Former Soviet Republic of Georgia To Become IT Tax Haven

A few days ago we noted how Ukraine is driving out its software freelancers with the threat of onerous taxation. Now comes news that another former Soviet republic, Georgia, will become a tax-free zone for IT companies. It might be the Google translation, but it seems that officials there are somewhat worried about how to categorize the IT segment: "[T]he main difficulty ... is to determine which organization is the IT company, and what is not: 'While from a formal point of view it is impossible to distinguish between software developers from the oil.'"

Comments

Does this mean Georgia will be invaded again?

[newdsfornerds]

heh

Re:Does this mean Georgia will be invaded again?

[mrsteveman1]

They do control a large percentage of our Peach reserves......oh you mean the other Georgia? Fuck who knows.

Re:Does this mean Georgia will be invaded again?

[Anonymous Coward]

I suspect Iceland is already mounting an assault battalion.

Re:Does this mean Georgia will be invaded again?

[dimethylxanthine]

By young and nerdy Ukrainians this time :-)

Re:Does this mean Georgia will be invaded again?

[emptycorp]

Fuck, who knows?

Fixed.

Re:Does this mean Georgia will be invaded again?

[Anonymous Coward]

Too late...

Re:Does this mean Georgia will be invaded again?

[Anonymous Coward]

Fuck, who knows? Fixed.

No because your mom knows and I'm fucking her right now...

awesome

[Anonymous Coward]

This is good news for Michael Crawford, (the Nobel Prize winning Joe Stack scholar not the shitty singer). He owes the IRS 6 figures in back taxes, so I suspect he'll move soon. He speaks perfect russian with no accent so it will only be a matter of time until he's rolling in the Georgian poony.

Re:awesome

[oldhack]

That's bullshit. How can you speak Russian "with no accent"? Stupid.

Re:awesome

[Kitkoan]

Same way you can speak English with an accent, stupid. Think, even in the USA you have many accents on the SAME language. A New Yorker accent, Brooklyn accent, country-hick style accent, southern drawl accent, California surfer accent...

Re:awesome

[Kitkoan]

He speaks perfect russian with no accent

Yes, but can he speak French... in Russian?

Re:awesome

[WillKemp]

That doesn't explain how you can speak Russian with no accent. It's impossible to speak any language without an accent. It doesn't matter what language you're speaking, the only people who think you haven't got an accent are the ones who speak with the same accent.

Re:awesome

[Kitkoan]

When your speaking with 'no accent' it means your speaking in the local style accent which no one there will notice. It helps you blend in and feel more like 'one of us'. And to the locals, your speaking with 'no accent'.

Re:awesome

[AK Marc]

When you eliminate the impossible, whatever remains, however improbable must be the truth. Since you know "no accent" is impossible, but "no foreign accent" is possible, then why assume the impossible and ridicule it, rather than taking the reasonable reading of it where "foreign" is assumed?

Re:awesome

[WillKemp]

When you eliminate the impossible, whatever remains, however improbable must be the truth.

No it mustn't. Whatever remains must just be possible - which isn't the same thing as "the truth" at all!

Since you know "no accent" is impossible, but "no foreign accent" is possible, then why assume the impossible and ridicule it, rather than taking the reasonable reading of it where "foreign" is assumed?

Because "no accent" is what was said, not "no foreign accent". If we're not discussing what's actually written, why not why not assume it meant "no Russian accent"?

Re:awesome

[Retric]

If there is only one past and you can eliminate all impossible pasts you end up with one and only one option; what actually happened.

Re:awesome

[AK Marc]

Because "no accent" is what was said, not "no foreign accent".

So?

If we're not discussing what's actually written, why not why not assume it meant "no Russian accent"?

Because that would be stupid. You are purposefully taking the absolute worst possible interpretation of the words possible, then asserting it to be the only one. "No accent" is impossible. So, what's the most likely meaning of that? "No foreign accent." If you have another plausible meaning, share it.

Just because someone says something you don't like doesn't mean it's wrong. Everyone else understood it but you choose not to, even when explained to you. So why? Are you of the camp that language is prescriptive and not descriptive? You choose to be an ass because you like to bash others when you are the one that's wrong and they aren't? I can't figure out why you are holding to your illogical argument.

What was actually written was that someone spoke a foreign language without an accent. That means (apparently to everyone but you) that they don't speak it with an accent that reveals that they are a foreigner. There is no ambiguity in that. There is no other plausible meaning of that. So I can't see your objection other than you are an asshole that gets joy from running around being a grammar nazi (and a wrong one at that).

So now our jobs go to Georgia?

[Joe The Dragon]

So now our jobs go to Georgia?

Re:So now our jobs go to Georgia?

[wmbetts]

You'll just have to move to Georgia to keep it.

Re:So now our jobs go to Georgia?

[Darkness404]

Thats basically what happens when countries lower their taxes corporations go there. It seems to be something that the current administration doesn't seem to understand, if we're charging higher taxes, higher labor costs, for essentially the same service why not move elsewhere? Most businesses would want to stay in the US but when the US seems to be raising taxes for successful businesses, is there any reason not to move?

Re:So now our jobs go to Georgia?

[cappp]

So what is the net benefit to companies who chose to move to Georgia as opposed to India or China or the Asian countries or Ireland or other European countries with tax breaks? Heck, Canada seems to be doing pretty well in the games development area with their rebates.

Does anyone know what special benefits Georgia offers beyond this abscence of tax? Is there a friendly judicial system? How's the IP protection? Do they have a significant body of skilled workers? Whats the infrastructure like? Is there a lot of access to the European market or benefits that aren't accessible any other way?

Re:So now our jobs go to Georgia?

