Slashdot Mirror
Andy Grove Speaks out on Offshore Outsourcing
molarmass192 writes "Andy Grove, of Intel fame, "spoke out" at a recent technology summit in Washington about the current trend towards offshore outsourcing and how it's causing the US to slowly but surely lose its edge in the tech sector. He states plainly that the US government must step in to restore balance between the need for profits and the lure of offshore outsourcing. There are also pokes at the patent system and slow adoption of broadband internet access. An interesting insight into what's going on inside the heads of the US's tech leaders."
People want lower prices, better pay and competition. Now these same people complain when they lose their job.
"The difference between pornography and erotica is the lighting" - Woody Allen
China #2
India #22
As the IT mgt books say, "Don't outsource your strategic intellectual capital!". Unfortunately, most corps don't seem to think of this and they're outsourcing everything they can just to save a few bucks.
I saw an article a few months ago, I think CIO.com, that mentioned how United Technologies saved a whole $7 million (US) on their IT budget by sending some work over to India. I thought, "Wow! Seven million dollars US!". Then I looked. Their IT budget is over a billion dollars. So they saved a whole 0.7% by going overseas. In the meantime, their employees are demoralized for having seen their buddies lose their jobs and some poor bastard(s) have to stay in the middle of night to deal with people on the other side of the world, because if they don't - it's their ass too!
There I go again, ranting!
There is no spoon or sig.
I'm currently unemployed and directly due to off-shoring. It sucks to be unemployed - trust me. However I think that it is really silly to put barriers in place.
No 1. You inevitably get what you pay for. After having lost my job, the company I worked for now has a team of people in asia and they cost far more than the team we had here in the valley and they have yet to deliver squat.
I think that these off-shore arrangements only work if you have a very strong cultural match between off-shore supplier and local organization or if it is managed very carefully. Very few US organizations are capable of pulling off such a feat and it is inevitable that most of these off-shoring relationships will result in huge craters.
The US tech recession is the result of the "perfect storm", a) Bubble pops, b) oversupply of skilled immigrants c) Oversupply of "cheap" skilled workers. So, a) the bubble popped and it's now starting to come out of recession, b) immigrant quotas have been curbed, and c) there is only so much you can outsource.
It will recover, just be prepared to hold out for a few more months (up to 12 months). Keep abreast of the skills you need with your spare time.
Governemnt interference with the market is bad. Huge subsidies that distort thetrade in agricultural products is bad, and it is killing Africa (literally).
/. terminology: Protectionism is proprietary; free trade is free.
Tariffs or other protectionism would not work-- what would we do? demand that XX% of code is written in North America?
The software sector is simply waking up to something that has happened to every other sector: as the segment matures, labor becomes portable, and therefore companies will seek the cheapest labor possible. Trying to stop this only costs consumers, and-- perversely-- the very segment they are trying to protect via regulation compliance costs, taxes, and loss of overseas marketshare.
You want a job? innovate. Become efficient. Figure out howto make money by "exploiting" all that cheap Chinese labor yourself. Find something that those rising Chinese and Indian middle-class consumers want.
If you want action from the government, demand that they stop supporting 19th century industries and that they demand open trade with other countries. Protectionism is going back.
Let me voice my opinion in
davejenkins.com |
Humans have social structures which circumvent it. Things like inheritance, family ties, friendship, traditions, religion, etc., etc. Emotions and the ability to reason routinely prevent the best from suceeding while allowing the worst to prosper. That's one of the many failures of capitalism. A small group of people monopolizes wealth and power to the detriment of the rest; and they use social structures to hold onto that wealth and power inspite of anything Natural selection has to say on the subject.
Oh, and the people with power in the U.S. don't care about keeping America in power. They're global, meaning they operate on a global scale sans petty concerns like patriotism. Nationalism is just something to keep the rubes in line. That's the major failure of capitalism. Adam Smith assumed small shop owners who had a stake in their community, and who themselves suffered if the community went to hell. Now global capitalists just move away from their rotting comminities. The slums are exported to poor countries, and the rich live where they don't have to worry about the crime, violence and polution they're creating.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Just let those outsourced projects fail (most of them do) and see those "bright minds" who came up with the idea of outsourcing getting fired without a severance package.
