CIO Magazine On Offshore IT

lpq wrote to us with a reference to the cover article from this month's CIO Magazine that talks about the off-shore movement of IT from its traditional bulwarks to the developing world. A selection from the article:" Think again. There are real costs associated with shipping your IT department (or a portion of it) overseas. Our Special Report covers the Backlash from a growing political storm as well as the Hidden Costs you should be aware of before you join the stampede overseas. "

Comments

More proof that common sense isn't common

[jbellis]

As well as evidence of how fad-driven the IT industry is. There is still no magic bullet but vendors -- and no less the press -- continue to drum up every new toy as if it were The One.

Sad that people who spend years on an MBA degree that presumably includes a course on Spotting The Obvious 101 can't, well, spot the obvious.

Re:More proof that common sense isn't common

[Serapth]

Sadly... I think thats the problem... Most MBA programs forget to include Spotting the Obvious 101.

Actually... I would love to see them add just one more course to the MBA programs...
Just Because Im Educated, Doesnt Make Me Smart: A Case Study of MBA Graduates

Re:More proof that common sense isn't common

[B3ryllium]

Reminds me of the recent FedEx commercial.

"We're short on staff, you'll have to handle the shipping."

"But ... I have an MBA."

"Don't worry, it's easy."

"No, you don't understand, I have an MBA."

"Ohhhh, you have an MBA. In that case, I'll have to show you how to do it."

Re:More proof that common sense isn't common

[Pig Hogger]

Sad that people who spend years on an MBA degree that presumably includes a course on Spotting The Obvious 101 can't, well, spot the obvious.

Has it occured to you that the whole idea behind a MBA is is NOT ABOUT SPOTTING THE OBVIOUS??? That's left for underlings whose opinions are discarded anyways (if not the underling itself).

What's the idea behind a MBA is greed, greed, greed and more GREED. MBAs are about extremely short-sighted profit-maximizing though any means possible, including disreputable, unethical, slimy and illegal ones.

Re:More proof that common sense isn't common

[caudron]

Just Because Im Educated, Doesnt Make Me Smart: A Case Study of MBA Graduates

If we're talking about MBA grads, can we just say "Just because we have a degree doesn't mean we're educated" and be done with it? ;-)

-Tom

Re:More proof that common sense isn't common

[Blimey85]

See any products that aren't made in your home country?

I don't see any that ARE made in my home country. What is still made here in the US? My computers I'm sure are made somewhere else, even if the companies are American. My desk is from Thailand or Singapore or Hong Kong or Korea. I just looked at my Belkin router... sticker says "Designed In California" and then just below that "Made In Taiwan"... so at least they employ an American designer... except how do we know that? Maybe they hired someone from Taiwan to move over here and design the router...who knows.

I'm willing to pay a bit more to buy goods produced here in the US, or even goods that are mostly produced in the US but I can't seem to find very many. I only drive "American Made" cars but how much of a Ford or Chevy is made here? Are the parts made somewhere else and then the car is assembled here? Why can't they make the entire car from start to finish including all of the parts right here in the US?

So how do we buy American products when most "American" companies build everything somewhere else?

Offshore IT work is fine by me

[stratjakt]

After Isabel hits on thursday, I'm gonna be living offshore.

You know, because my house is going to get blown away and swept into the chesapeake bay, you insensitive clod.

Get used to it

[Brahmastra]

It's called capitalism. It works. Get used to it. If offshoring makes sense, companies will do it. If it does not make sense, they will not do it. That's how it works. Engineers don't know anything about finance. That's why most successful companies don't have engineers talking about finance. I'm just posting this pre-emptively before a bunch of engineers start talking about the finances of offshoring. And, yes I'm an engineer too.

Re:Get used to it

[Mikey-San]

This is complete bullshit. You've failed to define "works".

Does it lower cost in the short-term? Yes.

Does it improve the quality of support? Arguably no.

Does it improve the quality and tightness of the product? Arguably no.

Does it strengthen the company from within? No.

Does it lower cost in a reasonably reached fashion that increases internal productivity and doesn't make the other 10,000 workers in your company pray every night that their job (that required $20,000 of schooling according to your posted job requirements two years ago) isn't going to be shipped overseas to someone else? Likely not.

I don't know if you call this "working", but I don't.

Re:Get used to it

[Choobius Gothicus]

I'm a heavy subscriber to one of these points. The quality and tightness of the product is often diminished with offshoring. Volatility and uncertainty increases, in direct correlation with the amount of offshoring that exists within an organization. Although there are well-planned implementations, what I've described is the norm rather than the exception. Now, for me, this matters very little since my focus is beginning to gear more into Bioinformatics, which really cannot be outsourced successfully for the forseeable future given the collusion of mathematics, biology, physics, and computer science involved (the barrier to entry is set very high).

Also, offshoring is actually helping the industry prepare for the potentially devastating effect of the demographics shift. Without offshoring to hedge the job demand that will make 1999 look like a small ripple, a glut in workforce contributes to a shrinking economy and potentially depression-like atmosphere. (Major economists have been predicting one at around the 2020-2030 time frame). Beef up your debugging skills: companies may require them very soon, and in a bad way.

Re:Get used to it

[AllDigital]

Corporate decisions are driven by profit above all else.
So, if you want corporations to make different decisions, you need to create a profit motive in one of the following ways:

1) Loss of sales, because consumers do not wish to support a company that is not supporting IT growth in the U.S.
2) Loss of sales, because consumers are not getting 'value' from the off-shore IT support.
3) Financial penalties imposed on companies by the Governement (Taxes, tarrifs and etc.) because they are not employing U.S. IT workers and damaging the economy.
4) Fear of potential loss of sales, because of bad PR resulting from the cutting of jobs in the U.S. while moving IT positions overseas.
This fear could motivate by affecting the companies stock price, or by causing the decisions makers to believe that any of the above are likely to take place as a result of the decision.

Because of widespread apathy, it is unlikely that any of these factors will come into play.
Unfortunately, we in the U.S. like to complain about how companies are taking our jobs away...but it does not seem to affect our purchasing decisions.
Why is that? If we really do care, then our wallets should send the message. But we tend to do anything to save a buck, even if it costs a few jobs.

Things will not change unless we make them change. Don't complain about the current environment if you are not willing to DO something about it.

As an example....if you buy a DELL computer...you are supporting the trend of sending U.S. jobs off-shore.
Answer: Stop buying DELL computers,
recommend that your workplace stop buying DELL computers,
don't recommend that anyone buy a DELL computer.

But, if you buy one because the price is great! You have no right to whine.

If people really did care, there would be multiple websites listing every company which does and does not support the U.S. IT workforce.
Offenders would notice that their sales drop when they are added to the list of companies are added to the list....prompting them to correct the situation.
If such sites do exist...I am not aware of them. Are you?
Just keep in mind that companies are very predictable. If you talk with your wallet, they listen to you!

**NOTE**I have never worked for DELL, so I am not a disgruntled former employee.

Re:Get used to it

[overunderunderdone]

Does it lower cost in the short-term? Yes.

Umm... read the article, one of it's main points is that it does NOT lower cost in the short-term. going off-shore can actually increase costs for the short term. It is *long-term* savings that are the real potential benefit. After the transition has been paid for, the kinks worked out and the off-shore staff trained and familiar with the processes and applications and the disruption (including the dissatisfaction of the remaining staff) worked through *then* it can save you a bunch of money. Not as much as it might seem at first but still a bunch. One of the companies was saving 20% - that's a lot of money and can certainly be said to be "working" for them. Over that long term of 20% savings the IT department survivors are either replaced or get over it. As for the rest of the workforce low morale may be a problem in some situations but I'm sure the DHL truck driver isn't that worried about his route being outsourced to India because IT guys he is only vaguely aware exists are now in India.

Re:Get used to it

[sql*kitten]

It's called capitalism. It works. Get used to it. If offshoring makes sense, companies will do it. If it does not make sense, they will not do it. That's how it works. Engineers don't know anything about finance.

Actually, you are wrong. You see, finance is engineering. The units are dollars instead of joules, but the principles are entirely the same. I mean this quite literally - the equations of certain derivatives are the equations of heat transfer. CFD algorithms are used to price bonds. Managers are engineers. A corporation is a piece of technology, just like an engine.

We don't think it's immoral when an engineer tries to get the most computation done per clock cycle, or the most torque from an engine, or the most heat from a furnace. Why do people get upset when a manager tries to maximize the output of his engine?

Farming out != Good

[Anonymous Coward]

I've done maintence programming and support for a few applications that have been farmed out overseas. Based on the limited experience with only a few development teams I've come to the decision that farming all this stuff out is a bad idea. They frankly cannot program very well and now we're going back and recoding huge portions of the application in house because they do such a bad job. No version control systems, poor development cycles, hardly no testing, desire to work on the live production servers to make "quick" changes. It's a PITA.

Re:Farming out != Good

[GooberToo]

Nope. His take exactly mirrors my own experiences. I've seen farmed out projects which were supposed to be cheaper cost 30% more than what the highest priced US bid was. Sure, the Indian bid was far, far lower and they could throw far, far more resources at it, but in the end, the code was written poorly, deviated from specification in minor, yet obtuse ways, performed badly, were up to 2-years late, and in the end required US programmers to finally come in and save the day. One such project was only 2-million over on a project which was supposed to cost a little over 2-million.

Outsourcing is fraught with hidden costs. Because of the fact that your resources are in a far off land, simple problems can often become huge problems because managing them can be greatly complicated by distance, language, social expectations, assumptions, and work ethic (basic cultural differences).

While I'm sure there as to be some success stories, I've yet to personally see a single Indian outsourced success story. Not one. All that I've seen follow the same downward spirl.

If a company has no experience managing remote workers, the last thing they should ever get in bed with is an outsourced software development project. If they can't manage their own workers right up the street, they are doomed for failure with a much more complex project, which might be a thousand miles away. In fact, I've even seen companies bring Indian workers in to minimize some of the distance management issues, however, again, they followed the same downward spirl.

The Stampede Overseas

[Hayzeus]

And my move to Bangalore was all set, $10/month budget and all. Damn.

Re:Americans

[Bendebecker]

Actually, last study showed Americans work harder (or more) than anyone else on earth.

It's about time.

[cybermace5]

So they're finally realizing that you can't skip the analysis of an action, just because it's the hot new thing all the management consultants are raving about?

Man, no wonder the economy fell flat on its face. The CEOs didn't notice their shoelaces were tied together.

Contact

[rf0]

I've always found that when things are outsourced (or moved offshore) is that the dialog between the users and the devlopers/support etc breaks down. The idea of IT is to help the company function and for that a good dialog is needed during development etc.