[Tumbleweed]

if we're charging higher taxes, higher labor costs, for essentially the same service why not move elsewhere?

The key there is 'same service'. All too many companies will decide that something IS the same service without taking into account factors which impact the company and the customers, all for the sake of lower taxes. Outsourcing to another country which may have another language, incompatible customs, and different labor practices and, in the case of IT, different development paradigms, may be far more costly in the long run than a lower tax rate. But that would require an understanding of IT, which most business people simply do not have, and aren't interested in learning about.

Re:So now our jobs go to Georgia?

[Anonymous Coward]

No - just your accounting and payroll department.

Re:So now our jobs go to Georgia?

[Darkness404]

Yeah, you have lower quality work, but in many cases it is easily offset by taxes. The main thing about taxes is it punishes you for being successful. The more successful you are the higher you have to pay in taxes. The foreign workforce is usually decently educated, cheap and willing to work long hours because the standard of living is lower. Someone being paid US minimum wage in the US can hardly even afford rent, the same pay gives a person "middle class" status in third-world or developing countries.

Code is generally code. Lower quality code for a much lower price is many times a decent price to pay.

Re:So now our jobs go to Georgia?

[Darkness404]

Is there a lot of access to the European market

With the internet, the world is your market. A small software developer in Kansas could access European, Asian, African, etc. markets. Someone in Georgia could access every market also (unless Russia has an embargo or something on them).

Re:So now our jobs go to Georgia?

[Anonymous Coward]

Where'd you hear all that bullshit from? Some salesman for an Indian outsourcing firm?

For every outsourced project I've worked on, the cost has been $X to develop the software in some foreign shithole, plus another $Y to have a bunch of Westerners fix it up. The sum of $X and $Y always far exceeds the cost of getting the software written fully in a Western nation. Why is that? Because most of the work done by the foreigners has to be thrown out, it's that bad. So you end up getting Westerners to rewrite virtually all of it, anyways. Except in addition to paying for the software itself to be created, you're paying for the Western developers to analyze the shit put together in the foreign nation, and to determine that it's complete shit that needs to be thrown out.

Sure, the cheap shoes you bought that were manufactured in China might not last as long as those made in America, but at least they'll generally do their function properly until they break. Software isn't like other manufactured goods, however. Generally, software works or it doesn't. There is no middle ground. There is no such thing as "lower quality code". There is either "working code", or there is "non-working code". You only get "non-working code" when you deal with outsourcing firms.

Re:So now our jobs go to Georgia?

[cappp]

Which is somewhat my point. What is the particular draw to doing business in Georgia given the modern state of affairs? If I can work in Ireland or India with pretty much the same advantages why would I bother to relocate and open-shop in Georgia?

Re:So now our jobs go to Georgia?

[dugjohnson]

Agreed and this is a strong argument in favor of the Fair Tax. http://fairtax.org/ Elimination of business taxes, payroll taxes, and all the other myriads of taxes that make business owners and their minions spend millions of dollars and hours just to comply means that business can concentrate on business. It's not just a matter of lower taxes (Fair Tax is actually revenue neutral) but a lowering of the cost of operating legally.

Re:So now our jobs go to Georgia?

[The Snowman]

For every outsourced project I've worked on, the cost has been $X to develop the software in some foreign shithole, plus another $Y to have a bunch of Westerners fix it up. The sum of $X and $Y always far exceeds the cost of getting the software written fully in a Western nation.

I agree with this assessment, and your post in general: however, it appears that the GP was talking about wages, not the cost of software development to the company.

Re:So now our jobs go to Georgia?

[LynnwoodRooster]

Lower cost of developers. Lower cost of facilities (housing, offices, power). Lower cost of living. If you can charge close-to-EU or close-to-US prices, and relocate to Georgia, your net take-home and keep-in-the-bank dollars skyrocket.

.
It's not how much you make; it's how much you keep.

Re:So now our jobs go to Georgia?

[Luckyo]

Taxation is merely one small variable in a big formula.

Among others are:

1. Infrastructure
2. Workforce availability
3. Culture of working
4. Political stability
5. Religious stability
6. Social stability
7. Corruption
8. Legal system
etc.

If you really believe that taxation is the biggest issue, I have a zero-taxation location for you in Somalia.

Re:So now our jobs go to Georgia?

[Anonymous Coward]

The cost of software development will include the wages payed to whoever is actually doing the work...

Re:So now our jobs go to Georgia?

[biryokumaru]

It's not all bad. They have very nice wine.

Re:So now our jobs go to Georgia?

[cappp]

Again, how does that beat India? Or China? Or generally anywhere in Africa, the Middle East, or Asia? If costs are the only factor then any of those places should easily beat anything Georgia has to offer. I'm wondering what other factors come into play that makes Georgia worth the interest.

Re:So now our jobs go to Georgia?

[LynnwoodRooster]

India is hardly a zero-tax country; likewise China and most of the Middle East. Low tax is nice; zero tax is great. Georgia also has an abundance of English speakers, unlike most of Asia. It has a large population of computer scientists and engineers, unlike Africa. And it's geographically close to the EU.

Re:So now our jobs go to Georgia?

[rtb61]

The additional cost of code review for outsourced work also doesn't cover the cost of giving away your source code for free. That outsourced company also has a free copy of your code that they can now incorporate in other projects and on sell. Plus tech workers are well informed workers, underpaid third world tech workers, know full well they are dramatically underpaid third world tech workers, this does not put them in the right frame of mind for declaring and cleaning up all possibly exploitable security faults.

