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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.
So stop competing on price and start offering a good, high quality, reliable service that people will pay a little more for.
http://twitter.com/onion2k
This reminds me of the story of Saudi Arabia and mideastern oil. Way back around the turn of the century, there was no great oil industry in the Arabian Peninsula. They were trying to find something to do with this deset wasteland. Then, the US comes in, offers to pay the countries (then Saudi Arabia was the focus) 1 penny per barrel exported, all drilled by the US, worked mostly by US oil workers. Now, we see what has come of this situation... Should we be as worried about tennis shoes and cheap nylon jumpsuits?
Speak for yourself.
Looks like Buddha is *not* smiling down upon the Hindu children. Pretty soon, techies in India will be doing what techies in America are doing:
Slaving for low wages or searching for a new job.
May "Bob" smile down upon them instead, may they quit their jobs and SLACK OFF!
I think there are multiple reasons here...
Most of the countries named have an actual infrastructure. EG I doubt Romania, Russia, Hungary, the Czech Republic have electricity problems.
Many of the Eastern European countries are not that far away from the Western markets, with some actually joining the European Union.
All in all it just makes for simpler business....
Funny though... (in an ironic sense)
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
Ever tried to force an open-source developer to change the design to meet your needs? Especially a large project not in a mode where they are begging for respect by pandering to anybody who will deign to email them.
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.
What's good for the goose is good for the gander. American employees hopefully won't lose any more jobs than they have already; but it kinda sucks for the Indian employees who are going to be out of work now.
The biggest problem with a global economy is that it caters to the lowest common denominator. The second biggest problem is, you more often than not get what you pay for. I have to wonder if American IT companies are even concerned with the quality of their technical support anymore?
!#@%*)anks for hanging up the phone, dear.
Kill or be killed. Always has been and always will be.
You can't tell the RIAA to change its business model without by being prepared to do so yourself. Be flexible and keep with the times.
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Cheap website reseller hosting Dragon Action Figures
A quote from the original Wired article...
Farhat Gupta, owner of several Bangalore call centers, said that little attention is paid to technical training, as "all the answers are always on the computer screen in front of the workers. We exist for people who do not want to use the Internet themselves to find their own answers."
The only time I ever call technical support is when checking the manual and web doesn't get me the answer. If the person on the other end of the line has no more information available to them, what's the point?
Personally, I think the multinats are on to something. They're cycling through countries, creating artificial "boom-bust" cycles in employment.
Take for example, the automobile industry. In the early 1980's, the US auto industry had some of the highest wages/benefits for auto manufacturers in the world. Alot of those jobs went overseas to Japan/Korea who (at the time) had lower wages (and better quality). This depressed US wages. Now, the reverse is true. Both German and Japanese automakers see that US wages are lower and have located plants here.
So goes it with IT. US coders were first to the trough and wages went up. Then the multinats moved to India who trained their people well and had low wages. Indian coder's rates go up and now the multinats are headed for Eastern Europe. As tech wages get lower in the US and we refocus on quality, the multinats will move coding operations back here and the cycle with start anew.
"We're sorry, but the website you're trying to reach has been disconnected."
Yeah, those Indians sure are living the high-life financially at the moment.
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Furniture, lamps, and antiques Australian medical couches
The history of the textile industry, I think, gives a pretty clear indication where the future of IT is headed, particularly due to the big trend of American corporations to outsource to India over the past few years.
The textile industry, at least what I consider the modern, industrialized version of it, began in and generated considerable wealth for England. Then, with the promise of cheaper labor, the bulk of textile manufacturing moved to the Americas, specifically the Carolinas, Georgia and a few New England states. The total generated wealth of the industry started to decline at this point, and another disturbing trend started as well. The distribution of the wealth began moving to a smaller percentage of people, namely the factory owners. Again, the prospect of cheaper labor induced the factory owners to move the bulk of textile manufacturing first to Mexico from the United States, then to the Far East from Mexico.
The important things to remember is that the total wealth generated by the textile industry declined with each geographic hop around the globe, and that fewer and fewer people got a larger and larger percentage of the total wealth of the textile industry.
How does this relate to IT? Well, considering that in the late 1990's we saw a mass movement of IT jobs for the US to India, and the associated wealth generated by the IT industry decline, I think the example of the textile industry is playing out again. Soon, the Indians who offered such low labor rates to win contracts and jobs away from American workers will be on the other side of the equation.
Russia, Eastern Europe and probably some African countries will do to India what they have done to America. The sad thing is that while India has been "carpet-bombing" the IT industry in the United States over the past few years with cheap labor and low costs, ultimately they've been laying the ground work for their own, future demise.
If all you offer is low costs and a cheaper price, then there is nothing to keep customers loyal. As soon as someone else comes along with a cheaper price, your customers will move to them. All because of the trend you started!
