Slashdot Mirror
Offshore Outsourcing Threatens Offshore Outsourcing
theodp writes "India offshore tech support companies may soon face job losses as U.S. companies such as IBM, Intel, Hewlett-Packard, Oracle and PeopleSoft explore countries with even cheaper sources of technical labor, including Romania, Russia, Hungary, the Czech Republic, the Philippines, Singapore, Thailand and Vietnam. Concerned that outsourcing might be outsourced from India in the near future, a Bangalore call center owner said 'It's hard to know where it will all end. Is there a country where people will work for free?'" There's a Newsforge story about the same subject.
> explore countries with even cheaper sources of technical labor,
this kind of thing haunts most developers - and, every company out there who needs to get something done is always seeking for the smaller cost/quick solution for all their projects. its also become common that a lot of developers are lowering their rates just to get work - its not looking good at all..
meanwhile, i perform consulting services - and, i simply refuse to budge from my standard rate for employment. they pay a little more - but, they will get what they pay for. i have had many clients do development in india, then, come to me - and, for a little bit more they get the product faster, of higher quality - and, are very satisfied.
the sooner these companies realize cheap labour has its down-falls, the better of they will be.
Now, the surprise on so many faces - "how can they do that to us", "how will our workers eat?", "We have so much labor, and they are moving operations to some backwater 3rd world country" ... will now be coming from New Delhi instead of New Jersey...
When your business consists of undercutting others, and providing services to willfully "outcompete" someone out of a job, don't expect pity.
As a piece of advice I once heard goes: "If you are stupid enough to date someone who dumped someone to be with you, don't be surprised when you get dumped, too."
meh
Open source only works if you want a piece of software that is good for everyone. Noone is going to come and write my factory control and admin system for free, even if they can give away the source afterwards.
Whats more, I don't think I'd trust running a control system that someone had written for free. Where would I get support? Updates? Who would I complain to if it went wrong without running the risk of the OSS programmers saying 'Sod it. Can't be bothered any more.'
As for the work being higher quality, you may well be write in the case of the big and famous OSS projects like Linux, OpenOffice, Gimp and so forth, but don't go thinking that OSS === Good Software any more than Pay For Software === Good Software. You get utter tripe in both camps.
http://twitter.com/onion2k
Once one company gets their employees to go along with a heath care cost increase or a salary cut, the other companies will rush to offer just as low pay and benefits. They call this "competitive" compensation. So if the jobs can be outsourced for cheaper, then the majority of businesses will all race to find where that is. It happened with manufacturing jobs, it is happening with service jobs. I don't really know what (if any) jobs are "safe."
Also, don't think this automatically translates into lower prices. It doesn't make the products better or less expensive, just cheaper to make. How much in lower prices do you pay for your Nike tennis shoes made in Burma?
Let's look at a few trends:
- Automatization leads to fewer and fewer workers being needed to do the same amount of work, meaning higher profits for the producer.
- Outsourcing leads to those workers being paid less and less , meaning again higher profits.
- This, in turn leads to higher unemployment rates and a higher number of workers with low wages.
- While any individual company might profit from cost-cutting measures, wide-scaled implementation of these measures will lead to too few consumers with enough money to buy the products.
- Thus, to keep the system going, those profiting from it - the producers - must eventually give back enough of the profits to keep the whole thing going, otherwise the distribution of wealth will be too uneven to allow the system to work.
(If you happen to be immoral, other possible ways to boost the economy would be forceful destruction of goods and/or workers, which would a) create the need for rebuilding the destroyed goods and b) lower unemployment, because after the destruction there'd be not only more work but also less workers left. This process is commonly known as "war".)
Yup. About the only way to win is to own your own business and screw your fellow Americans. We live in a society built around sociopathic greed.
It's a nice theory but you forget that equilibrium may never be attainable. Skill and knowledge starts in a location just as it did with all these industries for autmobiles, programming, etc.
So the cycle we have today, will be the cycle we have tomorrow, or hundreds of years from now, just with different industries, different technologies and different products. You'll benefit from the countries establishing better infrastructures, but did you really expect some countries to continue their civilizations on candle-power? The employment cycles and people wallowing in corporate migration-mires will continue. People will always be subject to the fear that they will lose their jobs to outsourcing. Infact it will be easier and faster every time as corporations establish a base of operations in all the potential countries, and have accumulated experience from making these shifts.
One place will always be better than another, in the eyes of a profit-seeker. Making these evaluations and determining the best choice is what executive decision makers get paid big money for, isn't it?
"Last one in is a rotten goblin!" - Kepp
"Kill or be killed" is not an enlightened guiding philosophy. It is not the principle upon which the United States or any other modern democracy was founded. It's unfortunate so much cynicism exists that this philosophy can become so widespread. It only leads to economic uncertainty, fear, and a life little better than living in a cave wondering how you are going to catch your next saber-toothed tiger.
Aspiring to be a human is not a right, it's a responsibility.