Georgia as a country, home of the Russians mafia for generations with statues of Joe Stalin at city centres still celebrated as hero to this day, perhaps not the most tech secure consideration. Sometimes cheap just ain't worth it. Outsourcing coding and data input to countries with a bad track record for corruption is really crazy. Alternative tax cheat, set up software company in Gerogia, it out sources all of it's code back to your local headquarters, pays the cost price, then adds in all the mark up before selling it back to you at your zero profit "heh, heh" retail price, if you really desperate to cheat that is about the only safe way to do it with Georgia (any country that doesn't toss out a tie chewing president http://www.youtube.com/watch?v=syKMsDS2OzE on his butt has got to be too cracked to deal with).

Re:So now our jobs go to Georgia?

[tftp]

Does anyone know what special benefits Georgia offers beyond this abscence of tax?

Georgia went through a couple of civil wars (and a few presidents) since the USSR dissolved. Georgia initiated another war recently, and successfully lost territory this way. The president of Georgia is believed to be insane; some say that he personally killed one of his political opponents. He is currently the black sheep among presidents in the region. Russian officials won't tell him the time of the day. There are frequent demonstrations for and against the president. The country is poor (but that's pretty easy to conclude by now.) The local language is pretty unique. The country is split into several tribes who aren't particularly in love with each other (that's what caused the loss of territories in the recent war.) Many people live in mountain villages, with minimum communications. Georgia was best known in the USSR for its agricultural goods - wine, peaches and other stuff that requires warm climate. There are probably quite a few programmers in cities, though.

Re:So now our jobs go to Georgia?

[shutdown -p now]

Georgia is #11 in the "Ease of Doing Business Index", and generally has very lax economic regulation across the board. There have been some sweeping social and political reforms since 2004, and the guys at helm are die-hard economic liberals, with all that implies - very little bureaucracy, and tendency of government to keep its nose out of business affairs for as long as all taxes are paid.

I'd say that, if you're looking for a libertarian paradise, it's one of the places closest to that. How long that will last is a good question, though - there have been some claims recently that Georgian economic growth has all signs of an investment bubble, and it's about to burst.

Re:So now our jobs go to Georgia?

[vigmeister]

Ignoring the racist implications of your rant, if you outsource software development to India and pay them a fraction of what you pay 'Westerners', I would definitely expect the quality of code to be low.

Foreign developers who are as good as you or better than you will not do your job for a fraction of the cost. They would simply migrate to a place where they get paid well for their work.

Outsourcing companies are typically cheap and shitty because your managers like cheap shit. If your manager bought shit computers from Dell for his employees, is it Dell's fault for making money off his stupidity?

Cheers!

Re:So now our jobs go to Georgia?

[Anonymous Coward]

"Your" jobs? Those were originally OUR jobs, before you fuckers took them.
Welcome aboard, back o' the bus.

Re:So now our jobs go to Georgia?

[DavidTC]

I'd say that, if you're looking for a libertarian paradise, it's one of the places closest to that.

I think that comment wins the 'inadvertently funny' prize for today.

Re:So now our jobs go to Georgia?

[rxmd]

Georgia also has an abundance of English speakers, unlike most of Asia. It has a large population of computer scientists and engineers, unlike Africa.

You are speaking about a country of four million people. The capital has a population of less than 1.5 million, and the regions outside the capital are largely uninteresting for IT investment. The abundance of English speakers and large population of engineers need to be seen in relation to that.

English in Georgia is largely limited to the young generation, people over 35 are more likely to speak Russian than English, even though they probably won't like to. I guess you could find more English speakers in many Asian cities than in Georgia, depending on what constitutes "Asia" for you. India, Bangladesh and Pakistan alone have something like a few hundred times the number of English speakers Georgia does. Knowledge also does not mean good knowledge. People already complain about the English of call centers in Bangalore, but I don't see significantly better English in Georgia on a broad scale.

And it's geographically close to the EU.

This means practically nothing. For IT work the Internet is the medium of choice anyway. For what it's worth, Kosovo is even closer to Europe, yet I don't see European IT outsourcing to Kosovo happening on a large scale. Georgia is also politically unstable. They got into a war with Russia recently where an EU commission later found that it was primarily the Georgians who started it. The Georgians may fly the EU flag outside government buildings on their own initiative and declare it their goal to join the EU and NATO, but both the EU and NATO are growing increasingly skeptical of the country. Politically they're further away from the EU than they ever were.

Political culture can be irrational in Georgia. It's formally a democracy, but changes of government have never resulted from elections. Public culture can be fairly racist; in 1991 the country was founded amindst slogans such as "Georgia for Georgians", which got them into several civil wars and cost them significant territories inhabited by ethnic minorities, which would now rather see themselves annexed by Russia than governed by Georgia (not that those minorities are necessarily much better in terms of interethnic relations). Infrastructure is problematic outside the cities, too. There are entire regions that don't have electricity (or that had them until 1992, when someone dismantled and stole 70km of overland electricity line for the copper).

Personally I actually like the country, make no mistake. I have been there, I have friends there, I can read Georgian if I have to. But it's not a place I'd recommend for major IT investments.

Re:So now our jobs go to Georgia?

[Anonymous Coward]

In former-Soviet Russia republics jobs go to you!

Wait...

Re:So now our jobs go to Georgia?

[228e2]

^This. All of this. Is correct.


People always want to focus on foreign programmers not being able to program but miss the point of equivalent exchange. This applies in India, the US, UK, and the North Pole. If Santa outsources his toys to every country, and pays them the same rate in the North Pole currency, and provides the same raw material, I im 99.99% sure that Santa could throw all those stuffed bears in a bag and not know hes giving Timmy a bear from the US and Tommy a bear from Brazil.