Same is true with regular white colar employee's. Time magazine did an article last month about the shrinking pay check. Basically in the 1990's employee's as well as IT were both viewed as investments. Today they are viewed as worthless commidites that eat up costs.
The problem is many IT managers may agree with you but the CEO is the one saying $300 a month for a programer is what I am willing to pay for. After all website design and IT support is just minimal maintanence costs. It provides no value to my shareholders.
http://saveie6.com/
To some degree the former colonies of England and America will always have an advantage. These would be mainly India, the Philipines, and South Africa. These countries hve people who learned English at an early age and understand US/UK business habits. Jobs such as customer relations would work best there. Even software development involves a lot of communication. This is possibly why India seems to have beat China and Japan.
How much money does a typical large company pay for software?
500 clients at $80 a pop for the os = $40,000
500 clients at $300 for some applications $150,000
Every 3 years per major release of windows.
Or?
Pay one human who's part of a open source project who fixes bugs and submits fixes @ $63,333 yearly, only diffrence is, you get them first.
Any company with 500 machines or more is going to have some form of help desk or software support contact. You could spend your money and actually buy a comercial product, or you could employ the people support open source.
The "pay for people not for software attidude"
Not to speak of the fact that having a viable project under your belt, rather then basic programing skill and bug fixing, would likely make you more desirable by employers.
There is no sanctuary. There is no sanctuary. SHUT UP! There is no shut up. There is no shut up.
and I do not think hugarian IT workers are cheaper than the Indian IT workers, to the contrary. One of the problems my coutry is facing currently is that the workforce is not as cheap as a few years ago. Many corporations plan to move towards east (Russia, China, etc) if the situation does not change. I think the same can be said on the neighbouring countries, too. Workforce in the eastern block is not as cheap as it used to be.
Government cannot make man richer, but it can make him poorer. - Ludwig von Mises
This doesn't surprise me, though it's happened a bit faster than I expected. Then again, that is sort of the point I was going to make . . .
A global economy and global communication accelerate things. The ever-increasing need for IT accelerates people seeking new products, ways to support old products, and development of new projects. Throw these things together and you have a recepie for change and unpredictability - and a chance for uniformity at relatively quick speeds.
The Outsourcing Raget can't go on forever, and my guess is this is part of the last hurrah (or next-to-last) hurrah for Big Outsourcing Moves. At some point all potential markets will be explored, competition and increasing need will affect prices and skills, and you'll probably end up with the bizarre situation of a global market where IT resources seem relatively alike. I wouldn't be surprised if we saw it in ten years.
I work for a company that tried outsourcing and got burned horribly (last I saw, 50% of all outsourcing projects fail). Ironically, they found that good organization, hiring good people, and careful cost containment actually saved them money over outsourcing's total costs. They hired more people (at very good wages) and ended up coming out ahead.
Outsourcing has its place. But my guess is the enthusiasm for it will dip in time, because the speed of change will create homogenization.
Just my theories.
"The Sage treasures Unity and measures all things by it" - Lao Tzu
I have commented on this before to the people on slashdot promoting free trade. I told them that this was not about helping the people of India, and as soon as they got too "uppity" the corporations would drop them on their face and move somewhere else. See, folks, this isn't about helping out poor countries, this is about making corporations rich. It's not about exporting capitalism, it's about importing a 3rd world standard of living, which is why so many people around the world are against this. It's about making a market place, a product out of entire countries, whose populations are shopped by corporations, much like individual slaves were shopped for in the early United States. 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.
bullshit, Gekko-boy. it just proves that people get desperate and will indenture themselves for lower wages. What happens is that wages hit rock bottom and then companies move there. The wages might be higher than they were the last time they hit rock bottom, but that's just inflation at work.
The only people getting richer are the board.
Stop worshipping at the scrotums of businessmen and get a clue. Business is out to fuck you and they will fuck you.
Seriously, in the future prisoners will write code. As companies look for cheaper labor, this is the inevitable conclusion.
Just imagine, prisoners are paid little or nothing for their work and can be easily penalized for poor quality. Imagine getting say 3 months added to your sentence for every bug! Or how about extra conjugal visits for software that sells a million copies. I could go on and on!
I wish this was just a joke, but I see little that could keep this from happening in the US or anywhere else. And few companies or consumers would care.
To the making of books there is no end, so let's get started
I run a company in Holland that just does this.. leverage eastern Europe to achieve similar cost levels but better control and quality. Budapest is a 1.5 hour flight from Amsterdam and is in the same timezone. Don't forget, these are the guys that during the communist era were reverse-engineering western technology. I have NO idea why companies continue to develop technology anywhere else.
I am getting sick and tired of /. crowd of crying babies - oh all the IT jobs go overseas, oh I cannot find job with nerf guns anymore, oh I actually have to _compete_ with someone else for this position.
