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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."
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.
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
"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
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"
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.
Don't be. It's business
Doesn't have to be. Stand up and support companies that share and uphold your ideals and beliefs by giving them your money.
Or you can go for the cheapest company and help them screw over your fellow man.
While I can't claim to have predicted that this would happen so soon, I will say that I saw it coming.
Part of what happened that made this happen sooner is that the Indian quality of life, bolstered by all sorts of outside companies outsourcing there and pouring money and jobs into their economy, rose. This of course becomes a positive cycle, where the newly wealthy* start demanding more**.
This sucks up potential labor far faster than simply looking at the unemployment/agricultural worker numbers.
We're seeing the results now. India's currency is gaining strength, the dollar is loosing strength. Soon it'll no longer be as economical to outsource to asian countries(China will take longer). Soon it'll make more sense to outsource from expensive american cities to inexpensive smaller cities, larger towns, or downright rural locations within the United States. Arkansas costs half as much to live in than Hawaii.
*relativly of course. They might still be 'poor' by 1st world standards, but they're no longer 'dirt poor'
** Services like telephones, internet, more frequent hair cuts, eating out, things like bigger, better constructed homes, vehicles, etc...
I don't read AC A human right
You wouldn't believe how much extra housing costs on Io once you figure in the extra rad shielding and periodic cleaning of the sulfur gutters. Volcano insurance isn't even obtainable at a reasonable price; everyone just does without.
And don't even get me started on the commute.
Obviously, Slashdot is outsourcing its editor jobs...
"Slashdot. News is for the nerds. Stuff that is the matter."
Just junk food for thought...
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-
First, the BW article speculates... the author doesn't really know. So was it high wages? Was it something else? "We" don't know yet.
However, there are several issues with setting up in India that probably make it less attractive for Apple.
1) Worker loyalty: while all tech workers probably seem like mercenaries these days, it is even more so in India's white hot tech areas. The workers will leave for what we, in the U.S., would consider miniscule salary differences.
2) Worker training: Indian workers are often broad brush trained in "popular" technologies - finding software engineers trained in non-Windows, non-Oracle, non-SAP, or non-J2EE tech is probably much harder to find at a cost effective salary. Again, this is an issue in the U.S. too, but more pronounced in India and many other non-U.S. technology boom areas.
3) Best of the best: Apple is small (workforce numbers) and tends to follow the hire the best of the best (even if they don't give them the best of the best resources to work with). Those that are really good are probably already working in the U.S., or would not find it all that hard to make it into the U.S. The number left of the best of the best in India probably aren't much cheaper these days (one would often have to be 4:1 to 8:1 cheaper to outweigh the below).
4) Big costs (not just money): Apple doesn't have huge projects that require a thousand or thousands of engineers on a single project that might be able to amortize the costs/issues of temporal and geographical displacement. Apple has most of its software engineering done in Cupertino, and it would take a big shift to deal with significant outsourcing or remote development.
5) Core strength: software engineering is Apple's bread and butter, it is what differentiates the hardware, it is its own profit center. Messing with this too much is not a good idea. Apple can't treat this as a commodity item on a balance sheet.
6) Expansion deals went through in CA: Apple bought a large data center and has plans to build another campus in CA - and the review of those deals going through probably meant that this Indian effort doesn't make sense for Apple right now.
None of this particularly means anything with respect to India, India's tech boom, IBM in India, outsourcing to India, etc. This is merely Apple's evaluation on whether or not it makes sense for Apple. These issues have been there, will continue to be there. It is strange that Apple started and effort but then pulled out, but that is better that they are contantly critically re-evaluating rather than what we've seen from some other U.S. companies that have staked huge efforts on "hot trends" that some CIO/CFO/CEO reads in a trade mag, rather than doing true critical analysis. Going to India may make sense for lots of companies, but certainly not to the level we've seen it lately.
Painstakingly.
Typos.
Insert "and" just before "came".
Indeed.
1) That's disappearing.
2) It-apostrophe-s is a contraction for "it is". "Its", on the other hand, is possessive. Counterintuitive, but that's English for you.
So to recap, you should have written "disappearing up its own asshole.". Have a nice day.
Hail Eris, full of mischief...
E pluribus sanguinem
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.
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