only be beneficial in the long term if they promote a levelling of economic opportunity and circumstance. We best hope that all those Indian call center personnel and Malaysian seamstresses start earning higher wages soon, else they become simply an unenfranchised underclass that continues to leach jobs away from developed nations while at the same time creating a huge wellspring of resentment towards same.
BTW, I'm a conservative free-trader type, but what I see going on now in the U.S. has nothing to do with free trade; it's mainly stock market driven greed and I really don't think you can candy coat it as anything but that.
--Len, flamebait, Quam
Re:Why do you buy offshore goods? (Score:4, Insightful)
I live in North Carolina. I hear about this topic daily. The thing you need to consider is that most of these folks were earning $30k per year or more thanks to Union negotiations. Almost none of them have a high school degree. Few now have the desire to get a high school degree because (direct quote) "school is hard."
When it comes to distributive justice, do you think it's fair for an American with no high school degree to make twice as much money as a Chinese citizen with a Masters or PhD in electrical engineering? The American did very little except for being born in the US. Essentially, they did nothing except for take advantage of of the investments in capital by their predecessors. The Chinese citizen busted their hump to get an EE degree. Why then does the American deserve more? Are we not all humans? Don't we deserve to be rewarded according to the fruit of our labors and not based on where we were born?
Re:Why do you buy offshore goods? (Score:3, Informative)
Earlier this year, the Los Angeles Times ran a three part series [latimes.com] on the "Wal-Mart Effect" -- namely the outsourcing of jobs to China and other countries.
Last year, the traffic to my local Wal-Mart (at the end of the street my neighborhood intersects with) was so bad I couldn't get out of my neighborhood starting from about Dec 15th on.
This year, after they published the story, it's clear sailing all the way out to the freeway.
I think people are starting to see what globali
Sell at a loss (Score:5, Informative)
They sell with slim margins, they also get lower prices due to volume.
Their selling price in some cases is even lower then other companies purchase price from the distributer.
Think about selling at a loss, first what do you gain. Secondly how do you explain to the owners that you lost money by selling below cost?
Re:Just Not Thinking (Score:2)
Re:Just Not Thinking (Score:2, Funny)
I can see the headlines: "Why Johnny 5 Can't Run" (ref [amazon.com])
Re:Just Not Thinking (Score:2)
Russia
China
France
United Kingdom
India
Israel
Pakistan
Too late, India's already got the bomb.
Re:Just Not Thinking (Score:4, Interesting)
Re:Just Not Thinking (Score:3, Informative)
They realize it, they just DON'T CARE.
See damaging the company is different than damagine THEMSELVES. As long as they get their millions, they don't give a shit.
1) Gut a company.
2) Make Millions.
3) Move on
4) Goto step 1.
Outsource the CEOs/Stock Market (Score:3, Interesting)
The loss of jobs overseas isn't going to stop until someone makes a stand that having skilled Americans working will matter more than the bottom line of any company. Unfortunately, it's likely to get worse before it gets better.
I am from India (Score:2, Funny)
There are no Humvees or 7-bedroom homes in India (Score:2, Informative)
Out of a population of 1 billion, 300 million = absolutely, wretchedly poor with barely enough to eat
300 million = low class, do menial jobs, earn wages just enough for two meals a day, probably send kids to govt. schools, but most probably make them work with them breaking stones, washing others' dishes, clothes, cars, etc.
250 to 300 million = middle class with cars, scooters, homes, and other "luxuries" of life.
Remaining = upper middle class to rich.
It is only
outsourcing may stop soon (Score:2)
This isn't a problem for routine advice because I'm convinced that the legal profession is much like early days of grunt coding, you have to be able to find stuff in books and make decisions based on t
The role of OSS (Score:4, Insightful)
So, where is money to be made? It's essentially in applying the now near 0 cost IP to people's actual business problems. That's where most OSS-based houses make their money.
