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BusinessWeek on Outsourcing

hotsauce writes "BusinessWeek has a couple of stories on the outsourcing of white collar jobs to India. One is a cover story on GE's fundamental research lab in Bangalore where scientists work on everything from the aerodynamics of turbines to plastics' molecular structure. The other is commentary on "America's worst-kept secret", and the effects of the upcoming elections on it."

51 of 681 comments (clear)

  1. Unemployment... by ChocolateCheeseCake · · Score: 4, Insightful

    I find this whole spitting and cursing quite funny. A few years ago we had people losing jobs in the manufacturing industry and all I heard from IT professionals was, "oh, why don't they up skill like us", well, here we are, and no longer are India and China the "T-Shirt" making haven of corporate America. Corporate America now see that these countries not only have cheaper labour but also, the people are just as qualified and just as many people "there" who can produce new and exciting ideas and products when given less R&D dollars.

    What I find funny is when I hear people complain about this shift off shore. Its the old story, when your neighbour loses their job it is called a recession, when you lose your job it is called a depression.

    --

    Erotic uses a feather; Pornography uses the whole chicken

  2. Re:Old Stories by fastidious+edward · · Score: 5, Insightful

    Well, /. does not source 'new' news, it merely brings stories together in a mish-mash that is more-often-than-not revevant to the /. target audience.

    Does it matter if this story is highlighted one week later than another? It is relevant but even this article doesn't bring some hot-off-the-press story, it is a sit back and think about it piece. The tech outsourcing trend, as mentioned in the article, goes well back to the 90s, so if an opinion piece is published now, or last month or next week, it is equally relevant as we're talking about long term trend.

    To extend your argument would be to say "why didn't BusinessWeek come up with this idea sooner?", why not a month sooner if all the facts were still in place,or a month before that? Or, as this is not new information, just a collection of old information with some insight, why couldn't you have done it? /. is not a live feed from Reuters, if you want that then hire a Reuters machine, this sort of story on /. to sit back and think about, a week or even month here or there doesn't matter much.

    --

    karma karma karma karma karma chameleon, you come and go, you come and go.
  3. Just Not Thinking by deKernel · · Score: 5, Insightful

    What really kills me about outsourcing is that companies don't realize just how they are damaging their future in so many ways. I will give just two.
    1) You lay someone off here in the U.S. as an example. Guess what, that is money that is not going to be used to buy products that most likely the parent company makes to some degree. Does someone in India buy dishwashers, tablesaw, etc. Not to be mean but not in the volume as here.
    2) Tribal knowledge that is desperately needed to stay within a company for future development. That is all gone, and personally the quality that comes from an outsourced job is short of atrocious. That comes from watching quite a few projects at two different companies go completey down in flames.

    Sorry, outsourcing is going to tear this economy in the U.S. to pieces. Quick short-term gain for a long-term failure!!!!

  4. Re:Old Stories by bj8rn · · Score: 5, Insightful

    Well, it's not news in the original sense of the word, but it seems to be yet another example of the other kind of news, the institutional news. This means that something becomes news if an institution that's known to be a news source -- Slashdot, for example, or Google News (they also list(ed?) press releases as news) -- reports it as such. Being reported by such a source somehow makes a fact more true, more reliable (If it isn't on the news, it didn't happen, right?) See, for example, how people still feel the need to read about a car crash they witnessed. Or how several hundred people felt the need to read about Saddam Hussein's capture on Slashdot -- they probably wouldn't have believed it otherwise...

    --
    Hell is not other people; it is yourself. - Ludwig Wittgenstein
  5. Re:Natural step. by Anonymous Coward · · Score: 1, Insightful

    It like your chain of thought, but could I reverse it? When the price drops on, for example, software is has to be done by a lot cheaper labour.
    Alternatively, you could say when the price drops people can spend their income on buying another product they couldn't afford to previously.

    So, say all prices dropped by 50%, $1 could buy twice as many goods/services as it could before, so there are twice production opportunities for these things.

    Now, there may be a chicken and egg problem here as prices halving may mean revenue for workers halves so they don't get the opportunity to buy twice as much, but as long as there is lag (caused by savings substituting income in the short-term or severance pay) in the equation lower prices mean demand for more products, more employment, more production, more consumption.

  6. Why do you buy offshore goods? by nuggz · · Score: 5, Insightful

    When you and everyone else will pay more for locally produced goods then the Chinese crap at Walmart they'll change.

    1. Re:Why do you buy offshore goods? by Steve+Franklin · · Score: 4, Insightful

      "Chinese crap at Walmart."

      I normally don't shop at Walmart, precisely because I know it's mostly crap. Of late, I hardly even shop locally for anything besides clothing and really large unshippable items. I just can't find the precise thing I want for a reasonable price. So I end up doing what I've always done, shop mailorder--now streamlined by the internet. But the local outlets stay busy and the Walmarts thrive. Why? Because most folks will buy the cheapest crap they can find and will settle for something other than what they really want. Somewhere in here is the root of the problem, and that seems to have more to do with the perception that the cheapest is somehow always the best deal. I had a friend who had a degree in economics and even he couldn't get past the silly concept that cheaper was somehow better.