<a href="http://www.joblessjimmy.com">Work is dumb and so is Jobless Jimmy.</a>
1) Supporting the likes of Osama bin Laden and Saddam Hussein by castrating the CIA
Actually I think castrating the CIA would do a good bit to prevent the rise to power of types like OBL and Saddam. Ya' see both of them had a lot of help from the CIA earlier in there 'careers'. The CIA has a policy of supporting the enemy of our enemy, no matter how unsavory the character is, or what his motives are. Well, when you lie down with dogs you get fleas. And we are paying the price for our past actions now. And we are doing it again. We are, so hypocritically, allowing a terror group in Iraq to keep it's weapons and camps, because they are against Iran. I for one will not be surprised one bit when in 10-20 years we are dealing with that group forcefully after they blew up some Americans.
"I'll have a Guinness, no wait, make that a Coors Light" -Grad student I work with, who shall remain anonymous...
One of the horrible things about the global economy is that it makes labor essentially a worthless commodity, since the amount of supply far exceeds demand. Due to anti-competitive pressures, new businesses aren't forming to soak up excess demand for cheaper products. Therefore, a few select corporations profit immensely, while the population of the rest of the world gets treated like slaves. But, hey, I guess the word "free" is in "free trade", so therefore it must be a good thing.
Let's compare the two types of devleopment.
:-) Those types of people are probably NEVER going to try open-source code and they will just live with whatever product the market leader produces for their needs. I have worked with many people like that, and thankfully most are no longer in positions of power. The rest are praying that nothing ever happens to Microsoft, or if it does it happens slow enough for them to move to another position.
Issue: I have a software package that doesn't due what our company needs it to do and I need some modifications to it. The developers/company doesn't want to do it.
Closed Source/Proprietary: - You beg the vendor to do it, and threaten to switch if they don't. This is generally a limited threat, because of the fact that it will cost your company a huge amount of time and effort to switch to another vendor (who will have other issues). You could offer to pay the vendor for the development, but unless they are a small shop this probably won't do the trick either, or you will be paying HUGE $$$$ to them. You could have your own developers, provide some type of workaround, but this will break when the vendors upgrade/fix their code. Basically you have no good option, except to pray that the vendor will address your issue. Also when the vendor does release the upgrade, it will probably contain code enhansements that you don't care about, but will probably cause you other errors... I have lived in this world for a long time... and still do with Oracle and Microsoft.
Option 2, use Open Source: You quickly determine that nobody is going to work on the "patch/enhansement" that you want. You will need to now hire a coder that knows the language of the system (probably C). That coder will have to take some time getting up to speed on the program, and then fix it. The coder can then release that code back to the open source community, and it will "probably" make it in future releases. Now if you find yourself making significant changes to the code on a regular basis, then I would hire/contract development to give you what you want, and you wouldn't have to pay for time needed to get the developer use to the code. They can still release their code back to the open-source community, and it probably will get put in the main codebase, so you will be protected with future upgrades.
Both options cost time and money, development isn't cheap, and some companies hate giving stuff they paid for away for free. However, at the end of the day THEY ARE IN CONTROL!!!, not some outside vendor.
This flys in the face of "nobody ever got fired for buying xxx".
The more I learn about science, the more my faith in God increases.
However, at the end of each bit of the cycle, the areas are richer than at the start.
Thre are now more educated people in India, they have a better economy and they've got moer infrastructure than before.
As the money gets pumped from place to place, there's a gradual (and slow) increase in the quality of living.
Eventually you run out of people who will work for rice and you have to step up to paying a slightly higher amount, and the big cycle begins again.
My Journal
And that's when they transfer you to "their supervisor" - who's back here in the US and actually knows the product.
But the call center full of untrained people in India with computer screens guiding them? They're fine for about 99% of the clueless users out there who don't realize that the answer is in the documentation.
-- Josh Turiel
"2. Do not eat iPod Shuffle."
First of all, if anyone actually said business is about saving the world, then you were stupid for believing them. Of course its about making corporations rich! And let's not obfuscate things, it's about making individuals rich, stockholders specifically. Which is awesome! That means that they were able to present someone with a better alternative use for their dollars than anyone else at a moment in time.
Anyway, the whole free trade thing...I live in Texas. I'm tremendously concerned about: <MASSIVE SMARM>
Come to think of it, I'm a programmer living in Dallas. I'm very concerned about all of the IT jobs that have gone to Austin and Houston. Perhaps I'll petition my local government to restrict companies from farming out jobs to them.</MASSIVE SMARM>
Here's the point: I pursue those restrictive policies, and so Austin does too. Or Florida, or whatever. Of course, Florida wouldn't care about the orange grove jobs they'd lose to Texas, so they'd do something like Texas-produced steel, or something we specialize at, just like Chicago specializes (duh) in Chicago tourism.
To an economist, this is a real head shaker. This whole sequence I'm talking about is called reciprocity. It's a solved problem in game theory. The only people who argue about it are people who haven't read and understand the solution, i.e., 90% of the whole world, unfortuately.
