How India is Saving Capitalism 1174
alphakappa writes "Salon goes onsite to Chennai (Madras) in India to investigate the whole offshoring phenemenon (free daypass) and comes up with an interesting series of stories. Katharine Mieszkowski starts with a company CollabNet which creates collaboration software for teams to work together on projects from locations all over the globe, and has centers in Brisbane (CA,US) and Chennai (India) - a company that would not exist if they didn't have access to engineers from India. She makes the case that in most cases, it is the necessity to survive, rather than greed that has fed the offshoring process. As Behlendorf from CollabNet puts it - 'We saved the jobs of the people who are employed in San Francisco by hiring people here [in India],' he says. 'I don't know that we would be around as a company if we hadn't done that. What was the right thing to do, morally?'"
Morally? (Score:5, Insightful)
Re:Morally? (Score:4, Insightful)
Re:Morally? (Score:3, Insightful)
Hiring someone outside the country while not firing anyone is a different question. There the question is the morality of negatively impacting job opportunities in the short term while possibly (if we are to believe the globalists and if we believe that somehow multi-national monopolies will be reined in) improving the economy (and the job situation) in the long term.
This critical distinction has been u
Re:Morally? (Score:4, Insightful)
Sorry, that's not a moral argument.
Re:Morally? (Score:5, Interesting)
I'm not going to go so far as to say that this is immoral, but surely you can concede that morality has nothing to do with capitalism (as your question, does, in effect, relate to morality).
Re:Morally? (Score:5, Insightful)
I'm not going to go so far as to say that this is immoral, but surely you can concede that morality has nothing to do with capitalism (as your question, does, in effect, relate to morality).
I don't think Capitalism and morality are perpendicular, but instead are loosely coupled. Immoral behavior by Capitalists will hurt Captitalism (witness the Enron and Tyco scandles), and morally based Capitalim will positively effect Capitalism.
I believe Henry Ford paid his workers a living wage because he relized that if he did not, then nobody would be able to buy his cars. If we continue to send labor overseas in the race to the bottom then we will depress our own wages, and who will then buy the products manufactured overseas? Answer: fewer and fewer, which means lower profits. Thus, immoral Capitalism hurts the goal of Capitalism.
Re:Morally? (Score:5, Insightful)
First off: globalization is pretty inevitable. In the long run, it's good for everyone (and how many things can be characterized that way?). In the short run, however, there are growing pains:
I should point out again that the goal of a corporation is to make money. They will not follow "moral" guidelines unless they are enforced by law. The only thing I would ask for in this period of globalization is that corporations that leave America be held to our human rights/workers' rights standards and laws. They should also be held to fair-wage laws (based on whatever the dollar fares against their currency, I guess).
I wouldn't accuse anyone of nepotism: these are tough times for some people, and nothing is black-and-white. The struggle seems to bring the worst out of some people though, on all sides.
Re:Morally? (Score:5, Insightful)
Actually, what led to the Black Monday crash was the newly created FEDERAL RESERVE trying to manage interest rates and keeping them artificially deflated to try to spur an "eternal boom cycle". That, coupled with the speculative loans the Fed had created, caused a massive market correction. Think of a casino lending you tons of chips to play with, on little more than your say-so, and then finally saying "ok, you have to pay us now". And you've got maybe a tenth of what you actually owe them. This is called fractional-reserve banking. It's what the Fed did (and still does, but with slightly better results), and it's their fault.
Now, to extend that analogy, consider half the casino's patrons doing this. What happens when the casino can't take the income it expected from these people? It can't pay its workers, its mortgage, its debts. And this is the "callous pocketstuffing" everyone laments; in reality, it's the Fed simply being too stupid to manage the economy.
But you can't blame them. For years and years and years, governments have tried to do exactly that, and met anywhere from mediocre to disastrous results.
Unfettered capitalism? No, not now, not anywhere, ever. We've never had a truly free market in the history of the world.
Re:Morally? (Score:5, Insightful)
That's not immoral, that's unpatriotic. A very different thing. Personally I think outsourcing to India is the moral thing to do: they need it more. Suppose the wage bill for one American could support five Indians. Assuming for a moment that all men are created equal with the same inalienable rights, which is the better option? Morally speaking?
Re:Morally? (Score:4, Insightful)
Re:Morally? (Score:5, Insightful)
Re:Morally? (Score:5, Insightful)
Half of what price? It's like those signs in the windows of BS stores that scream "EVERYTHING 50% OFF!!". Meaningless.
I disagree. I've been buying shoes for thirty years, and the price are going up, UP. Even adjusting for inflation.
I doubt much that a 10 dollar an hour worker in the U.S. would take 20 hours to make a shoe, to yield that $200 pair of shoes. It'd probably take two hours, if he did it all by himself. A labor cost of $20, in the horrifically overpaid U.S. labor department. The hundred dollar pair of shoes would have a distribution cost/retail markup of $80.
Made in Vietnam, the labor cost would be about $3/day per worker, or about
So the difference between the U.S. and Vietnamese labor per shoe in the hand-made shoe market would be $19.40.
Because of that 19.40, if the shoe was made in Arkansas, the retail cost of the shoes would double from $100 to $200?
You see how silly this is?
1. Consumer prices have risen, not dropped.
2. Labor cost differences are insignificant in determining the price of the shoes. It's almost all distribution, marketing, and retail markup.
3. The companies have NOT kept the prices down by offshoring labor. They have instead increased profits. The "savings" for the consumer never happened. It was a lie.
4. The U.S. has lost its maufacturing base because of this lie. We don't even build our own defense electronics anymore, for the most part.