      Until people stop settling for Windows and shoes that fall apart in six months nothing will change except the nature of the item being outsourced. I wish I had an answer to this, but I don't. Short of a wholesale shift in mindset it's not going to happen.

      The only thing I can even imagine is to establish a second numerical "value" to a particular good beyond its price. Perhaps some quantifiable value assigned to it that would include such things as a Consumer-Reports-like rating, a length of warrantee figure, a guaranteed trade-in value, an ease of repair value, and the like would have the ability to draw the consumers attention away from the base price. Again, I don't see any short-term obvious solution other than to do what my great uncles did and go from being a blacksmith to being a machinist or a scrap iron dealer. In other words, you gotta go with the flow.

      --
      Hic iacet Arthurus, rex quondam rexque futurus.
    2. Re:Why do you buy offshore goods? by BaconLT · · Score: 2, Insightful
      It's not our choice. Those that will willingly pay more for "better quality" domesticly manufactured goods are the outliers. Most people buy what they are selling at the best price they think they can get.

      It's naive to think we can impose long-term thinking on millions of people, most of whom are living in debt and barely making ends meet, as it is.

      The responsibility is in the companies, then, to give the people what's best for them in the mid and long term. Cheap outsourcing only helps companies in the short term, but I agree, it hurts everybody in the long...

      --
      Who mediates your information?
    3. Re:Why do you buy offshore goods? by lquam · · Score: 5, Insightful

      Except that even the expensive goods are produced offshore. My wife really likes Brooks Brothers wrinkle-free dress shirts. They're expensive, but the cloth and manufacture is very good and they last a long time. They cost $59.50. Not custom shirt prices, but much more than you'd pay at Wal-Mart. Where are they made? Malaysia. Now, I think it would be quite possible for Brooks Brothers to have that shirt made in the U.S. and still make money, but they're obviously interested in making tons of money. And that is of course what their stockholders want, so the hell with American manufacturing jobs.

      My question is what jobs will be left except for burger flipping, construction (can't very well move pouring concrete offshore), and senior management munch butts. Take a woman from North Carolina who was an excellent seamstress who's out of work because almost no clothing is produced in the U.S. these days. She isn't going to go to Wharton for her MBA and become a manager; she's gonna end up flipping burgers if she's lucky! Free trade is fine, but when countries abandon a balanced economy where there is adequate opportunity for people of all levels of skill and education you wipe out the middle class. This has happened to farmers overseas when cheap U.S. food flowed in, and it's happening here as we exploit cheap manufacturing and now white collar labor overseas. So what is the middle class supposed to do for a living in 20 years. I have never heard a good answer for this from any of the 'free traders', just the same old babble about productivity, innovation, blah, blah, blah. The sad fact is that economic activity just can't grow fast enough to offset job losses like we've seen in the U.S. in manufacturing--Best Buy only needs so many washing machine salesmen.

      Free markets can only be beneficial in the long term if they promote a levelling of economic opportunity and circumstance. We best hope that all those Indian call center personnel and Malaysian seamstresses start earning higher wages soon, else they become simply an unenfranchised underclass that continues to leach jobs away from developed nations while at the same time creating a huge wellspring of resentment towards same.

      BTW, I'm a conservative free-trader type, but what I see going on now in the U.S. has nothing to do with free trade; it's mainly stock market driven greed and I really don't think you can candy coat it as anything but that.

      --Len, flamebait, Quam

    4. Re:Why do you buy offshore goods? by Swanktastic · · Score: 4, Insightful

      Take a woman from North Carolina who was an excellent seamstress who's out of work because almost no clothing is produced in the U.S. these days. She isn't going to go to Wharton for her MBA and become a manager; she's gonna end up flipping burgers if she's lucky!

      I live in North Carolina. I hear about this topic daily. The thing you need to consider is that most of these folks were earning $30k per year or more thanks to Union negotiations. Almost none of them have a high school degree. Few now have the desire to get a high school degree because (direct quote) "school is hard."

      When it comes to distributive justice, do you think it's fair for an American with no high school degree to make twice as much money as a Chinese citizen with a Masters or PhD in electrical engineering? The American did very little except for being born in the US. Essentially, they did nothing except for take advantage of of the investments in capital by their predecessors. The Chinese citizen busted their hump to get an EE degree. Why then does the American deserve more? Are we not all humans? Don't we deserve to be rewarded according to the fruit of our labors and not based on where we were born?

  7. Good news by Anonymous Coward · · Score: 1, Insightful

    This is good news. It will drive wages up in India, wages down in the west, but make goods cheaper in the west. This way everybody profits. The only pain is short term shifts in employment patterns.

    Eventually with the barriers to trade removed by advancing technology, the whole world can enjoy the same level of wealth.

  8. Re:Historical precedents by Anonymous Coward · · Score: 1, Insightful

    Yes it did.

    And what did that mean for future generations? They would not have to work 14hrs/day in a textile factory, they went into higher value-added professions, earned more, had more, skill, better education.

    Although the textile workers at the time did not like becomming unemployed, it did their future generations good.