Now that I've kind of dropped a nuke on this whole argument, I'm going to pull back a bit. There is such a thing as hidden costs in free trade. I obviously understand fundamentally that free trade is a Pareto optimal solution for nations, and yet, I don't think we should trade with China under certain circumstances. Why? Because the cost of goods carries a moral cost borne in production not represented by the price. If I buy a shirt from China, I'm not entirely sure it wasn't produced by PoliticalPrisonCo (motto: where products are made by people who think like Americans!) I'm open to the idea that that factor might exist elsewhere. I don't, however, see that factor in dealing with India.
If your bitterest enemies are people who hack the heads off civilians, then I would say you're doing something right.
I fear I can't completely agree with this. There are too many cases where an organization, be it corporation or government, really does exhibit behavior that's different from its constituents. Look at an organization as a sort of life form built out of people, just like people are life forms built out of organs and cells, etc. Members will do things "for the organization" that they just wouldn't do on their own, or for themselves.
IMHO, there is a real difference here.
The living have better things to do than to continue hating the dead.
No, you need to find a high-paying occupation that by its nature cannot be outsourced to foreign countries.
This is why so many intelligent Americans end up being lawyers.
"dope will get you through times of no money better than money will get you through times of no dope"
I want more outsourcing! In fact, I want companies to start outsourcing managers, exects, QAs, designers, and accountants. I want those people to feel the results of unemployment and I can't wait to see guys in Armani suits bitch about it! Why? Because I want them to feel what thousdands of American IT workers feel right now. I want them to wonder about all the years they spent in college, all the loans, morgages, families, kids and their future. This is how I feel whenever I start cutting out coupons and wonder if I have enough money to pay my rent this month.
Until the issue of foreign labor hits the hightest steps of corporate ladder nothing is going to be done. The funny thing is that if outsourcing is going to continue at this pace, pretty soon we'll end up in a world where only a few people will have buying power. Both American and foreign workers will not have capital; just watch the world's economy go down the crapper.
This can be clearly seen in the French governments illegal blockades on British beef. Years after they were taken to court and found to be blocking imports for no valid reason, they are still doing it, because otherwise their rural farming communities would go bankrupt (and agriculture is a powerful voter influence in France).
The same is true of steel import tariffs imposed by Bush.
So, we can see that fundamentally the concept of free trade is broken - like most of classical economics, it doesn not work in the real world, and to pretend it does is to deny reality.
Most "real" economists have realised that free trade is not something that should be preached, because despite best intentions it has simply become an abused idea. "Free trade" in practice meant the ability for the US to freely export its goods, but not the other way around (and Europe is just as bad in many respects). This has led to crippled economies in the third world.
So, to say it's a "solved problem in game theory" is correct - it's a solved problem in theory only. In practice, it's not a solved problem and people are looking at alternative economic constructs to help increase wealth and distribute it more fairly (see the work of Lietaer and Gesell for some examples).
One would think that more than two centuries after The Wealth of Nations was published this sort of dark, superstitious nonsense would have been extinguished by the light of reason. Sadly such is not the case.
The beauty of a market is, provided that fraud is not allowed, the greed of all paradoxically leads to the betterment of all. Yes, the corporation wishes to spend less, and so goes with a cheaper supplier of the same good. Well, guess what--that's better. If B can produce the same as A for less, then it is a waste of one's money to use A; it's also a waste of A's time. Going with the cheaper supplier rewards those who do more with less; it is economical.
You know this, I'm certain. Who does not shop for the best prices on groceries? Why is it bad for an employer to shop for the best prices on labour? Of course it's not.
There is the law of comparative advantage to keep in mind as well. If A is better at X and B is better at Y, then it is best for A to devote all his time to X and B to devote all his time to Y; this ends up yielding far more of both X and Y than otherwise. If India is better at call-centre staffing at the US is better at R & D or at finance, then it is best for India to focus on call centres and the US to focus on R & D or finance. This yields more call centres (a good thing) and more research or financing (also a good thing).
The message in return being sent to Americans isn't,"Thanks for helping us get to where we are.", but instead was, "Other countries are out-competing us, you better start working more hours." Of course, what they don't state explicitly, is that you are simply competing with another branch of your employer in a different country.
Hey, you have no right to a living. Why should anyone pay you more to work less? It's insane, like buying lettuce for $50/head. That's what competition is about. It's rough, but that's Real Life.
This is how the world will look for the next fifty years or so. Formerly, markets and labor pools were isolated from one another by transport and regulatory barriers, with the result that standards of living could vary wildly from one part of the planet to another. Now, the barriers are low or gone, which means that the places with lower-priced labor are pulling jobs from higher-priced areas. Of course, this decreases the econonmic level of the former and increases the latter, causing wages to fall in the source country and rise in the sink country. Let this process run long enough, and the whole world will have roughly comparable labor pools working for roughly comparable wages at a roughly comparable standard of living. If we're lucky, we'll get everyone at something close to the current "first world" standard; if not, we'll get a straight averaging of the current world situation.
When all you have is a hammer, everything looks like a skull.