5. The lower middle class is disappearing. No real paying jobs for those not at the top of the academic chain anymore.
6. Once the housing bubble bursts, the lowest paid workers won't even dream of buying a home. Rents will also explode, so even more income will drain from those not working at real jobs.
7. If one can't get a decent job, who will buy all these products that are INCREASING or standing pat in price: meat, poultry, fruit, vegetables, homes, clothes, milk, gasoline -- all the staples. Ans: wealthy people and upper middle class people won't care, but everyone else will suffer.
And it boils down to this:
The offshoring of labor did not keep prices down. Prices stayed where they were, or increased. PROFITS increased spectularly. We've lost manufacturing capability, a national security nightmare. We're losing the ability to provide a living for anyone not on the top of the employment pyramid.
And we did it because businesses wanted to make a LOT MORE money than before. We've traded our country's economy in for a pyramid scheme for corporate stockholders and the men who run the executive suites.
The business of America's government is not business. We should have learned this lesson in the robber baron years of the late 19th and early 20th centuries, but apparently ideological religion dies hard, especially when trillions of dollars in profits are to be made. We'll have to become economic secularists again -- the hard way. By learning what is and is not real, by watching the next decade's slow slide into an unstable world economy.
Re:Morally? (Score:5, Interesting)
Re:Morally? (Score:5, Insightful)
Actually, this is very wrong. American companies that "survive" or get rich contribute to the American economy while at the same time cutting proportionally small paycheck to Indian workers, whom also benefit by becoming a growing economy. A wealthy American company can - and most likely will, if they plan to be around for some time - reinvest in something called R&D, expansion, growth - all depens on what business you're in. General Motors would reinest in itself to produce more innovative technologies for the world, creating better products (cars) for Americans (primarily). Although there is a job-loss situation for a period of time, it is temporary and will swing the other way once companies are able to begin growing again. This does not mean that the same jobs that were shipped overseas will come back. No. More likely, it will create jobs that lie on the frontier of the industry.
Re:Morally? (Score:5, Insightful)
Okay, clearly something about international trade needs to be explained to you: Money never flows out and not back into a country, unless they are your colony.
When nation $FOOnia sells a product or service to nation $BARistan, they get $BARistan money in exchange. Since the only place you can spend $BARistan money is $BARistan, the people of $FOOnia really have no choice but to turn around and buy something from $BARistan.
This is why the Japanese were buying so much US real estate in the 80s and 90s. The "trade deficit" between us had grown to the point that the Japanese found themselves sitting on more US money than they really knew what to do with, so they invested in chunks of downtown New York.
Employing people in other countries is simply an element of free trade between nations, and is a Good Thing, in the macro-economic sense, even if it means that you can no longer get a crappy consumer tech support job in the US.
Re:Morally? (Score:5, Informative)
The only reason that the US dollar has any value overseas is that it can eventually be redeemed in the US. Someone has to eventually spend it here (although not necessarily the someone that you initially gave the dollars to). Otherwise it's just a piece of paper. The situation is the same with international banks - sure they convert currencies, but they do it in accordance with an exchange rate that is rooted in what a given currency will buy in its country of origin.
Re:Morally? (Score:4, Insightful)
Until they get fired.
Re:No, Patriots believe Americans are better (Score:5, Insightful)
Re:Morally? (Score:5, Interesting)
When programmers start giving away their time, and effort, it makes their time and effort worth less.
So if the programming community does not value itself enough to charge a good rate- then our business community can send our 'custom' jobs overseas, while getting the other stuff for free. Sounds like a good deal for businesses, and a crappy deal for programmers. Because in EVERY business, the final price of a product comes from PERCEIVED VALUE not the real cost of goods. So, by giving stuff away for the past few years, the percieved value of software has been going down.
I still go back to the analogy of plumbers. If I know that I can get someone to fix my plumbing for free- I will resist paying a regular plumber a few hundred bucks to come out. But as it is now, I know that I can expect to pay about $150 minimum to have some work done. And I'm happy to pay it.
Yes of course there is a difference, because plumbing cannot be outsourced to India. But when people run around shouting 'software should be free' and telling their bosses to use the 'free version' then the general feeling is that software *should* be free, or at least cheap.
I've never seen any other industry where there was such a push towards devaluing its own product. And then people get upset when the money flows somewhere else?
Re:Morally? (Score:4, Insightful)
Except, if people here have no jobs to earn money...who is going to be able to buy those less expensive, good quality 'toys'?
Re:Morally? (Score:4, Insightful)
Do you have a pension plan? A 401(k)? You do realise that the owners of the companies are not just fat men with cigars?
the haves are taking decent paying jobs away from the have notsWouldn't you consider Indian workers to be have nots?
On the flip side it seems thoguh that these haves are exploiting the Indian workers.
The Indian workers are earning what are considered very good wages in their country. The average wages have risen strongly as demand rises. I doubt they would consider that they're being exploited.
Re:Morally? (Score:5, Insightful)
Very well: I'm an Indian programmer who's signed up with Atlantisoft, a company which has hitherto employed Americans and Europeans. Due to the new laws you propose, they must pay their Indian employees in India the same as what they pay their Americans.
I now earn what is, in India, a vast fortune. An idea springs to mind: rather than do my job, I'll hire someone to do it for me at Indian market rates. I'll subcontract. Since I'm an Indian the law you propose doesn't apply: I'm an Indian employer paying an Indian wage to an Indian.
The result being that the person who does the work gets the same low Indian wage, and I'm happy as a clam being a useless middleman skimming a huge sum off the amount the company pays.