Then what happens (Score:5, Interesting)
One: What happens if this rush to off shore "skilled" starts to succeed? We (the US) is the largest consumer of products from around the world, but if skilled labor follows blue collar labor, the amount of people left to spend money on anything goes down. Even though moving that labor forces off shore will increase the purchasing power of the people in the country where the labor went to, their combined purchasing power and demand to purchase anything will not be anywhere close to what the same jobs in the US could produce (at least short to mid term). Judging by what happens to the world economy when the US economy suffers, just how much outsourcing is a good idea? When does it stop benefieting the companies and starts hurting them because they can't sell their products in a poor economic climate?
Two: In the US the commonly held belief is that if you want to get ahead, you get an education, and your hard work and academic achievement will be the keys to your success (Unlike India or China where there are relegious and other cultural pushes for education). If the people stop believing in that, and an education isn't seen as a step up, or providing an advantage less people will pursue it. In an information age isn't one of the most important factos in the labor pool is it's education and technical skill?
It's all about global competition - or so they say. I wonder what the ROI is long term. Since more and more companies are only looking ahead a quarter at a time, just to satisfy the wall street pundits, I bet the ROI is pretty good short term. So how do Western Europeon and American workers compete? Our salaries are higher, and our standard of living is higher. Eventually with enough investement and time India will be a developed nation and these differences will slowly dissapear. Jobs will also probably leak back to the US - but how long do we have to wait, and how do we survive?
In the end the US worker has to offer something that his/her indian counterpart can't. Language, proximity to the project, and superiour skill and/or inovation are just some advantages that people might leverage.
AngryPeopleRule [angrypeoplerule.com]
Re:Then what happens (Score:2)
Two primary effects come to mind.
1. Deflationary pressures. Can't afford that $2000 refrigderator? Thats ok because in 3 years from now its going to be $800. (yes I know some people will not be able to afford the $800, but its way too early in the morning to think about secondary effects)
2. Buying things hasn't stopped
This is our own fault. (Score:5, Insightful)
We want everything to be cheap. Extremely cheap. And even cheaper. As soon as a manufacturer starts demanding money for US-made quality people being to bitch about high prices and coporate greed. Nobody is paying a fucking dime more just because it's US-made. Why should we do ? Slave child-workers will to it cheaply in Tibet or Taiwan. Oh, and evil company outsources my job to India, these evil bastards, they are just in for the money, these bloodsuckers !
Take e.g. Apple. Saving US jobs by US goods in the US. But when they charge prices to substain these US jobs everybody whines about teh evil Steve Jobs. Just look at the frontpage and the "iPod battery costs money= TEH EVIL" stories. And this bigotry doesn't even rule Slashdot, it rules the whole country and makes it on the frontpages of NY Times and Newsweek.
Outsourcing justs means: we get what we pay for.
Umm - how much does Apple produce in the US? (Score:2)
Even Microsoft's general evilness has not got to the point where they have exported their software engineering to India. But then, they manufacture the X-box in Mexico, IIRC, but I have a dim recollection that they were going to move
Re:This is our own fault. (Score:5, Insightful)
Your complaint against people prefering cheaper things is riduculous. Its like complaining about gravity. Its just a law of nature, and there's not a thing in the world you can do about it, get used to it.
Traditionally, the global market is extremely unfree. There are artificial boundaries to movement of people and goods in the form of nations. Countries can make clever immigration laws and trade agreements (and an occasional imperialistic conquest, or liberation if you prefer) to perpetuate a steep difference in the quality of living. In economics its called purchasing power parity.
Enter the internet. Completely unregulated, uttlerly chaotic, ruthlessly efficient, the perfect anarchy and the ultimate free market. Suddenly all the carefully erected barriers collapse, and huge supressed pools of labor and talent compete untramelled for a slice of the pie. Its like making a hole in the dam. What you're seeing is the tip of an iceberg, the beginning of a revolution.
Regulation won't help, there are numerous ways around it and its already too late anyway. Nor will jingoism. In fact, there is no "problem". You're merely being forced to compete fairly.
Hello from India.
