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A Thoughtful Look at Indian Outsourcing
thefinite writes "This article needs to be read by anyone interested in the outsourcing of IT jobs to India, no matter your opinion of it. It dispels some rumors (for example, if Indian IT companies do such bad work, why are over half of Carnegie Mellon's highest-rated programming companies Indian?). It addresses all of the arguments. Perhaps most importantly, it adds faces to the problem. It not only tells us about the American programmers who are out of jobs, but also about the Indians who are getting them. In the end of it, this is what Free Trade is about: people. This article makes that clear."
I assume that some of them are bad, and some are good. Some of my friends have worked with outsourced code that was unbelievably bad; on the other hand, I've seen awful code in the US.
I think there's a bit of everything in that; some actual bad code, some poor communications, some just about everything.
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Actually AFAIK an Indian programmer would have a pretty hard time going to America and getting a job there, they would similarly need a work permit to work in America. So the propaganda goes both ways.
You obviously don't know crap about economic theory. Free trade relies on the idea of comparative advantage, that one place is inherently better at doing something than another. When Indian programmers are just as good as American programmers and there's no transport cost (facilitated by internet transmission of code), then it really is a race to the bottom to see who can pay the least for the samee service. There's no advantage to hiring US programmers, so it goes to India! In short, we're screwed! And, as posted earlier, it's a one way ticket! We can't get visas to work in India, and even if we could, it would be for 1/6th of what a programmer would make here! So don't give me bull about capitalism. This isn't a debate about capitalism v. socialism. It's protectionism v. free trade, and right now free trade is winning and the American programmer is losing.
Since when has this country used intellectual elite as a pejorative term?
You are obviously uninformed and ignorant to how things work in the US. Do you realize we give tax breaks to the big companies in a belief that they will hire more americans thus decreasing unemployment. Since they are NOT hiring more Americans we are shipping these tax dollars off to other countries. Since they are NOT hiring more americans then the unemployment rate can not be going down. When you see the unemployment rate in 6-8 months then shoot off your ignorant trap about how the unemployment rate is lower. Until then do a little reading on how they derive these stats. To give you an example my company just layed off 30K. They then hired 40K offshore. Thats 30K less jobs in America. They plan to do the same for another 20K in the next few months. If you took basic math you would relize that that is a decrease in jobs.
That's a great idea. Are you going to pay off the $30,000 in student loans I had to take out when I was hoodwinked into believing the way out of poverty (which I truly grew up in) was to get an education? Otherwise I have to make more than $11,000 a year. As do, I imagine, most people here. Many of us didn't get a free ride or stumble right from high school into the tech sector. Some did. Others of us have had to fight a little harder, maybe assume a little debt at a young age when we didn't know any better.
Because if you had a family, you'd NEVER go for what you just posted, even if you simply multiplied x each person. Once you have a kid, things change quite a bit. Your economics are also a bit skewed as far as internet/transportation costs. You're saying that a year's worth of bus service equals one month of internet. I don't know anywhere in the US that you can get a year's worth of bus for 50 bucks. Factor in the time it takes to get to work on public transportation. Again, once you have a kid, your priorities would be different.
I think you added on 3 extra zeros to try to sensationalize your "point".
22 * $36,000 == $792,000
But yes, a good portion of the Indian Programmers have servants and chefs. You don't need to spew BS numbers to point out that being paid 22 times the per capita GDP is quite a cushy lifestyle.
The rich keep getting richer. The poor keep getting poorer.
This mantra of the left never fails to chap my ass. It certainly is accurate when describing communist societies such as China, the USSR, and North Korea, in which the political elite live large at the expense of the working class. It emphatically does not apply to capitalism, under which the rich get richer, and the poor get richer.
You're right. They use that money elsewhere.
Bigger boats
$15,000 watches
Expensive artwork
Marble dog-houses
McMegaMansions
- New building to accomodate growing staff
- Expand QA dept to increase product quality
- Security system in parking lot to prevent assaults on employees
- Holiday party
(seriously, I know dozens of executives and none are big spenders. Most are frugal as hell and trying to run tight ships in a still-struggling economy)
The little guy doesn't get to assemble these either, by the way. Those jobs have also been outsourced. We get to sell them if we're lucky.
We get to either adapt to the changing needs of a global marketplace or STFU. That's life.
$500 a month to rent a room
Where the hell do you live? Anywhere that has housing that cheap, has no jobs. Anywhere that has decent-paying jobs, try more like $800 for a livable apartment, and easily over $1200 in any densely populated area (ie, the places with the most jobs).