You think Indians can't be conniving, exploitative bastards too?
Re:Morally? (Score:5, Insightful)
Why not "outside of your town", or "outside of your circle of aqcuaintances"? Or, indeed, given the terms of your post, "outside of your extended family"? You are aware that you are, by extension, advocating nepotism?
Re:Morally? (Score:4, Funny)
Re:Morally? (Score:5, Insightful)
But what if you hire two heads of households outside the country to replace the one domestic worker just laid off, and still cut costs?
And who, exactly, is being immoral under your judgement? The executive who makes the decision, or the buying public, who continuously sends strong signals to companies that lowering prices is the most important thing they can do to increase sales? People vote with their buying power every day, and you've seen the results in the rise of discount chains like Wal-Mart and Best Buy.
The bottom line here is that white-collar types have gotten fat and happy over the last several decades, and are now shocked to find that they are facing global competition much like agricultural and manufacturing workers have for decades.
Re:Morally? (Score:5, Insightful)
Look at American productivity numbers. The amount of work we do per capita exceed that of the Japanese, who we used to stereotype for working too hard. These companies were built on the work and sweat of the employees, and rather than share in the profit we are being sent off to the glue factory.
I don't know whether you are trolling, but you really struck a nerve.
Re:Morally? (Score:4, Interesting)
First off India isn't "saving capitalism". Capitalism is using India to satiate its voracious appetite for cheap labor. In the complete absence of any checks on it there is zero chance of Capitalism failing. It will take care of itself, it always does. It will destroy a lot of people en route, like it always does. The people being destroyed are just changing. Capitalism is about picking winners and losers.
As for facing global competition, there isn't really any competition to it. You can live like a prince in China or India for ten dollars an hour. In the U.S. you are living in poverty at that wage.
What you're seeing here is all of the barriers to globalization have been removed. As is the way of capitalism, it rushes to the cheapest labor that can do the job. With globalization a labor pool of a couple billion new workers has come on line in China and India. There were also huge imbalances in the cost of labor between developed and developing countries. In China in particular there is no minimum wage, no pollution controls, no workplace safety regulation, health care costs aren't spiraling out of control like they are in the U.S. and there are no out of control taxes, especially payroll taxes, draining a workers income. There is a near inevitably that globalization is going to devastate workers in developed countries whether it be the U.S. or Western Europe. At the same time its going to continue to make multinational corporations and their share holders richer. If the government in the U.S. cared about working people it would have left enough barriers in place so they wouldn't be broadsided by the imbalances in global labor markets. Instead corporations are actually being given tax incentives to move jobs off shore. The fact is both Republicans and Democrats are so in the pockets of multinational corporations now abandoning U.S. workers is inevitable until working people get a clue, realize they are in the majority in the U.S. and start voting out any politician who is screwing them in favor of multinationals.
Indians should note that if Indian labor becomes wildly successful wages and cost of living will start to inflate. In the new world order, as soon as it does the jobs will just move to China or Vietnam and Indians will be carping about off shoring. The one thing in their favor is it will be a near impossibility to achieve full employment for the billions of workers in China and India. If you were to do it you would proably decimate increasingly scarce world resources like oil.
What you're seeing here is a godsend to multinational corporations and a death knell to workers. Workers in India and China should rejoice now for their rising prosperity but they should appreciate that they are just as expendable as workers in the U.S., its just a matter of time and inflation. With globalization we have reached a market that is entirely in the favor of employers and entirely against employees.
Its no accident the Bush administration is all for outsourcing because its entirely pro business and anti labor. You see the writing on the wall when you read a bio of Elaine Chow, Bush's labor secretary. Her father and her family make their fortune in container ships, shipping goods from China to the U.S.
http://www.counterpunch.org/flanders04012004.ht
Our labor secretary is decidedly anti labor as evidenced by her departments effort to strip U.S. workers of overtime pay last year.
Re:Morally? (Score:3, Insightful)
AlI still don't believe they *had* to hire Indian workers or go broke. If you are at the point where the only savings left is cutting engineers, then you have the most efficient company in the history of the world. And I have a hard time believing that management which could design such efficient processes can only think of cutting engineers as a cost save.
Typically what happens is the quality managers design t
Re:Morally? (Score:5, Informative)
Re:Morally? (Score:5, Insightful)
In fact, the same general situation happened in South Africa, from what I understand, even under apartheid. Even with that society being generally racist, there was still a big part of the white business community that worked hard to flout laws against hiring blacks. Whether they thought less of the black man or not, it just made good economic sense to hire him if he was cheaper than a white worker. So the government had to actually work to enforce apartheid, even when the business owners they were influencing were racists in their own right.
It's immoral to tell someone that they aren't allowed to compete with me, just because I was lucky enough to be born a white man in America, and they weren't. Another thought that comes to mind is that, as Americans, we have an awesome opportunity. We're given an opportunity for a free decent education (obviously depending upon the location, but still better than most folks in the world), we're given economic freedom, along with all the other freedoms to develop ourselves that come with being Americans. If we, as Americans, can't compete with people from second and third world countries, there is a problem with us, not with them.
Re:Morally? (Score:5, Insightful)
Why not?
No. Whoever is the most efficient wins. Newspapers tend to report on efficient bastards disproportionally, though -- while some of the inefficient bastards try to bribe lawmakers to make the efficiency illegal...
Re:Morally? (Score:5, Funny)
It's immoral because the job of businesses is not to maximise shareholder value by increasing their cost-effectiveness - their job is to provide a welfare service to Slashdot readers who were laid off after the dot-com crash. Duh.
