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Offshoring IT
Bill Blunden is the author of Cube Farm - a humorous autobiography and story of author's fruitless employment at Lawson Software. A physics major faced with the grand prospects of waiting tables after college graduation, Blunden is not a newbie in the unemployment world. Offshoring IT promises to give the reader "the good, the bad and the ugly" of IT outsourcing practices.
The book is not very long -- just five chapters -- but it's thorough, as each chapter packs data and statistics from various government and commercial reports. "Setting the stage" talks about general trends in the software industry and cost of education. "Measuring the trend" tells the reader which companies outsource, why they outsource and who's helping them with outsourcing. "The Offshoring Obstacle Course" describes existing outsourcing processes - when exactly should company start thinking about outsourcing, what type of jobs is most likely to go offshore, what's the difference between India, Ireland, Israel, Russia and Mexico. Finally, "Arguments in Favor of Offshoring" made it into the book just because the publisher requested a fair look at the other side's arguments (which shows which "side" Mr. Blunden is biased towards). "Arguments Against Offshoring" is truly the author's work with major myths and excuses about offshoring debunked.
Blunden points out that in order to compete in the global marketplace, countries like India invested in their educational system and constructed high-speed data networks, which provided the foundation for companies popping up with the capability to take over remotely as call centers, software development houses, and R&D departments. Meanwhile, the cost of going to Ivy League schools keeps going up, leaving the fresh graduates with six-digit debt -- debt which the Student Loan Corporation (division of CitiCorp) expects to be promptly paid. The cost of college education for those who choose to go this route stipulates adequate pay requirements after graduation, and in the world where IT is going offshore, the paycheck is often just not there anymore, which leaves the fresh grad owing money and needing immediate retraining or a career switch.
The book delves into specific industries and companies, looking at the outsourcing numbers and potential for jobs to be offshored. Blunden notes that while corporations made their offshoring figures public before, lately the backlash against going offshore has made PR departments suddenly avoid the topic. Blunden refutes the argument that only low-level jobs are being outsourced and points to Intel designing CPUs for wireless devices on campuses in India.
Chapter 3 focuses on reasons for outsourcing. According to Blunden, the more face-to-face interaction and management effort a job requires, the less likely it is to be outsourced. At the same time, many companies are currently exploring offshoring some of their projects, claiming that only non-essentials are going abroad. Outsourcing of small projects allows them to establish the necessary processes and test their service provider, so that when a bigger project comes along, the management can feel safer working with the same offshore provider.
Chapter 4 deals with pro-offshoring arguments. Even though the author states he only had to write this chapter to satisfy the publishers, the arguments he picks are ones that appear in the press quite often - namely, that offshoring means more efficient allocation of resources, better revenue projections, and increased shareholder value. In Chapter 5 Blunded goes on a crusade to discredit these arguments, though, saying that offshoring does not benefit average Americans, that only the top 5% of income earners benefit from increased shareholder values, and that frequently top management receives additional benefits while laying off the proles.
While the first two chapters of the book are filled with data, numbers and statistics, the last three chapters mostly read like an rant on the current state of affairs, which many of us may have gotten for free from the older members of the family at Thanksgiving. Blunden does have some valid arguments about the increased danger to national security and wealth due to offshoring, but you can't help but notice the feeling that the author feels entitled to a job provided by an American corporation, even though corporate America is bad-mouthed in the next sentence. To give Blunden credit, he mentions that sometimes reasons for offshoring include the low popularity of call-center and data-entry positions in the U.S. Americans view doing support for AOL and data entry for Cingular as grunt jobs, just temporary positions on the way to a better life, while for many Indians it is the ultimate career, and are thankful to the provider for giving them the opportunity.
Blunden also does not distinguish between different types of IT workers. The aforementioned AOL support soldier and top NASA scientist, designing microcontrollers for the next space mission would be aggregated into the same "IT worker" category. There's little detailed statistics on what sectors of IT are prone to outsourcing and which are pretty stable to be in. Sometimes the author plays little tricks with the reader to make his points across. On p. 106 he talks to an invisible IT manager: "Sure, you can hire six Indian engineers for the price of an American engineer. But if an American engineer can do the work of six Indian engineers, what's the difference?" Oops. Notice how by the time we get into the second sentence the equality in price gets substituted by equality in productivity. Just because 6 Indian salaries would equal to one American, the author assumes the productivity level is going to stay the same, making the example nonsensical, since why would you outsource if it's the same money and the same productivity?
Overall, it's an interesting book to read, although somewhat depressing, as it provides little pointers into how do the readers stay competitive in this marketplace or what needs to be done on the personal skills level to make oneself more valuable. You can definitely tell which side the author is leaning, but subjective writing makes the reading more interesting. Nevertheless, the title does leave an impression of being one giant complaint about the current state of affairs, and I don't think I will be re-reading it. Perhaps just loan it to my friends, who are in college pursuing IT-related careers.
In an attempt to stay up-to-date with his skills Alex reads and reviews many programming and technology as well as keeps the list of free ones available on the Web. You can purchase Offshoring IT from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.
