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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."
Is it only me that gets frustrated when my calls are piped over to India? I'm all for globalisation and outsourcing but when basic customer service suffers it serves only to frustrate customers, or me at least.
I've lost count of the number of times I've literal just given up and hung up while trying to do simple tasks over the phone like notify change of address or query a bill.
The 3 companies I've had particular problems with are Amex, Dell and Apple.
What a retarded non-sequitor post. It's not even Apple making the excuses, as they haven't offered any and didn't write this article.
"The turnover is high, and the competition for good people is strong."
My company is currently using Indian developers to augment our in-house staff. Every time the offshore company presents someone to us that cuts the mustard, we end up having to rotate someone else on after that person bolts for another company in India three months later. We keep getting told that demand is so high for QUALITY Indian developers that no one can keep them. They keep bouncing from outfit to outfit, getting salary bumps with each move. It's second hand information obviously, but it certainly does synch with what we've experienced.
Not sure how the subscription model for time.com works, but I have been able to access all stories in the Cover article without a subscription:
Bombay's boom
Hooray for Bollywood
India Awakens
My lost world
Worth a read.
An Indian-American Hindu committed to non-violent thought/speech/action alarmed by the global explosion of radical Islam
India is becoming expensive in some parts like Bangalore. But Pune, Hyderabad, Delhi, Trivendrum are not that expensive.
I still feel, it is not a good decision, looking at huge market (over 1 billion people) of India.
hilarious
This economic phenomenon is expected and was already discussed in this fora.
As the demand for the work increases, to get the best in the business, one has to pay more.
Also, the overall economic indicator increases along with it comes higher land rates + higher standard of living.
This makes it much more costly for the average person too, which means the average pay increases quite a bit.
Along with it comes the fast growth of the other economic indicators - more people get more vehicles etc.
These things will start congesting the infrastructure, which also would act as a deterrent for new companies.
Now the option is to go to not so fancied (earlier) sites in India (or any outsourcing nation), so that you get everything cheap.
Since they saw the growth of fancied sites, they also would have improved the basic infrastrcuture to make it close to them.. without the current issues. But I guess Apple execs were lazy enough to not look at the new sites and stayed with the fancied ones. -- Yep, they had to pay for that.
I guess China skipped these issues by using far-sighted (and possibly evil) government policies - ex - they forcibly decreased the standard of living in many areas - which meant you get more people coming to urban centers - which means the demand and supply chain stays the same.
Also they improved the infrastructure by pouring in money for the same + they started builiding up a lot of suburbs to decrease the rising land-rates.
rajmohan_h@yahoo.com
India is going through a tech boom similar to the U.S. tech boom in the 90's. Qualified computer-related experts are demanding higher and higher salaries and jumping to whatever company is the current high bidder. As the wages go up, the rest of India's economy booms. India is beginning to take on many of the good and bad aspects of the U.S. economy. With most of its over 1 billion people in povberty, China can out compete India easily on wages. Training just 1% of that number with technial support produces a 10,000,000 strong workforce. The process of U.S. jobs migrating to India will happen to Indian jobs over the next 5-10 years as China becomes the outsourcing destination of choice.
What are the major requirements for locations to which you want to outsource tech jobs?
- A stable power grid (if it's not there, build a small one yourself)
- An oversupply of labor with high population growth (to keep that oversupply rolling)
- A sufficient percentage of English-speaking workers.
The rest is training and, for large companies, will pay off quickly. I'm sure I've left off a couple items, but African countries, Indonesia and other PacRim countries, and SE Asia are where tech labor outsourcing is heading next.
This is a positive for these countries (standard of living will increase) and, in the long run, a positive for the US and other western powers (greater influence in those areas, long-term economic benefits).
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Avie Tevanian left Apple in March. Rumors are that before he left, he was overruled by Jobs on three major issues:
You are not alone. This is not normal. None of this is normal.
Hey, that's capitalism. I don't know why anyone finds this mystifying; in search of a cheaper labor pool, a bunch of Western companies invested a bunch of money in a developing country. So much so that the "developing country" has developed so far that investing there just isn't the payoff it used to be. So now they're either going to look for another developing country to invest in, or decide that shifting their labor pool from country to country isn't the long-term investment benefit they thought it was going to be.
Gifts for Geeks - Stuff that really matters!
Zimbabwe was quite a developed economy, until the glorious leader there went on a rampage of forced wealth redistribution and wrecked the economy. I understand that the supposed rationale was the righting of wrongs committed during colonial and post-colonial rule by the white "overclass", but the practical result of the half-assed way this was carried out (squatters, mob rule) meant that it was an utter disaster. I feel sorry for the average Zimbabwean, regardless of race or origin, because it isn't pretty for them right now.