There is nothing to compensate for talking round the water cooler and say "Whilst I think of it...". I hoenstly believe that the development costs might be lower but overall it will cost more on the bottom line

Rus

Bitter?

[darkmayo]

Why bother shipping IT overseas when you can ship the exec's job over seas.. they are the ones that don't do anything and get paid way to much for it.

Re:Bitter?

[Mikey-San]

The problem is that these overseas workers are full of productivity.

Executives aren't.

At least if jobs are sent overseas, the people being paid to work, not sit on their asses. ;-)

. . . Though, if we sent executives' jobs overseas, perhaps the overseas workers would send them back. I mean, that's what OUR executives are doing now, right?

Screw free trade

[Bendebecker]

Lets set up tariffs. They want to farm there work offshore, lets make it so expensive to do so that they will lose money outsourcing.

Re:Screw free trade

[molarmass192]

I'm not saying yes or no -but- remember that tariffs are very effective on physical goods since those goods all go through customs on their way in/out. That's arguably not so easy with "work units" and it's very easy to spot loopholes to exploit any system they try to put in place. If you have an offshore subsidiary farming out the work, then where's the tariff going to be collected? Since there's no effective way of measuring a "work unit" there's no effective way of running it through the customs system.

Re:Screw free trade

[MulluskO]

Agreed, lassiz faire capitalism in the United States would utterly devastate the middle class.
Regulation is needed. Pure forms of either capitalism or socialism are foolishly idealistic and sure to fail.

Re:Screw free trade

[pmz]

Lets set up tariffs. They want to farm there work offshore, lets make it so expensive to do so that they will lose money outsourcing.

Is this a joke? Do you really want the USA to stagnate in its little corner of the world while everyone else just rolls their eyes and laughs at us while progressing far beyond us in every respect?

Free trade is the long-term normalizer of the world. It levels the playing field so THE TRUTH and the FREE MARKET runs business, not some politically contrived fantasy of keeping the jobs at home.

Your statement reeks of isolationism, culturalism, racism, and a whole bunch of other -isms that are simply inappropriate for members of a FREE COUNTRY to speak of lest they put them into practice.

Yes...

[Channard]

The Atlanteans are receiving call-centre training as we speak.

favorite quote

[ih8apple]

From the article: "Internal people will refuse to transition to the offshore model because they have a certain comfort level, or they don't want their buddy to lose his job," Renodis's Manivasager says. "There has to be a mandate. Trying to build consensus can take a very, very long time." Manivasager has seen some relationships take as long as three years to get off the ground because the strategy was neither shared with nor embraced by employees.

The strategy was not embraced by employees about to get laid off? Ummmm.... how stupid are you if you think people will embrace being laid off to save the company a couple of bucks? (which then goes into an executive bonus, no doubt)

ComputerWorld article on same subject...

[Maditude]

Here's another article I just read this morning at ComputerWorld:
IT's Global Itinerary: Offshore Outsourcing Is Inevitable. An interesting read, and they do make it seem pretty inevitable.

At least you have a job

[Anonymous Coward]

I became redundant when my department that they no longer needed a Turbo Pascal developer for 16-bit Windows 3.11 applications. I feel especially wronged by this offshore outsourcing.

What should I do?

Remember Sammy Jankis.

[Channard]

So they're finally realizing that you can't skip the analysis of an action, just because it's the hot new thing all the management consultants are raving about?

Nope. They're realizing that the current Offshore IT fad is over-rated. Come the next fad they'll be praising it to high heaven as if there had never been any other fads. The IT industry has no long term memory at all.

Re:Remember Sammy Jankis.

[cybermace5]

You're far too correct on that. There's no way past experience indicates they'll learn a lesson from this. Each fad is not seen as a concept tried and failed, but as a goldmine harvested and now mined out. Time to move to the next one.

The fault in our economic system

[pubjames]

For me, jobs going offshore exposes the fault in our economic system, and shows how in many ways it is very primitive.

At the turn of the last century people imagined a time when everyone would live in luxury and not have to work. Machines would be able to do the work, and the majority of people could just relax and have a good time. The idea is even more possible today - we can create machines to do most jobs these days, and we should all be living in a work-free time of abundancy. So why aren't we? The simple answer is that our economic system won't allow it - in our system, in order to be able to have stuff, you need money, and to get money you have to work. They crazyness of this situation is highlighted by the fact that periods of adundance now actually cause recession - things become "too cheap", defalation occurs, people can't make money, everybody looses when things are plentiful.

How does this relate to offshore IT? For me it is exactly the same situation. If someone is willing to do my job in another country, then great, I should be able to put my feet up and relax. But of course it doesn't work like that - I loose my job and have no money.

People say that our current economic system is the best system because "it works" but I don't buy that. In many ways it is fairly crude. I think if an alien came from an advanced planet and looked at us today it would think, "look at those idiots working most of their lives when they've already most of the tools to live a life of luxury!"

Re:The fault in our economic system

[Bendebecker]

Back in the 1800's someone looked at the economic system and found that eack adult would only need to work 2-3 hours a day, five days a week to support our present system. The problem it turns out is the inbalance in the classes. The problem was not that dead beats were not working, the problem was the rich weren't working enough. So who makes up the difference? It turns out we do. In order for a person to do the necessary amount of work it takes to maintain a level of living such as Bill Gates has, a person would have to contribute an immposible amount of man hours. Someone has to make up the difference.

Re:The fault in our economic system

[garrulous]

When robots become common, corporation should not be allowed to own them to do work, and each person should be allowed 1

Well you better hand over all those Lego Mindstorm kits.

Re:The fault in our economic system

[pubjames]

see, what your thinking of is a type of socialism. so don't be talking about it to loudly.

Fortunately I live in a free country so I don't have to whisper my non-mainstream thoughts. I feel sorry for you poor Americans.

Ok I'm being deliberately provocative, but you raise an interesting point. I have a friend that grew up in the USA until his early twenties, then came to Europe, then decided to spend some more time in the USA in his early thirties. He returned to his old community where he still had many friends he grew up with. He said he was amazed by the fact that he was completely rejected by many former friends just because he had some non-mainstream views. Nothing very controversial either, at least not here in Europe - Bush is corrupt, Americas foreign policy these days is much worse than it used to be, stuff like that. He said that people he grew up with would completely stonewall him and reject him just because of his opinions. Now, I don't know what you might think of this, perhaps in America this type of behaviour might be "normal" or accepted. But pretty much anywhere I've been in Europe people don't reject you just because of your opinions. The fact that you have said I shouldn't "be talking about it too loudly" because I have mentioned something that might be considered socialist makes me understand what a hard time my friend must have had returning to the USA. He only lasted four months before returning to Europe.

Bad Comparison

[mopslik]

From the article:

"A good American programmer will push back and say, What you're asking for doesn't make sense, you idiot," Zupnick says. "Indian programmers have been known to say, This doesn't make sense, but this is the way the client wants it."

What a bad comparison: compare a "good" local worker to a generic "bad" offshore worker, rather than comparing good-good or bad-bad. I look around and see plenty of local programmers who adopt the "build-to-specs-regardless" stance without hesitation. Similarly, many of the projects here that involve overseas development involve far more communications meetings to work out the details prior to building applications.

There is no shortage of poor programmers here. Blanket statements like the above only steer people toward looking for poor qualities in foreign developers, while ignoring those around them.

Re:Bad Comparison

[pubjames]

"A good American programmer will push back and say, What you're asking for doesn't make sense, you idiot,"

Overheard in offices all over America:

Programmer: This doesn't make sense, you idiot!

Pointy Haired Boss: Doesn't it? You're a professional and I trust your judgement. Do whatever you think is best. Thanks for pointing out my lack of understanding.

Re:Bad Comparison

[GreenCrackBaby]

While I agree that you will find bad programmers wherever you go, I think you missed the point.

When you farm out your work (doesn't matter where), the people you are farming it to lose any and all context. While build-to-spec without question can be a problem with local workers, it's a HUGE problem with farmed out work because often the only context those workers have is the specs.

As an example, the company I work for produces billing software. We farmed (and are still farming) work out to India, and the stuff we got back was, for the most part, crap. Not because of bad programmers, but because it was blindly build to spec. The developers were working in a black hole -- specs go in, code comes out -- and any decent developer will tell you that's a sure-fire way to guarentee crap code.

Re:Americans

[grub]

Actually, last study showed Americans work harder (or more) than anyone else on earth.

Yes, in fact Office Space is a documentary...

CIO Magazine on offshore IT

[woverly]

As a nation with an MBA President, we should be prepared to outsource everything but our "core competencies". What are America's "core competencies"?

1. litigation
2. consumption
3. entertainment
4. warefare

This change will not change until we start outsourcing the two political parties.

Re:CIO Magazine on offshore IT

[UnderScan]

This change will not change until we start outsourcing the two political parties.
They are!
The US Republican Party now has a band of young and enthusiastic fund-raisers in Noida and Gurgaon, India

Hidden agenda?

[Anonymous Coward]

I think most people on a site frequented mostly by american IT workers may contain a few biased comments?

Re:Hidden agenda?

[Politburo]

The agenda isn't hidden. We would like to keep our fucking jobs, or for those of us just out of college, we would like jobs to begin with. Selfish? Perhaps. Hidden? No.

The company I work for just announced..

[GreenCrackBaby]

..that they will be increasing their Indian workforce. They did it with quite a play on words too.

With the success of this initial stage and with our need for resources continuing to grow, we will be resourcing to grow this team substantially in the coming weeks.

While we are directly recruiting in India now, we would also welcome your recommendations of suitable external applicants that you may be aware of as potential permanent employees in Bangalore.

Applicants should have 3-5 years experience in billing system deployment with perl, SQL, Oracle and Unix skills. Willingness to travel internationally and to be based and paid in India is a requirement.


Here's what bugs me about my company specifically, and the trend of moving work to India generally:

1. My company is trying to do this covertly, like we wouldn't notice more and more layoffs in our offices in North America and Europe while at the same time increased staffing in India and a requirement that those Indian workers must be willing to travel internationally.

If you are going to farm your workers out to India , at least be honest about it and admit what you are doing, all in the name of a temporary increase to share price....which leads me to point two:

2. If your company will go bankrupt unless you move your workforce to India, then fine. But if you are going there to save a few bucks and make the share price jump 1/4 point, then fuck you. I get billed out at around $300 US per hour, of which I see less than $30 US. Isn't that enough of a profit margin? Maybe we should bring back slavery so that they can make that margin jump to a full 100% of the $300!