I am still in school. I have a mediocre GPA, good skills (IMHO), I am tall, and I am friendly. Will my computer science degree land me a good job in the field, or will I have to teach (respectable, but I would rather not personally), or join the military or something to be doing something that involves my expensive education in a meaningful way?
"Read on for the rest of Moskalyuk's review; watch out too for my upcoming review of N. Sivakumar's Debugging Indian Computer Programmers: Dude, did I steal your job?."
How in the world do you debug an Indian Programmer?
Were's the GDB patch for that?
Seriously is things that bad were you have to debug their output?
And can a job really be "stolen"?
it is hard for IT people to see the benifits but if you are the company, you want to make money.
But offshoring does have major drawbacks. I think you are starting to see the threshold of what people are willing to take with offshored call centers. personally i hate calling Compaq and taking to someone in India. I am not trying to be rude but I can't understand them, and it bothers me.
I think you are going to see people in India, ect pushing for higher prices of pay in a few years, you can only pay them pennies for so long before they realize they can earn more, or until they start to become entrepreneurs themsevles, then what will you have on your hands?
also i do thing you will see American companies step out of outsourcing a bit, why? people again are getting annoyed with calling a call center and not talking to someone htey can understand. Customer service is king and people will be willing to pay more for.
Offshore development apparently is a hot topic. From well-informed sources I know that certain IT integrators are making strategic investments in offshoring IT development and IT services to India, Mauritius islands, as well as near-shoring to Eastern European countries (Czech Republic in particular).
I think that this fact speaks for itself: offshore has more advantages than disadvantages for huge projects (Texas unemployment office, anyone?).
Since Bush won the elections, more and more people are dragged into the offshore development centres and apparently the code quality is not as bad as some people might think.
The consulting firm I work for actually hires 100 people PER DAY in India alone.
Like it or not, I guess we better start living with the fact that offshore will stay where it is.
--Use ant to make
I won't claim the US or EU as pure by any means, but by comparison they're far safer places to store your company's future... it's a simple matter of record.
HTH a little, /P
Quo usque tandem abutere, Nimbus, patientia nostra?
Why is that ?
I'm pretty right-wing and I think that your society is class based. I say "your" because I'm from the UK, but US society is just as class based as that if the UK. It just that yours is based on other factors than ours.
Ours is based on birth, property, who you know and are related to, and to a greater extent nowadays, celebrity. Yours seems to me to be based on money, education and power. But whether your right or left, libertarian or authoritarian you can't deny the existence of "class" attitudes.
No but, yeah but, no but...
The Dollar is going to crash. Its already started. If Indian programers are now at 6:1 price wise verses Americans, this will drop as the dollar depreciates. This is the natural course of a trade imbalance. An hour at Burger king will no longer entitle an American to 20 hours of chinese labor. This is not a bad thing, sure DVD players, Television Sets, Fuel, and PCs will cost more, but there will be alot more jobs as factories and services become more cost effective when done in America.
no, a true socialists would bemoaning the high wages cost of living in western countries.
Look what capatilism's done, it's made everything stupidly fucking expensive!!!
thank God the internet isn't a human right.
Pity America tends to look down on academic achievement as well...
I'll buy that statement *only* if you extend it to prospective employers. Of those (including myself) who I've seen struggle in a terrible job market over the last 2-3 years, the majority are math/science educated, experience technical professionals.
And this brings up an interesting question: since there's very little social respect in technical pursuits, and now that we're letting employers remove much of the economic incentive to be trained in math/science, who's going to pick it as a profession?
Becoming a suit or tradesman increasingly looks like the wiser choice.
Tweet, tweet.
One month after I started my current job, my new boss informed us they had just hired 12 programmers in India. "Great, I'm toast" I thought.
5 years later, the guys in India have yet to produce any usable code. My job is very secure for now.
I went the Bangalore to train some of them to do my job. Before I went I had a preconceived notion that the programmers over there would suck.
Well, I was wrong.
I now think they are quite competent. The problem delivering a working project, IMHO, stems from extreme shortsightedness of my company. All the company sees is "12 engineers for the price of 2!" What they don't see is "12 engineers, 13.5 hours out of synch with the US, who need good documentation training on our existing systems & very good requirements documentation".
The Indians were not hired with a working knowledge of their project (obviously). Since the company wanted only to save money, they didn't explain the project well, or document the requirements. Communication was limited because of the time difference. The project ended up working, but only barely. To the best of my knowledge, it has not been deployed anywhere.
The guys I trained did a fine enough job, but only because I went to Bangalore and explained things in person. I answered questions, demonstrated some things, and have maintained contact since.
Once my little project was done, they were moved to a very complicated project. The company should have brought them over for a month or so of in-person training. Instead it was decided to do all training via email. The new project is now entering its 3rd month, with no completion expected soon. In the US office the project would have been done in 2 weeks, tops.
In short: productivity is slower and software quality is worse, not because the programmers are bad, but because the american company involved wanted to save money without spending any $$ to support the offshore development.