Re:So now our jobs go to Georgia?

[WillKemp]

Foreign developers who are as good as you or better than you will not do your job for a fraction of the cost. They would simply migrate to a place where they get paid well for their work.

That's ok in theory, but it assumes that they can migrate - and if there's no shortage of programmers there, because all the work's been outsourced to where they come from, they probably won't get a visa.

Re:So now our jobs go to Georgia?

[phunster]

Thats basically what happens when countries lower their taxes corporations go there. It seems to be something that the current administration doesn't seem to understand, if we're charging higher taxes, higher labor costs, for essentially the same service why not move elsewhere? Most businesses would want to stay in the US but when the US seems to be raising taxes for successful businesses, is there any reason not to move?

Whether we like it or not we live in a global economy. We know that When other countries give breaks like that, in the current system, it is at the expense of one or many countries. And is especially egregious to the employees.

Countries develop embryonic industries by giving them extraordinary breaks, they all do it. When other countries respond with equal or better breaks, we get trade wars.

Regrettably, as important as IT is, it is but one of thousands of industries. It gets lost in the cloud, while other segments get help.

This has nothing to do with administrations and everything to do with those who've got the most money to spend on politicians.

It isn't any administration, the current global economic system is brutal on employees everywhere. Our politicians are like the morons who do the same thing over and over again and expect different results when it comes to economic theories. And it's really hurting millions perhaps billions of people.

 

Re:So now our jobs go to Georgia?

[Anonymous Coward]

Actually, I think it's pretty safe (depending who you outsource to). Granted, generic apps being outsourced won't have the same benefit of being outsourced there than to anywhere else, but speed intensive, algorithmic optimised kind of stuff (like rendering various file formats to screen - PDF, CAD, SVG, or high performance desktop stuff etc) will be very very good.
In my experience, the high level of maths these people do at high school (probably 1-2 year university stuff for math-idiot westerners) coupled with crazy-ass fundamental computing teaching at universities (lectures along the lines of Knuths art of computer programming rather than HTML101 and "Whatever the market wants" classes that most Western universities teach).

I'm not saying that all of them a good, I'm saying that the former-USSR programmers I've dealt with (50+) are the types who can deal with heap dumps, optimizations, crash logs, memory management etc rather than morons who can't grasp the concept of a switch statement. I am sick and fucking tired of outsourcing to India and getting back a pile of steaming crap consisting of the copy-pasting together of various internet tutorials.

Re:So now our jobs go to Georgia?

[eugene ts wong]

Thank you for sharing that link with us. I find the results very surprising and fascinating.

1 thing that I love about slashdot is the way that we share information that I would have never thought to even look up.

Re:So now our jobs go to Georgia?

[aliquis]

I think salaries is a bigger factor, but productivity is most likely the biggest one.

We usually have social democratic leadership over here in Sweden and some of the highest income and vat taxes in the world. Now the last time the other side won and have lowered income taxes, but I doubt much more companies came back/stayed because of that (if they still pay the same salaries maybe it doesn't even matter to them.) Some small companies complain and atleast over here bigger companies like Volvo and such got ways / creep holes to not pay any taxes whatsoever anyway.

I assume taxing people higher and companies lower may help.

Anyway, your salaries in the US is tens of times higher than in some other countries and you still got companies around, changing taxation a few percents won't affect that much.

Also speaking for myself the municipal can go in and pay 80% of my salary up to around 16000 SEK or whatever it is if anyone is willing to employ me, that way I will cost a lot less. But unless I perform decent most companies most likely rather employ someone else who actually arrive at time, can be trusted and do what they are supposed to do (not saying I wouldn't, but yeah, they rather pay and get performance than not pay so much and have things fall apart.)

Cost isn't everything.

Re:So now our jobs go to Georgia?

[aliquis]

Code is generally code. Lower quality code for a much lower price is many times a decent price to pay.

Unmaintainable code, low performance and shitty product is most likely not worth more or a better investment than good, clean, well-documented code and a product which performs well.

Not that I believe that low-cost / indian / ... code would have less quality for some reason.

Re:So now our jobs go to Georgia?

[AK Marc]

I guess you could find more English speakers in many Asian cities than in Georgia, depending on what constitutes "Asia" for you.

That's silly. It's not about the number, it's about the percentage. If you walk into a store, what's the chance that the guy behind the counter speaks English? If you hire a programmer without specifying a specific language to speak, what's the chance they speak English? The raw numbers are useless, as you stated it's a small country.

By your statement, New Zealand is a bad place for English speakers to do business because the whole country has less than 5 million English speakers, and you'll find more than that in France. It may be factually true for the numbers quoted, but is silly logic.

Re:So now our jobs go to Georgia?

[Anonymous Coward]

...unlike Africa. And it's geographically close to the EU.

you need to look at a map

Re:So now our jobs go to Georgia?

[KahabutDieDrake]

That explains why intel and microsoft are screaming at congress about HB1 visas.... Or not.

Re:So now our jobs go to Georgia?

[dunkelfalke]

I used to have a Georgian girlfriend who was a pc game developer at that time (6 years ago). She told me that it was quite difficult to work when there is no electricity for hours every day. In the capital, that is. IP protection was non-existant, skilled workers were scarse and the judical system was as friendly as money could buy.

Re:So now our jobs go to Georgia?

[rxmd]

I guess you could find more English speakers in many Asian cities than in Georgia, depending on what constitutes "Asia" for you.

That's silly. It's not about the number, it's about the percentage.

Actually it's about both. China probably has a lower percentage of English speakers than Georgia, but if you have more people enrolled into universities than Georgia has citizens, the raw number probably does make a difference.

