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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 have nothing again'st people making a living, but lets see how your tune changes when they start outsourcing journalist jobs...
My days of not taking you seriously are certainly coming to a middle...
In the end, I do think it'll be a while before the "highest level" of IT (such as research labs) find comparable counterparts at that deep a discount. People who are worried about their job moving offshore should think about how they can do things that can't move as easily, perhaps by increasing their education (MS/PhD)...
Mencken had it right. So glad that's old news.
Outsourcing isn't the magic arrow CEOs want it to be. This article doesn't really address anything important at all. Ratings are pretty meaningless. I know parts of companies that are rated at SEI Level 5, but produce some of the worst crap I've seen. They're rated well though, so they much be good.
Why doesn't someone write an article about all the times outsourcing has been tried before? How about what happened with Malaysia? How about the fact that the overhead involved in trying to manage people half-way around the world is higher than the amount they save by outsourcing? This isn't a new fad people. Sure, the people and the places change but the problems don't.
Things are different now than they were in the 80's I'll grant you, but no one seems to be drawing the comparisons. Health Care costs are rising in the US, thus possibly providing better savings when outsourcing now. However, it's not like this is a new concept and that the problems aren't well known. Let's see some hard questions asked and analysis done based on past experience!
KhyronThis article makes interesting advertising for outsourcing firms and raises some very valid points but hardly can be considered either objective or entirely factual. The article talks about the quality of Indian IT firms (and they do have some high quality professional firms). However, they fail to mention the many negative experiences U.S. firms have had with botched projects, poor service and support compounded by language issues despite claims that Indian English skills are adequate (albeit this is not true in every instance). One of the main issues offsetting these facts is that they work for a tenth of what their US counterparts do. Companies find it cost effective to allow them to make these mistakes and learn from them (which they seem to be doing). Outsourcing is a minefield that can lead to extraordinary success or disastrous failure. From an economic perspective the cost savings you reap from outsourcing you pay for in the long term (as a nation) by the erosion of your markets buying power. 3 Million consumers in your home market (making $70,000 dollars a year) are replaced by consumers in a market hostile to foreign competition making $8000 dollars a year (for the top tier anyway). Sooner or later America will realize this and legislation will be put into place to stop it. But in the meantime hang onto your seats
I guess things have quieted down now or perhaps we in the US have just lost interest. But there was a time where I am sure a few CEO's and CIO's had to be worried how long it would be before their big software project went up in a giant Pakistani mushroom cloud.
Do political situations, like the border skirmishes near Kashmir, ever get discussed when it comes to making these outsourcing decisions? If India was thrown into a state of turmoil due to an attack from Pakistan what would happen to outsourced projects? Or if India attacked Pakistan in a way that the US felt was too severe and sanctions were put into place against India, what would happen to these contracts?
'Same speed C but faster'
That's all this Indian Outsourcing thing is.
Are there really really good, really smart Indian programmers? Of course there are! But overall, on the average, outsourcing will end up biting most companies in the ass, in the long run. There are hidden costs to it, like the 11 hour time difference, language barriers, cultural differences (anecdotally, from many accounts, Indians tend not to raise questions, or think independently when a design sucks, etc.)
Worse yet, this will bite the US Software industry in the ass when we suffer from brain drain - when software engineering is no longer a sought after degree. Then the Indians will start their own companies, and eat our lunches.
Worse still - with the decimation of these high-paying jobs, comes an overall lowering of the standard of living here in the US. These companies got rich by selling to the richest market in the world - American consumers. By gutting their own customers, these companies are shooting themselves in the foot.
- - -
That said - the writing, in big letters, in crayon, is:
Investors should believe that a wise company outsources, because it's a move towards efficiency. It will eliminate those overpaid "web designers" that are sapping corporate profits. Companies are "cutting fat". It's perceived as a gutsy move.
Actually, it's the herd mentality. "Oh my god! IBM's outsourcing, they're going to KILL us unless we outsource too."
