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Long Term Effects of Outsourcing
simulate writes "There have been several postings about outsourcing and offshoring in the past
few weeks. Is outsourcing just a fad? In Outsourcing
Programmers is Bad Strategy for Software Companies
author Michael Bean compares offshoring to the enthusiasm for Internet startups
in the Nineties.
He claims
that
outsourcing programmers is bad for companies not because
of the programmer layoffs, but because technology companies lose their
capacity
to innovate.
Offshoring is a mistake
when technology companies confuse operational
effectiveness and strategy." I don't think the comparasion to Dot Bombs is entirely accurate - the trend to globalization overall has been going on for decades. Still interesting piece.
While I don't think it's what you're referring to precisely, there has been a considerable move to outsourcing customer service call-centres in recent years. I think that in some cases this has led to a much higher level of customer service from the companies concerned. That's outsourcing taken care of. Offshoring, or moving the business outside of the UK (in these cases) has been considered lately as well. This seems to be having the opposite effect, as the new centres in foreign parts are staffed with inexperience workers without the requisite communication skills. It's going to continue as a trend though. Because it makes money. Cost rules all these days. No one cares about the service level, just about the profit margin. Right?
If I seem a little hostile about this particular trend, it may be because the jobs of a few people I know are under threat as a result of it.
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Has this guy ever worked for Accenture or PWC Tech Consulting? Those guys essentially have a few people do the design, write some high level code documents, and then hand it off to some code monkeys for assembly (oftentimes recent college graduates who didn't know squat about programming until their corporate training kicked in). So his argument isn't good - companies can still keep the design close to home and then outsource the assembly to India or China.
:) .
FYI - I worked for Andersen Consulting (now Accenture) so I know how those guys do business. I left after two months
smd4985
The largest problem with outsourcing/off-shoring software development is SECURITY. Remember Y2K? Many major corporations outsourced their Y2K work to foreign countries because they didn't want to hire the extra programmers locally to do it. What several companies found when they got the code back was that trojan horses, backdoors, logic bombs, and other nasties in the code in addition to the Y2K fixes.
NOTE: I am *NOT* saying *ALL* people from other countries are dishonest. You can find dishonest people anywhere in the world.
What I am saying is that if you turn control of your software code over to someone else, you run the risk of them altering it to their advantage. This also applies to local hires as well, but it's MUCH easier to keep track of what your people are doing locally than half a world away.
Why do you think that the US Government/Military doesn't outsource? The same with most financial institutions: SECURITY. (Microsoft not included.)
If "disco" means "I learn" in Latin, does "discothèque" mean "I learn technology"?
What we've found during the six month trial of hiring outside programming help this is what we've found:
o While Indian programmers (we used 8 different ones for 6 different projects) may be perfectly competent to produce software to spec, they usually ALWAYS built it to spec and NEVER brought up any issues they might have found in the process. Either they didn't see a flaw in the design or just figured it would be job security if they changed or fixed the ap later.
o We had no luck with Russian programmers (We had went thru 4 of them and none could complete the project they say they could have)
o American (We used 10 of them for 8 projects) outsourced programmers communicated MUCH better with their project managers and usually offered suggestions to how we might want to change the app to make it better or more efficient. The applications developed stateside required less QA and went to market faster.
Is this a good enough sized sample to make judgements? Maybe not. But good enough for us.
After the six months, it just didn't make sense to outsource, howerver if we do again, it will be domestic. The shortterm costs may look good but a 33% savings per hour usually gets lost in the longer development cycle.
Karma means nothing to me, so suck it...
I'm in a MBA program and my professors stress that out-sourcing strategic assets is a very bad idea. Because, you never know where your IP will end up - regardless of which country/company you out-source it to.
The trend we're seeing is people who are just looking at the their numbers, which were probably fsck'd up anyway, and not at the long-term ramifications to their IP.
I just finished a class last semester that drilled into our heads that projects can be calculated in ways that will show them to be profitable, or calculated another way, to be unprofitable. Unfortunately, there's a lot of people out there who think accounting is a science.
There is no spoon or sig.