Not to mention that there is a fair number of countries in Asia where the percentage is higher, too.

If you walk into a store, what's the chance that the guy behind the counter speaks English?

In Georgia, somewhat OK if you look at banks and tech stores, not great if you look at grocery stores or bus drivers.

If you hire a programmer without specifying a specific language to speak, what's the chance they speak English?

Better than the guy in the store, and probably better than in Turkmenistan or so, but not higher than in India, for example.

By your statement, New Zealand is a bad place for English speakers to do business because the whole country has less than 5 million English speakers, and you'll find more than that in France.

I was answering to a statement that there is an "abundance of English speakers", compared to other nations in Asia. There, the raw numbers do play a role. It's much easier to find a qualified English-speaking Indian than a Georgian.

Re:So now our jobs go to Georgia?

[Anonymous Coward]

no, it doesn't require an understanding of IT. any business could possibly encounter the same obstacles you mention. the problem is...how do you enumerate all the little unforeseen problems of moving? cause i promise you this:

somewhere, in some board room, some schmo eager to get noticed and climb the ladder will make a presentation showing how much money company b will save by relocating. it would be very easy to show those savings. in that same board room, some guy with wisdom knows it's a bad idea and that all those savings will be offset by all those 'unforeseen' problems. he'll try to make his point, but his position is much harder to defend. he'll be labeled as 'obstinate' that's unwilling to change and get passed over promotions and raises. meanwhile, the company moves overseas, the 'idea man' gets a big bonus and promotion, then gets a higher paying job with another company.

Re:So now our jobs go to Georgia?

[Anonymous Coward]

In other words - we are the best, let us do the job .. the 'foreigners' are baaaad. Pure homophobic crap.

Re:So now our jobs go to Georgia?

[microbox]

if we're charging higher taxes, higher labor costs, for essentially the same service why not move elsewhere?

Perhaps we should tariff countries with pathetic labour laws. Might halt the exploitation race to the bottom.

Re:So now our jobs go to Georgia?

[dimethylxanthine]

And food to go with it - khachapuri, shashlyk, kharcho. Davai daragoi!

Re:So now our jobs go to Georgia?

[hitmark]

its because management can leverage the move to get the share value to jump, getting a bonus back from the board.

then they leave the company once the long term effects of the move becomes noticeable, leaving the workers with ties to the location in the rut and the shareholder cutting their losses.

Re:So now our jobs go to Georgia?

[Cyberax]

"The additional cost of code review for outsourced work also doesn't cover the cost of giving away your source code for free. That outsourced company also has a free copy of your code that they can now incorporate in other projects and on sell."

This usually is not true. I'm the owner of a small outsourcing company in Ukraine. Most of our customers have widely different requirements, so code reuse is fairly small. I don't recall reusing ANY code between outsourced projects (apart from small additions to our utility libraries).

"Plus tech workers are well informed workers, underpaid third world tech workers, know full well they are dramatically underpaid third world tech workers, this does not put them in the right frame of mind for declaring and cleaning up all possibly exploitable security faults. "

That's not correct as well. I pay my workers a fair salary, and they know it. We also have a code review policy and we even can give you a guarantee that there won't be major security flaws in our software (and you're welcome to ask a third-party of your choice to audit our code).

We're a bit more OCD about security and quality than most of other outsourcing companies here, but still you'll generally get a fair deal if the price is OK. Of course, if you pay $5 per hour - you'll get exactly what you pay for.

Also, I know a bit about Georgia and now I really think about relocating there. Corruption there has lowered dramatically since the 2000-s. Their president might chew ties and try to wage a land war in Asia, but at least he knows how to fight corruption.

Re:So now our jobs go to Georgia?

[Anonymous Coward]

Atlanta isn't too bad if you don't mind the heat in the summer.

Re:So now our jobs go to Georgia?

[GioMac]

6 years ago was absolutely different situation and not only in IT... Fundamental changes were done, salary's grow, economics grow, militia was replaced by police, corruption taken down and so on, wanna buy something with money? be aware! you both will live for next 7 years in prison, government warned you about that... You better ask your Xlove that :)

Re:So now our jobs go to Georgia?

[GioMac]

Man, you are getting the wrong info :)
Who said that there is a mafia? :)))
Joe Stalin and communists are considered as worst nightmare of nation in here, we better will celebrate day of the Satan, or another Joe, Satriani :))
Fact is that paying taxes is very easy in Georgia, you can read any report of that, of course not Russian sources :D

Re:So now our jobs go to Georgia?

[PHPfanboy]

I think the concern would be that the Russian government and army keeps its nose out of business affairs.

Re:So now our jobs go to Georgia?

[AnonymousClown]

Plus tech workers are well informed workers, underpaid third world tech workers, know full well they are dramatically underpaid third world tech workers, this does not put them in the right frame of mind for declaring and cleaning up all possibly exploitable security faults.

Or....they're being paid quite a bit more than their neighbors and living like kings in their home country - even if they are being paid significantly less than a Western worker.

Let's put in an American point of view: A tech worker in the outskirts of Austin will make quite a bit less than a worker in Silicon Valley, but considering the cost of living differential, the Austin worker is probably better off. Or if you're living and working in SE Florida, you'll be making a bit less than someone in Metro Atlanta, but you're by the beach with hot chicks in bikinis - and NO STATE INCOME TAX.

If you look at the working conditions at Tata and Wipro in India, I tell ya, it looks pretty damn good even from my Western eyes.

Re:So now our jobs go to Georgia?