I don't hold anything against India workers, but I truly hate any corporation that farms work to India (and other cheap countries) all for the sake of a quick buck.

Love the numbers

[mccalli]

Scattered all over the article. Bottom line: expect to pay 6% to 10% on . Bottom line: expect to pay 20% extra on .

No back up. No studies. Nothing. These numbers appear to have just been dreamt up. If they weren't - if there's some serious data behind it, then why not just present the data?

Cheers,
Ian

True

[Knunov]

At least on a per case basis, if not on the whole.

Our staffing company, in all its brilliance, hired an Indian systems manager to run one of our overseas offices. they saved about $1000 per month in salary. Well, due to his one week of wrecking half the systems, that $1000 they save per month will necessitate his working at least 6 months just to pay for the phone bill.

You see, he crashed the e-mail server, basically irreparably. Needs to be redone from scratch, and he, of course, has not the first clue of how to do this. So who does he call past mignight to unfuck his system? Me! The only American sysadmin at the company.

While e-mail is down, the workers turn to fax/phone for communication, so our long distance and cell phone bills are now skyrocketing, just because of this twat. I wrote a nasty-gram to HQ about how whatever money they thought they were saving has just evaporated.

Going overseas is not always the answer. There is some superb, home-grown talent that even makes economic sense to employ, when all factors are taken into account.

Knunov

Fixes on the fly have been a problem

[Anonymous Coward]

The corporation I work for has it's "make or break" product being developed in India. What we have seen on the Betas is long delays in getting bugs and other issues fixed. Often they have had to fly in part of the Indian development team to the Beta customer inorder to get these issues resolved, because no one based in the US has been brought up to speed on the architecture.

Unfortunatly, these delays and lack of knowledge by the corp has made us look incompetent and word is getting out to other potential customers.

It will cost even more ...

[Giant Robot]

CIOs must bring a certain number of offshore developers to their U.S. headquarters to analyze the technology and architecture before those developers can head back to their home country to begin the actual work. And CIOs must pay the prevailing U.S. hourly rate to offshore employees on temporary visas, so obviously there's no savings during that period of time, which can take months. And the offshore employees have to work in parallel with similarly costly in-house employees for much of this time. Basically, it's costing the company double the price for each employee assigned to the outsourcing arrangement (the offshore worker and the in-house trainer). In addition, neither the offshore nor in-house employee is producing anything during this training period.

In addition, the in-house employee will be quite pissed for being forced to train his replacement, and will not do so as a result.

Get an IT job in a non-IT industry

[BanjoBob]

There are a lot of positions available that pay very good - maybe better than at an IT company. The position requires you to do more than a single task and that makes you more valuable in the long run. You have a small IT staff but a lot of work. You're move valuable there than in a shop like at a telco. There's a whole lot of companies out there that needs top IT people to support their specialized industries and these jobs are all here in the USA.

Marketing Hyperbole

[handy_vandal]

Reminds me of ads in trade journals for various database products, showing a picture of a non-geek executive getting amazing results from the product, with a slogan that amounts to "Simple Yet Powerful!"

If it's that simple, it's not powerful.

If it's powerful, it's not simple. (Furthermore, it's not really powerful if you can't hurt yourself with it. A power saw that won't saw your arm off isn't much of a power saw; same as power-tool software.)

If offshoring is so simple ... is it that powerful?

... Probably, which is a bummer for American programmers like me. Welcome to the modern world, I guess. Still ... I expect the foes of offshoring to exercise due diligence in the discovery of hidden costs.

Re:Marketing Hyperbole

[Esion Modnar]

A power saw that won't saw your arm off isn't much of a power saw

How true! I bought a power saw once, tried to saw my arm off, and not a scratch. So I took it right back and told the people at the store to give me one that could saw my arm off.

UGh

[Anonymous Coward]

I worked at an American company that did a lot of business in Israel. I shudder to imagine the millions upon millions of costs in lost producitivity in trying to coordinate efforts with the people there, not to mention plane flights and training and the language barrier. What a disaster.

Re:Americans

[Bendebecker]

http://www.naplesnews.com/03/09/business/d961376a. htm
http://www.businessweek.com/magazine/content/01_24 /c3736054.htm
http://news.bbc.co.uk/1/hi/world/439595.stm
http://www.hartford-hwp.com/archives/26/077.html
http://www.cnn.com/2001/CAREER/trends/08/30/ilo.st udy/
I found that an even more recent (2003) study that says south koreans work more hours but are not as productive.

1) Pay Indians to learn your business. 2) Profit??

[Futurepower(R)]

One hidden cost is you are paying Indian programmers to learn your business. After they learn well enough, Indians will certainly begin to compete against you.

They will cut out the middleman and the middleman is you. Indian global banking services, anyone?

For Outsourcing to Work...

[Serapth]

For outsourcing to work, you need a project that can be properly outsourced. This is the part that constantly boogles my mind, is when I see companies outsource work for perceived savings... when in reality, the product should never actually be outsourced to begin with.

Certain things can be outsourced, but the key it seems is for the item to be extremely well spec'd and self contained. If project A depends on project B being completed, and project A is done in house... project B should not be outsourced. The ideal things that can be moved over seas, are projects that can be completely managed at the other end, and have few dependancies on this end. In other words... all the design specing, etc... has been established already... the people doing the work will have *NO* questions as to what needs to be done, and what their deadlines/goals/etc... are.

Where an outsourced project seems to breakdown are:
Improperly defined specication for work needed or misunderstanding of said work
Dependancies on projects/information else
Poor communication structure between parent company, and outsourced branch
Lack of understanding of parent companies needs or function
No understanda engrish ( this one is bigger then you think )

Where I am at now, we are a manufacturing environment that is expanding. Now, we dont exactly outsource, we build new plants in other countries. As it stands now... *EVERY* time we set up a new plant... it was always a communication breakdown that was the primary problem. Also, setting up the infrastructure between China, US, Canada, etc... isnt even slightly cheap. Every new faucility costs a wack of cash. That said... not one of the expansion plants we have built overseas ( including Europe ), has approached the success level of the ones we have in North America. Additionally, local laws have all but resulted in closure of one remote faucility... and work ethic of one certain European country, is soon to result in another.

There are alot of hidden costs in dealing with countries outside of North America. Until you go down that road, you are going to be shocked to find out, just how many. ( For example... probrably 1000 man hours, atleast... and 100 cross continental flights... just for initial training/setup ).

Re:For Outsourcing to Work...

[vinn01]

Speaking of specs...

Software specs universally suck. Software specs are primitive compared to mechanical drawings, architectural blueprints or electronic schematics. Those things are much easier to outsource. Mostly, you get back what you asked for and it works. From my experience, outsourced software projects fail. And most porjects were not even offshore.

The majority of offshore software development projects will fail, but not before corporations show huge short term savings on their quarterly reports. By the time they have to expense money to fix their mess, it will be many months down the road. WTF do they care about the stock price next year. It's this quarter that matters.

Short term thinking is what is driving this mess...

MOD PARENT UP

[xchino]

He has a good point. Our corporations are protected from offshore corporate competition by high tariffs being placed on imported goods. Why do our corporations receive the benefit of taxable import on goods, when we the people do not receive the same protection.

This is a ridiculous double standard, that needs to be remedied immediately. Either drop all import tariffs or enforce tariffs on exported jobs. The government is by the people, of the people, and for the people, so let's start acting like it.

Re:MOD PARENT UP

[pmz]

Either drop all import tariffs or enforce tariffs on exported jobs.

Then, drop the tarriffs, albeit slowly, so the markets have time to react. Eventually--given appropriate time--the lack of tarriffs will only bolster international trade making the USA better off for it.

Hidden problems with offshoring

[Anonymous Coward]

There is another aspect to offshoring that everyone seems to be missing. It goes like this:

I send out a spec to my carefully chosen offshore vendor and they dutifully develop the application at a lower TCO than I think I can do it for.

While they're developing it, they have a secret 'shadow' team - maybe in a completely separate company - that takes my spec and produces an enhanced version 2.0 of my application. Now they can bypass me and market directly to my customers, competing with my (now out of date) v1.0.

Oh, they can't steal my Intellectual Property like that? Think again. And you think you're actually SAVING money???

Outsourcing is good, stupid.

[$criptah]

I do not have problems with it as long as we outsource management along with the other workforce at 1:1 ratio.

Screw that!

[tjstork]

I'm not getting used to anything.

If the corporate system does not work for me, then screw it. It's a system and we have choices. Companies are all in favor of free markets except when it comes time to compete, why should I be any different!

My question is, why can't the people of India build themselves up the way the Europeans and the Americans did. They can't because of an economic system that screws everyone. Third world nations can't get their markets started by themselves because the first world nations don't want them to industrialize outside of their control, and the first world citizens get their careers continuously destroyed by their supposed leaders.

You know what this system is? It's a bunch of robber barons screwing over the third world and the first world at the same time, adding no value to the system anywhere.

If you really wanted the third world to be able to compete, you would get rid of all intellectual property world wide, and let the value of the dollar and the euro plummet to match parity with the rupee.

Lovely ethics these folks have

[hawkfish]

From the "Backlash' article:

That CIO feels guilty, but he is insulated from the ethical and legal implications of the visa issue, indeed from the entire transition to offshore--as is his company. Its executives simply are not involved, except to make the decision in the first place.

But later on he says:

However, the Fortune 100 CIO who has that recurring nightmare is worried that it's too easy for companies like his to outsource overseas today. "Look, I can't wake up tomorrow and decide I'm going to move to Italy and get a job," he says. "So why should someone from another country be able to come here on a temporary visa and take jobs from Americans?

So here he is, richer and better educated than most of the humans who ever lived and he can't even handle basic moral action! He doesn't think something is right, but either can't be bothered or doesn't have the power to say or do anything about it. This makes him either a coward or a slave, neither of which is particularly admirable.

this is a good quote!

[Anonymous Coward]

Quote "A man in the audience fumes that offshore outsourcing has the potential to wipe out the middle class. "Are our legislators aware of this?" he asks."

But what you do not reliaze is that your legislators have ben bought and paid for by most of these groups that are doing this! it is a sad reality.

going off on a tangent (core issue)
This is why we need to build into these public offices accountablilty (remember who you are working for?), fiscal accountablilty, and a REAL campain finance reform. NO SPECIAL INTREST, or PAC groups! NONE, GONE, BYE, BYE.... those are the real threat to american freedoms, and jobs.......

madd is a tool of the devil
riaa is a tool of the devil
statistics are a tool of the devil
john ashcroft is a tool of the devil

Re:this is a good quote!

