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Ask Indian Techies About 'Onshore Insourcing'
This Slashdot interview has a little twist to it. Instead of using email, I'm going to relay your questions 'live' to people I meet while I'm here in New Delhi, speaking at LinuxAsia2004. Offshore outsourcing has gotten a lot of attention on Slashdot (and NewsForge) lately, but I figure that from this end we ought to call it 'onshore insourcing' instead. Feel free to ask other questions about 'geek life' in India, too; I'll ask as many questions as I can of as many people as I can, and post their answers when I'm back in the U.S.
I might be able to answer that in real terms for outsourcing projects (instead of just relocating the jobs)
During the dotcom and shortly after, the going rate for Java developers was around $100-$120 per hour (Northern California). To undercut the competitors and local contractors, an Asian software company bid on (and received a contract) to supply Java programmers.
The billing was at $80 per hour. Out of that, the programmers on site received the following:
:)
a. $40-$50 per diem fees (yes, that's right.. per DAY)
b. free fuel
c. a rented car
d. rented housing, situated reasonably close to their office
Each of the outsourced contracts typically ran for 8-12 months. Obviously, the programmers were also flown in and back home by the parent company. Now, you figure the margins
Disclaimer: this is just one case.. so YMMV
American workers have certain legal protections that drive up the cost of our wages. Do Indians have similar protections in the workplace?
No.
Are you allowed to organize into unions?
There are no unions for engineers/programmers. The companies have two "unions" - NASSCOM for software and MAIT for hardware.
Legally, nothing stops anyone from organizing a union, but on the few attempts made by some engineers, the HR guys across several companies - including US owned operations - shared info and blacklisted those engineers. (Basically HR people are the same kind of scum the world over. Refer to Catbert for details.)
How long is your work week?
Legally 40 hours. People may spend 50 to 60 hours if required. Usually it is, thanks to the stupid conference calls that US managers love.
What are your working conditions like?
Standard dilbert cubicle.
What kind of benifits do you have? Vacation? Medical? Dental? Profit sharing? Stock options? I find myself wondering, if the playing field were truly level, would your labor still be so inexpensive?
Vacation = usually 25 days a year. This may be called "earned leave" or "privileged leave" and is encashable for money if not consumed.
Official holidays (legally *required*) = 10 days a year. These can not be encashed.
Medical = Rs 15000/- a year for misc medical expenses.
Medical insurance coverage is required.
Profit sharing = optional. Wipro gives it. Can't say about any others.
Stock options = optional. I know some people who are millionaires. Yes, in US dollars. I've not made a penny. Yet.
Hope this helps.
Do Indians have similar protections in the workplace? -- Yes. The rules are the same.
Are you allowed to organize into unions? -- Unions are definitely allowed by law. But as in the U.S there are no Unions of Software Professional. BTW, India is probably the only place in the world where there is a democratically elected communist state govt. In fact, the labor laws are stricter here. Its nearly impossible to fire Blue Collared Workers or Declare Bankruptcy.
How long is your work week? -- I put in the usual 40 hrs a week over 5 days.
What are your working conditions like? -- The food in the cafeteria is better here than what I had when I was in U.S :-)
What kind of benifits do you have? Vacation? Medical? Dental? Profit sharing? Stock options? -- Folks in India probably get more vacation than in the U.S. As per Indian Law there has to be atleast 14 days of earned leave and 7 days of sick leave. This is excluding the 3 national holidays (Republic Day, Independence Day, Gandhi Jayanti); 3 Hindu Holidays, 2 Muslim Holidays and 2 Christian Holidays, Plus 1 State holiday; Unless they fall on the weekend. As far as Medical goes, Govt of India Rules specify that a group Medical Insurance Policy be taken out by the Co. Usually this works out to a coverage of about $10000 for about $40 a month. Profit Sharing, Stock Options and Employee Stock Purchase Plans all exist. In fact one of the biggest stories used to be the Infosys Stock Plan. Also, the Govt Specifies that 12% of your Salary be paid by the Company towards Pension each month. This earns about 9.5% interest.
I find myself wondering, if the playing field were truly level, would your labor still be so inexpensive? -- Thats because cost of living is far cheaper here. Food - about $50 a month, Rent about $175 a month, Entertainment, Eating out etc.. about $100 a month. So in all about$350 a month is more than enough. Whatever remaining usually goes into buying a car or a house.
What legal protections? White collar workers generally do not get the kind of protections blue collar workers do. Salaried workers, for example, who work tens of hours of overtime per week without seeing an extra cent.
Also note that American white collar workers have the longest work weeks and shortest vacations of pretty much any country in the world.
As for medical and dental benefits, those are factored into the compensation, and are not a hidden cost.
A deep unwavering belief is a sure sign you're missing something...