Re:Morally? (Score:4, Insightful)
Re:Morally? (Score:5, Insightful)
Either way the idea that outsourcing is somehow immoral when it fulfills the duties that management is committed to seems absurd.
Ridiculous (Score:3, Insightful)
That isn't a moral imperative, that's a fiscal imperative. But fiscal duty can and must take a back seat to moral imperative, otherwise you can justify virtually anything by saying "I had a duty to the shareholders...".
NO.
Corporations exist as a legal fiction primarily because society decided the benefit outweighed the risks. If corporations become more of a burden or risk to society than they pay back, they will simp
Re:Morally? (Score:5, Insightful)
> uphold their DUTY to the shareholders.
Thats not moral, thats a legal requirement.
Its the same requirement that requires Exxon to minimalize the public relations disaster caused by a rupturing oil tanker, rather than the moral one which says "clean it up".
Its the same requirement that requires Enron's auditors to change their company name and logo, rather than admitting they overlooked one of the biggest corporate collapses in history.
Its the same one that causes Ford to through the blame for their un-balaced top-heavy vehicles onto a tyre manufacturer.
There is nothing moral about protecting shareholder interests.. and that it needs to be done every three months is one of the reasons that corporations are so screwed.
Re:Morally? (Score:4, Insightful)
You're absolutely right.
Let's you and me go to India and open up a sweatshop.
Re:Morally? (Score:3, Interesting)
From purely capitalistic point of view, the moral thing to do is to maximize profits in short term, while ensuring the survival and profitability of the company in the long term. These are often the same thing (long term survival probably being more important if there's a conflict between these), as not trying to maximize short-term profits can easily lead to going bankrupt unless long-term prospects are good enough to attract risk capital anywa
Re:Morally? (Score:5, Insightful)
If Adam Smith were alive today he would be up in arms about the amount with which large corporations thwart the will of the market. Between volume discounts, incestuous relation between big business and regulators, and corporate empire building.
We don't have capitalism.
Great... (Score:3, Interesting)
When will the middle class realize that the upper 2% is screwing us in the ass daily, and actually do something about it???? We are the *majority* afterall...
--Ryan
Re:Great... (Score:5, Insightful)
Buy American (Score:5, Interesting)
Detroit was faced with the same problem in the 70's. The Japanese were whipping us six ways to Sunday. The unions wanted us to support American-made cars even though they were utter crap. You could go into a showroom and see that the doors were mis-aligned, switches were poorly installed, etc. And that's just what you could see doing a casual inspection. American public said, "I don't think so" and purchased Hondas, Toyotas and Datsuns (now Nissan) They were simply far better products.
Detroit bitched bellered and bawled about it but finally got their act together and started producing a much better product. For Detroit, it was a stark reminder that they couldn't just throw up barriers and hope to have a captive market. It was painful but they came around and are able to compete globally now where in the 70's they were getting creamed.
Same thing is happening to us - we simply have to be able to compete. Whining about unfair competition just makes us look like whiners.
You might ask how you can compete with a $5/hour worker. What I've done is started a small business that uses software I wrote. The business is large enough to support me and a couple of other people but small enough that it doesn't attract competition. Niches abound if you're willing to go look for them. Just don't sit around waiting for someone to hand you a job - get out and create your own job.
Re:Buy American (Score:5, Insightful)
Eh, no. It's about "accepting less": less pay, less benefits, less freedoms. A US programmer is just as capable as an Indian one, he just needs to be paid more.
Companies outsource because they can pay a fraction of the salary, a salary that in america would put you below the poverty line.
What you're basically saying is that in order to get jobs back in the US, computer-related jobs have to drop to a level equal to flipping burgers at mcdonald's.
You don't need to take a pay cut (Score:5, Insightful)
I don't know if you've noticed but the Dollar has been falling for the last couple of years. In 2002 1 dollar would have bought you 0.7 pounds sterling (GBP) or 50 Indian Rupees (INR). Now, 1 dollar will only buy you 0.55 pounds sterling or 44 Indian Ruppees (INR). That's more than a 10% reduction in all American's wages right there.
Another example is the Japanese Yen. It halved in value during the 90s while their economy was contracting, effectively halving the wage bill compared to the rest of the world. Harder times for everyone in that economy.
Re:Great... (Score:5, Interesting)
-
When will the middle class realize that the upper 2% is screwing us in the ass daily, and actually do something about it???? We are the *majority* afterall...
Never if most of the middle class keep believing politicans who claim tax cuts/etc. are aimed at helping them out. I am shocked at how many educated smart people that believe these claims without even bothering to investigate to make sure they're valid. I don't hold much hope of the majority of middle class voters ever getting a clue on this, so I'm afraid the answer to your question may be "never".Re:Great... (Score:5, Insightful)
PS. Just the fact that you are posting on
Save Capitalism- OPEN THE BORDERS (Score:5, Insightful)
The Classical theories on which Capitalism is based were written in the 19th Century. At that time, capital was basically land, and labor was much more free to move about than it is today. Before anyone objects that transportation is more advanced today, let me explain what I mean: in those days, workers were not locked into compartments from which they could not escape, and could basically go where the work was without having to worry about passports and work visas. Anyway, because of the conditions that obtained in the 19th Century, the Classical theories are based on assumptions of immobile capital and highly mobile labor.
The conclusions of the Classical theories are nice, especially "mutual advantage." Unfortunately, those theories have about as much to do with our current reality as the "spherical cow" of every physics nerd's favorite joke. In today's world, capital moves at a high fraction of the speed of light through wires, or even at the speed of light as radio signals in the air or visible pulses in fiber optic cables. Meanwhile, because of the fortified borders between countries and the need for passports and work visas and such, labor is basically locked into little compartments. As a result, the situation of today is almost exactly the opposite of the situation assumed by the Classical theories.
