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Outsourcing Growing Beyond India
PreacherTom writes "One of the most controversial aspects of the global economy has been the newfound enthusiasm of companies, freed from the constraints of physical location, to outsource jobs. No country had embraced tech outsourcing with more passion than India. Of late, problems are beginning to arise in Indian outsourcing: engineers will start a project, get a few months' experience, and then bolt for greener pastures. The level of attrition can cause the turnover of a project's entire staff within the course of a year. Combine this with salaries in Bangalore that are rising at 12% to 14% per year and it is no surprise that companies are looking beyond India to a slew of emerging hotspots for IT, such as Brazil, China, and Vietnam. Will Ho Chi Minh City be the new Bangalore?" From the article: "India remains an IT outsourcing powerhouse, with $17.7 billion in software and IT services exports in 2005, compared with $3.6 billion for China and $1 billion for Russia... India's outsourcing industry is still growing at a faster pace than that of... other wannabe Bangalores... By the third year of an outsourcing deal, after all the costs have been squeezed out, companies get antsy to find a new locale with an even lower overhead."
When people find out what they are worth, they start demanding it. Pretty soon, the entire world's IT population will be high-salaried, no matter where you go.
My twitter
But turnover is the real project killer. But what did they expect? Worker Loyalty after they proved that they had no loyalty? The strange part though is how this infects EVERYTHING- I moved to government for stability, but my sub-sub-department of application developers has a 26% annual turnover rate; for the simple reason that in America we've destroyed the loyalty of the workforce! Now we're doing the same in India. If you treat people like widgets, expect them to act like widgets- and move to the most ecconomically efficient place for them to be.
SJW: a person who perceives an injustice, and while correcting it, commits a greater injustice.
So you see high staff turn-over in India. The "solution"? Move the project to a different country.
But why would that country's people be any different?
The fact is, once the outsourcing staff has the knowledge and experience that was previously YOUR expertise, there is no reason for them to keep working for you. Eventually, they start their own companies in your market and replace you.
Don't focus on short term profits at the expense of long term survivability.
zo'o nai cai
Look, if you are GOOD AT WHAT YOU DO, YOU WILL NOT BE OUTSOURCED. Start your own company. Get some gosh darned CONFIDENCE.
Stop celebrating your weaknesses! Do it only if you are GOOD at it, not if you are just interested. If you can't hack it, do incoming calls. Enough said.
fa'o
The Brazilians, Chinese, and Vietnamese haven't had a whack at my personal information yet!
My company has been offshoring small jobs to viet nam lately. They are actually much better than India in my opinion. They listen to what we say and act on it fully, rather than just doing the least amount of work they can get away with before moving on to some other project. I suspect that will change as demand for their services increases, then they will become another India.
Logic says the same thing is going to happen in every place that is outsourced to. Maybe that is the point to make to the CIOs. Just keep projects where you can control it in the first place, and it will save money in the long run. Lack of control on a project and high personnel turn over can be more expensive and deleterious to a project than keeping things close to home and paying a reasonable salary to begin with.
-- I ignore anonymous replies to my comments and postings.
While its true that it helps to 'flatten the world' into a large community, it harms our own communities when we outsource. Sure there is that short term bottom line issue of money, but you don't have to go much beyond 'short term' to see that the cost of wages is hardly the big cost in outsourcing. Before this story came out there were many others telling us how good outsourcing is and those that told how bad it is. The indicators have been there all along as to why it is bad.
.... and all those nice cliche's
Big indicators have been the outsourcing of work from India to China! The fact that customer service companies in India cannot communicate with the average person in western English speaking countries on a level that is equitable. The high turnover rates have always been there as a problem that was politely ignored in favor of lower initial labor costs.
Any project manager can tell you that trying to lead a project of software engineers that is not only geographically separate, but separated by as much as 12 hours from the part of the company that needs the software.
All of that is not news, or shouldn't be. What is news is that more and more companies are finally realizing this. There will be companies that continually hunt to find short term savings, like gold rush miners, but in the end, customer service and ease of development will drive down the desire to outsource work.
Yes, I know that Bill et al have proclaimed that there is a shortage of IT workers in the US, and apparently there is a glut of degreed IT workers in India. The trouble with such claims is that those Indian IT workers (no matter how many degrees they have) do not have any kind of realistic understanding of the western world's business environment, and often I swear that they really have no idea about software either, but I suppose that is borne from not understanding the business culture as well.
This story is really about how outsourcing work to foreign countries is coming back to bite the people that thought outsourcing was a good idea to start with.
Those who won't learn from history
Support NYCountryLawyer RIAA vs People
Will Ho Chi Minh City be the new Bangalore?
After those workers start demanding higher wages, an alien slave trader will set up a trading post to provide cheap labor and the Men in Black (MiB) will be put out of business after the industry lobbies the government not enforced the alien immigration laws.
No big deal because, as any good PHB knows:
:)
* IT work is, across-the-board, easy and something that can be learned in 21 days.
* IT workers are interchangeable.
* The amount of work that can be done on a project is directly proportional to the number of interchangeable resources devoted to it.
See? No problem!
We all know that the CIO responses to this will be to spend a billion dollars in an even more backwards country, hire thousands of people who are even cheaper, figuring that even if turnover is 200% they can break even on the lower headcount cost. Pretty soon we'll be building data centers in Angola & Bangladesh paying those people half of what we pay them in India and in 3 years we'll be wandering aroung dazed at the absolute sucknocitude of everything. I don't who we'll get to work at that point, maybe Chinese convicts.
You reap what you sow CIassholes. I have zero empathy for your plight. You killed the industry in the US and now it's crap everywhere. I'd be cheering for your failure except we know you all lavished millions of dollars on yourselves just in time to run out of the burning buildings. So screw you.
Sea-Code has a former cruise ship they plan to station off the coast of So. Cal (San Diego) and staff with programmers, etc. The idea is to make the staff closer to US based clients, who wont have to travel days for meetings. Having staff stuck on a ship might also keep them from 'jumping ship'?
I don't understand why companies complain about there workers not having any loyalty to them. Why should we be loyal to a company who will drop you like a bad date when that are tired of paying for you.
$DO || ! $DO ; try(); > try: command not found
So, now that management has run out of ways to prove that their plans work they will find a new, even cheaper place... good luck with that.
So far I have not come across many Fortune 500s where outsourcing actually worked in the end - that means not just a lower rate but comparable quality. There are plenty of CxOs that announce how much money they saved and all, but if you talk to the techs they almost consistently have another story to tell. For each 100 hours of outsourced work I estimate the average will be about 40 hours of US time to review and fix the programs... And those 40 hours will eat up all the cost savings you had in the original 100 hours. Its sad - but in the end for a million line codebase that has a certain quality, it doesn't really matter where you do it - the cost will be the same... The only ones that have a big advantage there is the russians. No idea why but their quality is usually better than you find anywhere else and the prices are reasonable too.
Before outsourcing, look beyond the hourly rate and consider skills. Then analyze your savings after the project has been in production for a while - and check if your expectations actually came true.
Peter.
I'll happily work for $3-4 US per hour, as I'm sure many other Canadians will.
As a university graduate with 15 years professional experience and zero current domestic employment prospects, no unemployment insurance or welfare, a few dollars an hour that the tax man does not know about is most welcome.
I can make enough to survive on for rates similar to impoverished Indians. Its all in your standard of living.
The benefit to my clients is mainly fluency in English (UK spelling) and ease of communication.
They get superior service at rates comparable to outsourcing to the east. And I get to eat, and buy the odd package of cigarettes.
I overheard something interesting right before I hung up the phone with Dell the other day... "Thank you, call again"
http://en.wikipedia.org/wiki/Arbitrage
The alternative would be to find other third world countries that used to be crushed under Albion's heel. I can think of Burma off hand, but I'm not sure if they are a viable option. I'm not sure what other countries fall into this category.
"MIT betrayed all of its basic principles."
How can you structure a CEO's (or other CxO's) salary/bonus plan so that their incentive is to keep the company productive and viable instead of "shedding" all the "unprofitable" sections (such as IT) and outsourcing them to raise short term revenues, cash in the bonus and leave for another company?
It is far more profitable for a CEO to wreck and sell the company than it is for him/her to actually spend time running the company.