US workers part of the problem (Score:5, Insightful)
Last night I went to the company xmas party. The subject of Christmas bonuses came up. The average bonus was $2000. EVERYONE got a bonus. People complained: not big enough.
The company GAVE away an average of 2K to people just because... and people still complained ("I remember the 20K bonuses at dropdotbomb... this just does stack up" - an actual quote).
I am not saying the greedy CEO's and stockholders aren't to blame also - they are. But this kind of attitude just goes to show that many American works expect far more than they are worth.
If US companies want to combat outsourcing they have to start from the bottom - offer lower pay to incoming workers, and somehow get rid of the top heavy "older" workers (attrition, lay off, whatever) from the 90's.
The excesses of our recent past are smothering us!
A question: how fast are salaries rising in India? I am betting you won't see Indian companies buying the naming rights of football stadiums and offering half a years pay as a signing bonus.
Re:US workers part of the problem (Score:4, Insightful)
You also say companies should get rid of "top heavy older workers". You mean dump all the people who know the product, how the company runs and actually do the running and replace them with new college grads like you? Hehehe... riiiight.
Re:US workers part of the problem (Score:3, Insightful)
Your argument is self negating: getting rid of the programmers who "know" the product is happening anyway - they are being replaced with Indians.
I love people like you who think that we can stop this trend while retaiing our current salary rates: wake up - it just isn't going to happen.
Many programmers are willing to ask management to give up margins, shareholders to give up profit, but they aren't willing to give up salary!
NEW FLASH: we all have to tighten up to compete.
Most of us have seen it coming on a personal level (Score:5, Insightful)
Global workers trained here are just as effective and talented as native US workers. The notion that US citizens are somehow more innovative is just that a notion. They get the same education what US citizens get. They are equally as qualified, and WILL work for lower salaries in their native contries. The real reason that US students aren't going into these fields is that they don't have the work ethic or the dedication for it. They would rather sell wireless phones for commision and make a quick buck than educate themselves for the future of our country.
In terms of solutions to this problem:
The answer in NOT legislation. This problem has to be solved by the US providing technical people where it is obvious that they are the best people for the job.
In terms of developing countries: In particular this is a great opportunity for India where they can bring about social change in their country. Well at least until some time down the road when we outsource their jobs to some other developing country.
Outsourcing to other geographical locations is not new and has happened to manufacturing, and it is happening with technology now.
Money (Score:2)
It isn't expensive (Score:2)
And as others have mentioned, graduate school (at least in the sciences) is free (well, I had to TA), so my parents didn't spend a cent on my doctorate either.
Refuse to talk to them? (Score:3, Funny)
ESR (Score:5, Insightful)
Retraining is not so simple (Score:2, Interesting)
From an Indian: its more serious than y'all think (Score:5, Informative)
Another mistaken argument is that there is only a finite pool of labor in India and so an equilibrium will be reached soon. This won't happen. Because the current level of penetration of computers and internet connections in India is extremely low (e.g: 0.4% dialup and 0.02% broadband). As this situation improves, it greatly decrease the barrier to entering the IT workforce in India and will continue to bring in an army of new workers for years to come.
As with the open source revolution, the internet changed everything.
Re:From an Indian: its more serious than y'all thi (Score:2)
Re:From an Indian: its more serious than y'all thi (Score:2)
Actually there are lots of factors I don't even think has been addressed here.
Next "miliary situation" involving India or any part of that world will bring about questions about the stability of that part of the world. There are nukes in that part of the world and they have a motive to use it.
Unions, they would love to gain more power. And the IT staff would love to gain the sort of power as the longshore men on the west coast just re
Re:From an Indian: its more serious than y'all thi (Score:2, Interesting)
Foreigner born Chinese and Indian take home 36% doctoral degrees in the US (20% Chinese and 16% Indian) and work on those innovative jobs
Re:From an Indian: its more serious than y'all thi (Score:3, Interesting)
Well, not really. What is described in these articles is applied research. Fundamental research is still primarily the domain of the large research university. When you start seeing people working in India winning Nobel Prizes at rates competitive with people working in North America, that will be a sign that fundamental research is being done in India.