Because of this, the conclusions, like "mutual advantage," are utter bunk in today's world. In fact, there is basically nothing now preventing capital (a term I also use to refer to those who control large amounts of capital) taking total advantage of labor. So when American workers want adequate safety conditions at work, capital dumps them and goes to Mexico. When the Mexican workers get uppity and want a decent working wage and don't want pollutants dumped in their rivers, capital takes the jobs to Vietnam... etc., etc.
More relevant to this discussion, when computer programmers in Silicon Valley start getting six-figure salaries, capital starts by importing Indian programmers. When the imported Indians get wise and jump ship to higher-paying companies, capital gets smart and takes the work to India. In general terms, capital (the "2%" mentioned in the parent post) can play the labor forces in different countries against each other and pick and choose which countries' laborers will get work.
Is all lost? Maybe not. It might be possible to restore something more closely resembling the "mutual advantage" ideal of the Classical theories (though I'm sure there are some who don't see "mutual advantage" as a positive ideal and prefer the current situation...). All we have to do is restore the mobility of labor. Make the borders as open to people as they are to capital. Yes, in the short term, there would be disruptions, like a huge mass of people whose knowledge of the USA comes from Hollywood, who would flood the USA temporarily looking for that streets-paved-with-gold-and-everything-works paradise, but eventually, things would settle down again, only with better conditions for workers (read: people).
For those who worry a lot about the short-term consequences, consider that that worry is part of the "playing labor forces in different countries against each other" I mentioned above. You want to preserve the apparent advantage workers in your country currently appear to have, and capital plays on that to make you oppose the kinds of changes that could actually make Capitalism work for many people, instead of horribly failing the great majority, as it has been for quite some time.
--Mark
Re:Save Capitalism- OPEN THE BORDERS (Score:4, Insightful)
The problem is that the programming boom ended. As a result, companies cut back. This (and the continuing educational push) created a large number of well-educated but unemployed Indians and Chinese. It is so bad over there that people with doctorates are manning help desks (and unable to actually help people, because outsourced help desks are all about minimizing call length; not to mention that a doctorate in programming is of little use in helping someone figure out that Word Perfect won't work during a power outage). As a result, a company can save money by switching to Indian/Chinese programmers and is under cost pressure to do so.
This is not a failure of capitalism; it's just a characteristic of business cycles. The big question is if the demand for programmers will return to its previous level or if it will be permanently lower. If the first, we techies should just ride it out. If the latter, many techies should switch careers.
One must remember (Score:4, Insightful)
Re:One must remember (Score:3, Interesting)
I'll play the devil's advocate here (personally I despise the outsourcing movement). Some companies we think don't need to outsource are forced to because competitors have. Those competitors may have outsourced intia
Re:One must remember (Score:3, Interesting)
When the bottom rung into IT is halfway around the world, we are going towake up one day and ask why there are no skilled people here.
If the goal is good, homegrown talent that you train yourself is the only answer. If you want cheap you generally get what you pay for. If
Re:One must remember (Score:5, Insightful)
At the day of judgment, I guess none of them wants to be singled out because they "lost" the company millions by not doing what the others have done. It's fair to say that not all of them have investigated the balance sheets carefully enough to understand all the benefits and/or ramifications of outsourcing, but rather have done this simply because others have.
Right thing? (Score:4, Insightful)
The right thing to do, morally, is probably to go out of business. What if the choice was to not pay for workman's comp insurance or go out of business? Or to pay their employees $2 an hour or go out of business? Using "but... but... we'll go out of business if we don't do this" is a lame ass excuse.
Re:Right thing? (Score:5, Insightful)
Re:Right thing? (Score:5, Insightful)
Oh please. (Score:5, Interesting)
Thats why its been called "A race to the bottom". Once your competitors start hiring offshore, you're forced to do it to compete on price.
Re:Oh please. (Score:5, Insightful)
Re:Oh please. (Score:3, Funny)
Friedman (Score:5, Informative)
And uh... (Score:4, Insightful)
sure. (Score:3, Interesting)
Sounds a lot like justification to me. Whatever helps him sleep at night.
We couldn't save all the jobs, so we saved half.
If companies refused to go off shore, then everyone would be able to survive and we wouldn't lose any jobs.
Re:sure. (Score:3, Insightful)
Re:sure. (Score:4, Insightful)
You can't just look at this in a company by company basis. Capitalism works of the principle of supply and demand. There will only be a demand for products when there is money to buy them. There will only be money to buy them if people have jobs.
Re:sure. (Score:4, Insightful)
How can we have happy shareholders who boost stock prices if we don't have a gainfully employed population. We can't invest in if we have nothing to invest with.
Re:sure. (Score:5, Insightful)
Or the company cannot keep costs down and thus fails to meet shareholder's expectations and flounders, bringing everyone down with it.
The real question (Score:5, Insightful)
Re:The real question (Score:5, Funny)
Re:The real question (Score:5, Insightful)
Open source software is nothing but massively outsourced labor. And remember from the open source debate that most of the money is made from using software, not writing software. Both outsourcing and open source makes software cheaper so that more people can make more money using software. This adds significantly to both the US and the world economy.
Rationalizations begin (Score:5, Insightful)
Now, this rationalization, it's "we outsource so at least some people in the US can keep their jobs". How noble!
