Slashdot Mirror
Growth in Indian Offshoring Slowing
quantumstream writes "CNN/Money is reporting that high wages are causing some software companies to look to other countries for outsourcing, including Eastern Europe and several other SE Asian countries. Gartner Research believes a drop of 45% in India's share could happen in the next two years. Is this the beginning of the end of the dominance of India in the tech offshoring market?"
From TFA:
"Four years ago, a typical call center employee would have earned between 5,000 to 6,000 rupees ($114- $136) a month. Now it may be up to between 7,000 to 9,000 rupees ($159 - $204) a month," he said. "The rise in labor costs isn't significant yet. What's more important is that these increases so far have not been passed on to clients in the U.S."
Who cares? The key here is the companies are still looking at OFFSHORE outsourcing. Doesn't matter from the U.S. "Average Joe" standpoint what country it ends up in. It's still "somewhere else".
disclaimer: I work in the outsource call center industry. Although I am not fully opposed to offshore outsourcing... it's disheartening to see people you know getting laid off so that their job can be sent overseas for cheap labor.
"why don't you just slip into something more comfortable...like a coma!"
http://www.smh.com.au/news/icon/attack-of-the-botn ets/
http://www.wilmingtonstar.com/ Basically, we're moving out of the (Indian) frying pan and into the (Eastern European) fire.[Fuck Beta]
o0t!
malaysia has a large number of english-speaking workers ready to take those Indian call center jobs that are getting too expensive...
Life imitates art. Or at least Outsourcing.
*** Sigs are a stupid waste of bandwidth.
When they say "Southeast Asia," are they talking about Vietnam? I can't think of anywhere else where they have a large residue of English speakers.
The Philippines - not a residue, but native speakers along with Filipino(Tagalog).
I'm a consultant - I convert gibberish into cash-flow.
Are they also taking into account changes in exchange rates when they are calculating the dollar cost? The figures stated look like they are basing the dollar cost in todays dollars(since the ratios stay about the same), but could it be that 6,000 ruppees buys more dollars now than it did 4 years ago?
Monstar L
Canadian wood? I wish. The tariffs on Canadian lumber are massive. This is a blatant transfer of money from the American home owner (who has to pay more for lumber) to the American forestry industry. It's a fine example of hurting the many for the good of the few, and why trade restrictions both suck and blow.
Our system of state-capitalism the best system known by the mainstream, just as Kerry might be thought of as the best alternative to Bush. Here's a kind of technical sketch on various systems.
Uh, wrong.
Firstly, the poorer aren't getting poorer. They are getting richer in fact. It's just the richer are getting richer faster (but not fast enough to negate any increases from the poor due to inflation).
Secondly, the US is an ultra-liberal interpritation of capitalism. Most other capitalistic societies offer a decent welfare system and universal healthcare while managing to produce good growth. The UK is a very good example of this - with massive investment in the last 10 years into the universal healthcare system which is ironically most likely the most universal since it covers almost everything, including drugs, which many other countries require a substainial contribution to.
The UK is still managing to put in very respectable growth and emplyoment figures, especially when you consider population growth is so low and its main trade partners (in the rest of the EU) are currently stuck in a quagmire of over-unionisation and outdated red tape and state ownership.
Lately I've been finding myself routed to South America for customer service (Motorola for one). I hope this is a trend because the general knowledge, english skills, politeness, and service is LIGHT YEARS above India. When I get routed to India for IBM or Dell, I'm more likely to get hung up on. My South American service with Motorola was so good I started asking where they were from. Argentina and Costa Rica. I guess the front line is Argentina and the actual support is in Costa Rica. They were great to talk to and if anything, overly polite.
Not sure about the rest of your comment, but it sounds mostly like anecdotal evidence and opinions tend to be subjective. I disagree with this particular excerpt from your comment, though.
Convering salaries directly my multiplying/dividing by the exchange rate without taking into account the Purchasing Power Parity is plain ridiculous. To sum it up for you, PPP is used because:
The PPP measures how much a currency can buy in terms of an international measure (usually dollars), since goods and services have different prices in some countries than in others.
Goods and services cost an order of magnitude less in India than they do in the US. For example, a loaf of bread costs about Rs. 10-20 (about 0.25 - 0.50 USD). Monthly rental for a pretty spacious house would approximate to Rs. 10000 (about $250). Those are rough figures, and will differ by region, but a single software engineer (for comparison purposes, since I'm single too) could live *comfortably* in a metro city like Bangalore for about Rs 15000 (including food/rent/groceries/booze/other_expenses). That works out to about 50% of his average salary of about Rs. 30000. Ofcourse when you convert his salary to USD, it comes to only about $750, (which wouldn't even cover the monthly rent in most areas in the US) and causes you to gasp, go hyper and claim "OMG, they're exploiting software engineers" or "OMG they're stealing our jaabs by working for less".
In the end, the major cost saving for companies is *not* the lower salary (as you claim fast food workers in the US get), but about the *Exchange Rate*. Poorer economies have a lower cost of living than more developed counterparts, and hence have a weaker currency against the US Dollar. This multiplication/division factor allows companies to earn in USDollars and pay in Rupees (or any other weaker currency) thus widening their profit margin. So please ponder over these finer points before spreading FUD/incorrect information and basing other (consequently erroneous) axioms on an incorrect assumption. Thank you.