But mainly - it's a movement designed to lure investment dollars back to the Tech Industry. It's basically hype. Companies who outsource are selling stock. Not products and services. This is their motivation, their drive. And it's very much a herd mentality. Among investors, AND corporations. They may be heading off a cliff. They may be heading to the slaughterhouse. Or perhaps greener pastures. But make no mistake. The Outsourcing Movement is NOT a drive to offer better service, or find better talent, or even save real money. It's a drive to LOOK like they are.
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
I've been out of work and interviewing. Every company I interviewed with has opening because they're bringing their outsorced projects back.
Granted, it's not 6 figures like 5 years ago, but it's still nice.
The Kruger Dunning explains most post on
There will be a revolution once the riches are sufficiently concentrated.
The Flight to India
The jobs Britain stole from the Asian subcontinent 300 years ago are now returning. Is this a good thing or a bad one?
If you live in a rich nation in the English-speaking world, and most of your work involves a computer or a telephone, don't expect to have a job in five years' time. Almost every large company which relies upon remote transactions is starting to dump its workers and hire a cheaper labour force overseas. All those concerned about economic justice and the distribution of wealth at home should despair. All those concerned about global justice and the distribution of wealth around the world should rejoice. As we are, by and large, the same people, we have a problem.
Britain's industrialisation was secured by destroying the manufacturing capacity of India. In 1699, the British government banned the import of woollen cloth from Ireland, and in 1700 the import of cotton cloth (or calico) from India.1 Both products were forbidden because they were superior to our own. As the industrial revolution was built on the textiles industry, we could not have achieved our global economic dominance if we had let them in. Throughout the 18th and 19th centuries, India was forced to supply raw materials to Britain's manufacturers, but forbidden to produce competing finished products.2 We are rich because the Indians are poor.
Now the jobs we stole 300 years ago are returning to India. Last week the Guardian revealed that the National Rail Enquiries service is likely to move to Bangalore, in south-west India. Two days later, the HSBC bank announced that it is cutting 4000 customer service jobs in Britain, and shifting them to Asia. BT, British Airways, Lloyds TSB, Prudential, Standard Chartered, Norwich Union, BUPA, Reuters, Abbey National and Powergen have already begun to move their call centres to India. The British workers at the end of the line are approaching the end of the line.
There is a profound historical irony here. Indian workers can outcompete British workers today because Britain smashed their ability to compete in the past. Having destroyed India's own industries, the East India Company and the colonial authorities obliged its people to speak our language, adopt our working practices and surrender their labour to multinational corporations. Workers in call centres in Germany and Holland are less vulnerable than ours, as Germany and Holland were less successful colonists, with the result that fewer people in the poor world now speak their languages.
The impact on British workers will be devastating. Service jobs of the kind now being exported were supposed to make up for the loss of employment in the manufacturing industries which disappeared overseas in the 1980s and 1990s. The government handed out grants for cybersweatshops in places whose industrial workforce had been crushed by the closure of mines, shipyards and steelworks. But the companies running the call centres appear to have been testing their systems at government expense before exporting them somewhere cheaper.
It is not hard to see why almost all of them have chosen India. The wages of workers in the service and technology industries there are roughly one tenth of those of workers in the same sectors over here. Standards of education are high, and almost all educated Indians speak English. While British workers will take call centre jobs only when they have no choice, Indian workers see them as glamorous.3 One technical support company in Bangalore recently advertised 800 jobs. It received 87,000 applications.4 British call centres moving to India can choose the most charming, patient, biddable, intelligent workers the labour market has to offer.
There is nothing new about multinational corporations forcing workers in distant parts of the world to undercut each o
I work for an Indian call center which does all sorts of processing and telemarketing for clients like Chase,Citi..ec.
I work as a systems admin at night(USA time), studying for my GMAT in the day along with catching a little sleep.The job gets me about $7000 annually.Yes I am going to study in the USA probably steal another job there, temp or not if I can get it.Does that make me bad?Does that make the whole outsourcing industry bad?Its not the minimum wage factor that I'd like to argue.
