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."

Comments

that easy for you too say...

[sTalking_Goat]

. In the end of it, this is what Free Trade is about: people.

I have nothing again'st people making a living, but lets see how your tune changes when they start outsourcing journalist jobs...

Interesting indeed

[Frisky070802]

This article was very thought-provoking. I know someone who left the USA to return to India and start an outsourcing company in the mid-90s, before it was fashionable. I never thought he'd be so successful, but it's clear this model has taken off. In the end, Americans who cry foul have to offer a reason for cost-conscious companies to employ them instead of offshore alternatives. This article demonstrates the opposite -- the effectiveness and quality of these cheaper alternatives.

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)...

Rather pointless article

[khyron664]

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!

Khyron

The problems with outsourcing

[SilentSage]

This 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

Just more hype

[jafac]

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.

Re:Outsourcing is a good thing...

[plalonde2]

You're right, it's not the economy Adam Smith envisioned: It's the one that drove Karl Marx to write the communist manifesto.

There will be a revolution once the riches are sufficiently concentrated.

George Monbiot - The Flight to India

[gordoni]

Here is an insightful recent article on outsourcing by George Monbiot (one of the world's leading overachievers):

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

My 2 cents or Rs 2...

[xot]

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?

Re:america are overpaid?

[Sivaram_Velauthapill]

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

Why listen to Hill & Knowlton?

[swimfastom]

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.

ADVICE TO YOUNG AMERICAN PROGRAMMERS

[crazyphilman]

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