[Yvanhoe]

Well, some companies and employees value the fact that in USA you are confident that you won't wake up one day to see Russian tanks on the parking lot and your daughter raped by soldiers. There is an ongoing conflict with Russia since 2008 and depending on whose definition you use, Russia can be seen as occupying a part of it :

http://en.wikipedia.org/wiki/Georgia_(country)#2008_military_conflict_with_Russia

But people who want to trade peace to save tax money are free to go there, sure...

Re:So now our jobs go to Georgia?

[Neoprofin]

True story.

I spent two of the best weeks of my life in Georgia last summer. Fabulous people, great food, beautiful country. The only real problem I could identify is that whole "being repeatedly blown up and slowly hacked away at by the Russians" thing.

They're still repairing parts of Gori.

Re:So now our jobs go to Georgia?

[Neoprofin]

I think their economy has plenty of room for stable growth. They've made very successful connections with both the US and EU for development aid, government corruption is down, and their tourism industry is only beginning to ramp up though the draw and infrastructure are already in place.

If they can avoid being bombed long enough to get themselves off of the state department warning lists I see a fairly positive future for them.

Re:So now our jobs go to Georgia?

[Jawnn]

Nice try.
Tax breaks for companies shipping operations (jobs) off-shore began in earnest during the Regan years. NAFTA pretty much sealed the deal. Force companies that want to do business (sell their stuff) in the U.S. to compete on an even playing field and the superior productivity (no, really) of the U.S. worker becomes a winner. Allowing the Wal-Marts of the world to buy from China and sell here, this siphoning dollars directly out of the U.S. economy, and all the while enjoying generous tax breaks for doing so, is the problem.

Re:So now our jobs go to Georgia?

[Hognoxious]

Pity about the neighbors.

Re:So now our jobs go to Georgia?

[Hognoxious]

What have pencils got to do with it?

Re:So now our jobs go to Georgia?

[wannabehippie]

Thats basically what happens when countries lower their taxes corporations go there. It seems to be something that the current administration doesn't seem to understand, if we're charging higher taxes, higher labor costs, for essentially the same service why not move elsewhere? Most businesses would want to stay in the US but when the US seems to be raising taxes for successful businesses, is there any reason not to move?

Our jobs do not leave the US for the most part due to taxes, but due to how cheap labor costs (low pay, no benefits) are overseas. We could eliminate corporate taxes and jobs would still flow out to China, India, etc due to how they work for pennies on the dollar, with no OT, benefits.

Re:So now our jobs go to Georgia?

[Yhippa]

Georgia peaches in two different locations on Earth? Did they go quantum on us?

Re:So now our jobs go to Georgia?

[Anonymous Coward]

Is there any particular reason that makes you the owner of your job, so that nobody from another country can have it?

It is called competition.

Re:So now our jobs go to Georgia?

[shutdown -p now]

I spent two of the best weeks of my life in Georgia last summer. Fabulous people, great food, beautiful country. The only real problem I could identify is that whole "being repeatedly blown up and slowly hacked away at by the Russians" thing.

They're still repairing parts of Gori.

Well, yes, that sort of thing tends to happen when you do a targeted shelling of a UN-mandate peacekeeper mission - alongside a larger one of a town full of civilians...

It's a good thing that you've been to Gori, but did you visit Tskhinvali while you were at it?

Anyway, the war was silly on both sides, but it looks like Georgia is willing to let Abkhazia and South Ossetia go away as a price for peace... which Russia is content with. I would expect the political relations between two countries to remain chilly, but another war is unlikely.

Also, ironically enough, some of the biggest investors into Georgia are Russian companies - when Georgians privatized huge swaths of their economy, they didn't restrict what hands those could fall into - and that was true even during the war, and remained afterwards, for all the rhetoric from Russia. Business is business, I guess...

Re:So now our jobs go to Georgia?

[AthleteMusicianNerd]

Is there any reason for the citizens to stay? I can see mass emigration ensuing is this crap continues.

Re:So now our jobs go to Georgia?

[AthleteMusicianNerd]

Code is generally code

That is a tautology, so I can't disagree with you on it.

I assume you're suggesting that code from two different programmers is of equal value no matter what? If so, I have to disagree with you. I've seen working code that is impossible to maintain. I've seen flaky code that works say 70% of the time. I've seen exceptionally clean code that doesn't work. And of course, my code...which is of course perfect. Both easy to read and maintain.

Re:So now our jobs go to Georgia?

[AthleteMusicianNerd]

No one is saying it's the biggest issue, it's an issue.

Re:So now our jobs go to Georgia?

[Neoprofin]

Is Sukhumi close enough? You know the one the military wont stop you from trying to get to as picture taking tourist.

The Georgians are certainly not without blame in the situation, but I do give a bit of credence to their claims that the Russians are instigating the entire affair given that neither Abkhazia nor South Ossetia actually want "independence" any more than Nagorno-Karbakh wants it. Throw in Transnistria and I think Russia has a pretty established track record that can either be seen as "aiding independence movements" or "really fucking up the maps by creating bizarre satellite states all over the former Soviet Union".

Re:So now our jobs go to Georgia?

[HereIAmJH]

Tax breaks for companies shipping operations (jobs) off-shore began in earnest during the Regan years. NAFTA pretty much sealed the deal.

...

Allowing the Wal-Marts of the world to buy from China and sell here, this siphoning dollars directly out of the U.S. economy, and all the while enjoying generous tax breaks for doing so, is the problem.

I'm sure you know this and just got carried away with a rant, but just to make sure... NAFTA has NO effect on companies purchasing from China. China's artificially holding down the exchange rate on their currency, that's another topic. And out of control for US administrations.