But I frankly don't see any reversal of the outsourcing trend
As foreign workers acquire more and more skills, the gap between them and the first-worlders being replaced diminshes. Already we are seeing this: instead of outsourcing to places like India or China, many companies are turning to not-so-poor but cheap places like Easter Europe, Brazil, or Argentina. Countries where technically skilled people exist but were in low demand, but most importantly where the culture is extremely compatible with their clients'.
(Brazilians or Argentines DO have a language barrier, but their culture is much more similar to that of the US than other people in the globe, which makes their skill acquisition faster).
The problem clients have with outsourcing isn't about foreigners or incompetence. It's about managing a herd of cats through virtual teams and bonding with people with the same accent and interests as yours. I know that personally I've had much more success with my customers due to my American accent than my less linguistically skilled co-workers.
sig: Cosas de un sysadmin argentino: http://aosinski.phpnet.us/
...for which I offer no apology.
Outsourcing is neither good nor evil, but the motivation behind outsourcing tends to be overwhelmingly merciless and short-term. Taking a knowledge activity and attempting to turn it into a commodity or near-assembly line function is, I suppose, a managerial Holy Grail worth undertaking in different guises each decade.
Consider H1B visas. Is there a shortage of IT workers in the US, or a shortage of *cheap* IT workers in the US? Most major media publications are overwhelmingly guilty of dropping the telling adjective, and the quotes they gather all support a lack of IT talent, no qualifiers added.
We who work in this space, live in the space, can confirm some of this. It *is* hard to find a superior talent for an IT position above entry level. However, it's not impossible if you have a salary and excellent position to offer.
So, when I read about outsourcing arbitrage and the chase for ever-cheaper talent, I just wait it out. Eventually, all of the talent, cheap or not, will come to fore and then the real shoot-out over quality and reliability can begin. Does anyone truly believe there's a hidden cachet of Polish supercoders who haven't been discovered because they lack the Internet connectivity? Does anyone see the inherent flaw in that premise, and by extension, any argument like it?
I'm not overly impressed with a single outsourced individual or group in my eleven pro years of IT, and that includes old Anderson Consulting of 1995 up to Patel Consulting of 2006. The prestige of the firm should only get them an interview: talent and not cost is what you'll need to survive.
As a final note, what, if anything, will the US do if it successfully outsources all of its IT functions? Does anyone expect anyone to major in CS in this country, knowing that electricians make far more and took less formal schooling? I think not. You can't outsource a physical service.
-BA
It's good to see that it didn't take India long to start turning over IT staff at an alarming rate. I was a sucker for a good 2 years before realizing that loyalty to any company or employment agency just limited my chances, and clearly reputation means nothing in a disloyal, mercenary environment (since any given company will attempt to destroy it when you leave, regardless of how good your work was). I really don't care where the IT work ends up; I just want a company that pays a reasonable wage for work done, or a contract that doesn't blatantly favour my client.
The solution to the problem is probably one of education. My experience is that the business community fosters this disloyal, mercenary environment because they want to reinforce the idea in the IT contractor's head that they are replaceable, and not worth that much. However, if the business community is saying that India isn't viable for the same reasons that North America isn't viable for software development, maybe a reality check has hit home. I suppose it's possible that China might be filled with people that respond to these incredibly negative business practices, but my guess is not. I hope your average CIO learns very soon that 1) he needs to more clearly understand the skills of the people he employs and 2) no matter where he employs them, a fair rate for the expertise needs to be paid.
mandelbr0t
"Please describe the scientific nature of the 'whammy'" - Agent Scully
I'm in China at the moment, actually, about to go to a second site here. My purpose? I'm looking at the security of two vendors who are competing for a financial BPO (Business Process Outsourcing) contract with a major corporation. This is my first look at outsourcing up close, and I can see why companies examine the option. Yesterday I looked at a BS 17799 and SAS 70-certified facility, with smart people who cost far less than their counterparts. Also, there was discussion about turnover in India.
Outsourcing is definitely here to stay, but from what I have seen, cost is not the only factor that gets considered these days. (At least, not by the client I'm working for.) They're looking at the whole package, but the biggest thing that has mattered so far are the tools and functionality that the outsourcing provider can bring to bear. At the end of the day, it'll be functionality that matters the most, especially as labor costs in markets like India and China grow. But don't make the mistake of thinking that in such countries lower cost is all they have to offer, because that's not necessarily the case; the provider I visited yesterday had a hell of a great system for handling the complex financial functions that are a main pain point for my client.
For your security, this post has been encrypted with ROT-13, twice.
Greediest bastards helping the poor and the needy more effectively than Mr Geldof in his wildest dreams. Who'd have thought? Mr Smith I salute you.
Sorry, is this news? This is simply economics in action...
p.s. The US is still fubar, but that's due to Mr Bush's excessive spending.
Deleted
Trade liberalization works. Free(r) trade agreements like NAFTA and WTO dealings are helping to drive economies from Asia to Africa. Of course, since labor is just another commodity whose costs the import/export wizards can minimize, free(r) trade means that most of those economic gains are going into the bank accounts of a few. Thus, the rich get richer and the poor stay poor.
The funny part is most people are too stupid to figure this out (cf. Dobbs, Lou), so they bitch about illegal immigration and outsourcing instead of demanding more equitable wealth distribution. Oh well, good thing I've got that trust fund to fall back on.
The Philippines are the 3rd largest english speaking country. I wouldn't discount them, probably a better choice to outsource American work.
Loyalty is and always has been a fairy story told to you by people in power to get you to do things for them cheaply.
Oh yeah, that includes patriotism as well btw. Typically they want you to die for their benefit.
Deleted
You knew it was coming, once the slaves in India started to relise that even imaginary skill sets were valuable. Big.com execs were going to need newer and cheaper slaves. Enter our dear President and his Vietnam trade bill. It helps that another Bill of the billwg@microsoft.com variety has already spent millions to build call centers and whatever else in the nam. I think the problem the top 3% are going to have is the lnaguage barrier. The Indian slaves were already trained to speak English after a fashon during there little stint with the British. No so for the occupants of the various Peoples Republics.
I disagree that outsourcing is bad. Generically that is like saying hiring a babysitter or a neighbor or anyone other than yourself is bad. So what are the indicators that outsourcing is bad? Just saying there are indicators is not the same as showing that the indicators are bad.
1) If you hire your son to mow your lawn, there is nothing stopping him from hiring his friend in turn... ala Tom Sawyer. If the job is unacceptable, make the terms part of the contract.
2) Customer service is not a function of outsourcing, it is a function of cost. You can have equally horrible customer service inside the US itself.
3) High turnover is also not a function of outsourcing, it is a function of management. If an employee has no training and advancement path then it is up to the employee to figure out their own. This is true of any company in any country.
All these problems would exist if the companies in question practiced homesourcing, where a company like IBM hired a temp agency in Alabama to support their developers in San Jose.
Again, why give work to a neighbor or a friend when you can do it yourself?
Answer: Because division of labor and speciality encourages increased productivity when both parties can do separate things more effectively than both parties replicating work.
In this case the flaw with outsourcing is that there was not a good reason or a good implementation for the division of labor.
GPL Deconstructed
WTF? Are you retarded?
The average (and even the above average) office drone couldn't program a microwave, let alone a computer.
i got into IT in the late 90's when companies were changing from win3x/win9x/novell to nt/2k/active directory, and leading up to y2k you could make $15 an hour just knowing how to turn on a computer. following y2k and into the dotcom bubble, many companies were desperate to import tech workers and there was all that drama over visas.
after the dot com bust a lot of work got offshored and moved the indian tech sector into y2k/dot com mode. i would imagine that if you offshore again, to some poorer country, it will start all over again. perhaps this time, it will only take 4 years instead of 8, you know, efficiency and all.
perhaps on the third or fourth iteration the US dollar will be so worthless that the work will be cheaper to source labour in the US, and the new economies of brazil, russia, india, and china will outsource their work back to us :-)
sarcasm:
-noun
1. harsh or bitter derision or irony.
Is suspect 98% of the time.
1. Workers who lost really well-paying jobs to outsourcing:
I'm sorry no one informed you, but one of the economic reasons you were paid so well was that your job was coming to an end. It was always a temporary state. Consider the extra wages a "retraining allowance" paid in advance.
2. Shareholder Demands:
Clearly outsourcing is a cost-reducing effort. As long as those costs are measured in dollars and cents your job is on the chopping block on a quarterly basis. Unless every business owner/shareholder in every country in the world becomes simultaneously enlightened, this is the benchmark.
The new american worker rules are:
There is no such thing as job stability.
