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The Future of Outsourcing in India
aaditeshwar writes "Economist has an article on the current and projected state of outsourcing IT and other business processes to India. The biggest problem seems to be that the talent pool of skilled workers will not able to keep up. Currently there are about 700,000 people working in IT and outsourcing, which is likely to grow up to 2.3 million by 2010, but only 1.05 million new graduates will qualify from local colleges in the next 5 years leading to a shortfall of 500,000 workers! All this despite the fact that almost 2.5 million students graduate in India each year." From the article: "In IT the growth in Indian exports is expected to come both from the software market, and from 'traditional IT outsourcing'--such as the remote management of whole systems, a market now dominated by the big global IT consultancies. This is expected to rise from 8% of Indian sales now to about 30% in 2010, while software-development's share will fall from 55% to 39%. In business-process-offshoring, the big industries will remain banking and insurance. But rapid expansion is also expected in other areas, like legal services."
Eastern Europe has a lot of IT/programmer types.
Since some of them aren't employed, they're part of the burgeoning spam/trojan/virus/worm market that has been growing over there. Organized crime too.
Once the Companies have run out of Indian workers to shift jobs to, they'll move to Eastern Europe sooner or later.
And by Eastern Europe I mean former Soviet Block countries & their neighbors.
[Fuck Beta]
o0t!
It is ALL outsourcing. Why separate IT from, say back-office banking, insurance and other tasks...
Heh, or are they trying to distinguish "IT" from trivial paper-pushing.
This issue is a bit more complicated than you think.
When they run out of people to hire in India, or when workers in India are expensive relative to workers in some other country, they'll move on to that other country - it's pretty much as simple as that. The quest for the most effective labour for the lowest price will never end.
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In my opinion (14 years of consulting), the India craze did cause a significant dip in rates for US people but even couple years ago we already were scratching the bottom of the barrel. I think the shortage of programmers is a global thing and caused by primitive immature tools and processes and outsourcing is not a magic bullet. My typical client cannot coordinate people across the room let alone across the ocean.
that they start outsourcing journalism to india
As far as I know (from cousins, friends, and general chat from India), there is still a strong demand for the outsourced jobs. Almost tens of resumes per open position, so the prediction of "short fall" looks to be based on shaky ground. There are so many factors involved: there is a large pool of current workers, not all positions require an "IT" degree, and that many jobs may not be created (may move to other countries, or be simply automated).
The unemployment rate in India is still staggeringly high, and the couple of million jobs that *might* be created will be quickly gobbled up.
I suspect that the industry agenda is to continue to have a huge surplus of applicants (or even increase the applicants to positions ratio), so that they can put a downward pressure on the salaries. I'd call it Walmart-ization of the IT (and non-IT) outsourced industry.
S
complains about the lack of programmer graduates from the US.
Does anyone wonder why few Americans want to take up programming any more as a career? There's no jobs for them - the corporations crying about a lack of programmers refuse to look to the US to hire any.
And when BPO hits the banking sector, you can kiss the security of your identity goodbye.
--- Grow a pair, liberals... stop letting the Republicans bully you!
And I've recently decided that my management was too expensive so Ive outsourced it to India.
We're in the process of hiring 100 Engineers from both India and Pakistan, with the plan being to bring them into Mainland China to work in the telecom industry.
:)
During our recruiting so far, we're seeing a yield of approx. 5% after all interviews and testing, but that is prior to them coming into the PRC. We've gone thru nearly 4,000 candidates since Sept.
For the record, I'd source domestically, but mgmnt. wants to curry favor with the home countries, so the burden to fit them in is on me. At least the bonus program is in my favor
I go through at least 40 or 50 resumes in the US (Metro NYC area) to find one person worth hiring. And these are resumes that have been supposedly pre-screened by headhunters. Resume counts mean nothing if those tens of resumes represent poorly skilled people.
I was an IT worker in India. I am Indian. Indian IT companies recrit all sorts of engineer i.e civil, mechanical, electrical, chemical etc apart from comp sci. Since most engineering students have atleast a common denominator of traits like analysis, rigourous coursework, maths etc. the IT companies know that they can train them in sofwtware with relative ease. Of course the CS grads get the more better technlogy to start with (says database. java etc) while the non - CS ones may have more maintenance, mainframe, testing kind of job to begin with. Most IT companies take grads and subject them to 1-3 months intensive introductory software training courses just like a mini college course. Check for example the infosys global education centre Also large Indian companies are in turn opening offices in China , Hungary etc to outsource the outsourcing.
I'm the network engineer for a company considering setting up an engineering / design shop in India. I just got pricing for a DS3 Internet circuit there. HOLY SPANDEX, BATMAN!
/constantly/, so you'd better plan on two of everthing for redundancy.
A straight E1 circuit (2Mbps) to the Internet is about $4000/month, and about $3000 to install. (All prices in US dollars) Not cheap, but not bad.
A 2xE1 (4Mbps) jumps to over $10,000 per month.
Once you hit DS-3 which is scalable in the sense that once you have the circuit installed ($17,000 one-time fee), you can go from 0-3 Mbps to start all the way up to 45Mbps, your rates go from $16,000/month for the 3Mbps up to over $80,000 PER MONTH for the 45Mbps.