They keep bouncing from outfit to outfit, getting salary bumps with each move.
You can blame HR for this. HR needs to weed out people who have made these kinds of moves too much in favour of people with long term business relationships with their employers. Testing a person's loyalty is HUGE for HR and they do typically drop the ball on it more than they keep the ball in play.
But blame the economy too. Companies have treated employees so poorly in the past, on almost every level, that there has to be some accountability for that. Every action triggers and equal and opposite reaction.
Treat them nicely and they treat YOU nicely. Treat them poorly for long enough and they will treat every other company categorically as poorly as they have been treated. This permanence of occupational conditioning is dark and moody at the core. It embellishes and derives its source from a much larger problem of economic scale.
People don't care enough about their fellow person, anymore. But the change has to start small and spread without being extinguished, like Pay it Forward.
The dangers of knowledge trigger emotional distress in human beings.
- A stable power grid (if it's not there, build a small one yourself)
- An oversupply of labor with high population growth (to keep that oversupply rolling)
- A sufficient percentage of English-speaking workers.
And a government not run by a guy known for his misgovernance. Which pretty much rules Zimbabwe out.
Go somewhere random
It's happening now. I live in Indianapolis, and there are already three companies here who are getting on that trend. One thing they point out is that prices for land and housing are 1/2 to 1/3 of what they are in, say, Chicago, and that while wages here aren't THAT much lower, they are lower. The labor laws are also pretty much the same as elsewhere in the US, plus there are nice little junkets like Colts games, the Indy 500, etc. Indy isn't the only place seeing this, either.
Of course, over time, as wages adjust, ... but hey, that's just how the world is.
The Independent: Reverend Spooner Arrested in Friar Tuck Incident - ISIHAC, Historical Headlines
Yes, making money is obviously important, but it doesn't preclude doing the right thing.
As an example, the Fortune 500 electronics company that I work for does most of its R&D in the US, but there are also R&D centers in other countries, mostly from acquisitions. It does most of its manufacturing in the US as well, even though it could get away with doing the job much cheaper in emerging countries, particularly China, where environmental rules are pretty slack and labor costs are much lower.
We've got at least one fab in China, true, but it meets US safety and environmental standards. I'm sure that the pay is not what it is in the US, but if the pay there is like the pay here, it's above the national average for the job.
Here in the US, we regularly win awards for going well above and beyond governmental requirements for environmental safety. We've got a fairly green operation, as much as possible, considering what it takes to do what we do.
The company has established a well-funded charitable foundation that supports education and arts in the community and around the country - and even in the big tech downturn when we were losing billions of dollars a year, it was able to give away millions of dollars each year.
And the thing is, we're not particularly different from most other large companies. So the "make money at any cost" mantra is getting pretty tiring.
-h-
The editors don't actually "edit" and never have.
.ogm files.
Users submit articles, they sit back and click "submit" about twelve times a day, and watch fansubbed Sailor Moon episodes that they painstakenly re-encoded into
Back in the day, it didn't matter so much. Now it's getting ridiculous, with retarded newbie typo's like "teh" making the front page.
I forgot about slashdot for about a year, came back just the other day. It seems the user base (based on posting on articles) is about half of what it was a year ago, and hell, a year ago it was only a shadow of it's former self. It seems that only the most self-righteous of the OSS flamers are left. Technically adept users seem to be slim to none, as I'm seeing hardly any intelligent comments being left on any of the recent technical articles.
To borrow a South Park qoute, non-gnome related, this site is literally dissapearing up it's own asshole.
And before you ask, I'm here because it's fun to watch and be labelled a troll for not toeing the line and bowing down before the great Rickie Stallman.
I don't need no instructions to know how to rock!!!!
The cost of living and the wage are only one factor of the cost of an ousourced worker.
You have to add the cost of duplicating power infrastructure because too many companies have moved in and the utility grid cannot cope. Current brownout+blackout rate is 20%+ during daytime and growing.
You have to add the exorbitant communication costs which will only grow up due to basic supply and demand laws. The fiber under the Gulf is still the same, there is no new coming up and demand has grown several times a year. The Eastern route is not looking any better because there India competes with the growing demand from China and other countries. 256Kbit there will buy you several E1s in the UK or the US (at the same contention ratio).
You have to add.. add.. add...
At the end of the adding all the numbers a worker in India will come up to less then US or EU costs in terms of salary and considerably more as far as infrastructure is concerned. From there on the overall numbers depend on how the work is organised, but I am not surprised at a company pulling out from India. There are plenty of other places around the world with comparable salary rates and considerably better infrastructure.
Baker's Law: Misery no longer loves company. Nowadays it insists on it
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Unions are losing ALL their members... because all of the jobs their members do are being exported. What good is a union that protects zero workers?