Everyday we get about 5 tasks that were done wrong by some desk jockey in the USA and have to be streamlined and corrected here.(not talking about the actually processing, just simple reports n stuff)
Ok maybe not everything is that bad but what is a guy like me supposed to do? I earn more than most of my friends..live an ok lifestyle and struggle to save up for future education.This is the typical scenario you find in a IT outsourcing company in India.
Should I just quit and work as something else? Why would Citi stop Outsourcing when they earn more by outsourcing and get better value for money? Isnt it right that we lobby for Outsourcing in USA?
Lord of the Binges.
I have previously mentioned my theory that USA (and other countries) might have to devalue their currency. I'm not a capitalist so a lot of capitalism is totally bogus, but how can a country like USA stay competitive if the wages in, say, China are 10x lower? Devaluing the currency is the only capitalist measure (protectionism/tariffs/etc are anti-capitalist) to remain competitive. Devaluing the currency will significantly increase the cost of imports while enhancing exports.
Apart from the controversy of devaluing (Americans would lose the value of their assets), it might bring down capitalism with it. The US dollar is tied into so many things that devluation will impact nearly everything. Starting with a mess in the oil markets (look into something call petroldollar), it will impact US debt, world trade, and so forth. If US dollar devalues, USA will probably default on its debt. I claim that if USA defaults on its debt, capitalism will collapse.
Sivaram Velauthapillai
Sivaram Velauthapillai
Seeking the meaning of life... @slashdot of all places
Just a quick comment here...
The Carnegie Mellon CMM Level 5 rating that a lot of these firms receive is not always related to overall quality. Like the ISO 9000 standard, you can have a poor product come out of a CMM Level 5 shop.
The CMM is supposed to improve overall software development process but, for example, there is nothing in the CMM that says "Don't use unprotected globals" or "Avoid goto's and labels".
Code written in CMM Level 5 shops can be good or it can be utter crap. The CMM states that you have a process which meets all of these different criteria.
That's not to say it's bad to pursue a CMM rating. In some cases it helps. A lot of it can be common sense. Though what is one person's common sense is another's undiscovered fronteer.
Do not let a CMM rating wow you just as an ISO rating should wow you. It can be a factor in deciding a contract but there should _never_ be a single factor to decided a contract!
It's the companies that should pay. Find out who is outsourcing and tax the hell out of them. They're making quick bucks off of the American government and domestic/foreign workers.
and on top of all that I was forced to give myself the pink slip and outsource my personal website becuase free was too damn spendy!
From the third page in the article: "Turner's bill passed the state senate by a 40-to-0 vote. But it got bottled up in the assembly, thanks to the efforts of Indian IT firms and their powerhouse Washington, DC, lobbying firm, Hill & Knowlton."
Why the hell do we allow Hill & Knowlton to greatly influcence our governmental decisions regarding outsourcing U.S. jobs? They have offices in 37 countries around the globe and firmly believe in outsourcing jobs outside the U.S. Our government really needs to stand up to companies like Hill & Knowlton and fight for U.S. jobs.
http://tomgould.com/
This makes it sound like the western countries got wealthy by plundering everyone else. In fact, countries become wealthy (increase per-capita income) almost exclusively by growing their own economy. Why economies grow has been one of THE questions in macroeconomics for a long time. In the early 1900s, Argentina was as wealthy as either the US or the western European countries. They have fallen behind, rather than being plundered. Several factors important to growth have been identified; consider how India or China (or Argentina) has stacked up until recently in these different areas.
no one seems to have a good idea just how to afford that lateral move and the training it entails, especially for the poor schmucks that are just now graduating
Well, actually, the idea is pretty obvious, and has been used repeatedly for the previous wave of outsourcing in manufacturing jobs.