NAFTA's intended purpose was to open new markets for goods between Canada, US, and Mexico. Mexico hasn't been the success that was hoped because the overall standard of living hasn't increased enough to provide a large market for American goods. I worked for over a decade in manufacturing, and the companies I dealt with generally had manufacturing in all three countries. There are other factors, some cultural, that discouraged closing down a US plant and moving it south simply because the labor or taxes are cheaper. (BTW, off shoring generally has more to do with labor costs than tax costs.) There wasn't a big push to off shore until plants started opening in India and China.

China also extends their markets by forcing companies that want to operate in China to have a Chinese partner. With Chinese markets booming, manufacturers want to enter those market with local plants. The choice then becomes operating multiple plants, or consolidate them with in the newly built facility in China and export back to your other markets.

Re:So now our jobs go to Georgia?

[shutdown -p now]

The Georgians are certainly not without blame in the situation, but I do give a bit of credence to their claims that the Russians are instigating the entire affair given that neither Abkhazia nor South Ossetia actually want "independence" any more than Nagorno-Karbakh wants it.

"Instigating" is a very vague word. There are specific facts which can be blamed on Russia, such as handing out Russian passports to South Ossetians on request with no questions asked, but I don't think that can be a reasonable justification for a full-scale armed invasion of the region, at least from a sane perspective. Then also, "aiding independence movements" is not a bad thing in and of itself, if they are legitimate, and in this case it seems to be pretty clear-cut - a national-identity-centric independence movement triggered by direct threat of assimilation and genocide ("Georgia for Georgians" under Gamsakhurdia).

Consider also that any direct Russian military aid to the uprising (which definitely was present) happened in the 1992 war, 16 years before 08/08/08. If this was an attempt to settle old scores, it was a tad too late, given the de facto independent and self-governing status of both South Ossetia and Abkhazia since their respective independence wars for many years now - to provide an analogy, it'd be as if Serbia invaded Kosovo in 5 years from now to "restore territorial integrity", and directly attacked KFOR peacekeepers while they were at it; imagine the reaction of the international community to that!

Why Ossetians and Abkhazians don't want true independence - for the simple reason that they won't be able to maintain it without external aid, including direct military intervention to defend if needed. Just the same as Georgia was actively seeking western help, trying to fast-track NATO membership etc, for the same reason (though they failed badly in that department).

Russia does have a track record of aiding independence movements where it suits it (in particular, where such movements are, for whatever reason, aligning themselves with Russia, typically on hope of assistance) - but that is same as any other country, and among ex-USSR states in particular. Central Asian "republics" have propped each others' minority movements for a long time - you mentioned Karabakh yourself, and that is not the only example - and Georgia itself supported Chechen independence movement semi-openly, providing the base of operations, when it was a strong card against Russia on the playing table.

Re:So now our jobs go to Georgia?

[richlv]

btw, there's no technical inspection on privately held cars in georgia. none.
supposedly that's because level of corruption in the inspection process was so extremely high, so it was decided to abandon it completely, at least until overall level of corruption can be brought down.
so if it moves - you can drive. and sometimes also if it doesn't move.

Re:So now our jobs go to Georgia?

[Dr.Syshalt]

The US state of Georgia was most probably called "Georgia" for a reason. The ex-USSR-Georgia is much older, BTW.

competition is a good thing

[Anonymous Coward]

This will only be good in the end. If taxation in one area gets to be too much, another jurisdiction can offer low or no taxation to balance it out. It will be nice to see some large tech companies move to take advantage of this. It also will be good for the employment opportunities in that area.

It also keeps pressure on governments to keep their taxation reasonable, something that many of them seem to have forgot how to do.

Re:competition is a good thing

[Darkness404]

It won't be good news for the US unless we lower taxes to Georgia's levels. While it is the low taxes that attract them, lower labor costs also are beneficial. Few US companies really want to outsource, but lower taxes + lower labor = profit. Many companies are willing to turn a blind eye to higher labor costs due to perceived quality benefits, but taxes simply harm successful companies so a successful company would want to move to someplace to lower taxes in order to get ahead.

Re:competition is a good thing

[LurkerXXX]

Sorry, but I couldn't let this pass because it's just entirely wrong. Successful companies are the ones who get tax breaks when deciding where to move or stay. They are the ones that grease the wheels in government to make sure they don't pay taxes, while less successful companies often still have to.

http://www.nytimes.com/2000/10/20/business/study-finds-that-many-large-companies-pay-no-taxes.html

http://sanders.senate.gov/newsroom/news/?id=712ae8a2-20d2-4334-abef-3191dd63fb59

http://www.actwv.org/press/Firms_Avoid_Tax.mx

Re:competition is a good thing

[bzipitidoo]

True, probably not good news for IT workers in the US.

But (and I may be modded troll for this), we have it too fat and easy in the US. Whine about $3/gallon gas when we should pay what it really costs, which is much more. Most of Europe pays double that, or more. Higher oil prices won't wreck our economy, any more than piracy threatens art. Quite the contrary. Do us good. Maybe we'd never have drilled in the deep areas of the Gulf of Mexico. Recall how US tastes in vehicles shifted dramatically when gas briefly went over $4/gallon. Honda was the only automaker that did well. We have huge houses which seemingly serve only to enable us to pile up more stuff that we really do not need, not even in a peripheral way, unless impressing the neighbors with peacock like displays counts. Costs a lot to heat, cool, and clean all that space. The bursting of the housing bubble helped, but more is needed. I fear our competitiveness isn't what it needs to be, hobbled as we are with the incredibly high costs of our ongoing American pissing contest over who's richer and more influential.