  9. The role of OSS by budGibson · · Score: 4, Insightful

    What strikes me in all of this is that we are talking about an essentially corporate phenomenon. Corporate entity producing proprietary intellectual property (IP) finds it has to lower the cost of producing it. Why? Well, IP is essentially becoming free due to pressure from free IP like open source software. This is really just the continued trend of IP's marginal value and cost toward 0.

    So, where is money to be made? It's essentially in applying the now near 0 cost IP to people's actual business problems. That's where most OSS-based houses make their money.

  10. This is our own fault. by Krapangor · · Score: 5, Insightful
    No this comment ain't gonna to be the standard open standards/ open source bashing. The problem lies in a totally different region:
    We want everything to be cheap. Extremely cheap. And even cheaper. As soon as a manufacturer starts demanding money for US-made quality people being to bitch about high prices and coporate greed. Nobody is paying a fucking dime more just because it's US-made. Why should we do ? Slave child-workers will to it cheaply in Tibet or Taiwan. Oh, and evil company outsources my job to India, these evil bastards, they are just in for the money, these bloodsuckers !
    Take e.g. Apple. Saving US jobs by US goods in the US. But when they charge prices to substain these US jobs everybody whines about teh evil Steve Jobs. Just look at the frontpage and the "iPod battery costs money= TEH EVIL" stories. And this bigotry doesn't even rule Slashdot, it rules the whole country and makes it on the frontpages of NY Times and Newsweek.

    Outsourcing justs means: we get what we pay for.

    --
    Owner of a Mensa membership card.
    1. Re:This is our own fault. by arvindn · · Score: 5, Insightful
      Its called the free market.

      Your complaint against people prefering cheaper things is riduculous. Its like complaining about gravity. Its just a law of nature, and there's not a thing in the world you can do about it, get used to it.

      Traditionally, the global market is extremely unfree. There are artificial boundaries to movement of people and goods in the form of nations. Countries can make clever immigration laws and trade agreements (and an occasional imperialistic conquest, or liberation if you prefer) to perpetuate a steep difference in the quality of living. In economics its called purchasing power parity.

      Enter the internet. Completely unregulated, uttlerly chaotic, ruthlessly efficient, the perfect anarchy and the ultimate free market. Suddenly all the carefully erected barriers collapse, and huge supressed pools of labor and talent compete untramelled for a slice of the pie. Its like making a hole in the dam. What you're seeing is the tip of an iceberg, the beginning of a revolution.

      Regulation won't help, there are numerous ways around it and its already too late anyway. Nor will jingoism. In fact, there is no "problem". You're merely being forced to compete fairly.

      Hello from India.

  11. US workers part of the problem by gatkinso · · Score: 4, Insightful

    Many of us expect too much!

    Last night I went to the company xmas party. The subject of Christmas bonuses came up. The average bonus was $2000. EVERYONE got a bonus. People complained: not big enough.

    The company GAVE away an average of 2K to people just because... and people still complained ("I remember the 20K bonuses at dropdotbomb... this just does stack up" - an actual quote).

    I am not saying the greedy CEO's and stockholders aren't to blame also - they are. But this kind of attitude just goes to show that many American works expect far more than they are worth.

    If US companies want to combat outsourcing they have to start from the bottom - offer lower pay to incoming workers, and somehow get rid of the top heavy "older" workers (attrition, lay off, whatever) from the 90's.

    The excesses of our recent past are smothering us!

    A question: how fast are salaries rising in India? I am betting you won't see Indian companies buying the naming rights of football stadiums and offering half a years pay as a signing bonus.

    --
    I am very small, utmostly microscopic.
    1. Re:US workers part of the problem by Anonymous Coward · · Score: 4, Insightful

      When top management gets tens of millions and sometimes hundreds of millions to run up the stock and bail after the 3 years it takes to kill a good company and everyone loses their jobs, then I'd say $2k is a really shitty bonus in exchange for your job.

      You also say companies should get rid of "top heavy older workers". You mean dump all the people who know the product, how the company runs and actually do the running and replace them with new college grads like you? Hehehe... riiiight.

    2. Re:US workers part of the problem by gatkinso · · Score: 2, Insightful

      That is exactly what I mean.

      Your argument is self negating: getting rid of the programmers who "know" the product is happening anyway - they are being replaced with Indians.

      I love people like you who think that we can stop this trend while retaiing our current salary rates: wake up - it just isn't going to happen.

      Many programmers are willing to ask management to give up margins, shareholders to give up profit, but they aren't willing to give up salary!

      NEW FLASH: we all have to tighten up to compete.

      --
      I am very small, utmostly microscopic.
  12. Most of us have seen it coming on a personal level by big_fish · · Score: 5, Insightful

    As a recent Ph.D. graduate in Chemical Engineering, this is nothing new. When I entered graduate school 10% of my fellow class mates were US citizens. Our finest graduate schools in the technical fields (engineering, physics, medicine) have been training foreign students for a long time now.