The basic notion of free trade is it that it makes people richer. (If not, the parties involved wouldn't trade.) We all buy electronics made in Asia because they're cheap; that's a great deal for us as consumers (because we get to have more stuff for the same money) and it's a great deal for Asian manufacturers and their employees (because they get a slice of our wealth). In the long run, everybody is better off.
But as you point out, in the short run people whose jobs go overseas are in a pickle; they have trained for a job that's no longer available. The solution is to tax consumers a bit (so their cheap imports aren't quite as cheap) and pay for job retraining and income support.
There are some programs like this for lost manufaturing jobs, and there should be more. And their needs to be support for those harmed by the new wave of white-collar jobs. Write your congressman!
But the solution isn't to block trade. Trade makes us all richer, and blocking it makes us all poorer.
I was that naive. I had no choice. It was milk cows and live in poverty or borrow my way into education and possibly a better life. I know there are no guarantees, but I was pretty sure I'd be able to get a better job than milking cows. Right now, if all the white collar jobs flee overseas, I'm not so sure. That's my point.
I have the desire, btw. I worked 40 hours a week and put myself through college. Then I worked 40-70 hours a week for the last 7 years while also putting time in to teach myself new skills. I deserve success. I've earned it. The fact that the jobs just aren't here is the problem.
I'm a relatively old fart in this forum; I'm 33 years old, and I've been programming in one language or another since '95. I've been around; I did the comp sci degree, the Y2K effort, the Manhattan, NY, dot-com/dot-bomb experience, some corporate IT, and civil service in a few different organizations. I've been around to watch our field go down the tubes, I have a pretty good understanding of the whys and whens, and I've got some advice for you, so please listen. I might be able to save you some grief.
First, look at the problem at hand: corporate jobs are going away because of corporate greed and disloyalty. First it'll be IT jobs, then virtually everyone as corporations move everything overseas that CAN be moved. This is nothing new, they did it to the manufacturing sector decades ago. But it IS unique in that once it's gone, that's it. There's nothing left for an ex-corporate type to retrain to except dead-end retail jobs at six bucks an hour.
So, this is pretty scary. But you CAN keep yourself out of harm's way. You don't have to just let yourself get sidelined.
First of all, ask yourself: do you really want to work for a corporation? You'll have to sign an IP agreement, a nondisclosure, and a noncompete, so you won't be able to work for anyone else for several years even if you're fired -- this is sort of like indentured servitude. And you'll have to work 60+ hours a week with no overtime pay because they'll write you up as an "exempt" worker. And you'll have some idiot suit breathing down your neck all day, reminding you on a constant basis that "you're lucky to have a job in this economy" (believe it or not, I've heard of this kind of thing from a lot of different people). You'll have to physically restrain yourself from dropping him out the nearest window, which will cause you stress. And you'll have to eventually watch your job go away, maybe even training your replacements.
So all those corporate jobs sucked anyway. Fuck 'em. Don't even consider them. The only reason corporations are still hiring is that they haven't fully ramped up their outsourcing yet. Why help them while they're still in the process of screwing you and all your friends over? Blow 'em off and get a non-corporate job. Stay in school. Get that Master's degree. Go on to the Ph.D and become a professor. If that's too annoying and your suck-up skills aren't strong enough, get into the IT department of a university near you -- you get all the benefits and none of the headaches of a professor's post. Get into civil service if you can. DISDAIN the corporations. They've earned it.
If you can't score one of those jobs, try and find something with a small business. Parlay your knowledge of computer science into a position where you'll learn some other trade at the same time. Wear a lot of hats. Be the indispensible local geek who keeps everything running. Small businesses are better than you might think; if nothing else, they would NEVER have the resources to outsource your job. Think about it.
So, ok, now you have a job. You're eating, you're making your car payments, you're not rich but you're not dead meat either. So, now what, you ask?
REVENGE.
Say it with me. "Revenge". Feel how it rolls off your tongue. "Revenge". It's such a happy word, such a WARM word. It LIKES YOU. It's your FRIEND.