Prediction: later it will be "we outsource because otherwise we'd have to move entirely out of country and then the US wouldn't get our taxes." How civic!
All have the same underlying message they wish to send, "we want to help people!" But corporations don't generally exist to help people, they exist to make money.
There are 2 _good_ reasons to outsource, both based on the fact that labor is always the number one expense for a company.
1) We can stay in business, whereas otherwise we can't. 2) It makes us more money long-term (not just short-term profit sheets). Unfortunately, both may be true right now.
Re:Rationalizations begin (Score:3, Informative)
The Bottom Line (Score:4, Interesting)
Now add in health insurance for the family, dental insurance, minumum wages, retirement matching, etc etc that a company has to setup for its labor in American, and you'll see that goods and services cannot be inexpensive if made in America. The cost of labor is too high here if we are to guarantee cheap goods and services.
It's an interesting paradox: In order to keep prices reasonable for a middle class, a majority of the labor needs to be paid at or just above the poverty line...which would theoretically remove the middle class.
So what should we do? In my eyes you either make wages worth more to the people (ie lower taxes) so you can offer less, or you cut down the overhead cost of labor (ie have the government install laws against frivolous malpractice lawsuits to reduce health insurance costs).
What do you think?
Re:The Bottom Line (Score:3, Insightful)
It's our consumeristic, throw-away society. When it becomes cheaper to throw away a broken piece of equipment and buy new (TV / VCR / computer / microwave / etc) than to repair it, we've got a self-perpetuating problem:
1. People buy cheap stuff
2. Companies that have the lowest prices get more business
3. These companies cut costs even more by integrating everything and greatly reducing the possibility of repair
4. People's cheap stuff break
Chennai's _Dune_ connection (Score:5, Interesting)
(Taking tongue away from cheek) Ha ha only serious. On a more positive note, it's also India's Bandwidth Capital because of all those transpacific cables landing here via Singapore. And electricity is very cheap here, probably the cheapest among all of India's major cities.
chickenegg argument (Score:4, Insightful)
With all other corporate scandals and problems taking place, greed is essentially at the center of the motivation wht with pump and dump activities, monopoly abuse, anti-trusts and the lot going on. But the start of the trend changed the landscape considerably.
I complained in-person to a Dell representative about Dell's off-shoring of support to India. I exclaimed that I would never again buy Dell while they are off-shoring the ONE thing that made Dell great -- their support. The representative said it was a decision made so that it could remain competitive. I still think it's a tremendously stupid and inappropriate thing for Dell to do -- sell-out on their one and only unique selling-point and gambling with their brand-name as their primary value...bad idea guys! Now Dell is just another clone! Back to IBM for big business.
Anyway, I digress. I believe that the start of this is corporate greed and the current status of the problem is now competitive culture. The end of it, if there will be any, will start with legislation. Only law can correct the problems that greed/capitalism creates.
Thats the stupidist thing I've ever heard... (Score:4, Interesting)
I really dont understand how companies can layoff people, send their jobs overseas, and expect their profits to rise. They layoff people, their customers... WHO will buy their products? with no one having enough money to buy them.
There is only ONE reason for outsourcing. Only one reason: to make the CEOs and execs of these companies more money.
These stories of how outsourcing is better in the end are a complete farse. There is NO benefit for the average american worker.
The Sky is Always Falling (Score:4, Insightful)
And not only do we pay higher taxes, and higher prices for food, but farmers in places like Africa have nowhere to send their goods, and they don't have the infrastructure to do anything else.
I think it was Bill Maher who said (and I'm paraphrasing), "Americans seemed to be more concerned with taking their own lifestyles from 10 to 11 than to help others bring theirs from 0 to 1." And that's the absolute truth. No one reading this is starving. Even if you did nothing but collect welfare, your lifestyle would still be better than 90% of the world.
So, you're a programmer. Someone else can do your job for 1/4 of the price with the same quality. You have a few choices:
1. Find an employer who requires a warm ass in a seat in the States.
2. Raise the quality of your work.
3. Be your own boss.
4. Change careers.
You know how the RIAA doesn't provide a unique service anymore? Neither do you. You have lots of competition, and right now you can't compete. Or can you?
Re:The Sky is Always Falling (Score:4, Insightful)
There are people all over the midwest complaining that their way of life is going to disappear, and we all pay extra taxes to subsidize their plight -- the plight of people unwilling to change jobs when the market disappears.
Goody, farmers can't move on to the next thing. This begs the question: why don't techies do that? Answer: what's the next thing? Why should I spend money I don't have to retrain for something that's going to India in 3-5 years?
I think it was Bill Maher who said (and I'm paraphrasing), "Americans seemed to be more concerned with taking their own lifestyles from 10 to 11 than to help others bring theirs from 0 to 1." And that's the absolute truth. No one reading this is starving. Even if you did nothing but collect welfare, your lifestyle would still be better than 90% of the world.
Are you implying that I should give up my low-crime apartment and clean water because there are starving children in China? I bitch about American corps selling me out and you call me insensitive to the plight of poor 3rd world countries (with an assumed racial bias). Fact is, if I lose my job, I may well be starving - welfare is going away because people like Bill Maher are opposed to any social safety net.
So, you're a programmer. Someone else can do your job for 1/4 of the price with the same quality.
Actually, nobody seems to care about the quality of my work, only the price on the balance sheet.
It's called the bandwagon policy (Score:3, Insightful)
First, it was because it just meant reconverting lower-tech jobs into "creative jobs", whatever the hell it means. That didn't quite float.