$20 a month for phone serviceZ
The absolute cheapest I can get phone service in my area comes to over $30 - And that assumes I have no special services and never make any LD calls.
$50 a year for bus service
WHAT??? Put down the crack pipe. First of all, just HAVING bus service available goes back to my first point, where you need to have a fairly dense (tight suburban) population. So stick the rent over $800. Second, a bus pass costs more like $50 per month... In Boston, you can get a fairly limited (destination-wise) pass for $31/month. For a full unlimited pass, try $79, and that still doesn't include MA-wide commuter rail (required unless you want to live right in the city and pay more like $1800+ for rent).
Not even including other expenses (food, heat, clothes TV, electricity, water, an a million-and-one little things that all add up), that comes out to nearly $16,000 to live in the Boston suburbs. Add in just heat and electric, and you have another 3-5 grand per year, easily.
Hi,
I'm a junior at a state-sponsered college in the US, and for the last 10 years, I have known what I wanted to do with my life. I wanted, and still want very much, to spend 8-12 hours a day hunched over a terminal writing code. I was promised, time and again, that the demand for computer programmers in the state would never be met by the supply. I would have the job of my dreams.
Do not talk to me about discipline, or crap culture, or lack of concern. Those might be your problems, but they're certainly not mine.
In conclusion: after getting past it years ago, I have now fallen back upon angst.
Thank you
Indian law is no different from American law in this matter. You're welcome to visit India, but if you want to work in India, you need a work permit. These are granted as a matter of course when the sponsoring company files the paperwork.
One major difference is that while in America, the LCA (Labor Condition Application) states that the H1-B applicant will receive a salary *equal to or in excess* of the prevailing wage for that job category in that region, in India, there is a reverse certification that the wages paid will be *less than or equal to* a certain constitutional ceiling, traditionally the same as the wage paid to the President of India, which is about $1100 per month. It's an archaic law that dates back to British times and when foreign exchange was a scarce commodity, and exceptions can be made, but that's how it is.
Americans (or any other alien) *can* work in India, if they're willing to work for about $12k/year. Above that, it requires more paperwork and approvals, but no reason that it can't be done.
Free trade has three requirements:
Outsourcing of jobs to India does not satisfy the third criterion. Technically, it is incorrect to call it "free trade".
The only true free trade system I am aware of is the European Union.
Reading Slashdot is ruining my spelling and grammar.
They're probably more effective workers too, being devoid of western egos.
Like the guy at our site here who wanted to unplug a fiber channel array from a daisy chain because he thought it wouldn't down the customers production environment? Even after the other senior tech and myself told him it was a very bad idea, even after phoning the drive array design engineers in the state where they designed them and having the lead engineer tell him that unplugging the drive cage while the system was running would corrupt the customers environment?
It finally came down to the other tech and myself finding an executive manager and telling him that if he valued his companys production environment, that this person could not be allowed to touch any drive arrays.
Is that what you mean by "devoid of western ego"?
It is easier to build strong children than to repair broken men. -Frederick Douglass
Could it just be that because of America's prosperity has created a "bubble" in the american labor market over the past decades?
Maybe all americans are simply overpaid and we're in for a BIG correction in the coming years?
It's called "deflation", and it's probably the worst thing that can happen to an economy short of nuclear war. Once an economy goes into deflation, there's almost no way to get it out again.
When an economy is going through deflation, it always makes more sense to spend as little money as possible, since prices will be lower in the future. But everyone holding on to their money just decreases the amount in circulation further, so prices continue to drop, so people hold on to more money, so prices drop further, and so on. In the mean time, since no-one's buying anything but the essentials, jobs are being lost left and right.
"They redundantly repeated themselves over and over again incessantly without end ad infinitum" -- ibid.
The Roman empire did fall 200 years before it's final destruction in the west, actually. The combination of pressure from the barbarian hordes and internal political instability that led to basically non-stop civil war for the forty or so years leading up to Diocletian's accession destroyed the old way of life and brought in a new, authoritarian regime (think of the worst American rhetoric used to describe the Soviets - ppl weren't allowed to be socially mobile AT ALL, they had to take their father's jobs etc.) which only resembled the old one in name. To quote Gibbon, "if Rome still survived, she survived the loss of freedom, of virtue, and of honor."
Free trade is when an unemployed American computer scientist can go to India to get a job. Guess what? It's impossible for Americans to get work visas in India. Why? Because they are protectionist.