As this situation improves, it greatly decrease the barrier to entering the IT workforce in Ind
Re:From an Indian: its more serious than y'all thi (Score:3, Interesting)
However this place was an elite institution. There is a wide spread in the levels of Indian universities. The goverment wants to concentrate the money in the places where they make a difference, so some of the poorer universities cannot affor
Re:From an Indian: its more serious than y'all thi (Score:3, Interesting)
Also, invest in your parent company. That way, when they drive up stock prices by announcing your outsourcing, you can cash in.*
Seriously, take advantage of this while you
I've dealt with Wipro-GE in Bangalore. (Score:5, Interesting)
In the beginning, the helpdesk was manned by GE employees, at the HQ of the business I worked in, in the US. Helpdesk is a hard position to keep staffed with quality people, for the reasons we all know. But, those pesky GE employees were _expensive_, so they walked the helpdesk out the door one day, and brought in an outside contractor known for doing helldesk outsourcing. And there was much rejoicing (at the VP level). Problem is, helpdesk quality fell drastically, as there was a crop of new people who didn't know the intricacies of the systems they were supposed to be supporting.
Soon, (coinciding, I suppose, with the end of the contract with Keane), it was noticed that the helpdesk was sucking. Rather than acknowledge the mistake, they decided to compound it. With great fanfare and jubilation, they were pleased to announce that the helldesk was being reworked. Oh, by the way, it's being run by a company called "Wipro" in Bangalore, India.
Initially, there were many problems. Eventually, it got worse. Helpdesk analysts who could not be understood by a western ear, utterly wrong advice, that sort of thing. One coworker of mine, having a bad battery (the Dell explode-o-cell model), called to get a new one. He was told to delete his hardware profiles and that would take care of it. Not just wrong, but damagingly wrong, and not even vaguely logical. Yeah, a battery is "hardware", but that's pushing it. The analysts would identify themselves as "Jim" and "Bob". Just this is insulting - as if we can't learn how to pronounce or recognize the name of someone from a different culture than ours? It's just a sign of not understanding the needs and/or culture of the clients.
A final note - the article seems to be holding this up as a glowing success. I think it's more than coincidence that GE stock has been consistantly underperforming the market for many years - since the day Jack Welch announced his replacement, in fact. GE was succeeding because of Welch, not because his replacement is sacrificing quality for cost, calling it a "Six Sigma quality initiative", and ignoring the failures that result.
Hopefully, business executives who read this article, will do a sanity check & see how GE is doing these days, before deciding to emulate a formerly glorious company's unproven CEO's failing strategy.
foreign accents and names (Score:2, Interesting)
The analysts would identify themselves as "Jim" and "Bob". Just this is insulting - as if we can't learn how to pronounce or recognize the name of someone from a different culture than ours? It's just a sign of not understanding the needs and/or culture of the clients.
Speaking of that, one of the more popular activities these days for people doing a gap year or just looking for adventure abroad, is not just teaching English abroad, but acc
Jim and Bob (Score:3, Informative)
You missed the point as to why they introduce themselves as "Jim" and "Bob." It's not because you can't learn to pronounce Sushruth or Ramu, it's because the gold collars back here don't want their customers to know that they've outsourced
Hidden Costs of India (Score:5, Insightful)
Unlike unkilled and semi-skilled manufacturing jobs, where the tasks performed are route and routine, a lot of programming jobs require heavy amounts of cooperating and coordinating to get a successfull result. The proper analogy to draw with your client is that of the homebuilder/architect and the homebuyer. Although the programmers may be Mexican immigrants who work less than minimum wage and get paid cash under the table to send to their poor families in Guadalajara, these folks still need the same amount of (if not more) specific direction to build a home that will be fit for you and your family to live in. Translating back to I/T, you may be mired in many, many more meetings, buried in email, and endless phone calls with your overseas colleages just to keep the train on its tracks and moving in the right direction. Be careful what you outsource.