I've seen the results of several outsourced projects. These projects are so fucked up, it's unbelievable. This must have to do something with the management there, because I've seen some very impressive Indian developers over here in the US (not that many, either, but then I'm hard to impress) and I don't believe they can't find any good developers there. It's just that the results of the outsourced work are often unmaintainable piles of horrendously written spaghetti code.
I have yet to see one single exception from this.
Now, how to stop it? I favor use of tariffs to force up the price of offshore workers
Nice idea, except that the US economy's success is predicated on open trade and open enterprise. Your attitude doesn't surprise me much. Free enterprise and trade is great until it effects you, and the average American has no qualms about being hypocritical when it serves.
The fact is that introducing tariffs will make the situation worse, not better. More industry will move offshore because the cost of doing business in the US will rise. Countries will retaliate with their own tariffs and the amount of business going to the US will fall.
The fact is that most IT jobs are commodities: system administration, building web pages, support, most programming (visual basic, etc) and the like can be done by anyone. The only solution is to innovate, become more efficient and smarter in how you do things.
I live in a country with a relatively small, export oriented economy. Reform and increasing exposure to international competition has made the economy more robust and efficient.
Reliable, Great Value Hosting: $7.95/mo 2.4G/120G
With global worker rights then workers all over the world will have rights.
.work.
That would include those to whom the offshore work is going, who have right to. .
You will also need monocultural global economy for it to work. You are perhaps thinking that that the reason jobs are going overseas is because workers are being exploited by being underpaid, i.e. being payed less than you are ( and thus being able to outbid you on your own job).
This is falacious reaoning. Most of these workers are taking the jobs because they are the best paying jobs available in their local economy where prices on life's necessities are quite divergent from our own. As are their ideas on just what constitutes a necessity.
Poor countries are not, I repeat not analogous to poor sections of rich countries and cannot be treated as such.
Paying someone $40/hr in a $1/hr local economy isn't treating those workers "fairly." It's totally destroying the local economny with runaway inflation, bringing misery to those that can't get those jobs, must pay $40/hr prices, but still make $1/hr. Revolutions have been fomented over much less.
The fact of the matter is that the rest of the world loves being thus "taken advantage of." You earn your $40/hr in a rich local economy that has become rich, at least in part, by taking advantage of poorer nations who now find themselves in a place to compete to get some of that back.
Your job will come back when all nations are equally rich, or all nations are equally poor, and thus share a common economy.
And you can't mandate that. It has to evolve. Or hundreds of millions will suffer. Even die.
You'll also find that most people who wish to protect American jobs think they can do it by opposing a global economy. I can't but feel that most of these people are fairly well off, always have been, have never lived extensively in a third world nation as a local would and thus generally being somewhat clueless as to how things really work, here or there.
Do you want to preserve American jobs and promote global worker's rights?
Go to Mexico. Build houses for the poor while earning a local wage for it.
You might learn something.
KFG
Not only that, Americans only represent 5% of the worlds population! Yet they expect to be treated as the majority and the only ones that matter. I guess that is because the USA has taken more then 50% of the worlds wealth. The only reason I can think of that 5% of the worlds population needs 50% of the worlds wealth is greed. Yes, I am a native born American and I served in the US Marines. I am saddened by the state that my nation has acheived. I wish that Americans had a broader view of the world and understood that the WORLD is MUCH larger then just America.
If Tyranny and Oppression come to this land,
it will be in the guise of fighting a foreign enemy. -James Madison
Quoth Michael: from the learn-to-speak-indian dept
Indians don't speak Indian.
Absolutely correct, and rather frightening, actually.
Capitalism is about driving towards economic efficiency, and that means Walmart devouring everything in the American general retail market and countries with cheaper cost structures providing whatever labor they possibly can, to maximize corporate profits.
I'm starting to see a lot more pro-tariff proposals in reaction to this, but in the absence of that sort of trade policy, it seems inevitable that wages will eventually reach equilibrium, corrected for education and technological resources.
Which wouldn't be bad, but it suggests a dramatic reduction in the absolute standard of living in the United States.. or perhaps just a reduction in the rate of growth of standard of living. 21st century middle class Americans enjoy in many respects a far higher standard of living than the absolute richest did in the 19th.