Wake up and smell the reality -
Dotcom crash was just a correction
Now, just like always, business is about making maximum profit out of minimum investment.
Foreigners grab US IT jobs because they ARE for grabs - US edu system cannot produce capable talent fast enough
Keep yourself on the edge, learn new stuff: enterprise Java, dot Net, whatever and you will be allright no matter what.
I entered the market in 1994. I have never been fired or laid off. I always stayed ahead of the curve and quit the moment company was no longer satisfying my personal goals. I maintain very comfortable income and can live wherever and drive whatever.
To be able to do so, I spend roughly $2000 a year on computer books and code outside of workplace for at least 20 hours a week: open-source projects and my pet ideas. I use advanced technologies for those so when time comes and this particular technology is finally adopted by the mainstream I am ready to apply for those jobs and have experience with new stuff.
So watch, listen and learn and outsourcing will not be a problem not in your lifetime not ever.
Posting as AC because of the location I am at right now.
will we ever get to a point at which everyone's lives will have been enriched? i mean, will we keep leaching off of the lowest paid people and finally have helped everyone?
This is my digital signature. 10011011001
Why is Singapore included in the list? It's a tiny island-state: you can see the entire coastline from the air. I suppose IBM can buy the entire island to staff one of its minor divisions (I'm kidding!). It has first-world living standards, so that would be the last place I would look for cheap labor. Sure, they speak English, but so do most Americans. About the only advantage I can imagine is having a 12 hr timezone difference is handy for tech support call centers.
Put your college hat back on for a moment, and remember the Signals and Systems course...
Think of an economic cycle as a simple oscillator. As long as we had loosely-coupled economic systems in various nations, they could go through their economic cycles somewhat independently. Even better, the loose coupling acted as damping to calm down the ranges of cycling. Things only get REALLY bad when the cycles coincide and/or badly influence each other, like in the 1930's.
Enter "Free Trade" and globalization. Instead of multiple independent systems with damping, we have one bigger, more complex system, and who knows where the damping is. How do you make this giant mess stable, or at least limit the swings?
IMHO the creation of a giant, undamped, unmodelable mess is the real downfall of globalization.
The living have better things to do than to continue hating the dead.
Foreigners grab US IT jobs because they ARE for grabs - US edu system cannot produce capable talent fast enough.
Wrong, lots of capable talent in the US, the talent just wants more money than the foreign outsource shops cost. Do you understand free market economics? Price point is everything. You sell yourself cheap so you never get laid off. I cut out the middle-man and contract directly with the customer reducing my market price-point and have more offers for work than I can service. Foreign outsource shops have lower labor costs so the work gets bid to them.
This is from a really high up "bird's eye view".
What separates the low per capita income countries from the rich countries ?
Answer : Industrial goods. Rich countries have long had the advantage of selling industrial goods to other countries which don't have them.
Why do rich countries get richer and poor countries get poorer ?
Answer : The enabling capabilities of mass production and economies of scale severely limits the capabilities of poor countries to compete in selling industrial goods. In other words, third world countries can't sell and produce cars because the market is already full of American and Japanese cars (ok, and quite a few European ones).
And typically, poor countries have agriculture-based economies. In order to get vital foreign currency, they have to sell agricultural products and compete with a lot of other poor countries selling the same thing. There are no economies of scale in doing farming.
Except when mechanized farming is implemented which is beyond the reach of most poor countries.
Indeed, the rich countries also compete in selling agricultural products and win big because of mechanized farming. Factor in the rich countries' government's direct and indirect subsidies.
Add to this the conspiracy of "Development Aid" to poor countries by the rich countries which have "strings" attached that basically prevents the poor countries from investing in industrialization programs.
Getting back on topic, what is happening now ?
Answer : Migration of labor. The huge differences in standards of living has finally reached a point where corporations could gain competitive advantage by moving their operations to poorer countries (very obvious).
Why is this happening ?
Answer : a)Education. Poor countries have finally built their education infrastructures that enable them to be globally competitive. From my observation here in the US, people only take collegiate level education when the ROI is good. In other countries, collegiate level education is normal. Everybody who could afford it gets one. b)Stiff corporate competition.
What is the effect ?
Answer : There will be a leveling out. Think about the excesses of the 80's and the dotcom boom. Those will be no more. Poor countries that will be able to take advantage of this labor migration will obviously benefit.
However, for political and cultural reasons, the businesses and jobs that have higher value added will still remain in the rich countries. On the other hand it remains to be seen if the rich countries' labor sector could withstand the job losses. Their governments should find a way to soften the impact do avoid economic collapse.
All these seems obvious. It's the invisible hand !
It is just trimming the excesses of purchasing power that have existed during the 70's, 80's, and 90's.