When my company decided to "offshore" much of its development to a newly created division in India, we laid off a lot of H1Bs and resident Indian workers. To be "nice", we offered them their same jobs in India. But not one was hired. Why? The interviewer felt that they had been "tainted" by working in the US. Most of the interviews lasted less than five minutes. But one caucasion WAS hired...to be a US/India Liaison.
Don't blame me, I didn't vote for either of them!
Uhm, you're oversimplifying. A lot Here's a more complicated, but still oversimplified, version.
Japanese growth in the 1980's was fueled not just by internal capital but also by foreign capital. When 1 USD was 200-300 JPY, it was extremely inexpensive to invest in Japan, coupled with the fairly high standard of technology in Japan, financial institutions both domestic and foreign poured capital into the country.
Then, a few things happened. First, because of the huge export-based economy, the value of US Dollar against the Japanese Yen dropped precipitously. From 360 JPY for every dollar in the 1980s, it dropped to below where it is now: about 90 JPY for every dollar. This makes an export-based economy much less profitable, even though the raw materials (paid for in US Dollars) is much less expensive, due to inefficiencies in the Japanese manufacturing economies, these savings were not passed down to the exporting manufacturers.
Second, the Japanese government, for various reasons, dropped or relaxed much of the foreign investment laws. Do you remember the Japanese buyout of various real estate pieces (and the Japanese love investing in real estate more than any other investment vehicles) and nonmanufacturing companies (especially entertainment, like film and music) during the late 1980's? This was the direct result of their relaxation of laws. Unfortunately, it was also a PR disaster.
Finally, America went into a bit of protectionist mode. Do you know why Camrys and Accords are now assembled in USA? The American import/export automobile export laws have changed, and now they have quotas on various vehicle classes. This made investments into Japanese manufacturing less attractive to foreign investors.
Because of these issues, foreign investments in Japan dried up considerably, and Japanese domestic financial institutions were overextended and became unable to fund the necessary amount of investments to maintain the status quo, let alone fund the huge amounts of growth. The direct result of both foreign and domestic captial loss was the real estate bubble bursting, in the very first years of the 1990's. This led to the further weakening of banks, which Japan is finally starting to crawl out of.
Japan was never an outsourcing target. They were, however, the world's Taiwan and China before those countries were ready to start exporting cheap manufactured goods.
As a Computer Science major at Fresno State, let me jump in here.
You're pretty much right on the dot. Here we are, just south of the Bay area (it's not even a full 3 hours from here to San Jose, barring excessive traffic near SJ). Our department is rather well respected - we're one of the few CS departments in the CSU system that pulls in recruitment from Microsoft, HP, etc.
And not only are we a tiny department, but the vast majority of the students that are there aren't Fresno natives. Most aren't even United States natives.
Rather, we get a ton of students from India, Japan, Russia, Ukraine, etc. Only a select few of us are Valley (that's San Joaquin Valley) products.
Virtually none of us will remain in Fresno come graduation. The overseas students will largely return to their home countries. The non-Valley natives will head back to their areas of the country, and most of us Valley natives will leave the Valley (which is fine with me, but I'm sure a few would rather stay in their home).
Funny thing is, Mayor Alan Autry (better known to most as "Bubba" from "In The Heat of the Night", our Arnold before Arnold) really was seeking to pull some Silicon Valley business down here, where cost of living is far lower. Unfortunately, things haven't remained rosy in the tech sector, and there's a lack of homegrown talent here waiting for the jobs. I'm sure there'd be a number of out-of-work programmers willing to head here, but California's business climate is just not allowing much of anything to happen right now.
There's likely very little you can do to stop Dell or IBM from outsourcing to India, but I guarantee a 5-person development company in the US is not going to outsource your job.
The 7 person development company that I used to work for years ago has now jumped on the bandwagon whole-hog, and has quite a few Bulgarian H1-Bs on the payroll. Yeah, it's not quite outsourcing, but the intent is the same.
Please stand clear of the doors, por favor mantenganse alejado de las puertas
The broader definition can be found here:
http://www.labor.gov/ilab/media/reports/oiea/wage
The formula most often used by economists is a statistic based on the mean income. A common yardstick is 20% below the mean, but sometimes even more conservative figures are used. The definition above uses the 40th percentile. The 50th percentile begins at $28k (half of Americans make less than that), the 25th percentile (meaning 75% of Americans make less) begins at $56k. However, this means that the statistical poverty line is different in Los Angeles, California than in Mobile, Alabama or even nationwide. A person in Mobile probably won't hit "the poverty line" until they're somewhere around $11k. A person in Orange County, California, where the mean (and, roughly, the 50th percentile) is nearly $50k, will hit poverty at about $35k. This is what all these myopic people yammering about "you are not entitled to a 'high paying' job" don't factor into their arguments. There is no IT industry in Mobile , Alabama and a $60k/year job in Silicon Valley or Orange County is NOT that great. In fact, if "relative poverty" was the bar for federal need-based assistance instead of "absolute poverty" (translation: Mobile, AL), a great number of less-than-senior programmers in Orange County and Silicon Valley would qualify for food stamps.
