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Why Outsource When Workers are Willing to Telecommute?
An anonymous reader asks: "Corporations and management resisted telecommuting for years, now jobs flow to distant nations. Did telecommuting become acceptable because of the greater distance? Because some form of on-site management persists? Because labor laws are favorable? Because a well paid middle class is a political threat? Is it really as simple as money? I'll work cheaper if I can choose where I live and work. Must I leave my country to do so?"
One advantage of having your workers in your office, despite labour costs, is that you can throttle them when they screw up, and the laws that cover labor are known to you directly. Any additional contractual law is also easier to enforce. Also, you can physically chew them out if they keep screwing up, so you have more direct management control.
If they work from home, you don't have nearly the same control as if you walked over to their cubicle to yell, and they're as expensive as they would be in India, to boot. So, you gain nothing by doing this.
Do not look into laser with remaining eye.
This may not pertain to *everywhere*, but it is a common problem. A lot of the reason it hasn't taken off is that the parent company assumes liability for what happens to you or your 'office' while you're working. In many jurisdictions, they also have to inspect your work area, etc. I imagine it is a support and legal nightmare.
Most of the outsourcing or moving of jobs overseas that I've seen (and what happened where I used to work) is not to a bunch of people sitting at home. It's opening up a whole office there, that functions just like an office anywhere, with managament in place, etc.
I think the typical "telecommuting" sense is that people are working in isolation, typically from their home. I see that as only marginally more acceptable now than it was before. Some companies embrace it, some don't, some do a little.
Jobs flowing overseas is something different. It's not just telecommuting on a grand scale.
It's ironic. For years, many businesses didn't like employees to telecommute because of communication problems, and the boss couldn't keep an eye on you to make sure you were working. In my mind, telecommuniting 1-2 times a week is great, as long as you get the work done.
And yet many of these same places have no problem outsourcing the same work half-way around the globe. Judging by the poor quality of some of the code I've seen from these outsourceing places (not all), there are a fair amount of communication issues, and then places aren't getting the work done properly.
Double standard?
"Can of worms? The can is open... the worms are everywhere."
Would you rather have one employee working from home or 10 employees in India? Who will be more productive?
Base on my experience with Indian development work?
One local person (regardless of ethnicity, country of origin, religion, etc.) who speaks fluent and clear English.
A computer once beat me at chess, but it was no match for me at kick boxing -- Emo Phillips
The real question is; will they let you keep your programming job if you are willing to relocate to India? Are you willing to live in Bangalore, Pune or Delhi for $12-14k/yr?
I guess you would have to look at the purchasing-power-parity for that salary in those locations before making that decision.
Whenever the offence inspires less horror than the punishment, the rigour of penal law is obliged to give way...
While I'm sure most here will play up the labor issue, the clients of my company's outsourcing solutions are paying mainly for on-site management of staff, project evaluation and management, and centralized billing cost-structure. If you use telecommuters instead of an outsourcing solution, you're still responsible for lots of administrative work, like payroll and project management. The main advantage of outsourcing is not only cost management in a labor sense, but in an administrative sense.
I think I'll stop here.
I have a friend who used to live and work in Texas. He was spending 3 hours a day just commuting to and from work. Was not permitted to Telecommute.
He got the bug to get out of there. Decided to move to Alaska. Once the company knew he was leaving, he was able to strike a deal and telecommute from Alaska!
Makes absolutely no sense business wise, since now he is much too far from the office to come in even if he had too, but if American business always made the choices that made sense then Scott Adams would be out of work.
I'm an American. I love this country and the freedoms that we used to have.
Companies did embrace telecommuting before. It did go through a phase when it was hot, but things eventually cooled down. I remember reading about this on my "Social Analysis of Computerization" class. The reasons given were that:
- Teleworkers are harder to monitor.
- Apparently, telecommuting hit productivity hard.
- Workers aren't in office enough to get promotions.
- In the office, there aren't enough people to keep ideas going.
- Working at home can be distracting.
- Telecommuting breeds resentment among co-workers since they are anonymous to each other and also because non-telecommuters might dislike others getting such a "rosy" deal.