[Bendebecker]

"john ashcroft is a tool of the devil"
I thought John Ashcroft was the devil!

Banding together - joining TORAW?

[RobertB-DC]

The Backlash article mentioned a group called TORAW:

It's not hard to find reasons for CIOs to worry. "Do you want to do business with companies that take away jobs for U.S. citizens by outsourcing work to foreign countries?" asks The Organization for the Rights of American Workers (Toraw), a group of displaced, angry American workers laid off by Connecticut insurance and financial services companies.

I'm browsing TORAW's web site now, and they look like an interesting organization. Not focused just on moving jobs offshore, they're also advocating a hard look at "non-immigrant foreign workers" - specifically, H1-B visa holders.

I like that TORAW explicity states that they're not against "permanent green card status immigrants", or against anyone based on ethnicity or country of origin. From what I've read so far, they address my concerns without hitting my Green Party hot buttons. The US should be open to those who want to come, stay, and build a new life -- but we can't afford to export our jobs and livelihoods.

Unfortunately, I can't tell if TORAW membership is available to all concerned Americans. Their membership form is encoded in virus-friendly Microsoft Word format, as are their brochures, and the CIO article notes the local CT connection.

But an organization like this looks like just what we need to keep the IT industry from being the next textile industry.

Let's see some stats there

[siskbc]

Does it improve the quality of support? Arguably no. Does it improve the quality and tightness of the product? Arguably no.

These last two are almost certainly true, but it's how they compare to the first that matters. The engineers always want to make the best product, and understandably so if they take pride in their work. But management has to consider the possibility of making the second-best product if it's a damn sight cheaper. It can certainly be a good move.

Does it strengthen the company from within? No.

That's pretty nebulous, and doesn't really translate effectively to the company's bottom line. Strengthening the company by reducing costs might be worth more. And it's questionable how a company would strengthen itself by keeping overpaid, underskilled, non-management-material American coders on the payroll.

Does it lower cost in a reasonably reached fashion that increases internal productivity and doesn't make the other 10,000 workers in your company pray every night that their job isn't going to be shipped overseas to someone else? Likely not.

Like hell. First, the most motivated worker is the one whose job is on the line, like it or not. It may not be pretty, it's the truth. Hell, remember the dot com boom? Where was the employee loyalty to the company then when employees were shopping themselves to the highest bidder? That shows how taking a hit for a "stronger company" gets the company nothing. Why should they take that cost hit for nothing when their employees leave anyway when the economy gets good?

Face it, today neither labor nor the company has any loyalty to the other side, as neither has earned it. Bottom line is if your job can be performed by an Indian almost as well as you do it for 20% of the cost, that's what they'll do.

If anyone has any actual numbers to counter this, I'd like to hear it. All I know is that the American auto industry strengthened itself immeasurably after moving manufacturing jobs overseas. For one, it actually became profitable again and stopped hemorraging market share to foreign manufacturers.

And that's the kind of jobs we're talking about here. We're not talking about people on mission-critical projects fearing for their jobs. We're talking about code monkeys, the equivalent of the assembly-line bolt-turner of the auto industry. That under-educated person has never had security in any other industry, and I fail to see why the code monkey should expect anything different.

What it means is that the economy will no longer guarantee $60,000 a year and job security to someone who can only write mediocre code with no other skills. Most other people are probably safe.

Re:Let's see some stats there

[Qzukk]

strengthen itself by keeping overpaid, underskilled, non-management-material American coders on the payroll.

I know, lets see it strengthen itself by only keeping managers on the payroll. We can call the company the Titanic. Oh, and just to make sure, hiring lawyers is off-limits.

First, the most motivated worker is the one whose job is on the line, like it or not.

Yeah, motivated to spend company time and resources farming out his resume. I guess morale can't be measured in dollars so it must not count.

Hell, remember the dot com boom? Where was the employee loyalty to the company then when employees were shopping themselves to the highest bidder?

Thats odd, I thought it was in all those people who put in overtime and ran the company without pay because they really wanted to see it succeed. You can call them stupid, I call them loyal.

Why should they take that cost hit for nothing when their employees leave anyway when the economy gets good?

Is it tit-for-tat then? Companies abused workers and the workers unionized long ago. Then unions started striking and laws were passed in many states outlawing union-only shops. Then the economy got good and people were looking for the best pay they could get. Then the economy got bad and the companies are shafting its employees by firing them rather than reducing their pay. Where did it start? Where will it stop?

All I know is that the American auto industry strengthened itself immeasurably after moving manufacturing jobs overseas.

Amusingly enough, the foreign auto industries strengthened themselves by moving their manufacturing to the US.

We're not talking about people on mission-critical projects fearing for their jobs.

Except that we *are*. Read the article. Do you think DHL's software is not mission critical? And what about the failed projects that didn't get mentioned by name in the article?

the economy will no longer guarantee $60,000 a year and job security to someone who can only write mediocre code with no other skills.

Right now it won't guarantee $60k to people with excellent skills. It won't guarantee anything at all to anyone just graduating from college regardless of their skills. Management has been blinded by the capitalist $ worship, and rarely takes other things into account. After all, morale, skills, and other touchy-feely stuff like that doesn't even figure in to the bonus your buddy-buddy incestuous board members voted you last month (don't forget to vote for their raises at their board meetings, thats the deal, right?)

Re:Salaries are just way too high

[CrazyTalk]

I assume this is a troll, but I'll bite - too much money??? Are you insane? This ain't 1999, bub. Bus drivers, bartenders, and Cable Installers make more than we do. Crane operators on construction sites can make 100k/yr. The guys climbing the poles for Verizon make over 75k/yr, at least according to their recent ad campaign. IT salaries, on the other hand, have fallen to 30s-40s/yr, maybe 50k if you are a manager. Thats assuming you can find an IT job at all

Security Implications of H-1b/L1/Outsourcing

[randall_burns]

There are huge security implications to outsourcing and use of guest-workers. Customer backlash and the possibility legislation will change soon aside, we have CIO's passing mission critical customer data into environments where they have no capability to run a background check and may have little understanding of the local culture.

It is one thing to outsource unskilled work-it is quite another to outsource the "command and control" infrastructure of a company-companies that do that have effectively reliquished their autonomy.

Where we are going

[Morris Schneiderman]

From http://www.ProjectsDoneRight.com/pdr/pdrPapersIP.a sp Until 100 years ago, almost everyone on earth lived with shortages.

While a few were rich, most people seldom even had enough to eat. The 20th century was incredible. We acquired the ability to produce food and goods to satisfy the needs of everyone on earth, though we did not make them available to everyone.

We have had two major power struggles during the 20th century. At the beginning, production was 'difficult', so those who could produce were able to 'call the shots'. WW II was a war of production and it was won by the side that was able to produce the most bombs and bullets.

Since then, productivity has continued to improve. Production is no longer the 'hard part'. The challenge during the past few decades has been to convince people to buy. Hence marketing has become king. Between 3rd world labor and automation, production costs have fallen dramatically. For most products, the major costs are Marketing & Distribution and R&D.

But the smart folks have recognized that the 21st century will be even more unsettling than the 20th century. Computer controlled extraction of natural resources and production (including nanotechnology) can drive manufacturing costs to almost zero. (Go read 'A for Anything' , by Damon Knight) With the Internet, we will be able to distribute the knowledge of how to produce. This will eliminate most of the challenges associated with distribution (since it will be possible to do most production locally) so there will be little money to be made there either, unless artificial controls and impediments are implemented.

This is why there's such a fight for intellectual property rights. Only by controlling the knowledge of how and what to produce can power be maintained by those who value it. By the middle of the 21st century, the major cost of any material item will be the 'intellectual property' charge.

With production automated, almost everyone who is employed will be working in service jobs by 2050. And then it gets more interesting.

As AI research progresses, we will be able to build robots capable of doing service jobs. The health care crisis will be 'solved' during the second half of the 21st century. Robots will replace, not only orderlies and nurses, but physicians and surgeons, too. The cost of producing these robots will be minimal. The valuable commodity will be the knowledge of how to program them to do what you want them to do.

By the end of the 21st century, creativity -- the creation of intellectual property -- will be the only currently known role that will still be the domain of us humans. And the control of that creativity is what is being fought for now.

That's the power struggle going on now. It's just started.

One more thing. By the end of the 21st century, molecular genetics will have progressed to the point where most people will be able to live almost forever. Imagine living forever in a world where production and services basically cost nothing. The only thing of value will be control of the intellectual property behind it all. Imagine a world where material items sell for a dollar each and services are provided for ten cents an hour. It could be paradise if you have the money to pay for what you want. But if you don't, how do you compete against such prices?

The challenge as we approach the 22nd century will be to rethink the issues of access. How will we reward innovation while making it possible for most people to survive and live reasonably good lives?

Because, if most people cannot pay for those goods and services, there will be a revolution. If that revolution succeeds, those who were on top will be gone. If the revolution fails, the whole economic system will collapse from lack of customers.

Hang onto your hat. It's going to be a wild ride.

You get what you pay for.

[JustAnotherReader]

We use to have H1B's from India in our shop as cheap programmers. Yeah, they were cheap, but the projects they worked on were all late and over budget. And the quality of their code was atrocious. Here's an example of some code to determine if a zip code is a 5 digit zip code or a 9 digit zip code with a dash in the middle.

String zip = new String(req.getParameter("ZIP"));

// several lines deleted for clarity

StringTokenizer ziptk = new StringTokenizer(zip, "-");
int zipcount = ziptk.countTokens();
String zip1 = null;
String zip2 = null;
switch (zipcount) {
case 2:
while (ziptk.hasMoreElements()) {
zip1 = (String) ziptk.nextElement();
userBean.setZip(zip1);
zip2 = (String) ziptk.nextElement();
userBean.setZip1(zip2);
}
case 1:
while (ziptk.hasMoreElements()) {
zip1 = (String) ziptk.nextElement();
userBean.setZip(zip1);
userBean.setZip1("");
}
}

1. Why are you using a switch statement when you already know how many tokens there are? zipcount is the number of tokens.
2. Why is the enumeration wrapped with a while statement when it's already inside case 2: or case 1: ?? If you got to case 2: then you KNOW that there are 2 items. Answer, because the programmer didn't know about "break"
3. How slow is StringTokenizer? Since you KNOW that the zip code either will, or will not have a dash in it then how about just doing an indexOf("-") and splitting the string?
4. Look at the methods in the userBean object. setZip and setZip1 ??? How about setZip and setZipExtension or any other method name that's self documenting. setZip1(String) !? WTF is that?

