Slashdot Mirror
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."
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?
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.
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.
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.
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.
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.