Get paid for today's work because there is no promise tomorrow. e.g. retirement and vesting options are mostly vaporware.
If you are lucky enough to be near the top of your wage curve, live at or about the middle of the wage range for your industry if at all possible. This gives you a nice F.U. fund if there's a sudden change in your employment circumstances.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
This is the biggest problem I have with globalization: we have removed all constraints from capital and freed it from all other considerations. It is truly a race to the bottom - who has the lowest labour costs, who has the fewest environmental restrictions "wins" some starvation wage jobs until we can find someone else who can be exploited even more.
The fear used to be that jobs were being sent south to Mexico. But when Mexicans workers start demanding fair wages, we sent the work to Viet Nam, where people earn $2 per day. But even that looks pretty expensive when there are people in China willing to work for $.50 a day.
It's exploitation plain and simple, and we don't care because we are insulated from the uglier aspects of it. Of course, we are getting screwed too - those over-priced sneakers are now manufactured for a fraction of what they used to cost, but we still pay roughly the same price at retail. At least the shareholders are happy, but if they could find someone who would work for $.25 a day, they would be even happier.
Whenever someone argues in favour of a living wage, we are told it is too expensive. What a shame that poverty has become an official requirement of our economic system.
If we found ourselves working in the sweatshops for less than a buck a day, I wonder if we would be grateful...
*** Where are we going? And what's with this handbasket?
Just got this on our team blog at Ford Motor on Friday: Rumors and the Future of the NOC There have been many rumors going around about the future of the NOC. I want you to know that some final decisions have been made this week and contracts have been signed - Vijay announced yesterday that the NOC, the SOC, and Mainframe Scheduling will be moving to India in the 1st Qtr of next year - by the end of February is the plan for the NOC and the SOC. This is part of the Way Forward efforts that the company have been looking at that are impacting all of us. There are going to be reductions for both Ford and agency personnel as a result. Please feel free to schedule a meeting with me if you have any questions or concerns. Merry Christmas lol
EGOTIST, n. A person of low taste, more interested in himself than in me.
bonus in the article cited above - a discussion on coding and the communications barrier. And i quote:
"Loyalty is and always has been a fairy story told to you by people in power to get you to do things for them cheaply
Always? Sorry, I disagree. Loyalty goes both ways. Yes, some people abuse it to get things done cheaply - and those are often the most memorable or newsworthy ones. But less newsworthy are the people in power who show loyalty to their underlings.
I'll bet if the Indian management simply paid their people what they were worth - and added an occasional attaboy - the engineers would stay.
....because I cannot communicate with my CEO. Me: We cannot layoff the tech support staff just because it is technically possible to outsource their labor. They have worked here for 10 years and, along with everyone, helped to build this company. CEO: We don't owe our workers anything. The shareholders expect bigger and bigger profits. Go with your tech workers and find another job. I am on the board of all the local employers telling them the vast advantages of outsourcing your kind... This conversation has demonstrated your sincere lack of communication skills and will be noted in any recommendation. Thank you for working for .
There's will come a time when the supply of IT workers will match or exceed the demand.
Take an econ class. You don't even know how to use the terminology right.
And as technology improves, the run of the mill business programming will become so easy (adding, updating, deleting data from RDMSs, biz logic, etc...) that the only need for real programmers will be for systems and development software (reason why MS Office is soooo popular! You wouldn't believe how many VBA apps I've seen on Excel!!! And all you need is the office developers to support ALL of those biz "programmers".). And that will be a much smaller labor market (hence plenty of supply) for programmers.
In my experience, the number of professionals who want to learn anything about IT besides "type it in here and press this button." is exceedingly small.
Even now, the number of people who are capable of doing IT work, let's say 70th percentile of the population, means there are over a billion people on this planet with the brains to do the run of the mill programming.
There's about 3 Million people in the US and about 800,000 people working as software developers. That means, in the US. about 0.267% of the population is a software developer. I doubt that we'll see drastically higher worldwide programmer/population rates any time soon.
However, I do thing that the vast majority of human activities can be made more efficient through software. So as the world's population becomes more computer-using I'd expect the market for software to expand greatly.
I say there's plenty of supply and salaries will always get lower - overall - regional differences may apply.
There were certain countries that had a waiting, highly-trained work force but they couldn't get the work because of high transaction costs. The internet drastically lowered the transaction costs but did not eliminate them. During the time when those costs were plummeting, we saw a massive influx of new developers into the market. So, the countries that had highly trained workforces sitting on the sidelines are all now pretty much in the game, So, I wouldn't expect to see another influx like that unless there's another radical change in the transaction costs.
The problem is that the remaining transaction costs are pretty hard -- mostly organization and physical.
In other words, the "damage" is pretty much done. Frankly, I think the world as a whole is better off due to outsourcing.
You are not a beautiful or unique snowflake -- but you could be if you got off your ass.
I think you are missing the point he/she was making.
"Programming" has been evolving towards higher and higher levels of abstraction. At some point a business analyst will be able to simply ask for what they need and a system will auto-magically analyze the request, write the code and execute it.
It won't be a question of who is an office drone and who is god's gift to syntactic sugar. You just won't need that many engineers/programmers at that point.
The fact that sales and marketing drones can whip up MEANINGFUL Excel spread sheets that do calculations that once only programmers did is but a glimpse of what will be possible in 10 or 20 years.
I think a lot of people in tech are going to have to get over their egos when the excrement hits the rotating blades.
I do. I'm having my most profitable year ever. It seems as if a lot of work has come back to the UK.
Hiring outsiders from half way around the World just doesn't work. If it does, why are companies not boasting about the latest successful product that cost 75% less to make than in previous years? Why are the PR spin machines strangely silent?
All we hear is that some company decided to offshore and hopes to make tens of millions of dollars in savings. Then it all goes eerily quiet. Then I get a call from an agent asking whether I am in the market for some maintenance work at a large blue chip.
The mistake these companies keep making is that it's the same PHBs running the shop (yes, they're not being offshored...). Not a single mother's-son of 'em ever thinks of asking a software engineer how to do, er, software engineering...
I'm currently working with a large European Telecommunication company who have shipped in two plane-loads of Indians. Man, you should see these white boys strut around the office. It's the last days of the British Raj all over again! I almost expect them to walk in with a pith-helmet some mornings. Now, as a result, they won't listen to the advice of their brown-skinned subordinates (though, to be fair, these young boys fresh from college need a lot of guidance too...).
"The problem clients have with outsourcing isn't about foreigners or incompetence. It's about managing a herd of cats through virtual teams and bonding with people with the same accent"
Agreed. I had a helluva job integrating with a team in Sweden. I learned the hard way that Swedish business culture is very different to the Anglo-Saxon model, despite the fact that their English was as good as (better?) than mine. They were great coders but you just can't say to a Swede: "Dude, this code's a bit crufty. Can we refactor it please?" - something you could say to any UK programmer that you quoff beers with. Cultural faux-pas like that (yes, I know, I was a compleat tit) resulted in a large loss of productivity.
--- "We've always been at war with Eastasia."
Any project manager can tell you that trying to lead a project of software engineers that is not only geographically separate, but separated by as much as 12 hours from the part of the company that needs the software.
Any stoned project manager can tell you that.
They said that about COBOL as well.
You may be right, but the "higher levels of abstraction" will,
in my opinion, call for more knowledge, not less, requiring
more skilled persons, not less.
Until the point that we have true AI, that is. ( And it will
still be true, but handled by the AI. )
emt 377 emt 4
Employee loyalty is a measure of how much the company values the employee also. Most of my friends who quit their workplace complained that the company recruited people far less experienced than him at a greater salary, a cardinal sin in the Indian Workplace.
The HR policies of some companies are frightening, they want employees to be loyal, but they dont honor loyalty. And they are the once who recruit employees who have jump companies at whim, I heard cases where a people have stayed in their jobs at an average of 6 months, I wonder how they get picked up at all.
So if there is a lesson that the outsourcing firms should take, it is this:
1. Award Employee loyalty
2. Stop recruiting people who jump companies, even if they are from your competitors.
3. Question bosses who have low employee retention rates, most of the time 'they' are the problem.
4. Tune your HR policies, its evident that they dont have an eye for talent, less for an unbiased compensatory practice.
Salary growth will have to slow in India.
At the lower end, 12% salary grows by 10 times in 12.6 years and 20 times in 16.4 years.
At the higher end, 14% salary grows by 10 times in 6.8 years and 20 times in 8.9 years.