    Global workers trained here are just as effective and talented as native US workers. The notion that US citizens are somehow more innovative is just that a notion. They get the same education what US citizens get. They are equally as qualified, and WILL work for lower salaries in their native contries. The real reason that US students aren't going into these fields is that they don't have the work ethic or the dedication for it. They would rather sell wireless phones for commision and make a quick buck than educate themselves for the future of our country.

    In terms of solutions to this problem:
    The answer in NOT legislation. This problem has to be solved by the US providing technical people where it is obvious that they are the best people for the job.

    In terms of developing countries: In particular this is a great opportunity for India where they can bring about social change in their country. Well at least until some time down the road when we outsource their jobs to some other developing country.

    Outsourcing to other geographical locations is not new and has happened to manufacturing, and it is happening with technology now.

  13. Re:Historical precedents by arth1 · · Score: 3, Insightful
    Didn't the same thing happen a long time ago* to the textile industry in the UK?

    A long time before then. It's called imperialism, where a country takes advantage of lower living standards elsewhere to maintain an artificially high standard back home. In the long run, though, it exhausts the resources without adequately putting back or compensating. Sure, the Indians might think they're getting a good deal right now, but it's draining away their best resources from improving their own country, and they become even more relying on the western countries.

    Regards,
    --
    *Art
    P.S. We can save a LOT of money by outsourcing the military, say, to Pakistan...
  14. ESR by arvindn · · Score: 4, Insightful

    ESR, never shy of controversy, writes in his blog: Salaries are dropping. Time to celebrate! . He claims that the outsourcing trend will ultimately benefit Americans; that's just how the free market works. You may not agree with him but read it anyway for an alternate viewpoint.

  15. Re:Natural step. by fataugie · · Score: 5, Insightful

    That's all well and good, but if your job was the one making the product at $1, and they decided to outsource it to [insert country here] for production and you're now unemployed and have no income, does it matter that the item which used to cost $1 is now $0.50? You can't afford it because you're worrying about your [insert payment schedule here] bills.

    I am not a protectionist/communist/anti-freetrade person. I actually think capitolism is the way to go, but unless we get our act together and start inventing new technologies and exploiting them here, we are in for some rough times ahead.

    --

    WTF? Over?

  16. Re:Historical precedents by Anonymous Coward · · Score: 2, Insightful

    There is a huge difference.

    At that time those bad jobs was going and was replace by better jobs further up the chain.

    These days the jobs being outsource are the jobs at the top of the chain.

    It's research and development; it's financial services and so on. There are no jobs further up the chain.

    This is not going to go well.

  17. You're not alone by HangingChad · · Score: 3, Insightful
    Gone are the days you could count on being able to find another tech job. If you're smart you have a non-tech emergency backup job that you work part-time now.

    Although the tech people I know that have been on the bench a while do eventually seem to fall into another tech job. But it's different. Contract work instead of perm and there's a lot more bench time between jobs.

    Bank cash and keep your bills down when you're working. Maybe one of these days we'll have a story on /. about the worlds longest chain of wi-fi connected latte' carts.

    --
    That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
  18. Hidden Costs of India by christoofar · · Score: 5, Insightful

    Speaking from experience with H-1B contactors and L-1s working in the U.S., the cost savings these companies seem to "realize" for I/T is not as rosy as one would think. Most managers that make these decisions can barely understand a balance sheet and an income statement, but they can certainly read a stock price. When outsourcing looks like an option, you have to look at all the hidden costs that lurk about doing it before you dive in.

    Unlike unkilled and semi-skilled manufacturing jobs, where the tasks performed are route and routine, a lot of programming jobs require heavy amounts of cooperating and coordinating to get a successfull result. The proper analogy to draw with your client is that of the homebuilder/architect and the homebuyer. Although the programmers may be Mexican immigrants who work less than minimum wage and get paid cash under the table to send to their poor families in Guadalajara, these folks still need the same amount of (if not more) specific direction to build a home that will be fit for you and your family to live in. Translating back to I/T, you may be mired in many, many more meetings, buried in email, and endless phone calls with your overseas colleages just to keep the train on its tracks and moving in the right direction. Be careful what you outsource.

    Ever heard the old addage "too much of anything is not a good thing?" Same principle here. A proper mix of outsourced labor and internal I/T staff can build successfull solutions with less cost than the tranditional MIS department (in less time is another story). Some jobs are perfectly suited to be outsourced, such as the DBA, data-warehouse specialists and some of the programming. The traditional PC helpdesk has also been successfully outsourced overseas, but you better hope that your callers can tolerate the Bombay accent on the other end of the phone.

    Some jobs cannot be outsourced without expecting a downturn in quality or a corresponding increase in time spent doing your project, such as technical writing, quality assurance, project and program management and many other jobs that require intense amounts of personal and communication skills. Hardware, network and software installs should NEVER be done by outsourced personnel. You also want to keep the programmers who are working on the big things, such as architecture shifts and regulatory changes (e.g. HIPAA) on staff for the tight projects where you don't have the luxury of time on your side.

    Outsourcing CAN be done, without firing your entire I/T staff, alienating everybody and stirring up bad blood. Find jobs for the folks who are being placed out or train them to do the jobs you aren't sending out of the company.