So, I'm not entirely disagreeing with the statement "11K is 1/3 of poverty," but as you will no doubt be skewered for implying that $33k is 'poor,' which obviously it IS in many places, the clarification bears attention.
You're completely right about Brooks and Deming! But I can't let this pass:
The other point is that it is not fair trade, the jobs leave and labor cannot follow. This is not fair trade.
I see. Is it unfair trade that, say, US movies are so successful around the world? Perhaps we should be noble and shut down Hollywood so that local film industry jobs around the world can flourish?
Of course not. Free trade is a positive-sum game; blocking trade makes us all poorer. If India can make better software for less, then more power to them.
But I think, for exactly the reasons you cite, they can't. In the same way that the Japanese competition forced American cars to improve drmatically, Indian competition will force American software developers to improve. And as you say, they could start by doing the things that Brooks was recommending 30 years ago.
Actually, most of the Indian software jobs are coding and testing. Communicating is left to a very small percentage of people.
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Bullshit.
"[Americans] are regularly told by politicians and the media, that America is the world's most generous nation. This is one of the most conventional pieces of 'knowledgable ignorance'. According to the OECD, the Organisation for Economic Cooperation and Development, the US gave between $6 and $15 billion in foreign aid in the period between 1995 and 1999. In absolute terms, Japan gives more than the US, between $9 and $15 billion in the same period. But the absolute figures are less significant than the proportion of gross domestic product (GDP, or national wealth) that a country devotes to foreign aid. On that league table, the US ranks twenty-second of the 22 most developed nations. As former President Jimmy Carter commented: 'We are the stingiest nation of all'. Denmark is top of the table, giving 1.01% of GDP, while the US manages just 0.1%. The United Nations has long established the target of 0.7% GDP for development assistance, although only four countries actually achieve this: Denmark, 1.01%; Norway, 0.91%; the Netherlands, 0.79%; Sweden, 0.7%. Apart from being the least generous nation, the US is highly selective in who receives its aid. Over 50% of its aid budget is spent on middle-income countries in the Middle East, with Israel being the recipient of the largest single share"
"Why do people hate America?" by Ziauddin Sardar and Merryl Wyn Davies, 2002. p79
______________
OTTERS RULE.
Both the main wave of outsourcing fever as well as most the outsourcefobia are mis-directed.
/. giving a nice profile of the shortsighted, term-profit and quantity-per-share oriented MBA, who are totally detached form any innovation, knowledge or background of the programs they manage. Outsourcing is just one in the large arsenal of tools often used poorly by the people in charge.
;-)) with no innovation, no expansion (or "added-value", if you will) is a sucicide going multiple ways:
Firstly, we have to focus on the right target.
There was a great article "Managing the company to death" posted on
These are the people who gave the outsourcing a bad name, and are ruining not only the products they tremple on, but the lives and economies on both sides of the sea.
Outsourcing a suitable product or better, parts of it, by maintaing or increasing quality, main purpose being extension of production and doubleing the pools where innovation can come from may be a very sensible thing to do. Having multiple products in different stages of development or levels of sofistication fits well with a multi-continental concept of a company.
Sacking one experienced set of troops to reduce costs (i.e. outsorcing code from a good team to a cheapest team, which, for that matter, may in the bottom line both already be located in Asia
- the products may well go sour
- ruined lives of sacked troops
- short-term benefit of new troops only lasts long enough to get acustomed to a good life just in time to lose it (and going back is never easier), as is washed away by an aftermath disaster or simply next downsize-cycle
- bad management decisions always create circumstaces that reflect in the local economies, creating new anomalies, like circles in the water, that have to be leveled later at the cost of those affected.
The problem in a "bad-but-show-me-a-better-system", democracy with a free-market economy is that there is no such thing available as an effectiv "corruption-pest control": before the politicans and the grumpy grey old pension fund board members both realize who doing a bad job (most of the times close buddies, with hands so interlaced in each others pockets that you can no longer tell where the thread starts and ends), a whole generation has to suffer and pick up the tap.
A lot of damage, especially by the US companies, has already been done and it will be very difficult to make the wrong-decision makers improve their thinking.