The Changing Face of Offshore Programming

teambpsi writes "BusinesWeek Online has an opt-ed piece on the trend in offshore programming pricing going up, with domestic rates going down. As a contractor, I've seen the downward pressure on contract gigs now to rates lower than what I was charging over five years ago. Dell Computers recently announced that it was bringing its customer service back on-shore, I wonder if this might be the start of some bigger trend -- maybe 'buy american' could be our new battle cry ;)"

Comments

battle cry?

[Slowping]

maybe 'buy american' could be our new battle cry ;)

Wasn't that Walmart's battle cry for years... until it became convenient for them to forget it in favor of another battle cry that generated yet more money?

Re:It will all balance out

[DAldredge]

Why doesn't freetrade work for the consumer? After all my goverment wants to make it illegal/claims it is currently illegal for consumers to import drugs from canada.

Why is it ok for large companies to benefit from freetrade but wrong for regular people to?

As for your doctor comment, some hospitals are sending xrays/mri scans oversees to be read.

Re:Whinging

[Alan Cox]

I would disagree. The bigger companies do think about such costs. Thats why you get a 25-50% saving when the salary difference is way higher. Similarly they are careful what and how they use very cheap but possibly lower quality resources. So for example who you get for a long distance phone billing problem depends on how much you spend a month.

Places like India are getting more expensive because they are getting way better at doing the jobs well. The experience and infrastructure is now there. Much of the really low grade work now goes elsewhere.

You haven't seen racism until you've dealt with...

[vkg]

Indians, Pakistanis or Chinese. Really.

I'm an Indian, and let me tell you, the culture is racist to the core. Hell, even within the race there's the caste system, and don't for a minute believe anybody who tells you that it's dead.

Most cultures are ferociously racists: the only exceptions are places where there are too few people of other races to even notice (some parts of England, say, are pretty chilll) or America, where the fight against racism is a big historical driver.

This is one thing which I think Americans have got right and can teach the world: how to deinstitutionalize and stigmatize racism to the point where basic values change for many, if not most, people.

Seriously: I think that America has an incredibly tolerant and non-racist culture over all. Festering throwbacks excepted.

Re:Whinging

[Lumpy]

I know you are a troll, and I shouldn't feed you but hey, It's 2004....

The smart companies never moved their programming and tech staff from in house, as they knew that the only way to get the best quality was to keep it at home.

We had a few phb's try and convince the CTO and the CFO that moving the entire development staff to an outsourcing firm... they almost suceeded until the old man (read that as the dude that built this company..) that hold's 51% of the stock said, "no way in hell. there is no security, no quality control, and no way for us to completely control the process." he went on about how only fools would trust another company with their secrets and their future.

The old man did this on one of the telecasts in front of the whole company intentionally making the Executive staff and the phb's look foolish for chasing small dollar returns for giving up the stable.

A company with strong leadership that actually looks toward the future sucess does not chase the easy dollar.

I'm not whining, I'm proud to have a leader in the company that isn't as incompetent as the management that thinks like you do.

My outsourcing experience

[Bozdune]

I moved four projects to India with reasonable success. We did not use a lowest-cost provider; instead, we used a company that charges more than Wipro or Infosys, but fields better talent than they do (in fact, they cherry-pick from Wipro and Infosys for new recruits).

Here are my conclusions:

1) We were able to ramp up faster than if we had tried to hire locally.
2) We were able to overcome personnel issues more quickly -- the vendor was able to add higher-powered programmers very quickly when they got into trouble, and "swarm" the problem with bodies. In our case (simple Web apps) it worked, although there are situations in which it obviously would not have worked (mythical man-month, blah blah blah).
3) The quality of the finished product was reasonable. Call it B/B-. Which was OK for us, maybe not good enough for some, but acceptable.

It turns out that if I had hired a much smaller number of local programmers as permanent employees (consultant rates would not have worked) -- very good ones at market prices -- and they had performed up to expectations -- I could probably have brought the same projects in on the same schedule for the same price. I probably would have ended up with a better architecture, and better code.

