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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, for one, would like to welcome our new Indian overlords.
Not all conservatives are stupid,
but it is true that most stupid people are conservative.
- Hume
1. Fire all of your American programmers, call center workers and IT personnel.
2. Replace them all with people who can almost speak English.
3 ???.
4. PROFIT!!!
Nothing against Israel (I personally support their efforts as one of the only democracies in the region, and they do have the toughest military on the planet), but one would think that the Middle East would be fairly low on the list of places to put one's IT future.
(Then again, considering the fights over the Kashmir in India, and the Mafia in Russia, etc etc... maybe it wouldn't be nearly as risky? As a guy in the US, The more one looks at it, the less one would sanely want to put their property at risk outside of US or EU borders in the first place...)
Quo usque tandem abutere, Nimbus, patientia nostra?
Two parties will not willingly engage in a trade unless both parties are better off afterwords than they were before. Discouraging trade to the benefit of a small minority of people (those who will lose their job to outsourcing) while hurting the vast majority of people (those who will receive the outsourced jobs and the consumers that will receive the products produced with more cost effiecent labor) is a recipe for disaster. This works at all levels of economics.
and get back to work. If you're worried about your job being outsourced, get the fuck off slashdot and do what you're paid to do - don't give them a reason to do it.
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
Well, in answer to the reviewer's doubts, the key to staying competitive in the marketplace (as a worker) is to actually know something, like biochemistry or exotic option valuation or how to flatter to auto company executives. IT knowledge is a perfect adjunct to the real skills that get you a job. That's the same as ever.
In terms of what to do about the increasing concentration of wealth made possible by advances in comms, transport and free trade, though, I dunno.
If in doubt refer to ancient Rome -- they lost their well-off middle class in a few short decades once the Senate families had gained enough leverage to begin consolidating huge estates. Those Romans who still remained socially mobile (as opposed to the other 95% whose families were plebs forever) did it by going abroad and setting up shop in ever more remote and volatile provinces, often via the armed forces. Note how the age of consolidation of wealth in Rome came at around the same time as the major wars of foreign expansion and the shift from kinda-sorta democracy to straight up God-Emperors.
In other words, at the same time as Roman wealth became immobile (locked up by the major families that ruled Rome) the increasingly aggressive foreign policy made new, more mobile wealth available. This might happen again.
As a member of the 'reading slashdot at work' class, I have no ambition to share in it
Whence? Hence. Whither? Thither.
However, the dollar is devaluing. This raises the cost of the Indians relative to the Americans. It also makes the Indians richer. This is how the market is supposed to work. We will reach a more level playing field. But is is one that many Americans won't like. Many economists are becoming increasingly concerned with a 'melt down' in the value of the US dollar. Think about this from the view of a foreign banker. They keep putting reserves into dollars, and we keep driving down the value of dollars. Before long, they are going to prefer Euros and Yen for their reserves . If they walk away from treasury bills, we might see the 'dollar melt down' scenario. As long as we are running trade and budget deficits, we are going to see the dollar devalue. So, in a rather perverse way, the policies of the current administration are reducing the danger of outsorucing.
Think global, act loco
I've been in the IT industry for 14 years and it has been extremely lucrative for me. I do not recommend anyone to get into the IT field if they're going to be entering the job market 4 or 5 years from now though. I think that the combination of outsourcing along with the increasing ease of doing complicated tasks with computers will lead to a bleak job future for IT-specialized staff. I think that more and more administrative tasks will be pushed onto what are considered today end users today.
As for recommendations (which this book reportedly lacks)... Study business. Be the person that's sending jobs overseas or setting up your own plug and play wireless network.
I'm a big tall mofo.
Since I live in the mountains of Northern Arizona, almost all of my work is telecommuting. For the last 8 months, I have been working for company in India and it has been working out fairly well. Sure, I don't get the same pay as I did when I worked in an office in San Diego, but flexible hours so I can spend more time with family and friends makes the whole thing work for me.
With the US economy heading south (foreign central banks finally seems to be dropping the dollar) I think that it is time for us in the US to realign our priorities:
1. avoid debt like the plague - unless you need to literally borrow to feed your family
2. consider doubling or tripling the amount of time you spend on "self education" to stay globally competitive
3. learn to totally appreciate non-material things like love of family and friends
I think that by and large things will be OK here in the US as long as people adapt to a sliding material life style. (It would also help a lot if everyone tried harder to conserve petroleum products! The patriotic thing to do is to try to help reduce the trade deficit.)
-Mark
>just American jobs should be considered "American first".
Its "American arrogance" that is blinding you to the fact that Americans are the ones outsourcing American jobs.
Americans are screwing Americans. Gee, I suppose its is "American first".
The surprise isn't how often we make bad choices; the surprise is how seldom they defeat us.
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.
I think it is ironic that the law of supply and demand only applies overseas.
A company in the US sends jobs overseas because it is cheaper. It is cheaper because the cost of living is lower, and there are more people so the cost (salary) for each one is less.
Yet, here in America, you could have the same thing, but it would take these same companies investing in their own communities first. For example, if a company were to spend money educating the future workforce in its own community, there eventually would be an abundance of qualified people right here at home. More supply = less cost, right?