    And even when you get to the state where you can do offshore and realize a gain, you still have to keep busy monitoring everything much more vigilantly. Outsourcing companies charge vastly different prices for the same tasks, and contracts don't span very long. There is also the question about what happens to your intellectual property when it's going out of your country's borders: if you are compromised from an overseas vendor you may be left with little or no recourse (which is why so many CEOs are lobbying Congress). The cost of securing a favorable contract with an overseas parter also adds to the cost, unless you are doing it through a U.S. firm (but don't think that those international legal firms' fees WON'T be passed down to YOU). I doubt that most PHBs will get outsourcing done right without paying a large sum of dough to outsourcing specialists (hmm maybe a new career option to layed off I/T workers?).

    Where does this experience come from, you ask? Well, I was replaced by Indians several years ago, which then followed up with a massive layoff at the company I used to work for. They are paying less money for the labor, but since I left they have had more projects fail miserably than before. They may have let off with benes and pension plans, but they traded it in for huge sums of airline fees to sh

  19. Frog in a pan of water. by LaminatorX · · Score: 4, Insightful

    When they offshored the textiles jobs, I did not speak out because I wasn't a textile worker.
    When they offshored the steel mills, I did not speak out because I didn't make steel...

  20. Re:Natural step. by Anonymous Coward · · Score: 1, Insightful

    We (as in the IT-industry) have been telling our customers that they shouldn't pay for anything for so long that now they don't anymore.

    To take an example: People will not even pay 15 bucks or so on high quality shareware games that gives hours and hours of endless fun. They don't want to pay $100 or so for a good personal firewall. They gladly pays it for a two person dinner that lasts one hour. It's madness.

    We have brainwashed people into not buying our stuff no matter how cheap it is. WE GOT TO STOP DOING THIS!!!

  21. Corporate fat-cats by state*less · · Score: 2, Insightful

    As profits roll in for companies that outsource our jobs the least our government could do is tax that money and use it to reeducate the unemployed.

  22. RTFM by timeOday · · Score: 5, Insightful
    ...at least the first paragraph:
    ..lead through laboratories where physicists, chemists, metallurgists, and computer engineers huddle over gurgling beakers, electron microscopes, and spectrophotometers....
    The center's 1,800 engineers -- a quarter of them have PhDs -- are engaged in fundamental research for most of GE's 13 divisions.
    Does that sould like coding to you?
    1. Re:RTFM by whovian · · Score: 2, Insightful

      With that word, it is tempting to respond.

      What has caused this? My guess: Companies lobbying congress for student visas. While the students are doing research at the university, they earn a salary, part of which they can send back home to improve the standard of living of their family. At the same time, the companies are seeding their applicant pool, and at the university the research is getting done and being published, thereby justifying professors' existence and grant money inflow.

      So that's another bubble waiting to pop, IMO.

      What's kind of interesting to me is that in the 1980's it was the states in the US that were concerned over "brain drain" ; now it's the entire country.

      --
      To-do List: Receive telemarketing call during a tornado warning. Check.
  23. Re:Historical precedents by xA40D · · Score: 4, Insightful

    it's draining away their best resources from improving their own country

    How?

    There is a differance between textiles, which has raw materials, and the service sector which just requires people.

    In India call centre workers get paid more than fully qualified doctors. Most of this money will find it's way into the local economy. If anything can be said of this outsourcing trend it's that it's going to bring India kicking and screaming into the First World.

    --
    Do you mind, your karma has just run over my dogma.
  24. Re:Historical precedents by darkat · · Score: 2, Insightful
    There is always a bunch of economists that beleive that their company can live on because of trademarks and so on without actually doing anything but history has shown that sooner or later the producer will start directly to the customers.
    And this shows what is behind the US (corporations) effort to force US-like laws about patents and copyrights down the throat of the other countries. They want to detain the *rights* about something. They want to be able to enforce these rights everywhere (and if a country does not agree one day there may be a lot of "american boys" to send and make them more reasonable).
  25. Re:Natural step. by DrSkwid · · Score: 3, Insightful

    Since dropping the gold standard the scarcity of money is controlled by the govt.

    It also opens the door to currency speculation (see the 30-40% devaluation if the baht for a case study or Britain's Black Wednesday).

    -50% inflation would seriously harm the USA's balance of trade as foreign currency would suddenly be able buy twice as many US dollars.

    I'm sure any president would shit his pants if suddenly the national debt doubled, oh wait, increasing the national debt by lowering taxes to win votes seems to have been US domestic policy for years, as well as plenty of other 'conservative' nations. Conservative, what a joke!

    Let's blame Thatcher & Reagan, they started it!

    --
    There are places where the networks are not touching,and there are places where they are-Boeing's Lori Gunter
  26. Re:software engineering by taweili · · Score: 2, Insightful

    And come out of school with a degree in "software engineering" makes you a software engineer? It takes years and experience in real projects to become a valuable one. As the projects are being outsourced, your chance of experiencing one is becoming less while the software engineers in the other side on gaining.