Ultimately, however, it came down to managers being distrustful of new ideas. They dislike having to put such a high level of trust on employees that they rarely see. They like things the way they are right now and wouldn't really like to see them change. Maybe after some time passes, when many current prospective telecommuters rise to managerial positions, we might see telecommuting establish a strong presence.
Posting messages for the betterment of humanity..
Yes. So sorry to see you leave! More jobs for me!!
Uh, not really, thus the entire point of the parent post. Rather than hire you or I for "only" half our salaries an allowing us to live somewhere cheaper, companies would rather hire someone in India or Eastern Europe.
So someone moving to such a place doesn't actually leave more jobs for us, it merely acknowledges that fewer and fewer jobs remain for domestic IT workers to take.
And now even IBM has gotten in on this, effectively "legitimizing" such reprehensible business practices.
Well, we may all suffer for it, but eventually corporate America will realize that you can't sell products to people who have no money. So just let them keep laying us off, and when the starving mobs appear in the boardroom with torches and pitchforks, they can't say they couldn't see it coming.
I have not dealt directly with outsourcing but I have yet to hear of one long term success story.
Most of the stories go something like:
"Outsourcing saved us a bunch in the beginning but then they started charging us for every little change we wanted to make."
IMHO outsourcing often is used to hide the fact that costs are out of control. Costs in areas that are not needed at all or are very ineffecient. Management never blames themselves so they decide that it must be the over paid techies.
My roomate has a great idea. Outsource management! I hear tons of complaints about ineffective managers. Why pay managers so much when you can get a monkey to contribute nothing (ok maybe a little) to getting things done?
Keep the Classic Slashdot.
Must I leave my country to do so?
Yes! Follow the jobs. You'd be surprised that the standard of living, working conditions, vacation, family/work balance, flexibility, job security...overseas can make the U.S. look like one giant red white and blue sweatshop. Sure, the pay is higher in the U.S. but can you call 70 hour work weeks with little or no vacation, or job security living?
If exporting jobs isn't "unamerican" than certainly following those jobs overseas isn't.
The people of the U.S. should write their representatives and demand a law requiring that any nation that accepts our companies and jobs should accept our workers. Right now it is a one way street, companies are free to export jobs but employees are stuck behind visa laws. Until this inequity is fixed we will never have a truely free global market, and companies will continue their headlong race towards the bottom in pay.
For those of you who work at companies where outsourcing has been used, how has it affected you at work?
At my company, in the past when we had layoffs of course that meant more work for those of us who remained. That being said, management was never so dumb as to think that they could get twice as much done with 50% less people - expectations were reduced to some degree (though not to high enough a degree, in my opinion) given that there were fewer of us.
Lately, however, we've had layoffs where those who were layed off were replaced with outsourced Indian developers. Expectations on our overall team (both those of us in the US and our team members in India) are in accordance with our team size, and herein lies the problem - for all pratical purposes (that is to say, actually developing useful code), our Indian colleagues do not count. I mean no disrespect to them, but between communication problems (most of them are reasonably fluent in English, but bad phone lines, thick accents, and the need for precision when discussing technical areas make for a bad combonation) and perhaps an insufficient understanding of the systems we work on and/or the technical subject matter, their work is often substandard and has to be redone by those of us in the US. And, since it is those of us in the US who are ultimately held responsible for the success or failure of our projects by the powers that be, we're sort of up that proverbial creek without a paddle.
Anyone have similarly bad experiences, or are we the only ones?
I mean, I've had the experience of being "fortunate" enough to still have my job after a few rounds of layoffs. After the first round or two we didn't really have any replacement for the lost labor, and so being one of the remaining people was bad enough cause we had to pick up a lot of the slack. On the other hand, our management is not unrealistic to the point where they expect half the people to do twice the work, so at least that mitigated the damage I felt to some degree/
Understanding is a three edged sword. - Ambassador Kosh Naranek, Babylon 5
First of all, this entire discussion is just going to get people all worked up. Emotional responses will drive the flow and so many useless words are going to be written on this topic. It is such a shame. Instead of taking the time to do research and think through this "problem" people will just whip off postings of little value. For being so intelligent, most folks here prefer to complain and whine and groan. As usual, even through feelings are strong, no real analysis will be provided and we'll only hear opinions.
