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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?"
Folks..
Lets not kid ourselves here, the poor developers in India are exploited. The average salary is around $390/month, the kids down at the local fast food joint here in the US make more money than that. Sure the cost of living is a little lower over there, but things like books, computers etc, still cost the same or more than they do here.
I've worked with several out-sourced Indian teams, and to be honest... you get what you pay for. Just like everywhere else, they have good programmers and bad programmers. Unfortunately, the nice people in India have a tendency to what to "please" you, so instead of giving you accurate, clear-cut information, they tend to tell you what you want to hear.
They also have very little motivation, unless they are working for a big company like IBM, which has a reputation for a solid career, most developers aren't going to pull the allnighter or get the job done to meet the deadline.
Out of about 30 code reviews I've done for Indian teams in the past month, I would say I've turned them all back for one coding mistake, bad design, or flat out not fixing the problem. The quality is poor.
I've also spent time building teams in India, and its been pretty much hit and miss. Some teams do great work and are very successful, other teams spend their time trying to negotiate to do less work and have longer times to complete projects, to the point where we've just dropped Indian teams and finished the work ourselves.
Outsourcing costs more than its worth, better off hiring some students and getting two or three good developers vs. 20 bad ones in a different time zone.
People want something for nothing, and are willing to enslave others, then justify it to themselves because they're "saving" these people from poverty.
Only one place those goddamn cost cuts are going. Into the CEO's pocket.
We need to cap CEO salaries to something like 4 times what their best people on the ground earn. Don't think it can work? Check out Korea's ship building industry.
Capitalism and a "free" market are all well and good but it's not a perfect system and there do need to be controls.
These posts express my own personal views, not those of my employer
It's not ironic. It's economics.
Cyric Zndovzny at your service.
1. Some "consulting firm" is involved in a study instead of some non-profit organization.
2. When that firm is Gartner, who've been known to make all kinds of outrageous claims to get publicity.
3. They come up with nice, easy numbers like "Gartner Research believes a drop of 45% in India's share could happen in the next two years." Anyone who've done any research or studies, knows that numbers ending in 5 or 0 don't have special meanings in reality. The only thing that it matters to are readers, especially PHBs. What this suggests is that Gartner just pulled some number out of a hand to get more publicity, again. 45% is much easier for a PHB to rattle off than 73% during a meeting.
I have no strong feelings about this "news" either especially coming from a source as unreliable as Gartner. The trend is probably true but the number is probably bogus.
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The truly rich are a small portion of the American population. You blame them for the global inequality that exists, yet you and the other 295 million Americans fail to do anything to truly limit their influence.
Chances are you're wearing cheap, imported clothes made in the same sweatshops you're here speaking out again, bought at a WalMart owned by the rich people who you are blaming for poverty.
If you want results, you'll have to actually take a stand. Perhaps buy a sheep or a cotton tree, grow your own wool and cotton, and make your own clothes. Others would have to do the same. Bitching here will have very little, if any, effect.
Cyric Zndovzny at your service.
I've been working on a little theory that the whole outsourcing phenomena is reflective of a much deeper economic problem that's been developing in the U.S. over the last 20+ years.
The last great bout with price-inflation in the U.S. was in the late 1970's, after Nixon cut the dollar's theoretical gold-peg (theoretical, because only foreigners could redeem dollars for gold), and while the economy was absorbing all of the dollars that'd been "printed" to pay for the Vietnam war.
Paul A. Volcker, chairman of the Federal Reserve from 1979->1987, solved the Inflationary crisis of the early 1980's by hiking interest rates to obscenely high levels. His entry in the wikipedia says that inflation was reduced from 9% in 1980 to 3.5% in 1982. The cure wasn't easy, however, as it induced a recession and much joblessness. It was thought that Reagan was going to be a one-termer.
Anyways, today is like the 1970's all over again. We've had tons of newly printed money spewing out of the government since about 1995. First it fueled the dot-com bubble. The government opened the money-faucet even wider after 9/11. The effect of having more money in the economy is that prices go up for scarce items with high demand. Hence we have home prices that seems to grow without end, and the price of oil going through the roof.
The difference between the 2000's and the 1970's is that Giant Corporations seem to think they have a way out of paying American workers the increased wages price inflation forces them to demand: outsourcing.
