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Why Apple Backed out from India?
rmunaval writes "BusinessWeek reports an interesting article on why Apple might have backed out from India. The prime reason being, India has grown at a much more rapid rate than expected and is no longer the cheap destination for the companies. It grew at an astonishing rate of 9.3% last quarter."
Funny, back when there was so much lather over outsourcing everything but the CEO to India, a few folk mentioned that this might happen and were replied to that with 2 billion people it won't happen in our lifetimes. Hope you are all doing ok!
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Now India will feel the pain as jobs are outsourced to Asia and Eastern Europe where rates are cheaper! Pretty soon, people in Zimbabwe will be coding :)
http://psychicfreaks.com/The most likely reason that comes into my mind is a power struggle of some sort between management of that company. I bet someone was sold on an idea that moving jobs to India would cut costs, but then someone else was in the opposite camp and we just saw the result of that battle. Was any manager fired from the company within the past month?
You can't handle the truth.
Apple is a publicly traded company and as such here's what's important to them.....
Making money for their stockholders.
That means sweatshops for iPods and doing things like heading down the dangerous path of closing off the Darwin source for development so that OSS geeks can't find a way to make OS X work on commodity boxes.
Apple is going to do what is best in their corporate interest. Surprised? Don't be. It's business
I thought the hippies were all about india, them being "like all about peace and love and like totally in touch with the universe man".
I mean, Ravi Shankar taught the Beatles to be smelly no-good useless non-contributing waste byproducts of society.
Am I the only one who sees this as utterly fascinating?
In a way US corporation going to India stimulated this growth. It is interesting to me that India has changed because of outside investment but the way they have changed has made them less appealing to those same investors.
Globalization is bitch, isn't it?
I don't give a damn for a man that can only spell a word one way.
Mark Twain
Well looks like work is finally going to be coming back to the UK
I never understood moving stuff like phone centres and manufacturing away from the customer-base.
Sure the labour might be cheaper and all (offsetting transportation of the goods ) but you end up taking out of your control aspects that keeping it in-house provided.
After the batch of Indian call-centre workers stealing UK account details and selling them I am glad such centres are comming back home
They were paid a living wage (or something close to it). The only difference is that a living wage in Cupertino, CA is WAY higher than one in Calcutta or Bangledesh. Heck, the living wage in Cupertio is WAY higher than one in Kansas City, MO or De Moins, IO.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
Doesn't the part of knowing when to cut and run imply that it was the right decision? The way I've always looked at outsourcing as an engineer is that you want to have people of varying backgrounds in any large organization. I think that India and China are part of this along with the US and others. Other countries will come into the fold as well, but I think that it'll be for the better of the company to have multiple groups with different backgrounds and experiences.
Now, it sounded like this venture was purely for help desk, which I think is being performed at a commodity level nowadays (in the sense that all service seems to suck, given that good service costs money). In that case, moving to wherever it is cheapest is probably a good move. Though maybe they'll just add to the number of workers woring 15-hour days in China.
-dave
/., where "Apple and Google provide Iran with nukes" will be refuted with "But Microsoft is a convicted monopolist"
What we are at this point seeing are the first steps in a cycle of balance.
India has been in a horrible financial condition. It's got large amounts of debt and it's trying to work it's way out of them. This comes with financial assistance from the international community. You have many of these poorer nations not able to afford the subsidies anymore for farmers , which means more people migrating to the cities for the promises of these fantastic tech jobs.
Problem is the cities aren't ready to handle all these people, and the government isn't ready to handle all this displaced workforce. Result? SLUM TOWN!
Uh Oh, now the international community is on nations to provide a base level of support for their people. They don't want sweat shops and shanty towns of workers paid pennies on the dollar of what others get. India has to rely for a good deal on it's own people to solve this problem for themselves because they don't have the money to. If they want to they have to start taxing these companies more, which means.... costs go up. On an individual level? How to get out of the slum, you have to get paid more so you can afford to live there, you demand more pay.. they demand more for your contracting.. Costs rise...
Suddenly all those cost benefits from outsourcing start evaporating.
From my personal perspective.. yay. This is far more effective a way to "keep jobs here" than trying to legislate some mandate for companies to do so. In this case, the "free market economy" is actually doing it's job.
I'm a fiscal conservative, it's a pity we don't have a political party anymore
Actually I wouldn't be surprised if they were getting a living wage all along. Problem is that the living wage went up.
Not until the Indian workers train their Nigerian replacements.
What's a "reason being"?
"India has grown at a much rapid rate"? As opposed to "much slow rate"?
It grew 9.3%? As in, the land area expanded?
If I remember right, the cost of living in India is still something like a tenth that of the USA. A meal that would be ten bucks here costs a buck there. Now admitably this is partially due to an average quality of life loss, but I've heard of a number of retirees on fixed incomes moving there because it costs half as much to live there as they're accustomed.