REVENGE.
Here's how to get one for the little guy, without breaking the law or doing anything that'll get you into trouble.
1. Don't buy anything from a major corporate outsourcer unless you absolutely have no choice. Or, be obnoxious: buy a Hewlett Packard printer (usually sold at a loss) and buy NON-HP INK. If you need a new laptop, buy it on Ebay, where the money goes into the wallet of one of your neighbors instead of a corporate bank account. Buying music? Buy it used in your local CD shop. Buying a car? Get a used one. BE CHEAP, and be proud of it. Convince everyone you can to be cheap as well. Think grassroots.
If you're buying an item like a TV, and you don't w
Farewell! It's been a fine buncha years!
Bear with me a moment.
o urce merry-go-round. Every once in a while, some manager hoping to score brownie points would suggest outsourcing as a means for the company to improve their bottom line. And it would be done.
I am currently looking for a job and have noticed that many companies ask that I send my CV as well as my preferred salary. Okay, I can do that. Of course if I state my preferred salary is R10 000 and someone with similar skills and experience says she wants R5000, who are they more likely to hire?
A few years ago I worked for a company that seemed to be permanently in the outsource-then-bring-it-back-in-house-then-
outs
Then not too long in the distant future, the outsoursed jobs would be brought back home because some other manager suggested that doing it ourselves would be cheaper. And it would be done.
Face it, Joe Soap might have started his lemonade stand as a means of feeding his kids but when he started making more money then he needed for groceries what did he do? He grew his company, branched out into orageade, limeade and coolade and employed his brother-in-law to do deliveries.
That is until Joe realised that he can pay the Indian kid down the street a fraction of what he pays his brother-in-law for the same job and in the end Joe makes more money.
Does he stop selling lemonade when the kids are all grown up and can provide for themselves (assuming they're not American programmers)?
Of course not, because it stopped being about feeding the kids a long, long time ago. Now it's all about the money.
Is it not better for a company of 150 people to outsource 100 jobs and stay in business or not outsource at all and so all 150 jobs are lost?
It's still about the money because if you don't have money, you certainly can't afford to pay a programmer.
"I'm going to worry like hell and that's not an easy job, believe me" - Lu-Tze "Thief of Time"
The entire CMM argument is just a marketing tool for these firms. CMM describes process not result or whether people actually found the software produced useful and usable. And the real issue is often not IT and its process, but that the line of business people and politics do not let internal IT shops practice the process.
A lot of the problems of US IT groups and projects is that with programmers down the hall and senior level line of business (LOB) guys able to threaten and yell at and IT execs and get them fired for being honest, a US based IT shop often has to do a lot of changes on the fly, delvier before something is ready, etc. With a remote operation, a specification gets written and a contract gets attached to the spec. The senior business execs sign off but now THEY CAN NOT CHANGE things without renegotiating and visibly accepting responsibility for the schedule and quality impact of the changes.
They can not pressure the Indian firm to make a change and still hiold the schedule. When you are in IT and work for a company, you are always powerless and the senior management listens to the line of business folks and gets angy at or ignores the process or schedule or deailed explanations about why a change will cost 5x as much, slip 1 year, etc.
The distance and the contractual relationship put the discipline where it is needed - on the line of business folks. That isn't to say that there aren't bad I folks, bad plans, silly promises and the like. But a lot of the problem is line of business people who buy a pitch from some software comapny whose product can't deliver the benefit promised, that will take 2x and cost 10x to implement ans the like. It comes from them refusing to understand why the stuff they legitimately need can't be delivered when they want it.
So, the discipline of the Indian companies isn't in the CMM stuff, it comes from the arms length contractual relationship protecting them from the stuff that screws up projects. It comes from the distance keeping the line of business execs from demanding constant change. Most IT shops know about process, and reviews and the discipline. The problem is that the CEO's and line of business people will not let their in house teams practive these techniques.