Given mostly stagnant salaries in the United States and other higher wage countries, India's salary growth is going to be rapidly constrained.
The world will not get better through technology. We must seek to be better people.
Absolutely.
20 years ago you could produce what was considered commercial quality code for those days and make a living off it with knowledge that was equivalent to 1-1.5 years of university education, sometimes less. Nowdays 4 years of college are not always enough to get you through your first day in the job.
Baker's Law: Misery no longer loves company. Nowadays it insists on it
http://www.sigsegv.cx/
How long before the circle completes and companies start outsourcing to the USA? Any bets?
They listen to what we say and act on it fully, rather than just doing the least amount of work they can get away with before moving on to some other project. I suspect that will change as demand for their services increases, then they will become another India.
That will change when they have acquired an in-depth understanding of your IP.
Then some of them may start a new company using it, or a spinoff of it, while the rest go to work for others who could use their experience on their products.
Just like it was with India. At first the place looks like a good administrative bet: Some good engineers with talent and English skills (so you can talk with them) who will work for cheap. And at first they buckle down hard - while they're running up the learning curve. So it looks like a good deal and more companies move there.
But once they've learned, why stick around? Especially in a location where the IP protections are less effective. Then the attrition starts.
At first The Suits think the attrition is just individual problems. Then they notice that's its got some spread, but they write it off to cultural issues. It takes a long time for them to realize that it's systematic and institutionalized - as they are FINALLY figuring out now, with India. So now they try it again with a new country - which looks better because they're still in the "drink it up" stage.
How many iterations with other countries, how much lost Trade Secret and other IP, and how many bankrupt companies will it take before management publications and business schools get it figured out and start teaching that outsourcing is a way to give away your company?
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
News flash: India is not a bottomless well of instantly tappable programming talent.
... India. However it won't look like the round we've been through. It will look something more like toe-to-toe competition.
What folks are complaining about is simply signs that there's a sellers market for programming skill in India these days. This will raise Indian salaries to the point where Indian salaries plus transaction costs are the same as US salaries. Another thing I've seen is that the average skill level level of Indian programmers isn't as high as it once was. Which isn't the same as saying the Indians are losing skill -- it's the opposite. The time was when nearly every Indian programmer you met was probably brilliant. There are more great Indian programmers than ever, but there are also lots more mediocre ones than there ever were.
I expect India's programming talent pool to continue increasaing, but you can't grow such a skill based industry overnight without compromising a little on quality and losing some price advantage.
There will never be another outsourcing phenomenon like the India. India has had three great advantages: (1) a huge and highly educated middle class population; (2) widespread English fluency; (3) stable government and laws. There isn't any other place remotely like it.
The next great outsourcing horizon will be
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Capable != Interested. I'm sure I'm capable of being an architect, engineer, physician, nurse, bartender, etc... But I'm not interested in it. That is the difference. Just like every profession that pays well, there will be a lot of people working only for money, and that ones won't be as good as the ones who works for interest (and, of course, money). And the ones who likes what are doing will remain the ones w/ good wages (just like any other profession).
ilex paraguariensis for all
Logic says the same thing is going to happen in every place that is outsourced to. Maybe that is the point to make to the CIOs.
The group to teach this to is not so much the management (who operate on short time scales and dance to their investors' tune) but the Venture Capitalists (who are in it for a long-enough haul to cash out, and write the tune).
A few years ago I was working with some people who were trying a startup. They couldn't get funding without having an "outsourcing strategy". Over 95% of the venture money from the Sand Hill gang was going to companies whose business plans had the bulk of the labor done offshore - mainly in India - and only a "core team" of architects and special-skill experts onshore.
If these people realize that offshoring your labor means giving away your IP before you can achieve success, they'll drive management in at least the new and expanding companies back toward use of domestic labor.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
This "problem" was always part of doing business with Indian subcontractors. The first time I encountered an Indian team was on a project around 1997 - back when it was just called subcontracting, and not 'out-sourcing'. We had a major problem of trying to get the guys up to speed, since they were just fresh out of university, and very green - and just when you got them trained to a useful stage, they would be gone. None of the coders would be on the project for more than 3 months before they left (left the company, or got promoted, I have no idea), and everyone had different styles and skills - and none were too great. I found out years later - when working with other Indian developers hired by the company I was in at the time, that the company these others were part of - Tata Infotech, is basically a graduate-eating meat shop with an extremely high turnover even for India. Of course with so much competition for workers, the same happens in all Indian I.T. shops, not just Tata.
Needless to say, for the original project we threw away all of the rubbish they'd coded and two of us wrote a working version in about 6 months - it was only a small bit of code really, but before that time we'd wasted 18 months 'reviewing' mostly crap code, and training their graduates for them in the process.
_
\\/ are accustomed' - First Lensman
Pay peanuts, get monkeys.
Software patents delenda est.
So all I need to do is move to Bangalore and get a 14% pay rise.
Oh, wait ...
"The greatest lesson in life is to know that even fools are right sometimes" - Winston Churchill
There are about 300 million people in the US
Or have you been missing the massive numbers of illegal immigrants (AKA undocumented workers for the politically correct crowd) who have come to America lately? America for the most part has been completely settled from coast to coast since the dawn of the 20th century and like any other nation on earth, has a limit to the amount of natural resources that the nation can provide. China quite aptly realized that their nation was at risk of imploding because of having more people than their environment can support, yet the United States is doing its best to hit half a billion people in a couple of decades by absorbing everyone on this planet who feels that squatting on the United States is their god-given right.
Yes, the elitists of the United States love outsourcing for the jobs which can be outsourced so as to keep labor costs artificially low, but for keeping labor costs low for anyone involved in jobs which cannot be outsourced, they use insourcing in the form of both legal and illegal immigration to drive down the wages of relatively low-skilled jobs like construction and of course being an electrician.
Elitist internationalists swear no loyalty or oath to any country and rarely have any cultural or religious feelings that underpin a greater moral understanding of how you should treat human beings. They don't believe that there is anything special about being American, Indian, Russian, or Iranian in terms of culture and they really loathe the ideals of any of the major world religions whether the religion be Christian, Islam, Judaism, Hinduism, etc.
To the internationalists, people are just economical objects whose services can be bought and sold like slaves. The only redeeming quality of these people is they are equal opportunists in spreading their evil around the world. They don't care what country you come from, what color your skin is, or what faith you practice (though they usually are suspect of anyone with religious ideals); rather all they care about is money and power and to them you are nothing but labor to exploit. To them, you are no more significant than an ant under a magnifying glass in the sense that they feel entitled to "burn you out" on a whim.
When people all around the world finally pull the wool out from over their eyes and see what is happening to their own nation, culture, and religion by this evil international cult of money worship that is hellbent on pitting the people of the world against each other for their own amoral greed, then maybe there will be hope for the regular Joe's, the regular Mohammed's, and the regular Taj's to stop fighting for the scraps of food left to them by the Gates', the Murdoch's, and the Walton's of the world.
Employment Stats:
Number of years in the workforce 47 +/-
Number of employers: 2 +/-
Longest Stint: 40 years.
Promises companies (and governments) make aren't really binding
My father would say this is the difference between his generation and mine. In his day, people's word actually meant something. Even if those people worked for a corporation there was a sense of personal responsibility in your daily dealings.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
The rest of them can't see the future.
Why the whining?
So we outsource jobs Americans won't do.
There is 0% unemployment in the USA. Humanities grads start at nearly 100k a year(usually much more) with no work experience.
Even MickeyDs burger flippers make 40k minimum.Illegal Mexican labor doesn't work for less than $20 an hour.
We HAVE to outsource these jobs.
And then treated the Brazilian workers like crap. The Brazilian workers will eventually wake up and screw IBM.
As an MSc Management student I am taught that companies seek Rule of Law. But as an independent thinker, I argue that companies seek Rule of Law for Themselves, and I theorise that they outsource to countries where officials can be bribed. Some businesses (all of them? hopefully not) are afraid of a transparent, just government and court system. Essentially, what some business owners want is to be able to chase criminals and competitors, but save their business by bribing officials when they are being chased.
Sorry. Typo. I think the rest is correct, though.
You are not a beautiful or unique snowflake -- but you could be if you got off your ass.
But that's my point. From 1945 through the mid '70s companies could afford to act that way because the economy was growing at a pretty good clip. But when you have a recession, companies cut payrolls - it's just a fact of life. How many jobs did his father have? Companies can't afford to keep people they don't need on the payroll.