Since I'm an Indian techie, I'll attempt to answer that. But the disclaimer is that these are purely my personal views and not a general Indian opinion.
Do the IT professionals you've met feel that US companies and the US government used bait-and-switch tactics to take advantage of cheaper non-US workers? Or did those applying for H1-B visas know what they were in for?
It is quite clear that the US companies are using the tactics of outsourcing purely for their own financial benefit. It is extremely naive to think otherwise. And this is not just a US phenomenon. Every company around the world that outsources cheaper expertise and/or labour is doing just that... trying to get a competitive edge over its rivals by cutting costs. And I am sure that all the Indian developers (all but some of the greenhorns fresh out of college) know this fact when they're getting into it.
So why do the Indians still do it?
The Indian software firms use the US necessity as an opportunity to grow themselves internationally. An Indian company bagging a key US contract can proudly proclaim their achievement and use it as a differentiator amongst its local peers.
Some of the developers, who are geekily inclined, love the opportunity of doing some 'quality development' and so they hardly complain. Others are overjoyed at the prospect of travelling to the US and hence jump onto the bandwagon!
And a follow-up question: does anyone think that US companies will hesitate to leave their outsourcing partners high and dry as soon as they (again) find a cheaper alternative?
I, for one, don't entertain illusions that the US companies would fall in love with our work and ignore cheaper alternatives if they present themselves. I don't think anyone else here does either!
With the US (and the global) economy having gone through a rough patch over the last year, the Indian companies have slashed their margins big time, to remain attractive for the Us companies to continue doing business with them. And I think the Indians have understood that in the immediate future they will need to stay one step ahead of their competitors by being the cheapest even though India has managed to brand itself as a key mover of the knowledge-based economy.
What does a decent 2 bedroom apartment cost per month?
Depends on how far it is from what americans call "downtown." See, unlike in the US, people in Indian cities prefer to live *near* downtown. So rents are much much higher if the flat is close to where the offices and shops are. Such a flat might cost around Rs 25000/- per month (around $500/-) and would be 1500 sq ft in size. 20 minutes away would be around Rs 10000/- per month. 30 minutes away would be around 5000/- per month.
How about food for 1 month?
I can eat out every night for less than Rs 300/- per person per night. If I cook at home, it'll probably cost me around 50/- max. (That's around $1 and change.) I don't have breakfast, and lunch is Rs 25 at the office - that's 50c to you.
Utilities, etc?
I assume that means water and power.
Let's see - power would be between 500/- to 1000/-
Water would usually be included in the flat rent or building charge. Say another 1500/- which would include water (unmetered) plus security and the use of the building gym and/or swimming pool.
You know, Slashdot does have quite a sizeable Indian community, though you might not be aware of it. So you might think about asking the questions here itself!
/.. Anyway, now that I'm done introducing myself let me see if I can answer some of the highest moderated questions.
I am an Indian and currently working for Tata Consultancy Services Ltd., India's largest software company that recently exceeded 1 billion dollars in revenue. Right now I am stationed in South America from where we cater to most of the Latin American countries. I'm pretty much the typical 'target' of most of the American outsourcing anger that gets vented here on
How do you feel about the American programmers that are angry they lost their jobs to outsourcing? Do you think they have a right to be angry?
The way most Indians see it, this is mostly American capitalism biting them back in the ass. We do the same thing you do, but we do it at cheaper rates. Sure, we understand that Americans wouldn't be too happy about losing their high-paying jobs, but that is something they will just have to deal with.
Cost of living etc. in India, with emphasis on real estate etc.
Most people who start out in the Indian IT industry do not earn that well. On an average, I would say it is pretty much the same as what one would get after graduating from one of the other engineering disciplines like EE, CE etc. However, with a few years of experience one can get quite a comfortable job. For example, a typical IT worker with 3-4 years of experience can land themselves a job that pays about Rs. 40,000 per month (~ $1000). This is a good income in a country like India where you can have servants in your house for about Rs. 2,000 per month. AFAIK, there has been no study which studies the impact of these new IT jobs on the real estate market, but obviously some effect must be there.
Is the picture there as rosy as painted by the media?
I hate to say this on Slashdot, but it is actually quite good. Students from reputable colleges and universities do not find it difficult to find jobs in the IT sector. However, I would not agree that the degree does not matter. Most companies (the good ones anyway) are quite choosy about the people they pick.
How much experience do most Indian programmers have?
I would say ~5 years on an average. Agreed, there are a LOT of new people coming into the industry, attracted by the 'gold rush', but there are quite a few old veterans here as well. For example, my company is over 35 years old, and it is not uncommon to find people who have been here for the past 7-8 years.