  27. Historical precedents-Job insecurity. by Anonymous Coward · · Score: 1, Insightful

    It's even worse. Don't forget that we're still importing foreign labour, as well as sending work overseas. Plus as pointed out in the article. Our "core" knowledge is going overseas. If your "secret sauce" is overseas? Then of what need is there for the "core" company? The article also mention's only that it's more expensive here, but doesn't mention weither companies have pursued moving around in the US to cut costs. You know, the same suggestion that the "just move" crowd trots out for labour. There obviously is some place in the US that's cheaper than India that companies are moving to. Also the fact that Indians (and others) are well educated AND moving into the higher-level jobs, bodes ill for the "go to school", or "get retrained" crowd. Then last there's the "jobs that can't be outsourced". First as I pointed out above, what makes you think it will be filled by a US worker, when an "imported" worker will work for less, and be less "problamatic" than a US worker? Second is there enough "face to face" jobs to sustain the US?

  28. The death of optimism by dachshund · · Score: 4, Insightful
    A few years ago we had people losing jobs in the manufacturing industry and all I heard from IT professionals was, "oh, why don't they up skill like us"

    Yes, it was part selfishness. It was also part optimism. The general story used to sell these sorts of policie is the old: "some jobs will be lost, but in the long run we'll all gain-- all you have to do is retrain for a more cutting edge area."

    It was easy enough to believe this was true when manufacturing jobs were going overseas. It was a terrible thing for the peope losing their job, but we sincerely believed that new opportunities would open up for those with a forward-thinking attitude, because we were Americans and that's the natural order of the world. You'll see many Slashdot posters taking that line even today-- comparing the current loss of jobs to the industrial revolution, etc., admonishing us all not to worry, we just have to wait for all the great new even-higher-level jobs that are due to us now that we've offshored those pesky coding duties to foreigners.

    Problem is, it's increasingly difficult to see where these new opportunities are going to open up. In the past we had the advantage of a) having more natural resources (coal/steel/etc), and b) being one of the most educated countries in the world. But in a global economy, natural resources don't matter, and we're fast losing our advantage in education, now that India and China are producing thousands of brilliant students (with enough highly-educated people that GE can open a pure research lab over there). Note that India and China are smart enough to adopt national policy to educate their people, while America is allowing its educational system to go to the wolves.

    So when this new opportunity comes along-- be it nanotech, biotech, whatever is next-- what insures that Americans won't lose it to foreigners? Unless it's something that by nature can only be done by US workers (and what would that be??), we're screwed. So I think the reason people are panicking now has something to do with the realization that there is nowhere to go from here-- that we've finally been pushed into the ceiling of our own capabilities, and the magical "retrain and retool" approach pro-globalization folks have advocated is not going to carry us when foreign workers can do the same and cost 1/50th as much to feed and house.

    1. Re:The death of optimism by willtsmith · · Score: 2, Insightful

      Don't forget were those "brilliant" teachers were originally trained. Right here in the US. Subsidized by the American taxpayer no less.

      --
      -------- -------- Support Wesley Clark for president!!!
  29. Re:Historical precedents by osgeek · · Score: 2, Insightful

    It boggles the mind that someone with access to a computer could draw such ignorant conclusions.

    American companies are diverting billions of dollars that are being pumped straight into the Indian economy -- giving jobs, money, and hi-tech experience to tens of millions who would otherwise have had to do with much less in a country that has epitomized "poverty" for the last hundred years.

    What resources are being "exhausted"?

    I lived in India before the real boom started to happen, and I maintain friends who still live there. Your assessment of the situation couldn't be further from the mark. People I know who weren't able to afford even basic medical care are now looking at sending their kids to college.

    I'm sure that you're well meaning with your "anti-imperialistic" bleeding heart rhetoric, and some lame moderator even marked you as "insightful" -- but try to think a bit before you put forth opinions that hurt real people with real problems in other parts of the world that you haven't taken the time to really understand.

  30. Re:Historical precedents by Anonymous Coward · · Score: 3, Insightful

    >
    If anything can be said of this outsourcing trend it's that it's going to bring India kicking and screaming into the First World.

    They may wait a long while. Even with this boom they have with the outsourcing trend their HUGE population (more than 1.05 billion) means that it will be very hard to lift the country into the standards of the First World.

  31. Three Answers to Outsourcing by salesgeek · · Score: 3, Insightful

    I am so sick of hearing tech workers whine about loosing their jobs to outsourcing. Yes it is a problem. Yes it is unjust. Here's the travesty:

    It's our own damn fault.

    IT workers have allowed themselves to be pushed around by business owners because of their high wages/salaries. At the end of the day the result is ugly:

    * Entire business units with at will contracts
    * No established standards on who can do the work
    * No use of worker leverage to get better working conditions.

    Here are three solutions:

    1) Get laws passed requiring foreign companies to be held to US standards for handling data. Restrict outsourcing only to nations willing to play by our rules - like HIPPAA, Fair Credit Reporting act etc.