An Indian-American Hindu committed to non-violent thought/speech/action alarmed by the global explosion of radical Islam
Well if anything, it makes things even more expensive (for India) because 4 years ago, it was about 49 rupees to the dollar. Now it's about 43 rupees. The more you outsource, the more the excahnge rates rise, the less revenue Indian outsourcing companies get, the less lucrative outsourcing becomes, yada yada and yada.
As an Indian working in India, I've been screaming myself hoarse about this, and how America really doesn't have much to fear from outsourcing - because wages/costs/value of rupee is rising a lot faster than jobs/wages are falling in America. So eventually, say within the next 5 years, it won't be worth it to outsource to India. Now some people think that it just means things will be outsource to China or Kazakhstan or Sudan..but no.
1) China's GDP per capita is already much higher than India's. This means (in very inaccurate, general terms) that a chinese worker is ALREADY more expensive than an Indian one - coupled with a MUCH higher exchange rate - so the work will NOT be shipped to China.
2) It won't be sudan or wherever because India's main advantage is ENGLISH population. Sure they're not speaking as perfect as an American (debatable point actually), but there are more people speaking English in India, than in China, or the Philipines or wherever - in fact the World's largest selling English Daily is published in India - the Times of India (I'm not including a link to it because the f-ing site is bloated with spyware, and one of you poor souls might actually still be using IE!). There's that and the fact that India is 10-12 hours ahead of a US time zones. This is one reason for the efficiency - providing 24 hour customer service to Americans is easy if for 12 of those hours, your customer reps are actually just doing a regular 9-to-6 in their own country.
So again, there some particularly unique factors as to why India has been successful. Once our economy picks up, outsourcing on the *relatively* large scale will slow, or even drop greatly. Plus, in those 5 years, America will also move on in different ways (incomes won't rise or may even drop, yyou guys will find some alternative "growth" industry to keep you going, allowing retrenchment of unemployed software engineers/call centre workers, e.t.c).
My Favourite Meme
Poverty comparison
I have also visited many countries in Asia. When most of the people in a city live in homes consisting of partial concrete walls and corrugated aluminum (conditions basically considered homeless in the US) you quickly get a sense of relative living conditions.
D6 63 0D 70 89 81 BB 8E 7B 7C 5F 5D 54 EA AB 73
Not really the case.
1) The Gate Gourmet workers were British citizens of Asian origin (mainly Sikhs I think)
2) The part-time staff were temps employed through Blue Arrow, presumably legally resident and employed in the UK.
The Gate Gourmet staff went on strike at the use of the temps. This is was not the legal process for striking,as opposed to being illegal, they commited no crime but lost the legal protection they would have had if they had called a ballot. The management then summarily dismissed them(plus workers on holiday and off sick).
Staff at BA, who had worked with these people for years and many were relatives, then went on strike. Again this was not legal.
The outsouring issue here is the relationship between BA and GG, nothing to do with the country or nationality of the workers.
Real terms GDP per capita (GDP minus inflation and taking into account population growth) is actually mildly negative in the USA. However due to a reduction in the cost of some goods (due to outsourcing) the relative standard of living of the middle classes has improved slightly. At the lower end, where relief on federal income tax is meaningless as it is not paid and programs that provided benefit have been cut there has been an effective reduction in the standard of living.
"Any sufficiently advanced technology is indistinguishable from magic" - Arthur C Clark
Whether you're advanced enough to appreciate it or not, economics is a science. A complex one to be sure but some people understand how it works. Now, press the button marked "off" on the bright magic rectangle in front of you and read a book or two book on economic theory. Adam Smith would be a good place to start.
Deleted
"The top 1% of Americans own 40-50% of the wealth in America, more than the bottom 95% combined."
i st.html
:-)
Actually, http://tiger.berkeley.edu/sohrab/politics/wealthd
Looking at some real data rather than some made up data, we find the top 1% have 34% of the total wealth in America.
Also, there is a very interesting Stanford study that shows that these numbers massively overstate the wealth of the richest Americans because they are gross numbers. Bill Gates has $26bn of Microsoft stock. *But*, if he sold it he'd have to pay capital gains taxes. His "after tax" wealth would be a (still obscenely large) $18bn. If we assume that capital gains have been disporortianately earned by the richest then this skews the numbers quite considerabley.
Anyway... I'm not saying America doesn't have terrible wealth inequality, just that people have a tendancy to make up stats in this area
--- My dad's political betting
The opportunity to be better off (than your parents) is actually higher in many European countries than in the US, because decent education is free. The fact that I have to pay 50% or more of my income in taxes does not make it harder for me to get a better job, or to compete, because the rules are the same for everyone.
According to the CIA World Factbook, 12% live under the poverty line in the US, while in France (which has a significantly lower GDP per capita than the US) it is 6.5%.
Of course, the unspoken and unproven assumption is that we're on the other side of that curve already.