Second, if you think for a moment that this isn't going to continue, you are smoking crack. More and more jobs are going to flow out of the United States, and other countries, to countries where the cost of doing business is lower. Notice that I say "cost of doing business" versus salaries. Listen, this isn't just about jobs and salaries and benefits. Those things are a very small part of this trend. You need to look at the entire picture and you need to think about how organizations are determining costs. It is cheaper for many reasons to move jobs to other countries.
Third, you can bet your ass that the output of folks in China and India is as good as the United States. I have first hand experience that demonstrates that quality is no longer an issue in most cases. That's one data point, sure, but I've heard similar stories from my colleagues and I've seen the reports. One more time: Quality is not an issue. "They" can do "our" work, if that is how you think about things.
Fourth, any and all jobs are up for grabs. Forget about competition from other humans, you also need to be concerned with competition from machines. Machines will outsmart us, and they will take our jobs this century. You can go into nursing, for example, but even face-to-face and touch-n-feel jobs are not as secure as you think they might be. With technology, any job can be eliminated, reduced, or changed. That last point is critical -- jobs and job types change over time.
Fifth, the only "solution" to the "problem" of job loss to other countries / technologies is to stay on top of the game: educate yourself continuously, never stop until you die. This keeps you happy, healthy, and employed. Another helpful hint is to be ultra flexible. In your job, your life, your thinking, your location. Be ready for change, and stay ahead...through education and training. Do whatever it takes to be the best, absolutely the best, at what you do. But, don't just focus on that skill or that area. Educate and adapt. Innovate. Treat yourself like a freakin' miniture company. Write articles, network, build value, sell yourself, remain as mobile as possible, never settle for what you have. Be like David Bowie and think of yourself like a product (Madonna, and other smart entertainers do this also). Are you getting the drift here?
Pffft.
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They do NOT make $5K a year, that's $2.40/hr. The average IT wage in India is something in the order of $20K. You'd have a hard time getting by on that anywhere in the US, but in Canada you could get by on the equivalent $28K Cdn (major urban centers excluded) since they have universal healthcare. Which brings up my real intent in this post, would universal healthcare here in the US be a potential job saver since employers would no longer be compelled to foot the cost of health insurance?
Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws-Plato
How much experience do you have with Indian coders??? I've worked on a couple of projects and what we got back was a bunch a sub-par code that had to be reworked by a bunch of overpaid us programmers.
The first job was OK.
The difference was, the one project that worked out well was a limited scope, basic online reporting tool.
The project that had to be rewritten required alot a domain knowlege that wasn't properly communicated, and in all fairness to everyone would've taken longer to educate the Indians in our business than to actully do it ourselves.
I believe what you will see heading offshore is alot of the grunt work, but stuff that requires intimate knowlege of the business process will stay here in the US ( for a while ).
So Long and Thanks for all the Fish.
Now you all know why Dell customer support sucks. They're half the time they don't even understand us/we don't even understand them. (Hence the reason why my friend had to spend 6 months calling Dell customer support back and forth trying to get his Dell laptop and Dell desktop to network properly.. only to have me set it up for him)
IT is going the way of the auto industry. Now that many big companies see that they can get a software product from other countries cheaper they do.
Telecommuting is vastly different. I don't like telecommuters. One or two days a week is okay, but any more becomes more of a hastle. Many peoplw will take advantage of this and work none standard hours or work to many hours to get stuff done, or work to few. I am working on a project now and 3 of the members work at home. One guy in the office created an object. At the same time one guy who was telecommuting created a similar object. Both do essentially the same thing. Had they both been in the office they probably would have talked about this and only one would have implemented it. Had management been more interactive they probably would have found out through a conference call. Problem is that managers in the US don't want to manage either, they want to make money and they don't care how it gets done. Most big companies don't give a rats a** about you working at home in your underware, or nude or even in your cube at the office, they want to make money, PERIOD. If they can get decent work out of someone overseas as compared to you for less which do you think they are going to pick?