    2) Unionize. Get collective bargaining agreements that offer a level of protection against unfair labor practices and ensure fair working conditions (none of that emergency saturday meeting to test loyalty thing). Mass layoffs and other job actions become a little more difficult as workers have to be paid per the CBA rather than individually negotiated. CBAs also allow the union a say when outsourcing occurs. Unions aren't tough to start, either. Call the US NLRB for mor info.

    3) Establish licensing requirments. Construction workers (who really aren't that far off from IT Contractors) have been very good at getting better wages, conditions, etc in a business where people are a dime a dozen and you can use foreign workers.

    --
    -- $G
  32. Re:Natural step. by calidoscope · · Score: 3, Insightful
    That's all well and good, but if your job was the one making the product at $1, and they decided to outsource it to [insert country here] for production and you're now unemployed and have no income, does it matter that the item which used to cost $1 is now $0.50? You can't afford it because you're worrying about your [insert payment schedule here] bills.

    And what happens when a good portion of the workforce ends up like that? Who is going to buy your products? Outsourcing comes across to me as the current equivalent of the dot-com pseudo-boom. At first people are making money, but after a while reality starts catching up.

    I'd like to propose a few changes to the corporate tax structure.
    No investment or R&D tax credits for offshore work.
    No dividend tax exclusion for profits earned offshore.
    A return to the 90% marginal tax rates for offshore profits.

    Henry Ford was able to make money by paying his workers much higher than the average salaries and at the same time, he increased the market for his cars because more people could afford them.

    --
    A Shadeless room is a brighter room.
  33. Re:Historical precedents by Jamie+Lokier · · Score: 2, Insightful
    In India call centre workers get paid more than fully qualified doctors.

    The "resource drain" is that fewer Indians will train to become doctors. In the long run, it will hurt them due to fewer doctors.

    Whether this "resource drain" is a significant problem remains to be seen. It might not be. It might be vastly outweighed by the benefits of all the work coming in. But it is there.

  34. Re:Natural step. by fataugie · · Score: 2, Insightful

    I think we're on the same page of music...I was implying the same you are...what if this trend continues? Then we're all screwed. I think you're also right that it's a bubble right now and sooner or later things will normalize. I read a story last week about Dell bring some of their help desk seats back to the US because of the India operations not living up to expectations. I think it was for the enterprise customers. My mother owns a Dell and had logged about 40 hrs in phone calls last year at this time going through their damn script of how to fix a modem they thought had a driver issue and turned out to be a hardware problem (defective). Most of the hours logged were with India.

    I hate taxes, but your ideas are worth considering because something needs to level the playing field. I'll be damned if I let my tax dollars subsidize outsourcing and not raise my voice about it.

    The middle poster (inode_buddah) was correct in pointing out that while some products are now made overseas, when can you remember a company lowering the price on any of their goods and NOT call it a sale or special purchase or whatever.

    "Since you all are such good customers, and we are saving a shitload by making our product in [insert country here], we're going to knock 10% off the suggested retail price."

    --

    WTF? Over?

  35. How do you define "forward progress"? by spideyct · · Score: 2, Insightful

    Do you mean funneling the wealth to a smaller percentage of people and increasing the masses dependence on these people?

    Are you saying that it is more important for BigCompany to make money than you? BigCompany needs the money more than you do, so it can invest the R&D dollars to improve our society, because you can't?

  36. Re:Getting out of IT... by michael_cain · · Score: 5, Insightful
    I'm staying in IT, because as an academic sysadmin with a Unix specialty, my job can only be done by someone in the building. I can manipulate my servers and some of the workstations from home -- but that's only about 1/4 of the job. The rest involves face-to-face support of the users, which cannot be done by someone who doesn't show up. The last guy who had my position didn't bother to show up, and so I now have what I think is my idea job.

    A year ago I got laid off from my high-tech job -- not because it got outsourced, but due to industry consolidation. Many of the headquarters strategy jobs ARE redundent when two large companies merge. Fortunately, I was in a position to retire and am back in graduate school, studying economics this time. There's a fascinating long-term economic question implicit in your situation, and mine.

    Your job, you say, can't be offshored because you have to be present to do it. However, the students that are the root source for your job have to have enough money that they can afford to be there (your description is almost certainly college of some sort, not K-12). In many cases Mom and Dad are paying some or all of the tuition bills. If Mom's high-paying research job goes to India, they will have a harder time paying those bills. Fewer students at school, fewer sysadmin jobs. Presumably the Indian researcher can now afford to send their kids to college (in India, they're not being paid enough to send them to the US), where there will be increased demand for your type of sysadmin. Indirectly, your job can be sent offshore.

    When a big multinational corporation moves jobs from one location to another, the demand for goods and services at the first location must decrease. We have seen this operate on a small scale -- the big factory that employed many of the townsfolk closes, and soon after that other businesses start to close or scale back because demand decreased. Now we get to see if it is possible for it to happen on a national scale -- if enough companies send enough jobs to India and China, can they cause significant decreases in demand for goods and services in the US?