Depends on the department, really. For bread-and-butter transaction processing, sure conservatism is the norm (and a good thing, if you ask me - many fad-of-the-moment Java/XML/OOP idiots don't realise how important ACID and transactionality are).
But Quantitave finance jocks in other departments do some seriously wacky stuff for technical analyses and Financial Instruments
MS does well in part because it's the brandname such stock market people see when they're using Microsoft OLAP and MDX (SQL RDBMS tables are two dimensional, MDX is n-dimensional, limited only by computing power. Needs LOTS of computing power.). OLAP and MDX are things that most computer geeks haven't even heard of. They don't realise that MS does in fact do some very interesting stuff.
I just bought a cheap house in an upper middle class area of Los Angeles for $428,000. I was very lucky; houses that inexpensive don't come around just every day, at least not in a civilized, livable part of LA.
This is an example of the horribly bloated costs associated with hiring American workers. Just because I bought, and can afford, a $428,000 house doesn't mean I'm a better high tech worker, or that I'll work better or harder for the company. It's just a matter of the crushing overhead of living here.
How does that make people more innovative?
Why can't Indians start their own software companies, write their own software and compete the heck out of us?
If I were starting a company that needed a lot of programmers, I think I'd leave the country to do it.
D
...for reduced ability in India that many westerners don't realize.
India is a caste-based society. In recent times, the lower castes have been throwing their weight around in their legislature.
Of particular concern is that they have implemented a "graduated" admissions policy in their universities. An upper caste member might not be able to get into a school with a 90% score on the entrance exams, but a lower caste member may be assured admission with a 70% score.
Because of this type of (reverse)discrimination, many upper caste individuals of means leave the country to obtain education and work elsewhere. While India is a big country, the trend is concerning, and western outsourcers should be aware of it.
Friend or foe? Call me neutral.
Most of the readers and contributers see Offshore Outsourcing to much lower waged coutries a threat.
The Indian programmers in India are too busy working to read and write to this thread.
I am almost neutral as my job in Ireland relies on globalisation from the United States, but is at risk from the globalisation to India and China.
Be Free: Free Software Tuition
First let me say that yes I am biased, I am an american .
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I can be considered further biased because me and ALOT of
ppl I know have lost their jobs to it
So in the best objectivity I can muster here are some reasons
I think it is bad
1) Money sent outside the US for third world labor stays there,
thus money that used to pay ppl here, to pay taxes, to buy
food, to further employ americans in a trickle down effect is gone
2) If we were to pay US workers third world wages, and have
third world labor laws, we would be breaking US law
*** So are we gonna lower minimum wage to 50 cents/hour ???
3) If you did pay lower than minimum wage to workers, would
they all have to be sponsored by the government and go on welfare
and increase the already burgeoning working poor caste
4) The value of the dollar has been steadily falling, what are
the implications on real estate, US investments, trade ???
5) Huge layoffs create bankruptcies, repossesions, forfeitures,
and broken homes, and broken marriages . Money being one of
the top 3 reasons for divorce
6) Even with a increase recently in GDP not seen in 20 years,
little to no hiring is occuring
7) Companies that reveal their internal secrets overseas may
just find new foreign companies making their products for even
less, after the plans were just copied by former cheap labor
With no recourse thru US patent law, etc etc, they experience a
TOTAL loss of market share as the foreign government chooses to
support their own ppl
8) Unemployment figures do not count those that are no longer
eligible for checks , they are no longer considered unemployed
9) The US cannot compete equally on unequal ground, we have a
huge tax overhead, and cost of living here is too high to
compete with countries that have poor humanitarian labor laws
10) US companies are going overseas and thru negligence are
creating disasters like Bhopal in India . They act above the
law and thousands die from it
http://www.bhopal.org/
The so called race to the bottom has negative aspects that
I feel will create even more hate for the US, within and
without and there is already a sense of a Elitist class in
this country
The funny thing is they expect to be protected by some of the
poor they pay to serve in the military, but in recent polls
soldiers were ask if they would defend the rich against
an uprising of the poor, you can guess the answer
Peace,
Ex-MislTech
google "32 trillion offshore needs IRS attention"