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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."
Only jobs that gives a high revenue can be done by people with high salaries (US&EU for example).
When the price drops on, for example, software is has to be done by a lot cheaper labour.
There will not be many software engineering or consulting jobs in the US in ten years or so.
This can't be a surprise to anyone knowing what open source is all about.
I've already planned my exit strategy. I am getting out of information technology next year. There is just no future in the US. Either you work for a small company and risk getting laid off due to the lack of profit or you work for a Fortune 500 company and risk getting laid off for no reason other than some Gold Collar worker thought it was a good idea.
This will not stop until we have leadership in this country that actually seems to care. Until then, I am leaving IT professionally and making a career switch into one of my hobbies, which is something that cannot be outsourced to India.
The U.S. is heading straight towards becoming a land of a permanent serf class, a sort of neo-fascist aristocracy ruling body over a nation of paupers.
(* Too lazy to look up which century it was !)
Don't go to a brothel if you want to buy broth
2 ideas that spring to mind here:
One: What happens if this rush to off shore "skilled" starts to succeed? We (the US) is the largest consumer of products from around the world, but if skilled labor follows blue collar labor, the amount of people left to spend money on anything goes down. Even though moving that labor forces off shore will increase the purchasing power of the people in the country where the labor went to, their combined purchasing power and demand to purchase anything will not be anywhere close to what the same jobs in the US could produce (at least short to mid term). Judging by what happens to the world economy when the US economy suffers, just how much outsourcing is a good idea? When does it stop benefieting the companies and starts hurting them because they can't sell their products in a poor economic climate?
Two: In the US the commonly held belief is that if you want to get ahead, you get an education, and your hard work and academic achievement will be the keys to your success (Unlike India or China where there are relegious and other cultural pushes for education). If the people stop believing in that, and an education isn't seen as a step up, or providing an advantage less people will pursue it. In an information age isn't one of the most important factos in the labor pool is it's education and technical skill?
It's all about global competition - or so they say. I wonder what the ROI is long term. Since more and more companies are only looking ahead a quarter at a time, just to satisfy the wall street pundits, I bet the ROI is pretty good short term. So how do Western Europeon and American workers compete? Our salaries are higher, and our standard of living is higher. Eventually with enough investement and time India will be a developed nation and these differences will slowly dissapear. Jobs will also probably leak back to the US - but how long do we have to wait, and how do we survive?
In the end the US worker has to offer something that his/her indian counterpart can't. Language, proximity to the project, and superiour skill and/or inovation are just some advantages that people might leverage.
AngryPeopleRule
"Science is about ego as much as it is about discovery and truth " - I said it, so sue me.
Perhaps India will enjoy the same evolution. Maybe in ten years well-engineered software, etc. from India will have the same esteem which we hold Japanese products. Every industrial toddler country entering the world of business has to find its feet. Japan did--so will India
Harpo Tunnel Syndrome--my wrist feels funny.
I worked for GE for well over a decade. I have dealt with the very people at GE-Wipro in Bangalore that this article glows about. My experience differs from that of the author.
In the beginning, the helpdesk was manned by GE employees, at the HQ of the business I worked in, in the US. Helpdesk is a hard position to keep staffed with quality people, for the reasons we all know. But, those pesky GE employees were _expensive_, so they walked the helpdesk out the door one day, and brought in an outside contractor known for doing helldesk outsourcing. And there was much rejoicing (at the VP level). Problem is, helpdesk quality fell drastically, as there was a crop of new people who didn't know the intricacies of the systems they were supposed to be supporting.
Soon, (coinciding, I suppose, with the end of the contract with Keane), it was noticed that the helpdesk was sucking. Rather than acknowledge the mistake, they decided to compound it. With great fanfare and jubilation, they were pleased to announce that the helldesk was being reworked. Oh, by the way, it's being run by a company called "Wipro" in Bangalore, India.
Initially, there were many problems. Eventually, it got worse. Helpdesk analysts who could not be understood by a western ear, utterly wrong advice, that sort of thing. One coworker of mine, having a bad battery (the Dell explode-o-cell model), called to get a new one. He was told to delete his hardware profiles and that would take care of it. Not just wrong, but damagingly wrong, and not even vaguely logical. Yeah, a battery is "hardware", but that's pushing it. The analysts would identify themselves as "Jim" and "Bob". Just this is insulting - as if we can't learn how to pronounce or recognize the name of someone from a different culture than ours? It's just a sign of not understanding the needs and/or culture of the clients.
A final note - the article seems to be holding this up as a glowing success. I think it's more than coincidence that GE stock has been consistantly underperforming the market for many years - since the day Jack Welch announced his replacement, in fact. GE was succeeding because of Welch, not because his replacement is sacrificing quality for cost, calling it a "Six Sigma quality initiative", and ignoring the failures that result.
Hopefully, business executives who read this article, will do a sanity check & see how GE is doing these days, before deciding to emulate a formerly glorious company's unproven CEO's failing strategy.
Taiwan became big in semiconductor manufacturing because over the course of three decades of private and government research and experience they were able to become very good at it, producing high yields that made them competitive with US producers. It wasn't because of cheap labor. Taiwan's workers aren't that much cheaper than in the US, and Taiwan's per capita income is over 10X that of India.
Japan's car industry became big because of quality, not lower cost. The first incarnations of their vehicles decades ago were cheap crap, but they didn't get anywhere in the market. Their eventual success came from producing high-quality vehicles that were able to sell for MORE than US-made vehicles of equal size and engine power.
Steel workers in the US lost jobs not because of labor costs, which make up a very small portion of steel manufacturing, but because other countries were able to produce higher yields per ton of raw material.
However the current trend of outsourcing software development to India is a management fad in pursuit of cheap labor, for a type of work that does not lend itself to cheap labor en masse. The real savings really aren't that great -- you're lucky to save as much as 25%. The quality isn't very good, and there are many risks including budget overruns due to miscommunication, intellectual property and privacy infringement which are practically impossible to enforce in India (you're lucky if the courts will see your case in 10 years), and the costs of paying people to cleanup the junk that comes back.
If outsourcing brings real net savings, we'll see the benefits in other aspects of the economy, like cheaper goods and services and increased profits that boost the stock markets. However, there is a very real danger that it is likely to materialize as another "gold rush" like the dotcom boom, only that this time the corporations and investors are chasing after imaginary savings instead of imaginary profits. And when the reality hits and they can't deny it, there will be another economic meltdown.
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There is inferior bacteria on the interior of your posterior.
In another news to retailiate against the outsourcing backlash from US India has decided to ban US companies from selling cellphone equipment/chips/software in their market, which is expected to reach 100 million in next two years (another url says The user base is growing at about two million a month and is expected to cross 100 million by 2005.)(US market is about 110 million for comparison) and 500 million by the end of the decade. . Similar huge numbers are expected for PC and car markets. Also, they have decided to ban the cars companies like GM, ford and other US companies like Mcdonalds, Pepsi,coke and Hoolywod movies etc. from selling in India. The govt. of India said that the local people are losing jobs because of this trade.
P.S. in case you are clueless this story is made up. I just wanted to make a point that trade is benefitial to both US and India. So, it is stupid to put barriers against outsourcing/trade etc.