There are things that could preserve our higher standard of living, though, potentially.. the biomedical industry might do it, if American companies can extract enough wealth from the rest of the world for a cure for AIDS or malaria or antibiotic-resistant tuberculosis or the cancers. The technology industry might do it, except we really are giving away the store when it comes to open source software..
Anyone know of any good science fiction or speculative non-fiction that deals in detail with what such a move towards economic equilibrium might look like in this country, say 20 years out?
- jon
Ganymede, a GPL'ed metadirectory for UNIX
What you are saying is wrong because the following flaw:
This is falacious reaoning. Most of these workers are taking the jobs because they are the best paying jobs available in their local economy...
Although it is true that these jobs in the developing countries are the best paying, that point is moot. Why? Because people will work, not just in those "high paying" jobs, but also in practically everything else. The crux of hte problem is that the majority of the workers in the world are underpaid and exploited. You can literally go to any one of a hundread countries and find workers to do WHATEVER you want.
That's why I find it interesting that capitalists are all in favour of a global (capitalist) economy. But they never explain what is going to happen. I claim that Western wages will have to be dragged down significantly but capitalists don't think so...
BTW, you are wrong in saying that you can't oppose a global economy. There is no such thing as a global economy. It is a bogus concept cooked up by neo-liberal economists. If free-trade agreements fail, that's the end of the global economy. Also, you will never truly have a global economy because countries will always value themselves--their sovereignty--more than a global economy. This isn't happening right now but it will once things get a little bit worse. How much do you want to bet that traditional conservatives (like Pat Buchanan, who are nationalists) will gain power at the expense of neoconservatives (who are mostly neo-liberal economists and are against US protectionism)?
RAM
Sivaram Velauthapillai
Seeking the meaning of life... @slashdot of all places
Western Europe has the same problem to a certain extent but not as badly as the USA. The reason not so many European IT jobs have gone to India and China is partly because of the language barrier. There are tens of millions of Indians and Chinese who can speak English but almost none who speak German, French, Italian, Swedish, Danish, Dutch etc. (I assume some Spanish and Portuguese IT has gone to South America) This doesn't prevent IT companies trying to outsource call centres to Germany from Switzerland for example (although the language spoken in Switzerland is a dialect of German that Germans don't understand).
Apart from this a fair amount of manufacturing, production (and coding) has been flowing towards Eastern Europe as those countries join the EU. The EU hopes that it will somehow balance itself out in that very large companies in Western Europe will have branches in Eastern Europe and that that way cash will flow backwards as well.
I think one thing that can really stay local in the IT world (and this applies to the US as well) is for people to start their own small companies specialising in other small companies in other sectors in the local economy. Programmes such as Tax or local business oriented stuff as well as doing consulting and support on a small scale are a good answer.
Another answer is to start a local company that adresses the problems that the people's previous companies cause by outsourcing coding to people who have low QA and communication skills in the local language.
As an example, let's take, for example a certain Desktop publishing layout software from a company in Denver Colorado. This company's product has had a virtual monopoly in DTP for more than 13 years. About three or four years ago, IIRC, that company (use your brains as to who that is) outsourced the entire software development to India. About six months to a year later, Indian developers from this company started popping up in developer mailing lists asking really basic C/C++ questions and acting very arrogant when they didn't get immediate answers. Aparently those Indian developers were so bad (relatively speaking, probably more a management problem) that it took them almost three years to port that DTP programme to Mac OSX, where it finally turned up a few months ago.
That would have been and was an opportunity for competitors to step in and develop alternatives.
Think about it. Tarifs and high import taxes will not solve anything in the long run, as the USA is no longer in the position to be able to simply dictate economic terms to the EU, India or China (or SE Asia to an extent), and if such measures are taken, sonner or later they'll reply in kind, and then you truly will be f**ked.
FYI, Indian companies already outsource to China, today. China, Eastern Europe/Russia, Vietnam, Mexico, etc. In fact, so called "daisy-chaining," where an Indian company gets a US contract due to its relationships and reputation, and promptly outsources it elsewhere, is the new buzzword. Computerworld calls this "a trend to watch."
You want to talk about China? The Sept 15 Computerworld had an article about outsourcing that profiled a number of different countries. Here's some fun quotes and facts about China:
Get your raincoats, storm's coming.