Pay peanuts, get monkeys.
Errrr, no, that's "Pay bananas, get monkeys." If you pay peanuts, you get elephants.
Don't piss off The Angry Economist
They don't require more skilled programmers, though. They require more skilled specialists in whatever field the program is being used.
Maybe it's a regional thing. Here we say "pay peanuts, get monkeys". Google seems to show the two variations as 50/50.
their small penises for losing the business. =)
I disagree. They require more skilled programmers who also have
enough domain knowledge to understand the skilled speciallists.
The more abstract the black boxes you are putting together,
the higher the complexity of the system. You need more experience,
not less.
What has happened at the generational boundaries of languages?
They have increased in expressiveness, and in doing so, have increased
in complexity. Requiring an increase in (average) programmer ability, not
a decrease.
emt 377 emt 4
An increase in demand no longer means a need for more people, nor does a decrease lead to the opposite.
Whether your demand is 1 or 100 DVD players, it takes the same amount of machinery to make it. That's why so few Americans are now hired to put out such phenomenal number of products.
And in IT, Americans can't move "up market" now because there are no entry level tech support/admin jobs from which people can get experience to move into higher level jobs.
--- Grow a pair, liberals... stop letting the Republicans bully you!
At least for America's workers, whose wages will never recover from the downward pressure of globalism.
America's booming IT industry is a thing of the past, as the entry level jobs needed to train people for higher end jobs no longer exist in America. Our IT industry will continue to shrink until it's completely gone, and all that is left in America are people jobs. The low paying cashier and medical clinic crap, with a smattering of middle class nursing jobs and doctors being crushed by malpractice premiums in malpractice award-capped states.
For globalism to succeed, successful nations must be impoverished.
Now where, you ask, is all the growth coming from? Simple. America is drowning in utterly unmaintainable consumer and national debt. Eventually that all has to be repaid.
Pray ye diligently that ARMs stop rising and that home prices stop falling in the superhot markets of today, or you may find yourself eating the words you're thinking of responding to me with - because that's all you'll have to eat when the shakedown comes.
--- Grow a pair, liberals... stop letting the Republicans bully you!
I spent 9 months in HCMC as the director of software development for a US based company last year. It wasn't my idea. The Vietnamese-American owner of the company who employed me to go thought it was the thing to do. I can tell you that it is NOT the place to outsource any IT tasks such as programming or web design to. Not unless you have some serious government contacts to get you access to the smartest kids out of the state schools (who will still have only minimal programming knowledge and only on Windows).
I couldn't find anyone there who spoke decent english who knew anything about computers. The best I could find were straight out of two year trade school/junior college amature windows jockeys. Linux? Perl? Fat chance! It is still very much a third world country. Software is pirated wildly too. Don't expect employees to obey any sort of NDA. Also note that since people there do not have credit cards, car payments, mortgages, and are already heavily dependent on their families for most things they need they are usually free to leave your company at any time.
At least they have cable modem in HCMC even though it can be a bit unreliable. Exepect a power outage once a month too. Expect theft. I have had motorbikes stolen, cell phones stolen, etc.
And the corruption...oh my god. We paid off everyone and were solicited for payoffs by everyone. My coworker overstayed his visa by a day. They wouldn't let him out of the country! The soldier/immigrations officer/policeman (all the same there) took him into a side room and basically asked him how much money he had on him. $60 worth of the local currency (Vietnamese Dong) and he was free to go. We paid $400 in cash to the customs guy to get them to let our IP phones into the country when the official tax on them was supposed to have been much higher.
And on top of it all they are still very much communist and most are quite brainwashed. It is in a similar vein to North Korea only not as extreme. Americans are lazy people who cheat on their wives and fuck in the streets and cannot be trusted. They do not know about nuclear weapons, don't know the cold war, don't really know anything about the world context in which the Vietnam War happened. Everyone treated me very nicely of course. No anti-Americanism at all as long as someone stood to gain money from me and I was paying in cash. They are always very friendly to tourists and smiling and respectful. Just don't try to date anyone there or talk politics with anyone as you will surely offend. If you hear someone say something about history which you know is patently false just smile and nod.
Suffice it to say the project did not go well. Doomed from the start. At least I had the good sense to bail months before the shit really hit the fan and the whole operation collapsed.
Vietnam is a fun place to visit and I recommend it. I will be going back there again in a couple of weeks for Christmas. I just won't be doing business there again until the business culture changes dramatically.
I did a minor in Economics at university (major in CS. I'm a developer too), with pretty good marks, particularly in the introductory courses, where econo-jargon is defined. I don't see anything wrong with his statement.
You can have an available supply of IT workers exceeding the demand for IT workers. And, of course, when this happens, the price -- the wage rate -- of IT workers falls; too many workers chase too few jobs.
Now, in practice the wage rate of employed workers doesn't fall (usually, though the end of the dotcom boom was an exception) - their pay is generally regular. But unemployment for that worker group rises, so the *mean* wage rate of *all* workers - the unemployed plus the employed - decreases.
Is Capitalism Good for the Poor?
Seems the obvious choice would be to outsource to Pakistan and Bangladesh, both have english as official languages and can collaborate with India and each other easily.
Word is that recent growth has resulted in a shortage of inherently corrupt Indian officials. Offshore individuals, primarily retired individuals from the few remaining communist regimes, are now being hired to take the requisite governmental payoffs, kickbacks, and bribes.
The average (and even the above average) office drone couldn't program a microwave, let alone a computer.
I don't know about you, but my microwave's pretty hard to program.
Writing firmware in general is pretty hard, too - you generally have to know/learn assembly and machine language on a minimalist, non-standard architecture, and write small, fast code that never fails.
Yet, the freshmen in my high school can make VB slot machine and dice rolling games.
But, the article suggests career prospects are more promising for office drones...
DATABASE WOW WOW
China is sitting on one trillion US cash reserves and they have said "enough". They don't really want nor need more US cash. In fact, the EU is now their primary market with the US number two. And very soon now they won't need either, their internal market and market in those nations that have the raw materials they need will be more than enough.
Comes a time when accepting IOUs in place of useful tangibles becomes untenable, and IMO, we are at most a year or two away from a rather severe global "correction".
Me, I have all tangibles or hard currency, hard as in physically hard. I don't have any notion that long term western paper, especially government IOU paper, will be worth much. Sure they may print it up with enough zeros appended, but it won't be worth much. Tangibles have always ruled in the end, nothng else is worth anything.
You have to also look at what the bigshots are doing-dumping their phony IOU paper (taking their options out in huge chunks while it is still worth something and the rubes keep buying into the get rich qucik schemes) and doing stuff like buying mines, real estate in nations other than the US where raw materials are, huge corporate farming estates,etc, locking in long term energy contracts, etc. that's what the uberbillionaires are doing-so what do they know? Their paid shills say do the opposite, wonder why that is??
I'd call that a lot of clues as to the direction the US (and then European) economy is going.
We've been sold down the river by the modern slave traders, who own the governments and who own the big media concerns. And to top it off, once it blows out, they get to finalise owning all the tangible real estate in the US and Europe when they call in the loans that they pushed on people which they financed with printed up out of thin air "money". You have to admire their chutzpah, doing it all in plain sight! Not even hiding it!
Great Depression con version 2 and so many, many people are falling for it.
India has a very important advantage, their command of the English language. There are lots more Indians with good english skills than Chinese, for example.
Wansu, th' chinese sailor
Still did not see any IT project out of Vietnam that was not eg. based on spam or some flopped US VN returning with 5 years of school thinking that he/she was a gift to Vietnam, bu..s... Real Company's know the real value of staff, mine don't btw but that's life
I know it seems a little pedantic to quibble over terminology but when you start thinking like this you can end up with all sorts of nonsensical conclusions. This is a case in point. Since we are talking about curves that intersect curves, talking about one as being higher than the other makes no sense.
This terminology and the difference between demand and quantity demanded is one of the points that's driven home in any decent intro microeconomics course. Hence, we have someone trying to hold forth on Economics, a subject in which he obviously has no training. Being a proto-Economist myself, it drives me nuts when people who have no training try to do Economics because everyone seems to think they are qualified but few people have had even a single course.