If all you want is a hamburger are you going to go and buy the $6 hamburger every day or are you going to get 2 x $1 hamburgers that will work just as well? If both will fill your tummy, and both taste like burgers, most people will go for the 2 x $1 burgers, thinking 'they are getting a deal'. Well think of yourself as the $6 buger and outsourcing as the 2x$1 burger. Most people go for the 2x$1 dollar burgers and save themself $4 in the process. Sorry but thats the way it is!
The auto and manufacturing industries have gone the same way. Its okay to buy clothes that were made in Mexico by some child, cause it cost you less in the US. It doesn't really matter which car you bought, cause many of the parts are made OUTSIDE the US. Just go to auto makers web site and see how many companies are actually 1 company. A Ford pickup and Mazda pickup are the same truck, just with different labels on them, and there are MANY cars like that.
Only 'flamers' flame!
Does slashdot hate my posts?
Sorry gang, I'd have to agree with this one as superficially elitist as it sounds.
I've dealt with offshore outsourced developers and sysadmins on a few occasions -- and it's always been bad. My experience has been that the code or systems are always poorly done. It's also been my experience that many of these outsourcing companys claim to have knowledge and experience, but don't.
Perhaps they are so eager to get the job that they overstate their experience even more than we do on our resumes (I'm in Canada). In one case, I actually had to fly halfway across the world for two weeks to correct the problem, and I can tell you that cost my company a lot of canuck pesos to do it. These projects have always taken more time and money than budgeted and usually more than if we'd hired local staff to do it.
I'm not saying that people in the underveloped nations aren't bright, just not experienced. I've also encountered the attitude that delivering the product does not matter, just saying what you need to say to get the contract matters. Why do you care about repeat business in a global market?
"You disturb me to the point of insanity. There. I am insane now." - The Sprockets
I work for a rather large corporation. Some of us are allowed to telecommute a few days a week. This may cause some folks here on slashdot to call me un-American BUT I have had the opportunity over the past several years to work with a fine group of developers from India. They were h1b visa holders. Due to the impact of numerous layoffs it became more and more difficult to justify keeping h1b visa personel while laying off American workers. I am just being honest here now, so don't take this personally but the h1b developers I worked with worked harder, worked smarter and consistently turned out outstanding code. They were not satisfied with merely turning out code that functioned but would always attempt to optimize the code in order to make it work more efficiently. They are now gone, two have returned to india and one has taken a job in another state. These members of my development team have been replaced by ionter departmental transfers from other groups within the company. The Indian developers never left at the stroke of 5 when there was code that needed to be finished. I never heard them tell me "that isn't my job" when asked to look at something or to help with some project not specifically assigned to them. I too used to wonder about h1b visa folks and now, off shore development famrs, taking American worker's jobs. I must say truthfully that if the cost is less and the level of professionalism approaches that of the folks I had the p[leasure of working with, it is no wonder businesses are turning to outsourcing. I am not making this a blanket statement but let's face it, many of us Americans are spoiled rotten and act like it too! Call my un-patriotic if you like but I woiuld gladly take the two developers who went back to India back into the group as outsourced labor over the 6 American developers here that "replaced" them. The project would not only be done faster but would have fewer bugs to be fixed and it would be running more efficiently as a side bonus!
The Matrix is real... but I'm only visiting!
Take a look at this article in Fortune . With it's high taxes it's long been more extensive to do business in California than elsewhere, but Governor Gray Davis and the Democratic-controlled legislature have enacted so many costly new taxes and regulations that businesses have finally had enough.
A few tidbits from the article:
I have a programmer friend in California that was bemoaning this very negative business atmosphere last week in reference to this article. "In 2001, Abrahamson said, South Coast Building Services paid $500,000 to insure its workers for on-the-job injuries. A year later, the company's bill more than tripled to $1.7 million. This year, the tab nearly tripled again to $4.8 million, enough to erode the firm's profits on its $33 million in revenue."