Depending on what you're doing there, the straight E1 isn't that bad, but you really can't pump that much data through it. The ds3 prices are through the roof. Plus, I've been told that the infrastructure there is so bad that shit fails
Now if you're truly outsourcing all of this and therefore feel that you don't eed to worry about the sunk costs, fine, but when you pick the cheapest-of-the cheap bid, that most likely means that they have a crappy DSL out to the 'net that goes down at least once a week for 24 hours at a stretch. "sorry, couldn't {manage your network | take your callcenter calls | upload those CAD files you REALLY REALLY needed by 8AM the next morning} because our local loop was down because some dude running a backhoe trying to upgrade our highway system just yanked our a thousand strands of fiber."
Oh yeah, there's also the problem that India gov't managed-monolopy telcomm says that you can't terminate out-of-country VoIP calls into the Indian PSTN. So now you need either two phones on every desk, or softphones, or ??. Again, two infrastructures for them to manage. (If, of course, they feel that their wageslaves^H^H^H^H^H employees need to be able to call locally while at work.)
My guess is that as these hidden 'costs' start to surface, and as the cost of labor increases in India, people will start to move on to the next cheap area. Lather, rinse, repeat, wait a few years, and everything balances out (or so the economists in the group would say??)
Every outsourcing story I've heard has ended in disaster, overrun budgets, wasting thousands of dollars
Actually, that's the case for most development projects, outsourced or not.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Anyway what do you folks say? ------- Apologies for typos and bad formatting - NO TIME.
having, in the past, worked with indian call centers, [IE flying to india, and training staff to answer the phones for a previous employer.] The reason I consider Indians a dime a dozen is because they were.
.. EVERY SINGLE ONE had certificates that said they met all three requirements. [IE Language skill schools certification, degrees, resumes listing years of call center work.] Around the 700th interview, we figured out something was wierd ... the people who had passed english fluency exams, couldn't answer simple questions asked them in english, like 'how old are you' or 'what is your name'. The people with degrees in computer science, had trouble turning on the test PC we had set up, the ones that could turn it on, had problems opening up ACT, or answering a list of simple technical questions we had: [how can you tell if a cat-5 netword card is working, how do you start up a web browser, how do you ping another computer] let ALONE any programming questions. The ones that had call center experience, were having problems transfering a call to another phone, putting people on hold, and dialing another country.
.. we were mystified, but skeptically drudged through more interviews, somewhere around the 1200 mark, I personally got a guy who spoke decent queens english, was technically compatent, but had only 1 call center job. I asked him, politely, to tell me why i should hire him over the 1200 people i had spoken to so far. His answer was simple :
.. thats FIFTY .. people who could pass all the tests. [we had been expecting to get 1k easily]
.. but at least I know he speaks english, really has his degree, and could actually DO the job.
Literally, we had 10 staffing agencies give us over 10k people to screen. The requirements were as follows :
Must speak english fluently,
Must have a degree in computer science,
Must have call center experience.
out of the 10k that showed up
All in all
'I am actually fluent in english, and I really have my degree - I may only have 1 call center listed on my resume, but I actually worked there - and you can call this number [which was in the UK] to verify that I was employed.' He then went on to tell me that he was SURE that lots of people had impressive references, and said they had degrees etc, but that in India - there was a whole black market of places that would sell you certification for whatever you needed to get a job.
out of the 10k people they sent us, we barely got 50
My personal favorite was a guy who MUST have been 80, who repeated 'Yes, I am perfectly fluent in English.' over and over, no matter what we asked him. [Including when we told him he could leave the interviewing room.]
The impression we got from the people we hired, was that we were paying very well for a call center, and that many people figured that we would be hiring like any other call center - basically, anyone that breathed. So they just did what they always do, get papers that could be attached to a form that is sent to the US showing they were qualified, and apply for the job.
Apparantly MOST US and British companies don't actually do what we did. They just hire a local guy to staff their centers for them. Who normally train folks to just read a set of scripts. Anyone will do. [Normally this fellow will take bribes from people desperate for work - to give them the priveledge of working.]
So when you ask what makes me (personally) think that a guy in a US college class would be more productive, My answer is that at least I have a very high certainty that he really is trained in what his degree is in, and if I am skeptical, I can verify the college is accredited, and call them to check his facts. I can call his previous employers, and although leagally they can't tell me if he was a crappy worker, they can at least verify that he DID work there, and the dates he worked there, how much notice he gave, and what his salary range was.
He may not work as hard, as some guy in india who REALLY needs the $2 a day, and he may not be as cheap
--Ne auderis delere orbem rigidum meum, non erravi pernicose!
The indian education system is still a fairly pure meritocracy.
For example, in the US, we might allow folks who make an "A" to go to a special school.
And once enough "A"'s had applied, the school would be full.
In India, you would take a test, and the top 70 scorers get to go- even if 180 of them made A's. Not first come first serve- the top.
I have been told that that concept starts early- by the end of highschool you are either going to a trade school, going to college, or ineligable for further education- all the basis of testing.
It's very harsh and a lot of high school students commit suicide when they realize their life is over before it started (they should probably come to the US instead of killing themselves- here if you have drive you can always succeed).
But that means, that the people who make it through college, are smart and exceedingly driven compared to a similar groups of americans who were not culled so severely.
But it's like a mono culture vs a sexual culture.
If the environment is well defined, they can master it. Once we are thrown back into an undefined environment, it may be different.
But do -not- under estimate indian programmers- a lot of them are competent and they are getting experience now.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.