There were tens of thousands of lines of code like this. So what are we suppose to do? Spend a senior programmer's hours to do code reviews of the H1B code? Where's the cost savings then?

The project was $270k over budget and a year late. That's the cost of three senior programmers at $90k per year for a full year. And we havn't even touched on the cost of maintaining this mess. Do you really think that the situation will get better if the programmer is 10,000 miles away?

Why can't management understand THAT side of the equation?

Re:You get what you pay for.

[sql*kitten]

The project was $270k over budget and a year late. That's the cost of three senior programmers at $90k per year for a full year.

To be fair, it's actually 3 ordinary programmers at $45k per year. Factor in taxes, benefits, rent, equipment, utilities, subsidized canteen/vending machines and you will find that annual salary is less than half of what it costs to employ someone.

Why can't management understand THAT side of the equation?

If you, the super-smart engineer, don't understand the cost of employing someone, why expect your PHBs to understand either?

Why Free trade is good.

[nuggz]

Sounds like a good idea, people will buy only from US sources.
But then the US supply is limited (which is why there is a huge trade deficit), so the US suppliers jack up their price.
The consumer has to either pay the inflated US price, or buy the imported goods with the tarrif.
The end consumer ends up paying more for the same goods, and the market loses competition.

This is a basic econ topic, along with why minimum wage kills jobs and such.

3 things

[Phoenix666]

First, how interesting how loudly programmers cry now when during the outsourcing of manufacturing jobs they said nothing.

Second, if companies can send jobs overseas, and move their capital around whither they will, so too should workers be able to chase the jobs. I'm sure many folks here would be more than happy to code while sitting on a beach in Goa.

Third, with video conferencing a CIO/CFO/CEO could really be anywhere in the world. So why not hire an Indian CEO with a degree from Stanford for $50K? Think of the millions the company would save! Hey, what's good for the goose is good for the gander.

Interesting...

[terrywin]

"You can't expect day-one or even month-six gains," Zupnick says. "You have to look at offshore outsourcing as a long-term investment with long-term payback."

IMHO in the last couple decades, most US companies have *not* looked at long-term investment or paybacks - only the short term profits. This should be a wake-up call to all those CEO/CIO's!

Terry

It was never about money savings...

[EvilTwinSkippy]

If you read between the lines, it's not about the money. It's about business busting the balls of skilled workers. We were scarce, expensive, and worth our weight in gold. We had them over the back of a barrel, and they knew it.

All of this outsourcing is a thinly veiled attempted to commodidize not just IT, but IT services. Look at every stinking product coming down the pipeline. It's all designed for a chimpanzee to use. Sure it can't do half of what the previous version did, but it uses MicroSoft's backend, costs 3 times as much, and we can hire a teenager to feed it.

So what if all these rosy assumptions explode and take our customer service with it. We sure showed those IT people who was boss. Who needs them...

Re:It was never about money savings...

[swb]

If you read between the lines, it's not about the money. It's about business busting the balls of skilled workers. We were scarce, expensive, and worth our weight in gold. We had them over the back of a barrel, and they knew it.

It seems conspiratorial, but I can't help believe it. I had a debate with my wife (who is a high-level marketing exec) about the wages of engineers vs. marketing staff, who ultimately end up dominating corporate management. The crux of her argument came down to: engineering salaries should never be more than marketing salaries, as marketing is "more important" than engineering -- never mind that without engineering you wouldn't have products to market, or with shoddy engineering you're working harder to sell shoddy products.

I think this cultural aspect is quite telling, and I think there are a lot of "suits" who think the same way. Whether or not IT salaries during the dot-bomb era were too high for economic reasons is immaterial, they had become too high for socio-cultural reasons ("Why is the IT guy driving a better BMW than ME?!?!"), and rather than see their businesses dominated by IT people, they sought to "control" this phenomenon by various means -- outsourcing, H1-Bs, lower quality packaged software, and so on.

The cultural explanation may not be the only reason, but I think its a significant one.

Re:It was never about money savings...

[NDPTAL85]

Without the marketing people the company can't sell whatever it is the engineers make. Plus engineers are only needed to make the product ONCE. After that its all about marketing. So yeah the marketers are more valuable. But this is hard to get across to the aspergers syndrome plagueged geek world.

Re:It was never about money savings...

[jafac]

This is truly IT, what it's all about.

(mod parent up).

When I was employed at "VeryLargeSoftware Corp", (who incidentally, has an office in Pune), I saw engineers who were denied new hardware, essential for fulfilling the needs of engineering a product to run on the same equipment our customers were running on. For budgetary reasons.

Our company engineered many products, because we were a result of many mergers and buyouts over the years, with satellite offices all over the country. But the sales team really focussed on our top-selling product. They could not be made or enticed to actively sell the other products. As a result, the other products, regardless of technical merit, whithered and died, and the satellite offices were closed down one by one, putting engineers out of work. The sales guys didn't care, because their offices were at our HQ.

So While the sales guys were, essentially not doing their job - they refused to do their job, and our officers refused to force them, and while our engineers were being constrained by opressive and crippling budgetary restrictions, the sales and marketing groups were rewarded with offsite meetings at posh resorts, junkets (one of which was a company-paid trip to South Africa, including a safari trip, resort stay, and an engraved commemorative gold watch - as a reward for what ultimately turned out to be a year of lackluster sales).

Freinds who had been laid off and got jobs at other software companies, had reported similar situations.

Re:It was never about money savings...

[Bull999999]

I think that it's laughable that there are so many poeple on /. that they are smarter than the big businesses but don't bother to start their own address.

My two partners and I run a small business. All of our specialties are in IT. We are in need of a good salesperson as we have lost several potential clients because none of us have good sales skills or experience. Good product and service to matter but only after you sell the product and gain clients!

I'll have to say that some of the most closed minded people I've met in my life are the IT people. They complain about the management, yet they don't take the time to take business classes, read business books, or research business publications to better understand them.

As the designated administrative person for the business, I've taken several business courses so far. Do you think that assembly language is hard? Try taking a class in tax laws. And after taking several accounting courses, I now better understand why some businesses run their businesses a certain way.

Agreement

[big-giant-head]

I've seen the same thing. If you have really simple stuff, you can do it. Anything larger and we basically had to rewrite it. This has happened on 3 projects now. According to managment there will not be a 4th.

It wasn't just bad, it was even unreadable in places.

Just my 2cents worth, go ahead and mod me down for being redundant........

Good point

[Marc2k]

"Does it strengthen the company from within? No."

That's actually a really, really good point. While I personally am not a good candidate for outsourcing (writing process control software that for now requires me to be on-site), my morale and loyalty to the company would be greatly depleted if my company were to send hundreds of IT jobs offshore.

Why? Well, regardless of my necessity at current, I'm always going to be working with one foot out the door if I know that I'm really only around until they can figure out how to pay someone else less for what I'm doing now.

Missing the point...

[MosesJones]

My experience with a small shop in the US in Oregon was almost exactly the same, totally and utterly useless gung-ho "we can fix it" cartoon like characters. And of course with any Microsoft code that has ever escaped into the wild you couldn't exactly bandy about the word quality.

Shit programmers exist everywhere. There are shit hot people in India, there are crap people in the US. The trick is to meld the good people in both areas to create decent teams as the client needs to speak NOW to someone, and that person HAS to be in the US. But the basic work can be done by top quality people in India.

It does work, and I for one have had good experiences of it, and I'll tell you one thing. Its a damned sight easier to get rid of the shit person on your project in India than it is in the US.

Re:Missing the point...

[MosesJones]

WRONG! Because the odds are some PHB hired the fuckwit and so you can't fire him or PHB looks bad, so you are stuck with numbnuts on the project for 10 months doing filing and even then screwing up the project. In India you just say "he is shit fire him" and he disappears, and is magically replaced by someone new, and IME the new person is almost always better as people realise the quality level you are setting and don't want to fail twice.

PHBs hire and fire, and they don't fire their own hires.

Cheaper Salary?

[Esion Modnar]

Everybody seems focused on how labor in India and elsewhere is cheaper, WRT salary. But has anybody thought about the different labor laws? For instance, what's the minimum legal age to work? And what is the equivalent of OSHA over there, if any? And health benefits, if any?

I seem to recall how some celebrity (Martha Stewart, somebody else?) was in a scandal because her clothing line was alleged to be made overseas by child labor. Illegal here, perfectly legal there.

I'm sure there are many inconvenient labor laws here which can be avoided simply by sending the work overseas.

Point is, some people insist on the notion of free global trade, and open competition between all the participants in the world economy. However, until everyone has to play by the same set of laws, labor and otherwise, some countries will have an unfair advantage in this competition.

And until then, countries which have this unfair advantage, should be penalized with tariffs and anything else to balance out any advantages, real or perceived, that outsourcing would provide.

Re:Cheaper Salary?

[dentar]

You're thinking of that Kathy Lee Gifford, the child slave driver.

Martha Stewart was only selling stock that was set to go bad... not nearly as horrible as enslaving children...

(and yet Ken Lay runs free...)

Re:The fault in our economic system - not only

[vinn01]

It's not just the fault of our economic system. It's also the fault of our political/legal system.

There is more than cost savings when moving work offshore. Companies also gain a lot of relief from litigation. They don't have to worry about lawsuits for discrimination, sexual harassment, or wrongful termination.

It's similar to when manufacturing plants went offshore. Corporations loved the relief from unions, OHSA, environmental and child labor laws.

It's a race to the bottom....

Why IT? Why not off-shore lawyers?

[semanticgap]

What makes IT so off-shorable, is that it deals with information only, so the result of the work can be moved over as bits.

But IT is hardly the only information-only occupation. How about writing, law, engineering, architecture?

My point is that off-shoring IT in the end will show to be not anymore beneficial as any one of these other professions.

(Imagine a law firm that uses cheap lawyers from Bangalore)

The article sums it up pretty nicely

[adam872]

This article could have been talking about outsourcing in general, not just overseas. One thing I have learned over the years is that you don't outsource simply to save money. In some cases, it costs *more* money to outsource than to do things internally.

In my opinion, you outsource to gain expertise you don't otherwise have, focus on your core business or other sound commercial reasons. Reduced costs should be the last reason for doing this. I have seen far too many outsourcing contracts go bad as a result of a failure to factor in the appropriate costs (this is on the providor as well as customer sides). I'm not saying don't ever do it, but be aware of a few things.

One of the comments at the end of the article also raised a good point: intellectual property. Be careful about dealing with *any* outsourcing company whom you suspect might take your brilliant idea and sell it on the open market. The opportunity cost of this happening can be staggering.