Quoth my friend "I knew it was bad, but I had NO idea it was THAT bad. 1000 employees, and $4.8 million in workmans comp. Holy fuckin' cow! No *wonder* it's so damned hard to find a job!"
During the Internet boom, the Davis administration spent money like drunken sailors rather than laying the groundwork for sustainable growth. Now it looks like they may finally have suceeded in killing the golden goose.
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
If you don't have those tools in place at your company, and you want to telecommute - I'd suggest putting them in place *first*, getting everyone using them, then try asking your boss. You can point out, at that point, that the communication is the same either way. Otherwise, standard telecommuting really does hurt teams if they can't communicate as well.
I write code.
Going to Nola's or Baha Fresh everyday for lunch? Not anymore dude. thats $300+ a month reduced to $100 by bringing my lunch from home. Now that I ride the train, I dont stop at Fry's twice a week to "just look around" like I used to tell my wife. An easy $150 a month saved just by staying out of the book/CD/game aisles. If I need something now, Ebay has it. Drinks after work with my team? Once a week instead of 3-4 times. Thats another $100 saved.
In one year, I have saved enough to help me make down payments on two rental houses, with positive cash flow coming in, that goes straight to the bank until I have enough to buy another one.
If you can give up some of the ego stuff, you can live just fine in the Valley. Now, when I go out in my Viper on the weekends, I dont give a shit about how much the gas costs. I havent filled up in 3 weeks.
This complaint seems to be directed at three different practices: outsourcing to another company overseas, hiring workers overseas, and not allowing telecommuting. All these practices save a company money, the first two because of differences in salaries, and the second mainly because the company has reduced facility costs (they don't need as much office space). However, these approaches are fundamentally independent and are not even mutually exclusive. Presumably, the most cost-efficient approach would be to outsource jobs to a company overseas (where labor is cheaper) that allows its workers to telecommute from home. Of course there are a lot of options to consider.
;) But I'll be the first to admit there are efficiencies to be gained by having people together in the same office, and even more when all those people speak fluent English (or whatever language, as long as it's the same one as their customers). There are also efficiencies you can get from telecommuting (reduced distractions). I think it all depends on the nature of your job and all the little things that go into it.
Believe me, I'd love to telecommute (I currently commute 26 miles a day each way on Ga. 400 between downtown Atlanta and Alpharetta every day. If you live here you know what that's like
Either way, these efficiencies are not well studied, and so it's hard to justify them against the hard numbers you can present if you want to move those jobs overseas.
Read my keyboard review.
Admittedly you can have a less reliable car because mechanics are cheaper, or no car at all because buses run more often due to higher demand (with drivers who are paid less); you can get food at a restaurant (made from raw ingredients) because the cook and waiter are paid less; maybe your wife can stay home because she has the skills to make that economically viable (by saving money with her at-home labor)... and it goes on like that. It's a different sort of economy, but one rooted in poverty, with a tremendous practical and ethical impact on society.
The third world is a different lifestyle and a different standard of living. But don't imagine that those Indian programmers are living it up over there because everything is so cheap.
I was a sysadmin at a very large financial institution and was hired as they were outsourcing programming to India. I had to interface with the programming teams there and found them to have a similar range of skill levels and competence that the American programmers had. The real problem was communication. Not just the language barrier (I've been in IT for a while and got used to the thick accents) but communication of the users needs to the programming teams and making sure that the projects progressed to meet those needs. It was difficult enough to get projects specced when the programmers were down the hall! Email and video conferences don't cut it when you are managing a multi-million line project. What eventually happened was that management found the experiment to be a failure, pulled all their development back to the US, and hired the best of the Indian programmers on H1Bs to continue their work (at big US wages too!). Didn't fire any Americans until they outsourced their whole IT to a big American firm. I was laid off soon after that happened (contractors go first!), but I understand the new management is now outsourcing again. Organizational memory is definitely short term.
You know what frustrates me?
What's the point of learning technology or any job market when management acts like this? Don't they care about these people?
