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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. "
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.
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.
I don't need no instructions to know how to rock!!!!
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.
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.
And my move to Bangalore was all set, $10/month budget and all. Damn.
Roving Web-Teleoperated Robot
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.
...
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
Cheap UK and US VPS
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.
"I am a kernel in the linux army"
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.
There's a growing sense that even if The Future comes,
most of us won't be able to afford it.
-- Lemmy
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)
Why do I h8 apple?
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.
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.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!"
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.
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.
Woverly Harris Gooch, IV CTO American Fire and Bomb, LLC
..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.
"The market alone cannot provide sufficient constraints on corporation's penchant to cause harm." -- Joel Bakan
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.
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.
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.
Banjo - The more I know about Windoze, the more I love *nix
http://www.naplesnews.com/03/09/business/d961376a. htm 4 /c3736054.htm t udy/
http://www.businessweek.com/magazine/content/01_2
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.s
I found that an even more recent (2003) study that says south koreans work more hours but are not as productive.
There's a growing sense that even if The Future comes,
most of us won't be able to afford it.
-- Lemmy
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, 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 ).
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???
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.
-Looking for a job as a materials chemist or multivariat
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?
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.
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.
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...
"Learning is not compulsory... neither is survival."
--Dr.W.Edwards Deming
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.
An Eye for an Eye will make the whole world blind - Gandhi
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
TODO: Insert witty sig
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.
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."
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.)
Boom Shanka