Ever heard the old addage "too much of anything is not a good thing?" Same principle here. A proper mix of outsourced labor and internal I/T staff can build successfull solutions with less cost than the tranditional MIS department (in less time is another story). Some jobs are perfectly suited to be outsourced, such as the DBA, data-warehouse specialists and some of the programming. The traditional PC helpdesk has also been successfully outsourced overseas, but you better hope that your callers can tolerate the Bombay accent on the other end of the phone.
Some jobs cannot be outsourced without expecting a downturn in quality or a corresponding increase in time spent doing your project, such as technical writing, quality assurance, project and program management and many other jobs that require intense amounts of personal and communication skills. Hardware, network and software installs should NEVER be done by outsourced personnel. You also want to keep the programmers who are working on the big things, such as architecture shifts and regulatory changes (e.g. HIPAA) on staff for the tight projects where you don't have the luxury of time on your side.
Outsourcing CAN be done, without firing your entire I/T staff, alienating everybody and stirring up bad blood. Find jobs for the folks who are being placed out or train them to do the jobs you aren't sending out of the company.
And even when you get to the state where you can do offshore and realize a gain, you still have to keep busy monitoring everything much more vigilantly. Outsourcing companies charge vastly different prices for the same tasks, and contracts don't span very long. There is also the question about what happens to your intellectual property when it's going out of your country's borders: if you are compromised from an overseas vendor you may be left with little or no recourse (which is why so many CEOs are lobbying Congress). The cost of securing a favorable contract with an overseas parter also adds to the cost, unless you are doing it through a U.S. firm (but don't think that those international legal firms' fees WON'T be passed down to YOU). I doubt that most PHBs will get outsourcing done right without paying a large sum of dough to outsourcing specialists (hmm maybe a new career option to layed off I/T workers?).
Where does this experience come from, you ask? Well, I was replaced by Indians several years ago, which then followed up with a massive layoff at the company I used to work for. They are paying less money for the labor, but since I left they have had more projects fail miserably than before. They may have let off with benes and pension plans, but they traded it in for huge sums of airline fees to sh
Frog in a pan of water. (Score:4, Insightful)
When they offshored the steel mills, I did not speak out because I didn't make steel...
IT outsourcing not allowed here (Score:2, Informative)
Corporate fat-cats (Score:2, Insightful)
Re:Corporate fat-cats (Score:2)
Until recently they were double taxing the same money (dividends).
Real Trend or just another Bubble (Score:4, Interesting)
There are other, just as valid points of view that see this hot new offshore oursourcing trend with a more skeptical eye [cio.com]. It's true that globalization is inevitable, and that means there is simply more labor to compete for (at present) fewer jobs. But everything is'nt all wine and roses with offshore outsourcing -- the start-up costs aren't trivial, there are time and cultural differences to overcome, and even when all this is done, sometimes the results are not satisfactory: Dell, for example, recently relocated some call centers back to the US [computerworld.com] after a raft of complaints about poor service.
If India is really going to be competitive, a lot of things are going to have to be upgraded there -- just an educated labor pool is not enough, you're going to need major infrastructure improvements to sustain these sorts of activities. This isn't free, and over time the cost of relocating labor there is going to go up -- either in terms of problems, or in terms of actual money invested in telecommunications, power, etc.
There's no question that India is going to become a major IT player over time. But let's not make more of this than what it really is.
Difference between Taiwan, Japan, and India (Score:5, Interesting)
Japan's car industry became big because of quality, not lower cost. The first incarnations of their vehicles decades ago were cheap crap, but they didn't get anywhere in the market. Their eventual success came from producing high-quality vehicles that were able to sell for MORE than US-made vehicles of equal size and engine power.
Steel workers in the US lost jobs not because of labor costs, which make up a very small portion of steel manufacturing, but because other countries were able to produce higher yields per ton of raw material.