    I think it was Keynes who first described "the corporate paradox of thrift." While a move that lowers costs may be good for an individual firm, if all firms make similar moves it may be bad for all the firms collectively IF the cost savings is translated into decreased demand for goods and services. TTBOMK, this has never actually happened. Improved productivity eliminated an enormous number of farm jobs 100 years ago -- they were replaced by manufacturing (and yes, I'm sure there were people who really wanted to be farmers who permenantly lost that type of job). Cheap overseas labor and improved technology eliminated a lot of manufacturing jobs -- they were replaced by jobs in growth fields such as IT. Will there be new growth areas this time, or will we see permenantly higher unemployment and lower incomes?

  37. Re:And whos fault is it by NDPTAL85 · · Score: 3, Insightful

    So tax dollars should be wasted on expensive overpaid Americans instead of on cheap Indians thus saving more money to be used on OTHER social programs?

    --
    Mac OS X and Windows XP working side by side to fight back the night.
  38. Re:And whos fault is it by willtsmith · · Score: 4, Insightful

    Stop laying there on your collective asses and do something about it. Contact your congress critter in your home state and bitch until ledgislation so that state and federal contracts can't be giving to companies that outsource overseas.

    Unless you write your letter on the back of a $500 check, it won't do any good. They are better paid by lobbyists.

    --
    -------- -------- Support Wesley Clark for president!!!
  39. Re:one thing that's missing from this discussion by taweili · · Score: 2, Insightful
    Interesting that you bring up the issues of currency. Economist has this intersting article about how it would affect America is Yuan (Chinese dollar) is revalued. As one of the largest US treasure bond holder, the US interest rate will go up if China started to sell its holding and higher interest rate will hit the US real estate market as well as US companies' operating cost. The devalue of US dollar may not have any effect.
    but face it guys: the world is - or should be - on track for greater equilibrium, which - in the u.s. - means a lower standard of living all around. get your big screen tv's now.
    Not really necessary to mean a lower standard of living. The cost of goods may have to be readjust. Large screen TV can be have in China for lot cheaper then in the US and so is the cost of other things. DVDs are costing $1 for the pirated but only $2.50 for the legit copies. I think it's time for US to revalue the price tags on the good they are paying for. While outsourcing helps US companies' to increase their profit, I think it's also time the US customers to demand something back from corporate US!!! Lower the price tag in the US market accordingly!
  40. Re:Getting out of IT... by fingusernames · · Score: 2, Insightful

    The thing that is different now is how transparent borders have become. In the past, the cost of moving an industry abroad guaranteed that it had an incubation period, perhaps a lengthy one, in the U.S. However, from now on, that incubation period may be terribly short. When a new industry comes along, it will very rapidly take advantage of the telecommunications systems we have, the low cost of transport, and the rising ability of offshore providers to quickly ramp up and produce. The fact that India and China have huge populations, attending better schools, becoming better educated, means that when these new, presumably knowledge-related (whether bio or whatever) industries come about, they can have a ready pool of educated labor immediately. Those foreign nations currently getting the benefit of our off-shoring will use that money to improve their infrastructure, airports, transport systems, telecommunications, education and so on, and thus be much more able to compete with us than in the past.

    I believe that we in the western world, not just the United States, are going to experience a painful period of global re-adjustment. For centuries, our better educational systems, liberal social systems, open legal systems, superior technology and such have given us the ability to dominate the world. However, we have been busily exporting those benefits in the hope of gaining trading partners for our goods. The reality is though that world out-numbers us, and as they become more on-par with us and able to compete for our jobs at a far lower cost, it will be only natural that our standards of living fall while theirs rise.

    I'm just glad I didn't buy a stupid-expensive house with a stupid-expensive monthly mortgage commitment a few years ago... people paying $3000 a month for an urban home better hope their industry doesn't feel the global pricing pressures too soon.

    Larry

  41. The difference today by RalphSlate · · Score: 2, Insightful

    We are all being played for suckers. In the 20th century, the fight was generally US corporations vs. foreign corporations. Our corporations were strong, smart, and we could be more innovative than a factory in Japan and win the fight.

    Now our corporations are selling us out. If a factory in the US comes up with a revolutionary new way to do something, resulting in a 50% drop in costs, the global corporation says "Great! We'll implement that in China and save 90%!"

    The battle is now the corporation vs. the workers.

    As a worker, it's pretty hard to win when no one is on your side.

  42. Re:Historical precedents by The+Cydonian · · Score: 2, Insightful
    In India call centre workers get paid more than fully qualified doctors
    Unlikely. You're forgetting that there's a big boom in the Indian healthcare industry as well.
    If anything can be said of this outsourcing trend it's that it's going to bring India kicking and screaming into the First World.
    Business Week might hype the Great Indian Outsourcing "boom", and for sure, it is indeed very promising for my country, but the reality is that it still is barely a blip in terms of numbers. A greater percent of my nation's GDP comes from agriculture and other stuff.

    Also, India's great big challenge is not just decreasing poverty levels, which have already fallen by 50% in the last decade, but introducing governance reform; there is, for instance, no reason why the national road network should be so bad, or why there's so much filth in urban India's streets.

    Not to say we shouldn't be focussing on outsourcing, just that it would be extremely naive to believe that India will step into the so-called First World with it alone. A lot more can be done to improve the quality of life of most Indians.