Another often forgotten part is the opportunity cost of not having an internal staff who understand and are aligned with the goals of the organisation. That is, those high potential technical and management staff who add more value to the business with their ideas/techniques etc than they cost in terms of total compensation. Do you want to outsource those people? An outsourcing comany has only one goal: to maximise the amount of profit they make per contract. This is not a bad thing, but it may mean that their goals diverge from your own.

The IT market seems to be very cyclical when it comes to outsourcing. It happens to be in favour right now, but who knows if that will be the case in 5 years time.

The old saying still stands true

[phorm]

"You get what you pay for"

Although in truth it doesn't always apply to highly paid workers (some are still lazy buggers), but quite often is the truth when dealing with attempts to save money by outsourcing.

Seriously, I doubt that anyone thinks that you can get 100% quality for 60% cost, but I'm sure many companies find the quality/cost ratio they end up with is well below what they expect.

Re:Salaries are just way too high

[el_gordo101]

The guys climbing the poles for Verizon make over 75k/yr, at least according to their recent ad campaign.

Those ad campaings were produced by Verizon in order to sway public sympathy away from their (unionized) workers that were about to strike in order to protect their benefits. My wife, brother-in-law, and cousin are all techs with Verizon, and, believe me, they do not make anything approaching $75k/year. Possibly with 30 or so years with the company and 15-20 hours of over-time each week (if it is available), then they might the approach $75k. A better estimate would be around $40k/year. Hell, I wish my wife made $75k, my life would be much easier ;)

Hmmm .... management chimps again.

[nosfucious]

Interesting to note that the anecdote of one manager is that they now have to define a rock solid spec, and of course, up the QA.

Most project I've worked on seem to fall down in those two areas. Clearly both areas are a management responsability to kick off.

Might they have saved half their problems getting these right in the first place?

seems risky for 20% savings

[nomadicGeek]

Seems like an aweful lot of exposure for 20% savings.

A terrorist strike in one of these regions and you could see the company stock plunge because 80% of your IT development is done there. Seems if I were a terrorist this might be a good way to strike US economic interests.

Let's say your "partner" overseas decides to take the money and run. Do you then track them down and sue them in Indian/Chinese/whatever legal system? How successful will you be?

If something does happen to your partner, how long will it take you to recover? How much does it cost to have a standby?

How about exposure to other political instability? Don't India and Pakistan stare each other down with nuclear weapons at the ready every year or so? Isn't there a crazy little dude with funky hair in North Korea making missiles that can reach a lot of these regions?

How about all of the pissed off in-house talent who leaves? You've turned your real partners into adversaries. All that accumulated knowledge has left and you're now trying to rebuild it half way around the world? Does this make sense?

20% doesn't sound like all that much. You might be able to save that much by working on better managing your in-house resources.

This isn't to say that there isn't danger and uncertainty here in America, but overall it seems to be about the most stable environment to conduct business.

Common Sense is Tricky:Outsourcing but NO to H-1Bs

[reporter]

Common sense can be deceptive. Common sense says that outsourcing will destroy American jobs, but actually, in the long run, outsourcing will help to preserve jobs and Western society.

How? First, please visit the web site that explains "H-1B Myths". Professor Matloff, who teaches computer science at a top-notch university, has campaigned tirelessly to terminate the H-1B program.

Anyhow, we have only 2 choices.

1. H-1B employment but no outsourcing.
2. Outsourcing but no H-1B employment.

The second choice is best and will result in the long-term gain of jobs for Americans. The United States of America (USA) is a big market, and companies will set up shop in the USA once their share of the market reaches a certain critical size. As well, domestic content laws facilitate this trend. Toyota and Honda are excellent examples; they have built huge manufacturing and design facilities in the USA.

Further, by terminating H-1B employment, you ensure that American jobs stay with Americans.

The second choice also directly deals with the strongest bogus argument by unethical American companies like Intel and possibly Google. Even when Silicon Valley has 8% unemployment, they insist that cannot find American workers for critical jobs and that they must hire H-1Bs. We in the Slashdot community should say, "Fine. Go set up shop overseas. There is plenty of labor there."

... from the desk of the reporter

It was *always* about money savings...

[thefinite]

Why in the world would the whole IT industry collude against skilled workers out of *spite*? Pat yourself on the back all you like by saying you are worth your weight in gold, but by saying that you specify the very reason the commoditization of IT services *is* about money. Like you said, you are *expensive*.

If you lost a job to an Indian IT worker, I suggest you *compete* instead of *whine*. (Glad I had karma to burn on this. I can't believe it got modded insightful.)

Re:It was *always* about money savings...

[swb]

Competing is fine, but I can't compete on wages. You can't live with any dignity in the US on $8k/year.

Re:It was *always* about money savings...

[EvilTwinSkippy]

If you lost a job to an Indian IT worker, I suggest you *compete* instead of *whine*.

Compete? Excuse me? I was laid off as an Intern at $12/hour so the company could move to Singapore. I lucked out, I could move back in with my parents. The other engineers have families and mortgages.

Your pop and swap mentality flies completely in the face of reality. People, get this, actually require steady paychecks. You start talking about universal health care, free meals, and housing guarentees, then we can talk about us all being interchangable.

But we aren't talking about that. We are talking about workers having to be self-sufficient with no guarentee of work. And it's not even unskilled workers anymore. You have hard-working college educated people who are now competing for the unskilled shit jobs of the world, bumping the unskilled people even further down the hole.

Ask the French sometime about what happens when the Middle Class goes into a toilet-bowl spiral while the Upper Crust get fabulously wealthy. Better yet, ask the Russians.

Re:It was *always* about money savings...

[Bendebecker]

"I suggest you *compete* instead of *whine*."
So me, with college bills, with a higher standard and thus a more expensive standard of living, am supposed to compete against a country with no minimum wage, no real labor laws of any kind? How? Those indian IT workers are making less than your average burger king employee ($10,000 a year is considered good there - here, you would have to go on welfare to survive at that level.)

Re:It was *always* about money savings...

[GlassHeart]

Competing is fine, but I can't compete on wages.

Isn't this exactly what Slashdot likes to tell the RIAA? That new technology enables new business models and kills old ones. That Internet distribution will kill the CD, and they better get on with it or face extinction.

Well, new technology enabled a less expensive worker to do your job. Are you more entitled to an income on your old "business model" than the RIAA?

Yes, the human cost is terrible. I have lost work, and I empathize. However, what do you propose US businesses do?

Re:It was *always* about money savings...

[endus]

If you lost a job to an Indian IT worker, I suggest you *compete* instead of *whine*.

That's real cute...maybe I can pay my half of the $1600/month in rent i was paying on the $10,000 a year an indian worker gets. Wait though, I can't even afford the half of the $800/month in rent I am paying now that I have been forced to move after more than a year of unemployment on that kind of money.

As far as H1b's, I'll take whatever they're surviving on in this country...sign me up...I'll report for work as soon as my no-benefits contract ends.

Re:It was *always* about money savings...

[EvilTwinSkippy]

Yes, the human cost is terrible. I have lost work, and I empathize. However, what do you propose US businesses do?

What do I suggest? Wake up, smell the coffee, and stop chasing each other to the bottom. Computer companies are like the airlines, they are trying to starve each other out. Look at the air industry, and tell me with a straight face that sort of behavior is healthy.

It must really be nice under Chapter 11 bankrupcy protection. They constantly operate there. I just wish the Gubment would stop bailing them out, let them die, and let a new set of players take their place.

Re:It was *always* about money savings...

[WeirdKid]

Maybe if you built robots, I suppose. I'm fairly certain that the e-commerce web sites, decision support tools, and in-vehicle telematics systems I've developed had little direct impact on the blue collar job market.

NAFTA, on the other hand, what Ross Perot called the "giant sucking sound", was primarily responsible for huge employment losses in the blue collar labor market. If I remember correctly, the government and big business were all for NAFTA, but the working people were all against it. Sound familiar? The difference is that we (tech workers) don't have even the unions to lobby for us like the blue collar folks did.

Re:It was *always* about money savings...

[EvilTwinSkippy]

Judging by how most American cars are mostly made in Canada and Mexico, you can see how affective Labor was in imparting change. Or rather, preventing change.

I for one am planning on starting a new industry: replacing CxO's with software. The smarts don't have to be that sophisticated. At present CEO/CIO/CFO's are random number generators with single register math. Imagine what could be done with a modern processor that can track more than one factor, and some memory to gauge progress and effectiveness.

Of course, computers don't need to be paid. They just run the world for kicks.

Re:It was *always* about money savings...

[TrekCycling]

Great idea, sparky. The problem isn't that the terms of competition are unfair. The problem is that we're whiners. I vow today to begin competing. For starters, I will begin by declaring bankruptcy on my student loans, my cars and my mortgage. I will then move into a house made of bricks and dog-crap. When that is finished I will stop eating out, turn off all unnecessary services (who needs power when you live in a dog-crap and brick house?) and begin competing on a level playing field. Once a few million of us do this, won't this country be a grand place to live?

Re:It was *always* about money savings...

[Bull999999]

" Yeah, because all IT folks are the same people, with the same job and the same opinion..."

Humm so looks like slashdotters don't have any problems lumping all the businessmen into one group but gets offended if they are lumped into one group...

Re:It was *always* about money savings...

[Bendebecker]

It was really about money, why has Hp fired 1000's workers, replaced them with indian workers, and then went out and bought 2 $60 million dollar jets to replace their 1999 ones?

Re:It was *always* about money savings...

[OldAndSlow]

gain a new skillset OK, what skillset do you suggest. It must meet the requirement that it cannot be done in India, China, Ireland, or Israel and have the results shipped back to the States by internet.
Let's see Finance, going offshore... Engineering, going offshore... Architecture, going offshore...

See a pattern?

Re:It was *always* about money savings...

[GlassHeart]

What do I suggest? Wake up, smell the coffee, and stop chasing each other to the bottom. Computer companies are like the airlines, they are trying to starve each other out. Look at the air industry, and tell me with a straight face that sort of behavior is healthy.

First of all, there are serious differences that must not be overlooked. In general, a business might be capital intensive with relatively cheap labor (think automobile assembly plant or oil refinery), or light on capital with relatively expensive labor (think computer programmer). Airlines are both: capital intensive (airplanes and other specialized equipment) and powerful, expensive labor (pilots, etc).

As such, labor cost is pretty much the only thing a software vendor can cut. An airline can go to the Southwest model and use only one type of aircraft to save on maintenance, or try to force unions to lower wages, or try to reduce flights in unprofitable routes. A software vendor is unlikely to save any significant amount of money by making its programmers use a cheaper computer, or take up less office space. This nature of the software business is also why people can write a competitive operating system in their spare time.