However the current trend of outsourcing software development to India is a management fad in pursuit of cheap labor, for a type of work that does not lend itself to cheap labor en masse. The real savings really aren't that great -- you're lucky to save as much as 25%. The quality isn't very good, and there are many risks including budget overruns due to miscommunication, intellectual property and privacy infringement which are practically impossible to enforce in India (you're lucky if the courts will see your case in 10 years), and the costs of paying people to cleanup [businessweek.com] the junk that comes back.
If outsourcing brings real net savings, we'll see the benefits in other aspects of the economy, like cheaper goods and services and increased profits that boost the stock markets. However, there is a very real danger that it is likely to materialize as another "gold rush" like the dotcom boom, only that this time the corporations and investors are chasing after imaginary savings instead of imaginary profits. And when the reality hits and they can't deny it, there will be another economic meltdown.
outsourcing doesn't have to fail (Score:3, Informative)
I'm not saying that outsourcing is the cure-all as some people want to see it, but it certainly can work and then it can also provide good work to people in the home company. In our company most people are still employed and are doing the quality/project management now.
Outsourcing is an old topic (someone mentioned rightly the outsourcing that happened to the English textile sector in the 19th century). It cuts many people and they have to adjust to the new situation which is often painful.
But if the companies stop trying to be more efficient, then the US/European/Japanese economies can't compete with the new and upcoming ones (India/China). The only way to survive is to try and get higher on the skill ladder. This is true for the individual but also for an economy that wants to compete worldwide. You can't demand 5 times the price for something that can be had with the same or slightly less quality somewhere else.
Everyone wants his/her life to improve always but noone wants to accept changes to the current situation. This is not how it works.
In another news India decides to ban US companies (Score:5, Interesting)
P.S. in case you are clueless this story is made up. I just wanted to make a point that trade is benefitial to both US and India. So, it is stupid to put barriers against outsourcing/trade etc.
Three Answers to Outsourcing (Score:4, Insightful)
It's our own damn fault.
IT workers have allowed themselves to be pushed around by business owners because of their high wages/salaries. At the end of the day the result is ugly:
* Entire business units with at will contracts
* No established standards on who can do the work
* No use of worker leverage to get better working conditions.
Here are three solutions:
1) Get laws passed requiring foreign companies to be held to US standards for handling data. Restrict outsourcing only to nations willing to play by our rules - like HIPPAA, Fair Credit Reporting act etc.
2) Unionize. Get collective bargaining agreements that offer a level of protection against unfair labor practices and ensure fair working conditions (none of that emergency saturday meeting to test loyalty thing). Mass layoffs and other job actions become a little more difficult as workers have to be paid per the CBA rather than individually negotiated. CBAs also allow the union a say when outsourcing occurs. Unions aren't tough to start, either. Call the US NLRB for mor info.
3) Establish licensing requirments. Construction workers (who really aren't that far off from IT Contractors) have been very good at getting better wages, conditions, etc in a business where people are a dime a dozen and you can use foreign workers.
Re:India Sucks (Score:2, Funny)
Re:Old Stories (Score:5, Insightful)
Does it matter if this story is highlighted one week later than another? It is relevant but even this article doesn't bring some hot-off-the-press story, it is a sit back and think about it piece. The tech outsourcing trend, as mentioned in the article, goes well back to the 90s, so if an opinion piece is published now, or last month or next week, it is equally relevant as we're talking about long term trend.
To extend your argument would be to say "why didn't BusinessWeek come up with this idea sooner?", why not a month sooner if all the facts were still in place,or a month before that? Or, as this is not new information, just a collection of old information with some insight, why couldn't you have done it?
Re:Old Stories (Score:2)
Re:Old Stories (Score:5, Insightful)
Re:India Colonizes Cyberspace while US colonizes I (Score:4, Funny)
Really ? In the Long Run? Economist John Maynard Keynes said In the long run ... we are all dead. [schipul.com]
Re:How did we get here? (Score:3, Informative)