And if people would stop shopping at Wal-Mart et al. and endlessly consuming the goods made overseas, we'd eventually have lower cost of living here as well.
I have no sympathy whatsoever for someone who loses their job due to outsourcing. Losing your job sucks (it happened to me twice in one year, but not because of outsourcing), but my guess is the people losing their jobs are the same people demanding 32" color TVs for $200, DVD players for $40, gallons of pickles for $2.97, and shopping at dollar stores.
All we do in America is consume. Everything in America is disposable. Why can't jobs be disposable, too?
You reap what you sow.
Man, is the parent post poorly written...
Your main problem is that you think what you do is easy. Doctors think being a doctor is easy too. Lawyers, same thing. For anyone without the requisite skill set, it is *NOT* easy at all. Now I do not refer to swapping out a hard drive, but how about figuring out a hardware conflict or some other more complicated software engineering issue? How about setting up some basic security for a 24/7 connected system? We slashdot types read and study these issues daily for what amounts to hundreds of hours a year - and the average person is willing to pay good money so that they do not have to do the same. Could they do the same thing? Sure, they can all become doctors and lawyers too, right?
What you really have to understand is that half the population of the U.S. is so stupid that they couldn't even be bothered to discover the true findings of the 9-11 Commission and voted Bush and his "lootocracy" back into power. Where do you think that level of intelligence leaves them when their mouse driver suddenly goes wonky on them?
A fellow IT person is not going to hire you, but what about the millions of soccer moms? How about their husbands at work?
With all that said, I wouldn't bet much on the progamming part of the equation (even though it is harder and requires greater intelligence in my view); you have to bet on the service side of things and work on your people skills. Good communication skills will help, as will a better grasp of basic grammar and a spell-checker.
Your CEO shipped your job to him for the shareholder.
Can't really blame the other guy now... right?
We've always been at war with Eurasia.
And who will buy these new cheaper products when they are on Wal-Mart welfare? Short-term you may be right; long-term your strategy is called "shooting yourself in the foot."
You need a robust middle-class in the U.S. unless you just intend for the U.S. to become a third world labor market.
Is that your purpose, you cheap labor republican?
And Racism != Cultural Bias. Relationships between coworkers, between superiors and subordinates, and between employees and customers, all become substantially easier when they share a cultural frame of reference. Granted, engineering and other technical tasks are culture-independent, but (and this is important) only after a fully mutual understanding of the nature, purpose expected results of the work have been established. Cultural barriers can make those a genuine PITA to understand.
I have worked with many dilligent and extremely competent technical people from all over the globe. One extremely sharp fellow I worked with, when he was fresh off the boat, was given the task of putting together a UI for a set of data tables. His design and aesthetic decisions were appalling---from the point of view of our American customers. So I showed him an existing, well-liked design and told him, "Do it like this." He did, and it was excellent, as was all his subsequent work. Why? He got the cultural clue he needed to respond to his customers.
Again, race != culture. Cultural difference can cause a huge barrier even when race is totally irrelevant.
This is not my sandwich.
What we need to understand here is that tech workers have experienced in 4 years what it took 80 years for auto workers to experience.
Job starts out as highly technical skill relegated to a privileged elite of the working class.
Job gets automated and simplified, pushing skillset availability to more and more people.
Job gets outsourced to placed with cheaper labor.
It's not the fault of the Indians that our tech jobs moved there, just like it's not the fault of the US Southerners that our auto jobs first moved there from the north, or the fault of the Mexicans that they moved there, or the fault of the southeast Asians that they moved there.
This is how capital works. Whoever can be best exploited gets the contract. Do you have no labor laws, a brutal dictator that puts down unions with bullets and tanks, and a crushed, oppressed populace willing to work for pennies? Well, then, sign up, because you're ready for investment!
India is getting the US tech jobs. They won't have them for long, because they have a pretty well functioning democracy, strong labor laws, and all the things that corporations prefer not to have to deal with. Plus, these tech centers are usually run like white collar sweatshops, and as soon as people there start to organize and form unions, the outsourcing will high-tail it out of there to somewhere a little less problematic (ie, free).
That's how things go, and I'm as against free trade as anyone, but the idea that you can stop it with protectionism and a "Buy American! (tm)" attitude is ridiculous. Look at how far that got the auto industry.
The only way to change the face of outsourcing and globalization is for the AFL-CIO to get off their asses, and stop sending millions to the Democrats (who have sold them out over and over), and start investing money in union movements in the countries where the jobs are going. If corporations are going to move a job somewhere else, we need to make damn sure that the new people they employ will have a good wage, decent hours, a union, and a safe, sane working environment.
Will the mainstream unions (or tech workers for that matter) ever start supporting overseas labor movements? I hope so, but I don't have much faith. Everybody's too wrapped up in this xenophobic, protectionist BS that won't get us anywhere.
We also have to look at IT as far less "special" than we thought it was. We are not the gifted wunderkind of the world. We are not the digirati, forever sipping lattes and controling the world from our laptops at the beach. We are nothing more than skilled labor, working folks who will be screwed over by CEO's and their profits, just like everyone else.
Once we realize that, then we get out of the dream world we've been inhabiting for way too long. And that's when the real fun begins.
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.