I don't know much about the whole situation, but consider:
Serious Sam is considered one of the most fun games of late. It cost $20 at the store. The developers are all in the former Yugoslavia. The cost of living in Yugoslavia (and living wages, etc) are *tiny* compared to the US. Not only do they not have to sell a lot of games to make an equivalent amount of money as they would if they were based here in the US, but it proves that there are LOTS of creative and talented programmers elsewhere who can produce QUALITY work and still make a good living for themselves. Personally, I love seeing other countries offer up their best and brightest, it ups the bar for the rest of us. I like the competition!
If you were me, you'd be good lookin'. - six string samurai
There are many people who given the choice between firing 3000 workers and quiting themselves, would choose to quit. Given the choice between 3000 workers and the corporation going under, these same people would choose to fire the workers though. In this example these people have done something for the organization which they would not do for themselves. The poster never said that they are not making decisions for their own gain.
The work people produce is a commodity that is traded openly on the world market. Get used to it. Your job is neither "yours" nor is it a "job." It is simply the current value of the manifestation of your labor, period, and can be exchanged (by your employer) for goods and services or even phased out completely with absolutely NO INPUT FROM YOU. I get so sick of hearing people bitch about "that God damned Mexican took MY job!" when the job was never yours in the first place.
It is really very simple, people: perform a service that people value highly => get paid well.
Perform a service that some 12 year old kid in a sweatshop in the Phillipines can also perform => lose "your" job.
"I'm just here to regulate funkiness."
I'm a Sr. UNIX Admin with over 5 years of experience with Linux and some experience teaching this stuff.
I would work for free if we could all agree to do away with money (or that money has no value) so I could afford to grab food from the local supermarket and live in a small home or apartment close to my job. I don't require a lot to keep me happy. Mostly just musical equipment, computers and tools/books that help me do my job.
But I know hardly any of you would ever agree to give up your money so its a safe bet I'd never have to work for free. Too bad. I would have let you stay home and watch TV. I only care about getting the work done and automated once and forever. I find myself continually repeating the same tasks over and over again for money, in our current system, but I guess this is what makes more jobs.
India has had wage inflation to the point where Indian engineers may one day cost more than American engineers. Keep your dusty old social security card around.
1) Indian labour is cheaper than Eastern European / Russian.
2) Russian offshore-development industry is much smaller than Indian one (both in absolute terms and per capita).
3) There are no significant growth reserves (this also applies to Eastern Europe).
4) The existance of a few successful companies doesn't constitute an industry (or a threat to India).
5) Without initial investments you can't create a large IT industry. India did those investments.
6) There are no real figures that indicate this process of "outsourcing outsourcing" is actually happening.
7) etc.
Usual sensationalistic journalism. Bettet than Blair's inventions, but not much better.
Future Wiki -- If you don't think about the future, you cannot have one.
When will ordinary consumers begin take advantage of offshore sources? When will it become practical for ordinary people to go offshore?
Banking? for financial privacy?
Insurance? to get around government restriction on exclusions on aids, alcoholism, mental health that are essentially a tax on low risk groups to support high risks groups?
Other examples?
Wow. Now I really want a time machine to take me back to 100 years ago. Because according to you, before the advent of public schools, the world was a utopia.
But what you don't realize is there has been a hundred year effort since the advent of public schools to train free humans to be part of an organization rather than think for themselves.
So the world was filled with clones of Plato and Aristotle, filling the world with enlightened thoughts. But tell me, if the world was filled with altruistic free thinkers, who formulated and implemented this vast conspiracy?
This is what the study of sociology was originally created for. This is why books like Brave New World were written. This is why you spend 16 years of your life in school.
One would suspect, especially one with a sense of humor and a taste for sarcasm, that Brave New World was written to satirize this type of world and make free thinkers examine their own world. (Oops, no more free thinkers. Blows that theory to shit.)
The modern system of organization exemplified by the corporation was the product of vast studies and research, it permeates our very existence in every way. It was done so that people stop thinking for themselves and do what they are told.
And you escaped this web of mind control, how?
It is a difficult concept because simply having free people live together does not produce the amoral behavior found in corporations. It requires a certain kind of person. That kind of person must either be trained in a school or desperate. It is usually the former.
So, in this utopia of pre-public education, there were no violent acts, violations of others rights, or crime of any kind?
Your apparent ignorance of this world wide trend over the last 100 years proves you are a dumbass. Don't be so quick to judge.
Don't forget to refresh the tin-foil in your hat. Cheers.
Probably not but perhaps people would consider working for food and drink provided at the work site. Now that's getting down to basics. Of course - that would probably solve your absentism problem but seriously - all lot of companies consider outsourcing more than just a cost equation. The India model today is used by a lot of companies because the functions ( call centres, IT development, are just not core competencies the company wants to spend a lot of bandwith on). I think I see a little xenophobia showing here???