It is in the interest of every union member to see better labor standards throughout the world. Until unions realize this simple truth, they are doomed to driving themselves out of work.
What's interesting to note here is that the Indian government played a big role in the quality of life expansion.
Take a look at Mexico in contrast. 2 years ago, illegal immigrants sent around 12 billion dollars back home. This was more than twice the highest foreign investment in Mexico. Last year, they sent back an estimated 17 billion. This was the second highest income for the entire country of Mexico; mexican oil brought in the highest income, but not much higher.* Yet Mexico remains dirt poor, despite the huge influx of cash they're receiving from El Norte and their illegal migrant workers. Ultimately, Mexico's government is to blame for the consistent failure to raise standards of living.
It really makes you wonder just how much damage corruption does to a floundering Third World nation. It also makes the point that throwing money at a problem won't even begin to solve it most of the time.
*Paraphrasing Dilip Ratha, World Bank senior economist
The UK's second largest electricity distribution company, PowerGen, has just announced that it's closing its Indian call-centres and bring the jobs back to the UK due to poor customer service issues.
It doesn't always work like that. Where I live, for example, Wal-Mart is currently prohibited from entering the market, precisely because they have a history of destroying communities and fucking people by way of its uncaring management and legendary bad taste. Whether you agree with the city planning commission or not (and I do) this is real money Wal-Mart is losing because they chose to be "evil." Even if the city let Wal-Mart in, it's far from clear they'd be as profitable here as they are in red states, simply because they have such a terrible reputation that nobody would be caught dead shopping there.
Point? Being good can pay off. There are incentives for companies to behave responsibly. Often these can outweigh the benefits of being evil. Probably not in the case of Wal-Mart--hey, who cares about New York, anyway?--but certainly for companies like Body Shop, whose entire corporate image is built on socially responsible behavior.
And now, a PSA from David Lynch.
If China respected foreign investors' money sufficiently, we wouldn't be censuring China either.
India is the "largest democracy in the world" but if there is social justice there, then I'm CowboyNeal and I have a date tonight.
Capitalism wants cheap labour and Western Politics is the art of smooth-talking mostly ignorant NIMBY voters. Western leaders don't have the guts to stand for and live by principles and the truth is that most of the people in the West don't have the guts either.
Rich And Stupid is not so bad as Working For Rich And Stupid.
Just shows, how lack of proper details about a situation can manifest itself into prejudice. Caste system in India is a non-entity in the way it used to be. The reserved castes (earlier called lower castes) now get active affirmative with as much as 70% of some colleges purely earmarked for them. Publicly distinguishing people based on caste can get you to jail
The caste system does not violate human rights, and commenting on an issue without understanding it just makes people look asinine.
"miniscule" when converted to dollars maybe (and not usually) -- Companies are paying 15 to 30% increases over their previous pay plus some additional perks (Indian tax laws exempt most perks from income tax -- e.g. Car Allowance etc) for engineers/tech-support types to switch. while 25% of $20,000 p.a. may not strike you as something other than miniscule, it is 25% over the previous and it matters. btw, the word on the street in bangalore is that Apple did indeed pull out because of cost related issues. At 15% average y-o-y increase in employee compensation (total) and office rents and house costs equal to silicon valley (in per sq ft), Bangalore just isn't that cheap anymore and the quality is definitely questionable. i think, based on personal experience talking to entrepreneurs there that there is approx 1 clueful engineer for every 100 or so in the big companies there.
Even more depressing, South Africa, after a relatively smooth transition from apartheid, is slowly devolving into the same kind of typically stupid/corrupt sub-Saharan political incompetence, with ANC one-party rule and a stupid AIDS-denying, Mugabe-kissup (Mbeki) on the throne.
The cost of living and the wage are only one factor of the cost of an ousourced worker.
This is a very important point.
We have a lot of people in India doing contract stuff for us where I work. The price for the contractors is relatively low, but there is a *huge* infrastructure cost required to let them do the work. There's the data connection costs that you mention, but also things like VPN gear, terminal servers, MS CALs (our enterprise agreement only covers employees, not contractors), plus all of the staff work here to ensure that everything can be done reasonably securely.
That's just the concrete costs. There are additional ones that are harder to measure. Things like the potential costs related to misuse of our data by people in a foreign country, or the costs of supporting applications that may have been written by a completely different team or outsourcing company.
I have seen some good work come from the contractors, but IMO they don't provide any savings worth the effort of sending the work to another country. It seems mostly like another big corporation Monopoly money game where they make it look like saving money by transferring the cost to another division.
"...always new atoms but always doing the same dance, remembering what the dance was yesterday." -Richard Feynman