I don't read AC A human right
/dev/random
Even if my company treats me like a god, I'm going to leave for a 25% pay increase.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
This should have been obvious to everybody, but what happens of course is that as companies hire their workers in what are essentally third world countries and pour money into the local economy in the form of foreign capital, the local economy picks up and suddenly the price of labor in the market increases. This makes the whole outsourcing thing a bit of a rat race as everytime you find some suitable location with cheap labor and build your factory/office there, the cost of labor begins to rise until it's hardly worth the trouble of outsoucing in the first place. Then you have to look for a new place with a new supply of cheap labor to start the process all over again.
The only way to prevent this from happening is to move into countries with brutal kleptocracies that will insure that the wages you pay never stimulate the local economy too much and the strong armed government thugs keep the people from setting up any sort of fair or equitable government. Your best bet is for those countries where two ethnic minorities have been fighting for centuries over some long lost or stupid reason. The downside is that it's very hard to find suitable working conditions in those type of countries because you generally have a big security problem and basic services like power and phone can be hard to come by (and unreliable). Also, you'll have to bribe government officials like crazy to avoid having your business raided, however in the long run it'll be cheaper than paying a decent wage to the workers. If you're really commited, you can surreptitiously fund one side of the conflict and give them enough of an upper hand to overthrow whatever government the country currently has and set up your own puppet government in its place. The only problem with this is that the puppets often try to sever ties with you once they get what they want (cheap slave labor and a country to call their own).
I read the internet for the articles.
[redundant use of article].. actually, redundant remark..
At one time, unions were sorely needed in the U.S. Workers had no rights and were thoroughly abused by rampant capitalists. The unions did a good thing there.
Then the unions kept going, demanding more and more. Now in some cases, the work doesn't get done at all because the union guys are too busy taking breaks, waiting for wacky regulations to be met, demanding pay raises, waiting for a seventh guy to show up before they can move a chair... all that unbelievably abusive stuff that unions do now.
So while laborers in third world countries suffer under miserable conditions, American unions keep fighting for higher wages and, well... less work. Is it any wonder American jobs are flying out of the country?
If anyone is interested in a solution to this seemingly intractable problem, there is one and only one: for American Unions to stop fighting for ridiculous benefits in the states and instead to focus ALL of their attention on third world countries.
If Americans stopped getting lazier and if third world workers started getting some equity... presto... these enormous disparities between our workers would start to diminish.
Lost: Sig, white with black letters. No collar. Reward if found!
Not until the Indian workers train their Nigerian replacements.
The problem with this is that we're running out of areas that have decent education standards, easy access to raw supplies, and, perhaps most importantly, are stable yet have low wages/cost of living. India was fairly unusual in that they had decent universities/colleges(though not enough of them) churning out qualified graduates, a large labor pool, stability, and a cheap cost of living/wage range that encouraged importation of work.
Areas like Nigeria haven't solved these problems yet, thus raising the costs of locating there, even if their labor is dirt cheap. When you have to import the machines, supplies, and labor to build the factory and trainers to teach them how to operate the equipment, costs rise. It'll be a while before they have enough people skilled enough to replace indian programmers.
Not that I object to businesses building factories there, as providing jobs, income, and training are some of the best ways to improve the above. People with paying jobs generally don't have much free time available to go play rebel.
I don't read AC A human right
And to can compare what is happending in Indai to the "Dot Com" era in the US. Lot's of people entered the tech market for the money, many jumped jobs every 6 months for better paid jobs. If you were in anyway good technically you could command a premium wage. Sounds famaliar? (Then the arse fell out of the market).
Indian developers in India are basically doing the same thing, they're taking advantage of a tight labour pool. And the really good developers/techies in India are getting good wages and aren't likey to jump ship to some "new" US (or European) company looking for low-cost India programmers.
For example I know of a manager who was told to hire the 3 new employees in India. He was was there for 2 weeks, settled on 3 lads and on the start date only one showed up. I'm sure the other 2 got better jobs based on the job they had in hand, or got headhunted.
I've been saying to others that at the moment I suspect that any company trying to start an India technical operation at the moment will have a hard time of it because all the good technical people already have good paying jobs and the only people they'll be likely to recruit will be medicore. Unless they pay good wages, and lead to an expectation of a long-term job.
I think at the moment if a company wants good staff for less money they may do better looking at locations inside the US such as Salt Lake City and other mid-Western states.
I have a very small mind and must live with it.
-- E. Dijkstra
How much is a living wage? Is it different if I'm single and live with 3 roommates? How about if I have 12 children (6 with "special needs")?
Should I expect to have to provide my employer with more work (or more valuable work) for the higher "living wage" I need for my family situation?
Because I thought I was supposed to get a "working wage" -- based on the value of my work.
Your arguement does'nt work. Supply one counterexample.
Even in the case of unskilled labor the worst kleptocracys are not drawing much investment (investment is pulled out as fast a feasable). Look at what happens when they steal the foreign investment via nationalizations. (typically they lose the industry just nationalized due to lack of capital to keep it running.)