For a better explanation than I'm managing at this point check out this and take a look at the section "A Shift versus a Movement Along a Demand Curve". You can have an available supply of IT workers exceeding the demand for IT workers. And, of course, when this happens, the price -- the wage rate -- of IT workers falls; too many workers chase too few jobs. Think of shifts in the curves. You also have to consider short-run Vs. medium run elasticities. You are correct, in a sense, in the short run, labor supply is relatively inelastic. Meaning that shift in demand causes fairly large changes in salary. But, in the long run people head off to other industries and the elasticity is greater and the change in salary moderates. At this point the wage rate is probably somewhere between the original wage rate and the "shock" wage rate. Now, in practice the wage rate of employed workers doesn't fall (usually, though the end of the dotcom boom was an exception) - their pay is generally regular. But unemployment for that worker group rises, so the *mean* wage rate of *all* workers - the unemployed plus the employed - decreases. What you are talking about here is known as "wage stickiness". There's recent work on wage stickiness in labor markets but frankly, I'm not up on it. If I weren't in the middle of prepping for finals (and procrastinating on slashdot) I'd read this
And to quote you out of order: I did a minor in Economics at university (major in CS. I'm a developer too), with pretty good marks, particularly in the introductory courses, where econo-jargon is defined. I don't see anything wrong with his statement. Since you did a minor in Economics, I'd recommend a PBS series called "The Commanding Heights". It's not particularly germane to this discussion just really interesting. I'd wager that you're Canadian or British (because everybody in the US calls university "college"). So I suspect it will make your blood boil a little bit because it's flattering of Reagan and Thatcher.
As an aside, I'm an older developer (about 18 years of experience) who went back to do a math/econ degree.
You are not a beautiful or unique snowflake -- but you could be if you got off your ass.
Let's look at one of the biggest EDA companies out there, Synopsys. Their training costs are generally about $1800 USD in US. Even in India, their training costs are the same. But if you look at the same courses offered in China, they are about $300 USD. The material offered is pretty much required for most new grad/ entry level engineers. Does this difference in cost mean they're encouraging expansions in China or are Synopsys application engineers really that much cheaper?
my blog
- Do I know what is expected of me?
- Do I have the right materials and equipment I need to do my work right?
- At work, do I have the opportunity to do what I do best every day?
- In the last seven days, have I received recognition or praise for doing good work?
- Does my supervisor, or someone at work, seem to care about me as a person?
- Is there someone at work who encourages my development?
- At work, do my opinions seem to count?
- Does the mission/purpose of my company make me feel my job is important?
- Are my co-workers committed to doing quality work?
- Do I have a best friend at work?
- In the last six months, has someone at work talked to me about my progress?
- This last year, have I had opportunities at work to learn and grow?
These question might be from a Gallup poll.a tech that is able to work with an office drone makes both of them significantly more productive.
India is a large country. The problems that the article describes hold true for Bangalore, but not for other parts of India.
Bangalore is like San Jose or Fremont, the center of the IT industry. Its a good place for setting up companies because there is a huge pool of talented, well educated and experienced IT folk. This leads to growth, then excessive opportunities for those with experience. It also leads to the problems described in the article (attrition, rising pay).
There are other cities (comparable American cities given in brackets) in India that also have a sizable IT economy
- Pune (Princeton, NJ), which is close to Bombay (New York) and has a good university.
- Chennai (Atlanta/Austin), which is a major port and business hub.
- Hyderabad (Raleigh, NC) which has had past governments supporting and encouraging IT growth. Microsoft India has its office here.
- Gurgaon/Noida (Maryland/Virgina), satellite towns of the capital, Delhi (Washington DC).
Note that I'm not talking about these places starting out from scratch - they have a well established IT base and have been players for at least the past 5-6 years. All are good places to live, have well educated, experienced, English speaking work forces.
Large companies like Wipro, Infosys and TCS (Honda, Nissan, Toyota) have huge setups in each of these cities, and there are numerous smaller companies.
So when you speak of Bangalore becoming too demanding, its only part of the story.
cat
You may be right in claiming that the easily accessible highly trained workforces are already in the game. I think the last big unknown is China:
They have lots of population and at least some high tech industry, so there may be a considerable untapped workforce left. On the other hand, English is not as ubiquitous there as in India, so the organizational part will be harder.
C - the footgun of programming languages
"Demand is the entire demand curve and supply is the entire supply curves." :-)
Take an English class. You don't even know how to match verb and subject.
It's true I tell you, feller at work's next door neighbour read it in the paper.
Somewhere I saw a while back that they were big in call centers targeting Britian in particular since English is already common. Don't they have the infrastructure depth to support development?
Demand is the entire demand curve and supply is the entire supply curves.
Since we are talking about curves that intersect curves, talking about one as being higher than the other makes no sense.
I'm not an economics major, but I am a mathematics major. Pardon my ignorance, but I fail to see why it would be wrong to assert something like, "The supply curve is higher than the demand curve...", over some interval in which the statement makes sense.
Posted Anonymously, as my employer does occasionally scan these groups looking for employees posting ;-)
I work for one of the largest financial companies in the world, and our development "team" across all projects is primarily sourced from Indian outsourcing companies. About 30% based in our offices (Europe, Americas, Asia), the rest based offshore in their respective company offices.
On the whole, they are polite, happy to learn new skills, and will produce deliverables. So far, so good, but what are the downsides? Quite a few...
1. They will never say "I don't know", or "I don't understand". I am not sure if this is a cultural thing, or something they are taught by their employers, but you really have to ask them 3-4 times to ensure they *really* do understand something, and are not just saying yes.
2. High turnover and churn. The ones with any real skills and experience will be gone in 3 months to a new employer in India for a huge payrise, and all the time you have spent with them to learn your setup, projects, environments and business domain knowledge walks out the door. Most projects get left with employees fresh from colleges, with lots of theory, little practical knowledge, of course no knowledge of what the projects are actually trying to achieve.
3. Concepts like Security, Good design and architecture, not hardcoding configurations like usernames, password and hostnames into code, and source control are often lacking.
But this is all subject to change, we have now moved onto South and Central America, Asia and even Africa. Why? It is cheaper (as usual, people earn their bonuses from short-sighted moves, not long-term stability), in some cases it is closer to home (ie. Brazil offices closer to the States, then say the Indian offices).
From what I have seen, there will not be any real development roles left within 5 years in our offices. So, either switch to a PM role, or, head off to Brazil, and get a job their. Rodizio, cold cerveja, nice beaches, not all bad I guess.
Something that everybody misses: yes that includes you, is that USA does not expend money in R&D. People out of school had the ideas (yes after all the drunken parties and chasing the girls, they still manage to get ideas). Therefore, if you need to compete with somebody that will charge 5 bucks an hour, but you need to charge 50 how you can compete with that? So currently, there are plenty of engineers and programmers, but not in the future. Why I want to go to school, put myself in a 60,000+ hole and cannot found a job? If I find a job will not pay enough to pay for college plus expenses, so will think about my career path and will not chose IT. When questioning corporations about the education that students receive they always said that the education system needs to be improved and that is woefully under prepared (TRANSLATION FROM BUSINESLINGO: WE want technical managers, we have plenty of programmers around the world) In addition, before forget: American corporations have a heavy fix expenses. For example: HP fiorina, the estimations of how much money she drained from the company was around 500M, so if the company has President, CTO,CFO, etc and they make 50% that the president makes, sum all the personnel bellow the president and you will see part of the problem)
I've taken and aced a handful of university econ courses, and one of the problems I noticed was a massive over-reliance on graphs.
The graphs sometimes contained too much information, somtimes not enough. Nobody understood that when you draw a supply vs demand curve, you're implicitly claiming to know the elasticity (via the slope). On the other hand it only shows you what's going on in one time frame but I rarely see people draw more than one curve per discussion.
A12A.713 is the root of ASC('evil')
We can disscuss economics without being specialists.
The post to which you replied is clearly describing instersection of curves and how each curve compares against each other once the intersection takes place.
The rampant anti-intellectualism in many western societies has to do with the hyperactive use of jargon in many fields of expertise.
To everybody sane and that knows a minimum of economics, the statemnt was clear and simple, qualities some people that have learnt a bit more than most in some fields should take as their own.
IANAL but write like a drunk one.
You benefitted from an economical anomaly for far too long.
The only thing people in rich countries have to do is to become more realistic about their consumption habits.
As somebody that has travelled extensively I can say the extravagant habits of people (both rich and "poor") in rich countries can't go unimpeded forever.
Those gas guzzling monsters you own, those houses that culd fit small african villages, all those gadgets (PS3 costs $500, woot!, that is half a years salary in many countries!) are putting you at a competitive disadvantage in a global market.