Then you see another bandwagon, say, a study that says students are not choosing computer science as much as they used to [slashdot.org] and claim that the reason why you're moving the jobs is because you can't find enough skilled people locally. Apparently the masses of skilled people finding themselves in the unemployed lists didn't quite bite that one either.
Next one, let's turn things around and show how the offshoring is actually helping the economy and the people by creating New Exciting(TM) employement opportunities as a middle-man parasite. Anyone wants to wager how far that bandwagon will travel?
The fact is that companies are doing that to cut costs and increase profit. Plain and simple in a capitalist market. The interesting thing is that they have to try so hard to make whacky justifications about it, pointing out the general consumer population (remember, we're not people, we're consumers) doesn't quite like the idea.
Skewed markets (Score:4, Insightful)
shamelessly reproduced from an article I read... (Score:3, Insightful)
The Cure for Outsourcing (Score:4, Interesting)
If you are a developer in the US and you are worried about outsourcing, get a job that requires a security clearance. That job must always be done by a US citizen, in the US, and therefore can never be moved offshore.
In the Washington DC area there is a huge, huge demand for IT people with clearance, and there are also lots of companies that will hire you and help you get a clearance.
What could she have done? (Score:5, Interesting)
Quit paying you and the top executives and senior management team filthy, unreasonable salaries. Not only are they inappropriate in most cases, the fact you failed (repeat that over and over again a few times to let it sink in) means the top brass should take it, not the producers in your company.
This is not the rant of some 20-something employee just out of college. I've run two companies I founded and grew, and don't see that I should fleece my customers or shareholders for obscene personal benefit (yes, $100K individually and over in this economy is obscene - you need to be living with less, providing good jobs for people, and investing in rebuilding your company!)
I see this over and over again. Wharten, Harvard, Yale types born on third base (thinking they hit a triple), that are slaughtering company after company for short term protection of their fat income. I own and run a tech company in the midwest that employs twenty people, and I'm the lowest paid. And no, it doesn't produce amazing profits I pocket as dividends. Someday it will be a nice company but I haven't earned that yet.
I get those silver spoon types all the time telling me how I should outsource my labor - which would be possible for us. Put all the tech oversees, along with support call center. I'd be making over $300K annually. The funny thing? They simply cannot understand why I would want to make less and employ people, because (you may have guessed), THAT IS WORK! Outsource it and collect the checks is the new Harvard MBA strategy, apparently.
Seems I saw the movie Wall Street. I've seen people pursue short term profit through slaughter. But you know, someone's gonna have to be around to buy your product, and if you get rid of the middle class, you might not have many customers. And don't forget, as long as you're expensive overhead (and not producing hard, tangible results towards the bottom line), you're expendible too.
Brazil (Score:4, Interesting)
Unfortunately 95% of the people are quite poor but for the rest it's an excellent place.
Once the USA had it's middle-class destroyed, too, it will definitely resemble Brazil.
Inventive corporate excuses (Score:5, Insightful)
The first excuse from companies from two or three weeks ago, was, "American colleges are not producing graduates with strong enough skills in CS, math, science, and engineering, so we are forced to outsource"..
Now we're hearing, and I bet other corporations (of Collabnet's size and position) will pick up on this, that in order to save a few jobs and the company there was a "moral" directive to go get cheaper labor.
Nobody says American companies are required to create jobs - but by outsourcing everything they're destroying the next generation of technological innovation - you saw the last wave of hackers in the dot com boom. The next wave you see is going to be a mix of MBAs and sanitation engineers - the new U.S. demographic mix.
The technical industries are far more important to preserve than say, the automotive industry, ever was. Cars burning petroleum were never going to be the final answer for the planet - we knew that since the 50s.. technological innovation is going to save the planet. Too bad it won't be coming from the U.S.
Better link (Score:5, Informative)
- A Chennai resident
I want to start an open source project (Score:4, Interesting)
Does this seem stupid at all levels? If it does than outsourcing should be viewed the same way. If not than maybe this is a massive shift by society and I'll have to keep the idea for my future management move...
There's no "New Economy" on the horizon (Score:4, Interesting)
What I have a problem with is the fact that I'm in my mid-40's and high up in the payscale for my particular niche. If my job got outsourced, I'd like to know what these profitable companies expect me to do for a living?
So far -- as the article points out -- all the executives can tell us is "Uh, think of something."
So forgive me if I don't cheer for India's (current) good fortune. Twenty years ago, when the manufacturing jobs began leaving the US, at least The Information Economy was on the rise, and most people managed to change gears.
Today there's nothing on the horizon unless you count flipping burgers. Uncool.
Fucking sick of all this navel-gazing belly-aching (Score:4, Insightful)
open source hypocracy (Score:5, Interesting)
If open source is good for programmers, than outsourcing is also good for programmers.
Unbalance (Score:4, Insightful)
The Flip Side of Outsourcing (Score:5, Insightful)
Re:The Flip Side of Outsourcing (Score:4, Insightful)
You can buy a product in Singapore and get it shipped. What's stopping you from doing that right now? It's exactly what wal-mart is doing, isn't it?
Ah yes - Capitalism runs rampant again (Score:4, Insightful)
The trouble is simple, there are many many poor in India. They are many educated intellectuals, and a growing upper class. YET they still have teaming masses of poor. I can gaurantee you that India's poor will not tolerate the this -- India is a Secular Democracy -- and its people can see the "promise" of Capialism for what it is: Extending the domination of the Upper Class.