So maybe it's a wash. Except, I would have had the following problems:

1) Hire/fire. When the work was over, I didn't need the teams any more. With the Indian vendor, I could cut back without worry. With permanent hires, I'd have a serious morale problem.
2) Risk. If my gunslingers ran into a problem, I wouldn't have been able to "throw bodies" at it. My budget wouldn't have allowed for that.
3) Maintenance risk. The Indian teams can be scaled way back, but I could still keep 3 people on the project for continuity. If I scaled back my own teams similarly, I'd only be able to save one job, and if that person quit, I'd be hosed.

So there are a lot of subtle factors that play here. The Business Week guy alludes to them, but doesn't really itemize them well.

Accents are not the problem

[fm6]

Here's the funny thing about the accent issue: call centers have been outsourcing to India for years. Aside from saving money, 24-7 operations find it useful to have a call center where the time's half a day ahead of the U.S.

So why don't you hear a lot of people complaining that their airline or credit card company customer reps can't talk good American? Because there are plenty of well-educated Indians who speak fluent western English. All they need is a little practice on their idioms and pronunciation, and you can't tell them from a native of Duluth. Not over the phone anyway.

So it's perfectly possible to run an operation out of Bangalore or Dehli without communication problems. And yet you hear all these horror stories. I have a few myself: I subscribe to techwr-l, and we often get lame questions from Indian writers, usually basic grammatical stuff even a American 4th grader or a Slashdot editor would know.

My inference is that the companies driving the offshoring trend aren't satisified with the pay differential between San Jose and Bangalore. So they don't hire people with degrees from India's universities or engineering schools. (Which produce a lot of good people -- I've worked with some of them.) They hire folks whose educational achievements culminated in one of those "learn programming in 2 weeks" schools. Their English is hard to follow, not because of their accents, but because its one of the highly-localized English dialects that Indians use amongst themselves.

Here's another horror story. If you're a tech writer in the San Francisco Bay area, you've noticed a lot of headhunters trying to fill a very strange job in San Ramon. What's in San Ramon? A bunch of engineering outfits that decided that rents in Silicon Valley were too high -- never mind a limited local talent pool, if people want to keep their jobs, they'll commute or move. One of these outfits is the development arm of what used to be Pacific Bell, now a nameless subsidiary of SBC.

You need massive databases to run an RBOC, and this one has fallen way behind on database development. People complain of billing errors and outdated listings. There's a hair salon in San Rafael that can't get SBC to put its Yellow Pages listing in the proper category -- for two years running it's been listed under "Massage". Which sounds funny, until you consider the kind of lowlifes who respond to a massage ad for "Curl Up With Kelly".

So these guys in San Ramon are scrambling to update the software. They need a tech writer who can document their work. Said writer needs to be able to read source code in half a dozen languages, including the venerable Revelation Basic. Oh yes, and the writer has to work for $25/hour.

Well, I have the skills and I need the work. But that's hardly a reasonable wage, especially considering the two-hour commute. (It's a short term contract, so relocation is not practical.) I'd be better off working at the Starbucks down the street.

When I pointed out the absurdity of offering entry-level pay for a job requiring advanced skills, I was told that all the costs were measured against the alternative of moving the whole operation to India. Which is total nonsense. I'm sure there are plenty of Indian operations that could engineer a fancy database from scratch, and do a good job very cheaply. But SBC doesn't even want to spend that much money. They want to continue hacking 20-year-old code running on legacy platforms. Do they think that India is swarming with experts on the PICK database system?

The whole offshoring thing is just the latest development in a nasty long-term trend. Even before the dotcom bubble burst, Wall Street was dominated more and more by numbers dweebs, people who have no understanding of the industries and businesses they're investing in, and have an idiotic obssession with the bottom line. They hate costs more than anything. Even if you're turning a

Not the right explanation

[GCP]

I don't deny the caste consciousness still strongly present in many Indians, but I don't think it's relevant here. We Westerners are exempt from the system. I've worked in India and with Indians in the West, and among the many perplexing cultural differences I've run into, the inclusion of *me* in their caste system was never one of them.

I think that what you encountered was just an individual personality. I've had these experiences with Indians, too (especially bureaucrats who wanted to prove their importance), but I've had similar experiences with people everywhere. I've managed a tech support group in the US and some of my own people acted this way (until I either stopped it or got rid of them.) It wasn't correlated to their skill level either, just to the degree to which they seemed to feel the need to prove to others that they were smarter (which seems to afflict geniuses and idiots in roughly equal proportions.)