But markets are benign, for all your unsuferable whining about the poor US worker, many jobs are being generated by foreign companies investing in the US. If you do not want globalization, then those companies have got to go.
For globalization to be less harmful (it will "succeed", if by that you mean it is unstoppable) to rich countries some impoverishment is indeed required, that is competition for you. As a national of the country that has benefitted the most from capitalism, I think you could damn get used to it frankly.
IANAL but write like a drunk one.
One of the biggest heritages the English left in India was the English language. Compared to mainland Chinese, Vietnamese and Brazilians, people from India have an enourmous head start, which is their relatively better command of the language.
These three will not really happen, unless you do not need them to read, write or speak English.
-jl
Add up all the savings you are making in cheap stuff produced elsewhere and you quickly will realize that if it was made in the US you could not afford it.
IANAL but write like a drunk one.
So hat you are syinag is that an US company is not taking into account cultural differences, and wants people to work as people in another culture.
And they want this to be successful?
Yeah, lets blame those local employees, the bastards, they should know how to be USians.
IANAL but write like a drunk one.
Shows us service is suffering.
If it was as bad as you dream it was, companies would be flocking back to the US since that would give them a competitive advantage.
They aren't of course, because service is perfectly acceptable for the enormous majority of people, and the reputation of the outsourcing companies is bashed based on hearsay and exceptional anecdotes rather than the turth.
IANAL but write like a drunk one.
He had one in the U.S. for his entire life. Picking lemons. The produce business was merciless too.
He owned the house he lived in plus a couple more, had good health insurance for the entire family. Both parents worked very hard to get what they had. They managed to make it through the Great Depression too.
It's possible to have a stable working class no matter the era. You've been convinced otherwise because it's in the owner's best interest to maximize profits at your expense.
Getting the political machine to endorse and legislate their perspective has been relativley easy because politics isn't personal or transparent.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
What do you need India for? I'm a skilled computer engineer with years of experience and I make € 17,000/year! Kids right out of college are offered internships making € 10,000/year!
We have wonderful, European-style labour laws, but hey, nobody abides to them! So, you want paid overtime? Are you crazy?
And it's close to you guys, a lot closer than India. In fact, we are your closest European neighbor. We have warm and sunny weather, great beaches, pretty women, great food and wines. Outsource to Portugal, the California of Europe!
People moving jobs mean they are free to do whatever they want, they no longer have to stay in a job that is not of their liking for whatever reason.
I fail to see how this is a bad development.
IANAL but write like a drunk one.
Have you dropped a sinble nuke the USSR would have sent you back to the sotne age.
And all of us. And them
Which is why the US did not do it in the first place.
IANAL but write like a drunk one.
Those people getting jobs in India and China can now afford all kind of luxury items produced in western countries, which in turn generate jobs back there.
If you don;t want globalization all the power to you, but you can't have your cake and eat it. Stop outsorucing and then it is just fair stop US commapnies trading outside the US and foreing companies investing in same.
IANAL but write like a drunk one.
Until the point that we have true AI, that is. ( And it will
still be true, but handled by the AI. )
Then we'll just be outsourcing all our work to that bitch Wintermute up in Straylight.
Or maybe your grandfather was just lucky. Both my grandads had to change not only jobs but careers a couple times in the '30s.
Take an econ class. You don't even know how to use the terminology right.
How about this: I will always be able to find someone to do decent programming work for below the US minimum wage.
You see, economists are always a few steps behind the markets and reality for that matter. They're are always trying to figure out what actually happened and they try to apply it to their theories. And they can never explain axactly what happened.
It's a pseudo-science Mr.(Dr.?) proto-economist.
Outsource it to Pluto, Uranus, or Neptune. Anything's better than Americans. Dollars are so worthless nowadays and the premium so high for Indians, it become a new outlet for old fashioned racism. Maybe humans are programmed to discriminate based on skin color, but it's not racism. It's "outsourcing".
The problem is the "interesting" interval always contains the intersection and there's only one intersection. The interesting interval being where a market equilibrium is being discussed. In particular, demand is (in all the models of which I'm aware) a strictly decreasing function of price and supply is a strictly increasing function of price.
You can obviously put some metric on the functions like (since you're a math major) letting f, g be two functions from X into some metric space, S with distance funct d_s. Then d(f, g) = sup {d_s(f(x), g(x)) | x in X}. Is a metric on functions. So, with this metric you can say one function is larger than another. I can't think of a single metric besides "on average" that's in common usage but even that metric is not very useful in this discussion.
You are not a beautiful or unique snowflake -- but you could be if you got off your ass.
They have lots of population and at least some high tech industry, so there may be a considerable untapped workforce left. On the other hand, English is not as ubiquitous there as in India, so the organizational part will be harder. I worked for a company in 2002 that was setting up shop in China. The infrastructure is there. The question is how fast will China produce acceptable (including language skills) workers. I suspect that the number of workers is going to be large but their entry won't be precipitous like India's entry was. (At least I perceive India's entry a precipitous but I really have nothing besides anecdotal evidence.)
The question is, what are the relative rates of change. I know which way I'm betting.
You are not a beautiful or unique snowflake -- but you could be if you got off your ass.
India and China will buy out, slice up and consume many of USA and European technology companies in the next 10 years. Their current USA/European based management teams will be most supprised at their future job prospects.
Technology chief executives typically do nothing after they leave their first CEO job, which is quite unlike top managerial executives at non technology companies. Why is this so?
Oh, it's never pedantic (in my book) to quibble over terminology! Without a common language -- which includes the definitions of words -- between 2 parties, communication can't occur! I quibble over terminology all the time. :-)
/. audience in mind. I didn't think it would make any difference to my audience which perspective I chose. But you're right: there is very much a difference between "supply" and "quantity supplied" ("supply" refers to the range in the supply curve covering all possible prices, whereas "quantity supplied" refers to the specific amount of supply actually supplied at a particular price point).
I considered the "supply/demand" vs. "quantity supplied/demanded" for a moment in writing my post.
The reason I used a looser terminology was because I was writing with the
This point leads into the broad question of "wage stickiness" in labor econ (and price stickiness, more generally, which is to say, price-inelasticity).
Your analysis is (generally) correct though. Wages don't change much in the short-run (which we might assume to be anything under 3 years), but over time (as the run length increases), you're quite right. Real wages of the manual-labor jobs that started becoming mechanized-away during the Industrial Revolution, such as working in textiles, strike me as among the best examples.
Hmm... :) (I hadn't read to this quote when I wrote the above on wage stickiness)
Ha, I'll surprise you then quite a bit then here!
I'm from the U.S.; I just prefer the term "university" instead, because "college" is a term (usually) referring to a particular school in a university -- the College of Liberal Arts, College of Business, College of Engineering, etc.. But since I didn't just finish my education under the umbrella of the Lib. Arts school (where my CS dept. was located) -- I took an EE class, in the college of engineering -- it's improper to say I "went to college", because technically, I went to multiple colleges. But I went to one university... (actually, that's not true either, but that's a longer story... Anyway, I suppose I was being inconsistently-pedantic in my previous post.)
I'm also probably among the biggest fans of Milton Friedman (my political and political-economy views seem to match his about 95% of the time; I have (and have read) both of his most-popular books on my bookshelf; I remember studying his permanent-income hypothesis in my Monetary Policy course and finding it a sensible theory). So the economic policies of Reagan and That
Is Capitalism Good for the Poor?
The reason I used a looser terminology was because I was writing with the /. audience in mind. I didn't think it would make any difference to my audience which perspective I chose. But you're right: there is very much a difference between "supply" and "quantity supplied" ("supply" refers to the range in the supply curve covering all possible prices, whereas "quantity supplied" refers to the specific amount of supply actually supplied at a particular price point).
I have a pet peeve about people wrapping up nonsensical analysis in the language of economics. That's pretty much why I went off on the original poster. Using loose terminology is forgivable if the rest isn't complete BS.
I'm also probably among the biggest fans of Milton Friedman (my political and political-economy views seem to match his about 95% of the time; I have (and have read) both of his most-popular books on my bookshelf; I remember studying his permanent-income hypothesis in my Monetary Policy course and finding it a sensible theory).