In today's world we'd just outsource to Africa instead of importing slaves.
--------------
US Management: "You're either with us or against us."
US Employee: "Okay, I'm with you. Now how can I get a job?"
US Management: "I hear we're hiring in Romania, if you hurry."
I mean I live in germany, I am a computer engineer, and earn about 36K brut (about 19K net) (*). I am nearly as competitive as India !!! Or , from my side of the pond, 75K is overpaid. Your call.
(*) coding on a mainframe for a big company
C. Sagan : A demon haunted world:
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visit randi.org
I contract for a software company in sunnyvale california, the heart of silicon valley. They've offshored their engineering and QA departments to India, and they pay the software & QA engineers over there $5,000 - $7,000 US Dollars a year, not even close to $20 per hour. They have close to 100 employees over there. Do the math.
This makes tons of stuff easier. Like oh, say, when the network is down between you and the world, you can't telecommute. The guys who all work in the same building, can probably press on, continue to have meetings, and make progress on work. Where you are stuck.
Oh, confidential paperwork doesn't leave the building. They don't need nearly as many VPN connections. There is no one making a connection from a Dynamic range of IP's that are outside of the network operations control.
Telecommuting, you aren't in the same building with 500 co-workers. Now if the started hiring lone guys, on their own island in India, yeah, you've got a point. However, your wrong, wrong, wrong.
What I really don't understand, is why they don't start transplanting business from major cities. Look, there is no god damn reason in the world you have to be in downtown SF to write software. You don't need to be in LA, SF, NY, or any other major city. You can get an amazing number of resouces in much cheaper places then a lot of companies feel they need to be in. It's just plain silly.
Kirby
Funny thing is about Japan and the cost of living.
The average mortgage over there is 2.69% interest,
income tax is alot cheaper than here, If you make less than 200k a year.
Every engineer I know in Japan makes between 65k and 120k a year and lives in the most expensive city in the world. The all own 4 bedroom condos, and one owns a house. The engineer I know who makes 65k a year lives in a bedroom community and bought a 4 bedroom house 1500square feet for 410k @2.25% interest rate ( the rates went up since he bought) and he has plenty of money in his savings and buys tons of gadgets.
Also one thing about Japan is that if you commute by train/subway your company will pay your commute fee. I lived in Japan and thought it was a 'gaijin' foreigner's perk, but no, everyone from the office girls to the top execs all get the commute passes paid for by your company.
The cost of living in Tokyo is a bit more than NY City Manhattan, but if you live within 45 - 60 minutes outside of central Tokyo or Osaka, you can live quit nicely.
I live in Los Angeles and I'm just sick of the cost of real-estate here and actually look forward to returng to Tokyo. I looked at a few houses and condos for sale and was surprised that they were affordable, that is in my price range.
I also payed around 15-17% in income taxes over there, my friends (Japanese) pay around 20-25%.
So with the cost of 5 apples being around 6 bucks, alot of other factors even things out.
Now of course I'm comparing things to living in SF/Bay Area, LA, Manhattan. The rest of the US is of course far cheaper than Tokyo.
So as always, your mileage may vary.
Why do you care about repeat business in a global market?
... probably something along the lines of
Hmmm
outsourcing.epinions.com is called for.
Write scathing reviews against people that defrauded you by pumping up their resumes -- lest other people make the same mistakes you did. It also provides a feedback mechanism to the people that genuinely care about what they have done -- where they have gone wrong.
Wow, I must be stupid or something. I am really confused by your comment. Can you clarify
I can't vouch for him, but I'd guess he's talking about the huge cost of getting an M.D. on student loans, then limiting the Doctor's income. Include the astronomical cost of malpractice insurance, and being a doctor makes no sense. My long-time doctor, who was a great, funny, informed guy as well as a great doctor who saw me through some tough times, recently decided to pursue other avenues of employment rather than stay on that constantly money-increasing treadmill. He really hated increasing office charges every six months, especially since he knew it was a burden for many of his elderly patients. It was a loss to the medical community - not just to me.