Remember Little Boy George's hundred-billion $ economic stimulus package that got passed soon after 9/11? In decades past, Americans (er, USians) would've taken the money and gone out and bought products built buy other Americans (USians). Those producers would take their profits from all the sales and use them to invent new things to sale, and new American factories to build them in. Closed circuit, stimulus gets recycled in the economy over and over again.
In the new system, Americans take their economic stimulus to go out and buy stuff "made in china" And profits from that sale allows chinese entrepreneurs to go and build a new factory in China. Open circuit. So Georgie Boy's stimulus package went around once.
There's nothing wrong with trade, so long as it's a two-way street. But at least in the last 4 years, Americans have been buying goods from China, and the chinese have been lending the dollars they've made in the sale back to us, to pay for our illustrious leader's silly little jihad against self-induced terrorism (See Harry Browne's When Will We Learn [part 2], and his other 2001 articles for what I think is a lucid explanation of how the U.S.'s foreign policy has lead to the problems we face today).
Getting back to the subject at hand: the primary problem is not that there's a trade imbalance, but that the Federal Reserve's willy-nilly printing of money allows the imbalance to grow much much larger than it ever could otherwise. In hard-money times, if China accumulated an excess of dollars, those dollars would become worth less in world trade. Chinese products would become more expensive for Americans to buy, and American products would become cheaper for the Chinese.
But as it has been, the Chinese pegged their currency to the dollar (hence, no relative adjustment in the value of the two currencies), and that was just fine for Georgie, 'cause the chinese bought plenty of U.S. bonds to pay for his silly little war.
I think i'm rambling now, so I'll quit soon. My main point is that Giant Corporations are outsourcing today to hide rampant 1970's-style inflation from their customers.
Outsourcing is also done to prevent the natural "leveling of the playing field." In a closed-circuit economy, if no one want
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The issue here in software programming which is skilled labor as opposed to who has the fanciest manufacturing plant.
It's a fallacy that electronic hardware manufacturing does not require skilled labor. Sure the people running the machines don't require alot of skill. But essentially they are the equivalent of call center people. Those factories also need:
Technicians - Maintain equipment
Mechanical Engineers/ChemE/MatSci/EE - develop machine processes, techical documentation, troubleshoot complex problems
Industrial engineers - layouts, material flows, production improvements
Business educated people - manage supply lines
Other college educated - managerial, training, quality,etc.
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Oh yeah, speaking about their English accent which probably might be their third or fouth language, how many languages can you speak without accent? Stop looking down at the third world countries. You are not any better....
Okay, I have to address this one. I have quite a bit of experience with Indians and their somewhat limited mastery of spoken English, both from tech support as well as a TA I had at an American university.
First, I'll say this: often their grammar is superior to the average American's. I have no doubt their written English would exceed that of many American's. And I fully understand that English is probably not their primary language. You ask how many languages I speak without accent. Just one...English. I can speak broken Spanish with what I would assume is a horrendous accent. But do you want to know something important? I do not try to offer technical support to Spanish speakers, or try to teach at a Latin American university.
To be fair, most English-speaking Indians speak much better English than I do Spanish, so the comparison is not absolutely fair. But if I cannot understand them, the effect is the same. I am actually impressed by the number of languages many non-Americans speak. But if you are trying to teach a class at a university in the US, or trying to offer tech support for a US company, and you cannot be understood, you are not accomplishing the job you are being paid to do. This actually bothers me less in the tech-support example, because I can always just call back later and try to get a better representative who I can understand. But in the education example, it is often a choice of staying in the class and hoping you just don't even need any help from the instructor (or ever need to understand what they are asking/telling you), or dropping it and hoping you can pick it up later. And hoping that you aren't in the same boat later. And you're paying a lot more for those credits than you are for tech support.
And it isn't necessarily racism. I've had a white European (German, specifically) TA I could barely understand as well. And if companies switch to Eastern European call centers, the problem will likely be the same. I cannot tell the color of your skin over the phone. But I CAN tell if I can understand you.
And yes, if I went to a street in Bangalore and rounded up 10 guys, I'm sure 9 of them would be smarter than our president. Hell, one or two might even be more effective speakers (in English) than our president (ever heard the guy talk?) Most of us are not trying to say than Indians, or anybody else from the countries being outsourced to, are stupid. Just that their English is damn near incomprehensible.