American workers have certain legal protections that drive up the cost of our wages. Do Indians have similar protections in the workplace? Are you allowed to organize into unions? How long is your work week? What are your working conditions like? What kind of benifits do you have? Vacation? Medical? Dental? Profit sharing? Stock options? I find myself wondering, if the playing field were truly level, would your labor still be so inexpensive?
No, the story you hear about 'sweatshops' are not true. Yes, we do have benefits. No, there no unions, yet. A typical week is 40 hours (8x5), but almost always is more than that, depending on the work load. Sometimes people do work for 15 hours straight, but on other days they also go home after putting in their normal 8 hours. We have vacations and medical benefits. TCS itself is not a public company, so there are no stock options here, but other public companies do give the option to their employees. Labour is inexpensive primarily because of two reasons - there are a LOT of people in India, and the cost of living is quite low.
How does it feel to have your skills and knowledge continuously disparaged by people with little or no experience of working with Indian programmers?
Personally, it bothers me
I work in India, and I am employed writing software. I make about 7000 rupees a week, and I work about ten hours a day on the average it changes every week. You are right that money is different here. For instance a succelent dinner for two is about fifty rupees.
-Srividya
The $11,000 on average for a programming job is a myth. On an average a fresh graduate out of a college gets between Rs. 200,000 to 300,000 ($1= Rs.46 approx) . A senior programmer with experience earns between (Rs. 350,000 - 600,000) now thats closer or greater than $11,000. And remeber like USA we have an income tax on higher side (30 - 40%)
And for the living costs $11,000 does not makes you live like a king for the stats
1) An average flat with (2-3 rooms) costs between Rs.5,000 - Rs. 15,000) per month on rent. But these flats are still below par with what you would call an average flat in USA.
2) Buying a flat would cost you around (Rs. 1,000,000 - Rs 2,500,000 ) and thats average (as above ).
3) A car costs between Rs. 250,000 for a Maruti 800 (a 800 cc car with no frills not even an A/C )
to a Ford Ikon (a low end luxury car yeah we call it a luxury car ) for Rs. 500,000 and yeah they have a lot of other realy luxury cars like Mitsuibishi Lancer , Mercedes Benz but they are all out of reach of even a good earning programmer. Most programmers would generally own a two wheeler as the cost of running is low due to low petrol (oops gas) consumption (petrol is Rs. 36 / litre approx )
4) A music CD would cost around Rs. 100 to Rs. 300. A DVD for Rs. 400 Rs. 1,000.
5) A decent shirt would cost in excess of Rs. 500 and a decent pair of trousers arount Rs. 1,000.
6) Food costs are arount Rs. 50 - 100 if you cook at home or Rs. 75 - Rs.150 if u eat out. The cheapest coffee at Barrista (the most popular coffee shop chain here) costs Rs. 30.
7) And yeah a desktop costs around Rs. 30,000 for an economy machine to Rs. 50,000 for a decent one.
8) Telephone costs aroud Rs. 1,000 pm under basic use and Rs. 2,000 to Rs. 3,000 if u make more call or are using dialup internet connectivity (and 98% or so use it).
9) Broadband is either not available or if it costs around Rs. 2,000 pm with dload speeds of 20 kbps (yeah thats b-band in India).
There are other basic eminities but this can give an idea of living costs in India and yeah $11,000 gives you only a decent living below par a middle class in USA but its more than enough for an Indian as we are not as materialistic as the West and there are a lot more people earning a lot less than us.
The Phillipines apparently works at half of what he was being quoted for India contracts. Granted, the English is a bit better in India, but when price is king, India's better quality product didn't matter. (India... hope you've enjoyed your 15 minutes!)
Actually, the english is better in the Philippines. There are two national languages in the Philippines; English and Tagolog. America actually occupied the Phillipines from the time of the Spanish-American war until the 1950s, when it was offered Statehood. The Philippines declined and became a sovereign nation, but still had American bases until the 1990s. During this time, English became as widely spooken in business as Tagolog and it is considered a pre-requisit to get a job.
I have visited the Philippines twice and my fiancee is Filippina. I have also done business with Philippino companies and have directly witnessed their work ethic. I have been working in the Silicon Valley for 12 years and also have experience with Indian workers and Indian companies. I can tell you with full certainty: Philippinos have better work ethic, are generally smarter and have a higher degree of education, speak english more fluently and work cheaper than Indians. The one downside is that, since this is not well recognized, there are not as many companies doing outsourcing in the Philippines. Yet.
Competition to India is coming. And it is not just the Philippines. Asia cranks out more engineers than any other part of the world. These guys are smart, ambitious and will work for nothing.
For my dollar, however, I would still rather outsource to Russian firms. They have the best engineers in the world (outside of the Silicon Valley itself).
The reason that it can be true that 1+1 > 2 is that very peculiar nonzero value of the + operator