If you haven't seen it, watch the commanding heights. It's available on the internet but *DO NOT* watch it there. A lot of folks thought that Friedman was an Ogre because of his involvement with Pinochet. I happen to think he was brilliant. But there's a bit where they show the protests at his Nobel acceptance and other demonstrations against him. You can see it on his face just how much that hurt even to that day. I dare anybody to watch it and still come away feeling that Friedman was heartless quite the contrary, I suspect. That footage is ommitted from the version that's on the internet.
So the economic policies of Reagan and Thatcher hardly fill me with rage. :-) (Quick: what was Milton Friedman's California license plate value? "MV PT" :) ) I am quite saddened by his Nov. 19 death too...
Good. I, like you, don't like the deficit spending (I think it just hastened the soviet collapse at best). However, many of the other changes I liked. However, I think the real unsung hero in all that is Paul Volcker (appointed by Carter but wisely kept on by Reagan).
BTW, we had a midterm the day his death was announced. It just hit me that Freidman and Pinochet died very close together.
What made you go change?
There were 3 reasons.
1) I got tired of "lumping data around". Most of the stuff that I've worked on basically involved moving data from one place to another while transforming it. To be clear, that's a wide range of stuff. I've worked on compilers, query languages, UI, IDE's (I've been an Eclipse contributor), transactional storage engines,... At it's heart, it's pretty much been all lumping data around. I wanted to do something a little different.
2) If I decided to stay in computers, I wanted to "raise my game". Hence the math part. I felt like I need to do something hard -- really hard. So I'm taking the roughest undergrad math degree that my school has. A little quote from fight club: "A guy came to fight club for the first time, his ass was a wad of cookie dough. After a few weeks, he was carved out of wood." I wanted to come out carved out of wood -- although it seems to have had the opposite effect on my ass.
3) I wanted to understand what was going on with outsourcing. Hence the econ part.
I'm currently gathering info about going back and doing a master's in CS, with an emphasis on artificial intelligence (maybe AI isn't so practical at the moment, but as robots creep into daily life (as the Roomba is doing), I imagine it could be a useful field).
I would urge you to take a look at "Understanding Computers and Cognition" by Winnograd and Flores. My personal opinion after reading that book is that a constructed solution to the hard AI problem is probably out of our reach. That doesn't mean that there aren't good A
You are not a beautiful or unique snowflake -- but you could be if you got off your ass.
There is a lot of BS floating around about offshore developers. Statements like 'you get what you pay for' are little more than jealousy and sour grapes.
In India, or China, you can live like a KING for $1,000 per month. In the US, entry-level programmers are demanding $50K per year fresh out of college with no experience.
Something has to give...
Customers (the people paying the bills) don't have any 'responsibility' to provide developers with a beach house or an SUV. In fact, they don't care whether you live in a cardboard box or have to dumpster-dine to make your way through the day -- as long as you produce the code they want at the best possible price.
Reality bites, but that's the way it works -- it's called 'capitalism'.
Developers abroad are every bit as good as American developers -- and in fact, sometimes even better because India, for example, has embraced certifications including ISO and CMM certifications that ensure the quality remains high. Check the number of CMM level 5 certified shops in the USA and India -- you may be surprised at the results.
Offshore developers are often have a much broader base of experience simply because they HAVE worked on many different types of problems and with different technologies as part of the offshore development system than someone who's done the same-old-same-old for years.
What seems to be the trend is that the work will move to the next cheapest available market, and then the next, and the next. At the same time, per-hour rates for the work will rise (at the low end) and sink (at the high end) to spread the wealth between developers world-wide and eventually there may be relatively difference between pay scales in rich vs. poor countries.
India used to have the 'lock' on offshore development -- but over the past 10 years, their prices have risen to he point where they are equal to Russian end other FSU country developers. Work is now shifting to Russia -- particularly from European companies that see a smaller culture difference (and time difference) between themselves and the Russians as opposed to the Indians. Work styles are also different -- Indians tend to work very well from detailed specifications -- Russians work best when they can be creative and just produce a result using whatever techniques they are able to come up with.
China is a late starter, but will DEFINITELY shape the market in the coming years. Initially, they suffered from very low quality work and tremendous language and business process weakness -- but they aren't sitting still and with the sheer volume of developers they can produce are going to have a very interesting impact on the market in the coming years.
Want a stable salary and a job for life? Better get a 'trade' and join a union and/or work for the government. The IT business is doing as it always has done -- change fast and change hard. Improvise, adapt and overcome if you plan to stay in the game.
Take a look at the theory of the Giffen good, wherein a price increase causes a demand increase.
Supposedly the theory would apply (as is the classic example) for me when I go to buy bread at the grocery store. The least-expensive bread goes stale too quickly for me, whereas more-expensive breads - which I use for the exact same purpose (and which taste similar, though of course not exactly the same) - do not... Of course there are limits. I won't buy any bread that is $4.00/loaf, but I do choose between loaves at $0.70/loaf and $1.00/loaf.
But then, in my case, it's not the higher price that causes me to buy the more expensive bread, it's the greater utility of longer-lasting bread. I don't care what people think when I buy bread. I would certainly buy the cheaper bread if it lasted just as long as more-expensive bread. Alternately, I would buy more expensive bread if it offers improved features: better taste, better texture, less crumbliness, better quality in the toaster, etc..
Hence, the question of whether Giffen goods really even exist...
Is Capitalism Good for the Poor?
Sounds familiar (I develop directory-aware apps, so much of what I do is piping data to/from the directory databases)... My boredom with this plumbing effort is part of my reason for wanting to go back to go back to grad school as well.
That said, econometrics (if you haven't taken it already) is in some ways like CS. Some extremely sophisticated analyses can be performed in SAS, and so to some extent, econometrics resembles programming (or it did in my class)... You'll certainly be shuffling around lots of data for your analyses.
Haha! Spending lots of time at a desk, pencil in-hand will do that.
That was the original reason I did my minor. I wanted to try to figure out where my job was going upon graduation (since I was already a year into my CS degree).
Although, as a graduating HS senior in 2000, I was considering doing an Econ major and then going on to law school, rather than a CS major and then going into industry as a developer (as I've done. The idea of going into law is thoroughly yawn-inspiring to me at this point). I've always had Econ. academic tendencies...
Thanks for the insight. People twice my age (and in other scientific disciplines) suggest the same thing. It may be a rough next couple decades for people in developed nations, as offshore outsourcing rapidly raises the real wage levels in other nations towards some equilibrium, as the real wages in developed nations for the same jobs stagnate (being held-down by wage competition in other, cheaper nations).
But so long as software grows increasingly-complex in its functionality and increasingly-large in code base -- and so long as demand for that software keeps its pace -- so too will the demand for developers to deal with the rising complexity. It's this sort of optimism that keeps me from more-seriously considering jumping-ship to another, less offshoring-prone career...
Is Capitalism Good for the Poor?
I see lots of anti-outsourcing comments on here, saying how it's a race to the bottom, etc etc etc.
Do you care about the world, or only your own little corner of the world? If you care about the world and long term benefits, you should encourage global trade and outsourcing.
Why? Take a look at the Invisible Hand theroy in Adam Smith's 'Wealth of Nations' book.
Yes it's true. Corporations operate on pure greed. What they are doing is leveraging the global labor arbitrage, and going around investing in third-world countries that nobody cares about. This in turn increases infrastructure, wealth, education, and knowledge about that country, which fast-tracks it to modern-world standards.
It also forces OUR OWN COUNTRIES to be more competitive. If programming is now outsourced, then our own workers must become even more competitive than before (as opposed to standing still and stagnating). Either we move up, or we become irrelevent. The climb up the value chain is endless. We are not all just grunt workers. There's a whole different world once you climb into management.
So yes, in the short-term there might not appear to be many SELFISH benefits, but in the long-term, everyone in the world is better off, which also means they will have more spending power for OUR GOODS. As a result of increase competition as well as a larger labor market, innovation improves much faster. 6 billion people fighting for innovation is better than 300 million doing it.
In summary, here are the benefits:
- End world hunger: countries and people rise up in spending power, and people are able to feed themselves. you DO care about ending world hunger, and not just how many rolexes you can buy right?
- World Peace: increase trade/communication, and you vastly decrease hostilities, misunderstandings, and drastically increase the cost of war.
- More Wealth For Everyone: as people in third-world countries rise up, their spending powers increase, and thus are able to buy OUR goods.
Stop thinking pro-protectionist. Time has proven again yet again yet again that it does NOT work. Do you think the world is better off today, or yesterday when most countries were closed off to the world?
eTrade SUCKS