Therefore, they try to find cheaper labor. Slashdot anecdotes notwithstanding, it really isn't clear at all to management that the resulting quality is markedly worse. In fact, the same Slashdot anecdotes would suggest that management hardly cares about quality at all. Like I said, I empathize, but I think "stop chasing each other to the bottom" is not an alternative that US businesses can understand and accept. Moreover, even if they didn't outsource to India (assuming the quality really is worse), they still may outsource to somewhere in Europe for similar quality and slightly lower wages. What would we complain about if they did that?

My point is, either you have a problem with poor quality, or a problem with outsourcing. Using the former as a reason to avoid the latter is really a bit hokey. A problem with outsourcing per se, however, is a political question, not a business or microeconomic one.

(Incidentally, this also likely means that setting up an automobile plant in the US is not that much more expensive than one in Japan or Europe. It's easier for the savings in shipping and taxes to make up for the higher wages, so it's not really fair to compare the two.)

Re:It was *always* about money savings...

[crucini]

We can't have the level of unemployment we have now, much less more, and expect to remain a world power...much less a technology and industry leader.

I disagree. The fortunes of US workers have nothing to do with the fortunes of multinational corporations nominally called "US Corporations." Imagine a future where the US has 60% unemployment. IBM has no US employees except for Sales and Field Service. All engineering and corporate management is distributed across India, China and Korea. IBM still gives to US political campaigns, and the US will defend IBM's interests anywhere in the world. The US has the best military, funded by taxes from "US Corporations". US Corporations hold most of the intellectual property such as patents, making them the world technology leaders. It doesn't matter where in the world the engineering talent is; it matters who owns the patents.

Cringely's two bits on this topic

[beetle496]

I, Cringely had a nice article (and even a follow-up) on this subject last month.
Body Count: Why Moving to India Won't Really Help IT

Don't forget onshore worker immigration

[DirkDaring]

"The latest U.S. Census Bureau estimates, however, show a record 8 million illegal immigrants in the United States, increasing at the rate of 500,000 a year."

While it's true the vast majority, if not all, of these immigrants are unskilled and will not be taking over IT jobs, they are taking over many jobs that would be filled by low income workers while driving down the wage categories at the same time.

http://www.denverpost.com/Stories/0,1413,36~1167 6~ 1631417,00.html

So where are the savings?

[gillbates]

• Bottom line: Expect to spend an additional 1 percent to 10 percent on vendor selection and initial travel costs.
• Bottom line: Expect to spend an additional 2 percent to 3 percent on transition costs.
• Bottom line: Expect to pay an extra 3 percent to 5 percent on layoffs and related costs.
• Bottom line: Expect to spend an extra 3 percent to 27 percent on productivity lags.
• Bottom line: Expect to spend an extra 1 percent to 10 percent on improving software development processes.
• Bottom line: Expect to pay an additional 6 percent to 10 percent on managing your offshore contract.

According to the article, the hidden costs of overseas outsourcing could cost between 16 - 65 percent of the total project cost.

I just don't see any savings here. Consider:

• Overseas consulting firms charge $20/hour.
• The average American programmer gets paid $35/hour.

The overseas firm charges 57% of what the American programmer gets paid - But, the minimum hidden costs bring that to (57 + 16) 73%, in the best case scenario. In a worst-case "successful" scenario (one in which the project comes in on time, without bugs..), the American firm will pay (57 + 65 = 122) 22% more than just hiring an American programmer. And to add insult to injury, should the overseas firm fail to fulfill its promises in any way, the American firm would have no legal resource against companies based overseas.

And I haven't even gotten into the cases of project overruns, code delivered late, or in an unworking state, etc...

You have more than 2 choices

[NigelJohnstone]

"Anyhow, we have only 2 choices. "

No, you have many, you are only presenting two.

Minor training of unemployed US programmers to fill the missing roles would have been the best option.

You're ignoring all the out of work US programmers.

Mainstream Silence

[sagwalla]

This is essentially a repost of last week's article, "No Americans Need Apply"", which was a sidebar to the main CIO article.

What strikes me most immediately about the phenomenon of offshore outsourcing is the low level of the outcry about it in the mainstream media. Just one more revolution of the vicious circle - the global economy's levelling effect. Maybe even schadenfreude that it's happening to a highly-paid sector of the economy. But in RTFA, they make the comment that in the last offshore wave, the service-sector economy replaced the manufacturing economy, providing a soft landing. This time, they suggest, is the "structural" adjustment for which there doesn't seem to be another soft landing on the way.

The problem is in the Friedman-esque incentives that make it preferable for this to happen rather than to keep the jobs at home. I don't want to seem a wild booster of the US economy in this one - it's pretty much every country for itself out there - but the structural adjustment the article refers to hollows out the competence base of American IT. From there, I worry about the stock of high-value jobs and the follow-on impact that this will have on the US economy in strange places, like university tuition and social security funding.

No doubt it's coming, but it seems to me that the CIOs aren't operating with sufficient perspective to do anything about it. That's why the wider silence is disturbing to me. The CIO articles are definitely worth a read once the /. effect calms down.

World's largest banking software comes from India

[Vedanti]

What you don't know is that the world's best selling wholesale banking software comes from India - Flex-Cube. I used to work for this company (it is part owned by citigroup). BTW, it is not the largest selling banking s/w in India ....

Let me assure you - knowing how banks work (even in and out) does not help you build a bank. Moreover, some Indian banks are as old as CitiBank and know banking very well, they don't need to first build a banking s/w to learn that. Anyway the knowledge alone does not help them become a global bank, simply because even the biggest Indian bank is very small in global terms. Afterall, you can't build another Microsoft if you know how to build an OS.

My first project was writing an application for treasury - forex, money markets. No, that didn't help me become a Forex dealer, because judging the next move of the market has nothing to do with the knowledge of how to process the deal, once it is made.

There is a lot more to building successful businesses than just learning enough to write software for them. Competing against entrenched businesses is very even tougher. It is naive to think otherwise.

Offshore or Onsite Projects will fail if unmanaged

[cOdEgUru]

First of all, I am going to try to write an unbiased opinion since I have managed both onsite as well as Offshore projects. Infact in my last Offshore projects, along with project I got booted all the way to India where I had to manage my team and even the client tagged along for a while.

But regardless of the fact whether its offshore or onsite all software projects are doomed to fail if there is no proper management in place. You can have a thousand people bang on it, but if you dont have a client who takes an active role in resolving issues, and identifying most needed features, if you dont have a team who is inspired and is capable of being focussed, If you dont have a manager who can lead and still be part of the team, every project is doomed to fail in the first few months.

One of my buddies who work for Kraft, USA recently told me that their project was recently outsourced to a firm in Russia. Now understand that these guys had more than an year and more than a couple of million to implement a solution the customer needs. But the weasel manager(whom I would blame here) who couldnt keep his team together and his client satisfied, chose to drop ball midway and outsource the project. They had all the time and money in the world to finish this project on time and now there are a bunch of guys out of work.

I cringe whenever my Director mentions having an offshore team handy when we talk to our (potential)clients. I feel he is not focussing (enough) on the positives of using our organization as a technology partner, but rather using the offshore model as an economical reason to justify taking projects offshore.

Recently I had the (mis)fortune of having to explain to a potential client about the feasibility as well as our internal processes when it comes to an Offshore project. Communication, I told them, is the key whether its offshore or onsite. I didnt mention the monetary advantages since to me, they exist, but i dont give a damn. For my client, I aim to make the best possible system with the best resources I have at the current time. And whether its done Offshore or onsite, I still aim to do my best. In the case of Offshore, I have to be doubly sure and have to push harder to ensure that the timelines are kept and the channel for communication remains open.

Greed

[notwhole]

You're absolutely right. On my first day of my MBA program, the professor made it abundantly clear that the point of any actions we do in business should be to maximize shareholders' value. If that meant massive layoffs so stock value would rise, do it. Dumping toxic waste into a river? Yes, if legal fees are less than disposal costs. I was waiting for the class where we had to sacrifice babies to make dividends increas by 1 cent a share. Greed was absolutely the entire point of the course, at least at that school. I couldn't even stand it.

Re:Common Sense is Tricky:Outsourcing but NO to H-

[Blimey85]

Bringing workers to this country does not mean that the money paid to these workers will remain here. I grew up in the Napa Valley in California where Wine is the big thing. A large share of the work force are from Mexico and a large share of their paychecks go to their families that are still in Mexico. Most of the people I knew would live in the US during the Spring, Summer, Fall while they could find work, and then return to Mexico in the Winter to be with their families. They didn't do much spending while they were here choosing to instead save every penny they could to support their families so how does this help our economy?

We have a lot of Americans out of work, displaced by workers from other countries who in some cases are not even legal to work here. They send money back home which does not stimulate our economy. So you now have two problems: Americans out of work have no money to spend and those who have come here and taken some of our jobs, have money, but choose not to spend it which causes businesses here to dwindle and fail because nobody is spending money in their establishments.

Lets hire more US workers, not less. Lets figure out ways to get the US workers additional training if they are under-qualified. We need CEO's of some major companies to step up the plate and decide to hire Americans and only Americans and do what it takes to find and hire those who are qualified. If we keep going the way we are, the CEO's may end up very wealthy, but what will they do with their money when our country has collapsed around them?

How can this be "insightful" ?

[aepervius]

US asked, pushed, blackmailed to get as much as free trade as possible. Always pushing "capitalism" where they begin to have interrest, but hell, as soon as it get cold they subsidide (the farmer, like EU), they want to put tariffs (steel) and now they are protesting some smart people outside US are "stealing" their job. Well tough luck. You can ask for free trade and have it all they way out, or tariff and protextionism. You can't have both.


And since you are speaking of protectionism, how about tarif on US farmer product, US biogenetic seeds, Tarifs on everything the US product and export everywhere. You might have a trade imbalance deficit, but once other country follow you, you WILL feel the pain. Do not ask for more that you wish.

Best of breed - get ready for tough love

[silverbax]

First, a dose of reality:

If you want to believe that Americans are losing their jobs to inferior non-U.S. programmers, you have your head in the sand. Their work is not inferior. Not by a long shot. In fact, I have to say that in my experience working with a LOT of Korean, Chinese, and Indian programmers, that very few - VERY few - American programmers have any real skills by comparison. For every great American programmer, I can name 5 Indian programmers of equal or nearly equal skill. If I can count that up, you can bet that CIOs can count it up as well.

