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?"

Comments

lose-lose situation

[TWX]

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.

Liability

[w42w42]

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.

Not working from "Home"

[rlsnyder]

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.

Ironic, isn't it?

[stefanlasiewski]

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?

Re:It's simple: money

[Oliver Wendell Jones]

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.

Management

[Reckless Visionary]

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.

Must I leave my country....

[frovingslosh]

Must I leave my country to do so?

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.

It's been tried before

[vishakh]

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.

Does outsourcing work in the long run?

[Monoman]

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?

Re:A telecommuting worker still needs to be manage

[josepha48]

I'd have to agree with you. Problem that I have seen most, and from some of the other posts here, is that the outsourcing to India and other countries does not give you a better product, only a cheaper work force. In many cases it actually gives you a worse product, cause of the communication gap.

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.

Re:Outsourcing generally results in inferior produ

[mardukvmbc]

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?

Why Silicon Valley Costs Too Much

[Nova Express]

One troublesome fact unvoiced in these discussions over why some companies might outsource jobs is the fact that the government of California has made it prohibatively expensive to employ people there, with the result that businesses are leaving in droves.

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:

• "The state has lost 289,000 manufacturing jobs since 2001."
  
  
• Davis and the legislature have approved new legislation that will increase some businesses' costs per worker "by $4,000 to $5,000 a year."
  
  
• "The legislature made workers' compensation more expensive by mandating a large increase in benefits. California businesses now contribute the highest premiums by far per $100 of employee wages: $5.85, vs. a national average of about $2.50. Yet instead of cutting costs, as other states have done, the legislature recently raised maximum benefits by 71%, from $490 per week in 2002 to $840 in 2005. Countrywide and Verizon both pay four to five times more in workers' comp per employee in California than in Texas."

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.

Silicon Valley on the cheap. I did it, so can you.

[LibertineR]

I make close to $200K. I parked the Navigator and Viper and started taking Caltrain. I save $200 a month on gasoline, and I get work done on the train instead of sitting on hwys 17-85-101 on my way to work. Instead of the $10 I spent on two lattes per day, I now brew my own coffee in the morning and carry a thermos. Thats another $250 per month. Movies every weekend? Fuck that; NETFLIX rocks, and I can make a dozen hotdogs for what one costs at the Mountain view cinema. $50 per month.

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.