In a global context, the USA is the Upper Class. The rest of the world is being (via propaganda like this, WTO treaties and open Warfare(justified time and again by self-serving lies, but still never comes close to excusing the Imperial Warmongering Aggressors to anyone with perspective, a lack of jingoism, a bit of history and a mote of objectiveness) taught a lesson (and sold a noble lie) either continue to serve our economy or face conequences. The DOMESTIC US middle and lower classes had better wake the heck up -- only you will prevent the US plutocrats from extending their Empire over the world. If you dont, these (cluefull) foreign masses *will* eventually kick off their yokes. Inspite of all this flower-y "India as proof of Capitalism" propaganda. The only thing it is proof of, is that YET AGAIN, USA's Plutocrats will make league with ANY CORRUPT system that will butress their status... Saddam, Shah of Iran, Gen. Zia ul-Haq of Pakistan in the 1980's (who helped nurture what later became Al Qaeda), Gen. Suharto in Indonesia, Mobutu Sese Seko in Zaire, Ferdinand Marcos, and and and. Obviously the American people DO NOT CARE about justice and democracy in the world as long as they Can Get Rich.
So when you middle and lower classes in the USA finally realize that "Free Trade" really means "Tolerate sinking living conditions at home, so we can finance the extension of our empire and underclass-serfs, so we may get stinking rich or else be hungry today." than we can discuss what the implications of Free Trade with India's wonderfull New Capitalists.
How Ironic (Score:5, Insightful)
It is not much different today. The iron ore produced in India gets shipped to Japan to come back as automobile engines, the GSM chip designed/QA'd locally comes back as Motorola cell phone etc.
Morality? Gimme a break.
Good, Fast, Cheap - Pick Two (Score:5, Interesting)
In the economy, you are the following 3 things:
1) a consumer
2) a investor
3) a worker
Now pick two. What's good for those 2 choices may not be good for the remaining one.
Currently, it's number 1 and number 2.
Taxes, not jobs, at issue (Score:5, Interesting)
That's a losing proposition for American workers. I know some web designers who would have accepted $20k/yr to do work, if they could work from home. THey had broadband, there was no functional difference between them and the Indian worker. The problem is, corporations can hide profits made my Indian workers and skirt paying taxes, and all the other hassles American workers have with them, such as employment benefits, the paperwork associated with W2s. You can write a single check to an outsourcing firm overseas. Anyhow, read the Yahoo article.
Bush doesn't care, he'll give US corporations anything they want, any tax loophole they can find he will support. The middle class is destroyed, and so you will need business skills and the ability to create an LLC and be an indepedant IT consultant to make it, because nobody will hire you.
It's saving industrial-age capitalism for sure! (Score:4, Interesting)
People who didn't buck up got laid off and replaced with people willing to work 80-100 hours per week.
I'm sure my friend would have something to say on the matter, but s/he doesn't have time to read or write to /.
Names and genders have been obfuscated to protect the already tenuously employed.
if you wear Nike shoes or (Score:4, Insightful)
Oh wait, outsourcing is good when it isn't YOUR kind of job being outsourced, is that what you're really saying? tough luck.
Population as a factor. (Score:4, Interesting)
America has a large share of the world's land with a much smaller proportion of the population. The benefits of this agriculture, natural resources, are the first order advantages enjoyed by the US. The mechanism of free-enterprise, and the risk-taking mentality in the have created second-order benefits which the US is enjoying today. Also, the vast separation from the rest of the world, kept the US industries standing after WWII, allowing th US to supply the rest of the world.
Now the massive population in the rest of the world has finally become a market that is worth serving, and is clamoring for resources proportional to their numbers. The US having used an enormously large proportion of the world's resources so far, is going to find itself using a smaller and smaller proportion of these resources and going back to the first-order advantages.
India and China, with their huge populations, will be able to do any service jobs that don't require actual physical presence at a much cheaper cost. The only platform on which americans can compete is their incredible efficiency, learnt over many decades. However, IT provides much of this efficiency, and can quite easily be transported anywhere in the world.
As trade between the rest of the world increases, trade between the US and the rest of the world will become proportionally smaller - except in key IP areas, where the US still enjoys a large knowledge monopoly, and agriculture, where the US has the advantage of area.
This is different from the previous scares (Japan, China etc.) as it represents for the first time, the benefits of a countries huge population, as opposed to the benefits of a small population.
The US should try to compete by growing R&D, getting and keeping knowledge workers, using NASA etc., as a springboard to newer techs, which the developing nations can only dream of.
Sorry for the long ramble... I hope some of the comments will be able to get some clarity from this..
Re:We Need to Compete on Quality and Efficiency (Score:5, Insightful)
The United States is a third world country that hit the lottery. We were the last man standing after WWII. People bought our stuff because most of the rest of the manufacturing base in the world was bombed flat. Rather than invest that money into improving education, we squandered it as profit, has a moon shot or 4, and built a really big road system.
We are now sliding back into a largely agrarian economy. About the only thing we produce that the rest of the world wants is food. For a while it was computers, but in our absolute lust for profit we sold the production capacity to Asia for cheap.
We have a first rate University system, but increasingly our own students aren't educated enough to use them. We can spend 600 billion dollars protecting ourselves from missiles that don't exist, but we can't spend 6 cents on education without some regulatory string attached to it.
We have fine hospitals that none can afford. When my wife delivered our baby, we were surrounded on all sides by women with no insurance, who often had no pre-natal care. And that stuff is cheap at twice the price.
We have sports fields that are subsidized by taxpayers that few citizens could afford tickets to. Our schools are scraping change, but we can cut massive tax breaks for a couple of billionaires to build a new ballpark.
And hey, I am an American. Born here. Educated here. Live here. But this place is a playground for the rich. There is the resort, but outside the resort is abject poverty.