Preemptive counterarguement: No the USA is not a kleptocracy. Most built in thievery in the 'first' word is via taxation and payout to the choosen (e.g. in the USA Haliburton, the NEA, government employees). As our taxes are lower and 'couch sitting, check cashing' classes less entrenched the USA has most of europe beat on this test (the exception being Ireland, the low tax, rapid growth center of europe).
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Honestly, people give China all kinds of shit (rightfully so) for human rights violations, but no one raises a peep about the Indian caste system.
there is no need to sign your posts. this isn't usenet. your username is right there above your post. stop it.
Er, not quite. India is about 15–20 years behind China, as far as the state of economic development goes, and this includes outsourcing from the West. The reason you think China is trailing India is that India's boom coincided with the IT bubble in the States, whereas China's has been ongoing for two decades longer; India's development was therefore much more visible to you in your particular (I'm assuming IT-related) industry.
And now, a PSA from David Lynch.
That isn't saying anything much about the society. Racism has been "illegal" in the US for about the same time now, but if you think it doesn't exist in the society, then you're probably blind or white (or both). (Cue KKK, discrimination lawsuits, etc).
if you like them and they add more value to your company - make sure they get paid.
it stuns me how self centered companies are - the invisible hand is great when it costs others their money, but it is bad when it costs them money.
hypocrites!
the employees deserve the higher wages - you can pay it or let someone else do so...
that's *YOUR* choice, not theirs. should they do less for their family to make *your* life more convenient?
get real!
how can companies who can't even spell loyalty feign contempt when others aren't loyal at the cost of doing less for their families?
It surprises you that money is the overriding concern? It is most likely that Apple is putting those jobs in Cupertino, CA, and the remark about efficiency is exactly that. Apple may find it more efficient to have the software engineers in Cupertino and the cost savings of going to India isn't worth it. If it is worth it, then by all means Apple should be there. Apple has outsourced much of its hardware manufacturing - it made sense to do so. Apple's management has a duty to its shareholders first and foremost... everything else is and should be a secondary concern.
Further, this isn't about outsourcing the software side - this is about Apple setting up another in-house development site. The arguments pro/con outsourcing is mostly irrelevant here. The discussion here also wasn't about the call support centers of which Apple runs a bunch from a variety of countries.
India is a REAL free market (outside the social Castes, but they're not legal anymore, kinda like discrimination isn't legal in the US anynmore) and they are starting to catch up with the US standard.. the joys of schooling in the USA then going home to being dirt poor don't last long. The only reason China is still cheap is the govt controlled labor market over there. (Work or be shot! and forget about Unions, funny hun) There was a front page article in the Wall Street Journal last week about how housing prices in some big chineese cities (not Hong Kong!) are outstripping the pay of even the people with masters and Phd degrees! And the Local govts are complicit with developers to sell off the public housing driving the costs higher. In "communist" China!!! Doesn't sound very communist to me..
And by having a US standard of living you mean the country has to have good burger joints?
In other words, let us exploit you, it's for your own good :-)>,
This encourages governments to be efficient, but also creates a race to the bottom on standards. "Exploitation" is more complex than good/bad. Wealth is more than money. A lot of the "wealth" from "exploitation" comes for hiding real costs. Creating huge negative externalities which aren't measured and thus removed from the bottom line.
Like all pain, suffering is a signal that something isn't right
As far as generation the "hug the trees alternative energy" stuff is very nice for villages with minimal consumption in the middle of nowhere.
It is not suitable for the real stuff. All big outsourcing shops in India are forced to have UPS capacity sufficient to handle all of their computer systems including desktops and not just portions of the datacenter like in the US or Europe. This amounts to be a parallel power grid. In most cases this hits the worst sour spot of power generation - mid-size from cold. That is phenomenally ineffective and costs a fortune, but they have no choice. All those hired hands have to keep on typing.
As far as wireless networks are concerned they are once again utterly irrelevant to the outsourcing cost.
The problem with outsourcing cost is network capacity into India which is oversubscribed and is only getting worse by the day. There is no way to alleviate this with "next gen wireless". The only thing to help here is new fiber around the gulf which noone is even thinking about putting in the ocean floor now.
Baker's Law: Misery no longer loves company. Nowadays it insists on it
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IBM is largely a services company, always has been, and even more so now after the sale of their PC division. The vast majority of their staff are consultants for hire. For IBM it makes sense to invest in India because the Indian market for consultants is booming both because of the outsourcing craze, but also because the Indian economy is booming and homegrown IT companies are getting to the size where they're becoming a large potential market for IBM. To service that market, IBM needs local resources. Establishing research centers is vital, because it allows IBM to grow and retain staff that would be hard to keep in a pure consultancy play.
For Apple, on the other hand, there are few benefits to hiring people in India, as their primary revenue source is hardware/software and consumer products/services (like iTunes), none of which require a large presence on the ground in the local markets.