The U.S. created much of the technology in use around the world today, but Indian and Chinese shops are filled with very hungry workers who are busting their butts to be better programmers than any American programmer. Theirs is not a luxury of choosing the best benefits package, people. Some workers in China are fined if they leave their work chair slightly askew.

American IT love to be arrogant, bent on condescending attitudes and poor communication skills. Those will be the first to lost their jobs. And, they will be very vocal about it. But they will either have to adapt or move on.

I have no excuses for myself in the face of such competition. The profile of J. Random Hacker is accurate in the idea that I.T. is embraced as a form of mental kung-fu, and while I respect those I face in competition, only by working even harder to be of greater value to corporations will I remain employed.

I have always admired the hunger shown by immigrant and non-U.S. workers and vowed long ago that I would not fall into the trap of so many of my fellow Americans by taking my citizenship and opportunity for granted. No excuses allowed. Too many people came before me and died so that I could have the opportunity offered me, and I'm certainly not going to go down putting out half-ass code.

Welcome to the real world, kids. Adapt or die, but stop whining and name calling, because it won't get you your job back.

Check this out...

[cafebabe]

CIO Magazine also has an interactive map that rates the attractiveness of outsourcing to different countries. The criteria are political risk, English proficiency, and wages. The scariest part, the rating for wages is annual salary are:
$ - Less than $4K
$$ - $4K - 12K
$$$ - More than $12K

The issue is that you can't compete

[hey!]

at least not on price.

Take India. This is a place where labor is so cheap that you get a driver when you rent a car. You can live much better in a place like that, dollar for dollar, than you can in the US.

Of course, it doesn't help that India is producing some top notch technical talent either. But suppose all other things were equal: talent, motivation and training. Differences in cost of living would mean that US programmers aren't going to be able to compete. The only things that keep all the jobs from being outsourced from the US to India are transaction and communication costs.

Perhaps eventually, development in India will narrow the economic disparities enough that US programmers will be able to compete. Hopefully economic distress in the US won't be part of this picture.

Re:Common Sense is Tricky:Outsourcing but NO to H-

[Dirk Pitt]

I assume from your post that Western economists are not your favorite people.

I think your view of the evolution of the US is unfortunate and at its roots simply pessimistic for pessimism's sake -- or perhaps a little prejudiced? I mean no insult, just my genuine feeling from your post.

You back little of what you say with data, and have peppered your argument with the kinds of 'proletariat overthrowing the bourgeious' Marxist rhetoric that died with, well, a vast majority of the Marxist states. Dialectical Materialism is all but dead, unless you like what's happening in Vietnam and Cuba.

For the middle class, undoubtedly the most powerful entity in the US ecoonomy, to die, and the lower-income segment of the population dominate the population numbers, a huge disparity in wealth would have to occur. Mind you I write 'wealth', not 'income'. Look at the average middle-class American, his/her life is not necessarily so different than that of the elite. TVs, nice cars, vacations, McMansions, all of these things abound. The *relative* cost of material wealth in the US, and for the most part the rest of the capitalist world, is constantly decreasing when compared to income.

It's also pretty easy to find data that debunks your claim that there is a blooming lower-income representation in the US. There is a *huge* amount of mobility in America in terms of income. As long as the lowliest, poor, academically challenged kid can train to become a plumber and make six figures, people in the US will continue to (with notable exceptions) rightly blame themselves when they're unhappy with their incomes/overall wealth. Mobility is alive and well, and small-medium sized mom 'n pop businesses continue to be a backbone for the economy.

Your post was lined with an implicit criticism of materialism in the US. I couldn't agree with you more, there. What famous Marxist said something to the effect that the West would sell the noose to its executioner? Unfortunately, it seems like the charge from materialism leads quickly to religious fundamentalism, a disease that is quickly spreading through all parts of the globe.

Why I said nothing

[lorcha]

First, how interesting how loudly programmers cry now when during the outsourcing of manufacturing jobs they said nothing.

Well, personally I said nothing because about the time when manufacturing jobs were starting to move overseas, I was starting preschool.

But I feel real, real bad about it now. I'm sorry.

About the Offshore IT folks

[$exyNerdie]

This article talks about the about the kind of folks who are working in Offshore IT :
Dilbert pokes fun at IIT grads

Contents:
Jokes apart, the ongoing backlash in the US against job losses to Indian techies has found a place even in the famous cartoon strip Dilbert, the latest of which (September 15, 2003) goes on to take a dig at IIT grads from India.

Asok, the brilliant but naive Indian trainee, the cynical Wally and the ever-sceptical Alice are sitting in the boardroom with the pointy-haired Boss. Asok says that though he was the project manager, nobody replied to his e-mail.

However, he is proud of the fact that he is an IIT graduate and considers himself superior to his counterparts and thus had been able to finish the project himself. When Wally asks him, "Are you tired?", he replies: "I am trained to only sleep during National Holidays".

And this spoof shows up the threat of Indian takeover in global arena specially in the field of technology. It also show up the Indian techie - the IITian - as he is perceived by his colleagues: a work maniac who has inhuman abilities to slog and thus outpace his American counterparts.

India's IITs have, of course, been the subject of admiration - now bordering on envy - in corporate America for more than five years now. A 1998 BusinessWeek article on India's whiz kids has this to say for IITians: "The rise of IITians, as they are known, is a telling example of how global capitalism works today. The best companies draw on the best brains from around the world, and the result is a global class of worker: the highly educated, intensely ambitious college grad who seeks out a challenging career, even if it is thousands of miles from home. By rising to the top of Corporate America, these alumni lead all other Asians in their ability to reach the upper echelons of world-class companies."

A researcher at UC Berkeley estimated that fully 20 per cent of start-ups in Silicon Valley are IITian-owned. Amazon.com CEO and founder Jeff Bezos has described the Indian IITian as a "world treasure." Bill Gates says the computer industry has benefited greatly from them.

Besides graduates of the prestigious IITs, where the quality of technical training is comparable to the best of the educational institutes in the world, India has a growing bank of 4.1 million technical workers, supplied by over 1,800 educational institutions and polytechnics. These train more than 67,785 computer software professionals every year - many of whom are a threat to America's homegrown computer jocks in the competition for jobs.

With the recent swell in outsourcing key software development jobs to India - coming on top of the BPO migration - a mixture of awe and resentment about India's brainpower is beginnning to develop. The American media have so far been mostly kind to IITs and IITians. CBS 60 Minutes had a very flattering portrayal of IITs recently. In fact, a co-anchor on CBS 60 Minutes had gone on to describe IIT Bombay thus: "Put Harvard, MIT and Princeton together, and you begin to get an idea of the status of this school in India."

But as usual, cartoonist Scott Adams - who draws and writes the Dilbert strip six days a week, is probably ahead of the pack in anticipating media and public opinion about IIT grads.

Here's the:
Dilbert strip

Re:Common Sense is Tricky:Outsourcing but NO to H-

[ninejaguar]

One possible scenario I can see is that as American IT disappears, America loses the ability to innovate in IT. The ability to innovate in IT at the rate we currently enjoy took about 40 years of IT experience building on itself, teaching itself, capturing a small percentage of those lessons in books, then moving them into the brains and character of the IT worker. Most of the experience learned, however, was never captured on text (at least not widely published text), and must be recreated continuously to maintain a momentum. That very momentum has kept America on the leading edge of tech. Tech can thank other supportive industries and sciences in helping it reach that momentum, and America can thank tech for helping it become a world leader. Unfortunately, while America as a whole is grateful for IT's role in helping it become a world leader, American politician's have taken American tech's role for granted except when they need to reduce soldier casualties (directly related to votes and corporate incursions into foreign countries) by utilizing high-tech oriented smart-bombs, guided missiles, satellites, mine-sniffing robots, fighter jets, and pilotless drones.

If nothing is done to stem the bleeding of America's IT, it's probably true that American tech will not disappear entirely, but it will be reduced to that of other countries. While those countries we've chosen over others, to gain hard-earned tech experience in our place, will rise and surpass their teacher. This may very well result in an economical reversal of roles. Corporations will move labor (IT/management/research/scientists) from cheap country to cheaper country (causing economic crises is less stable economies as jobs leave) until corporations find themselves hiring IT in an economically unrecognizable United States; an America probably still significant in IT (otherwise the IT jobs wouldn't come back), but as a country no more the super power than Canada is now. This may take anywhere from a few short years to decades, but companies will manage to get cheap labor that by happenstance also speaks English (assuming that English is still the language of business).

If there was a person of middle-eastern ethnicity who could at the flip of a switch cause America to lose its IT workers, we (knowing all the benefits of even HAVING an IT capability) would've called it an act of terrorism and gone to war. If an American citizen were able to intentionally cause a massive disruption that resulted in the loss of the American IT to a foreign power, we (understanding the economic and security capabilities one gains from having IT capability at home) would declare the citizen a traitor. When an American company does this to America, what do we call it? Sun's Scott McNealy calls it an "international company". If the Chief Executive Officer of Sun no longer considers Sun an American company, it should be treated as such. Otherwise, it is given an unfair advantage over other foreign companies that don't have the luxury of pretending to be an American company and all the benefits of allowing it to operate in America as an American company. The pretense should be dropped in fairness to others if fairness can be attributed to a libertarian, and to allow the status of being an American company reserved for those that really are American. I don't think McNealy (despite his complaints of taxes, employee benefits...etc) would consider the idea either profitable or plausible. I wonder why? I don't mean to single out Sun. I consider McNealy's attitude inimical towards American citizens, but not a dangerous one when acting alone. It is when many companies as a whole start considering themselves as "international", but behave in unfair self-interest that specifically hurts American citizens, that I co

Common reasons why outsourcing is considered bad

[swapsn]

From the postings, some common reasons why people think outsourcing is bad :

• Code quality is bad
• 
  You will find shitty programmers all over the world just as you will find good programmers. One guy gave an example of code to check the zip code. Any vendor that has even a half-good QA will ensure that such code will never be shipped. Ditch the vendor. Look for another one.
  
  
• Problem of context. Developers don't get to interact with clients.
• 
  To some extent thats true. But all good vendors have onsite co-ordinators who are in touch with the clients continously & act as an interface between the clients & the developers. And lets face it; you don't generally find clients and developers chatting together near the coffee machine and discussing changes in the system.
  
• They should compete on equal terms with respect to Health benefits, labor laws etc..
• 
  Its easy to say this when you have many years of economic development behind you. For a developing country where much of the population lives in abject poverty, such policies are very difficult to implement. They are leveraging their only advantage (cheap labor) to boost their economy.
  
  
• I am losing my job to foriegn code-monkeys
• 
  
  Move up the food chain. Become a PHP and spend your life doing powerpoint presentations :-)