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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.
Oh well. I can always fall back on that SCOX stock.....oh wait.....
It's really hard to come up with anything else to add to this story. I mean, did anyone _not_ see this coming? Global companies will do what's cheapest...and there will always be someone who'll be cheaper than you.
Now, when they start outsourcing management...that's when I'll be happy.
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.
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"
> 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.
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."
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
Elbonia, lovely Elbonia
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".)
This is even better, now you can get even more developers for the same price, or the price for Indian developers will be cheaper. It's a win-win situation for you.
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!
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
it kinda sucks for the Indian employees who are going to be out of work now.
Maybe this will lead to an explosion of Indian blogging.
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.
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.
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.