I used to think that it would be good if the whole world was unified under one democratic government. No more borders or exchange rates, freely trade, travel, and work anywhere. Lots of benefits. But it was divided and fragmented Europe that advanced the most in the last millennium, not the far more populous, mightier, and unified empires of China, India, or the Islamic world. No European government could unilaterally choke off all trade, or impose crushing taxes, or squelch progress that might threaten established businesses. Whenever any did, they soon found themselves abandoned by whatever interests their policies hurt as there were many other places to do business, and quickly became weaker and poorer than their neighbors, and ripe for a takeover or revolution. Europe was way too competitive an environment for any one state to get away with gross stupidity for long. Unfortunately, since WWII the US can get away with rather more of that sort of thing than is healthy for anyone. We have these crazy regulations that have driven much security research out of the US. Our intellectual property laws are among the worst in the world. Many would-be tourists have good reason to stay away, and choose to go elsewhere. We can and do pursue harmful, market distorting policies.

Re:competition is a good thing

[ducomputergeek]

Also depends on where in the US you are. We're in a smaller college town and we can pay developers about 2/3 rd's as much as the nearest "big city" and developers still make pretty good lives because cost of living is relatively cheap.

Re:competition is a good thing

[Yoozer]

Most of Europe pays double that, or more.

That's mostly because of taxes, not because it's for some noble green goal. In a way it's somewhat beneficial since some of that money flows back to improving or creating infrastructure where needed and people take mileage into account more than sheer size and weight, but the number of BMW X5s and other steel "compensation" fortresses I see on a daily basis is still pretty depressing, and it's not clear that the money for gas goes towards that goal.

On the other hand, it also means electric vehicles aren't being developed as fast as they could've been; because of the better average mileage, there's less need to upgrade.

The Netherlands, where I live, would be an ideal test bed for "commuter" vehicles; light-weight 2 person cars with great styling and streamlining. All small cars with good mileage look like pugs that smacked into a wall, all streamlined cars guzzle, and people dislike public transportation but drag the weight of the extra seats in the back with 'm. It's too bad the Volkswagen 1L isn't on the market yet; while not looking like a sports car, its mileage alone would probably already win a lot of hearts and minds.

Georgia...?

[Anonymous Coward]

Is that where they make Coca-Cola? And they held the 96 Olympics before it flooded and they had to learn to live underwater?

Re:Georgia...?

[DavidTC]

No, you're thinking of the airport in the south of the US.

This is over in Europe. Or Asia. Or, possibly, both, or neither.

Except it's not the same service.

[Anonymous Coward]

It's a pretty common misconception that a bunch of people half-way around the world in some third-world nation can somehow write equivalent software to Westerners.

Like we've seen time and time again with India, no, they cannot write software as well as Americans, Europeans, the Japanese, and Australians can. This is why virtually every project sent to India has been a failure, and why every piece of software developed there has been a huge pile of shit that has to then be cleaned up by Western software developers.

Re:Except it's not the same service.

[vigmeister]

Like we've seen time and time again with India, no, they cannot write software as well as Americans, Europeans, the Japanese, and Australians can.

Your nationality has little to do with the quality of code you can write.

I guess you also believe that the Chinese cannot manufacture products as well as Americans can. I'd argue that they definitely can, but if they did that, then your kids wouldn't have fewer toys to play with because they would cost you more. As long as you buy cheap, poorly manufactured goods from China, they will sell it to you.

Similarly, when you are willing to pay what you would pay an Australian, European or a Japanese programmer, let me know. I will find you an Indian who is as competent.

Cheers!

Re:Except it's not the same service.

[vigmeister]

your kids wouldn't have fewer toys

The should be "would have fewer".

Cheers!

Re:Except it's not the same service.

[hairyfeet]

I don't know if it is just that, as talking to an Indian coder who moved here (really nice lady BTW) she said a lot of the shitty code problems with India have to do with the culture. There she said you NEVER question a higher up, ever. It doesn't matter if you know what you are doing will never work, that it is just a huge money sink, nobody will say anything because you just don't question authority there.

She said she'd take American coders over her countrymen any day because they will be more than happy to point out the bad ideas, and often will come up with better ones to replace the bad ones. She said the only problem she had with American coders were the "cowboys" that did everything by the seat of their pants and wrote lousy comments in their code, which made them hell to deal with when they moved on.

But never underestimate the effect of culture on the work, you can't just expect to go to some country and get a "cheaper American" which is what all these companies that jumped on the outsourcing bandwagon seemed to expected.

Re:Except it's not the same service.

[DavidTC]

You're a moron.

The reason outsourcing development has little to do with whether or not people in third world countries 'can' write good code, and everything to do with the fact that paying someone for each line of code, without any relationship to if the code actually works or solves the problem, is just incredibly stupid.

It results in companies hiring people to code straight out of a book, and producing nonsense. It's cookie cutter shit, the sort of stuff you'd get if you kidnapped a bunch of freshmen CS students and forced them to write programs.

You cannot have unskilled software development, and that's what the offshoring coding houses are doing, with a few skilled guys to actually communicate with everyone else.

There's probably, statistically speaking, as many skilled coders in Indian...but they're working for actual Indian software development places that develop their own software. But Indian has managed to invent the equivalent of fast-food jobs in software, and Americans are dumb enough to buy the results. That doesn't mean that Indians can't actually cook....it means stop ordering from McDonalds if, you know, you want actual normal quality food.

Re:Except it's not the same service.

[vigmeister]

I definitely acknowledge the effect of culture on an individual's output. And I'd also say that from observation, Indians certainly are more hesitant than Americans are to question authority. However, I doubt that that changes whether they are competent or not.

As a counterexample, I'd claim that (again, from observation) that Koreans show a much greater tendency to defer to authority than Indians do. However, from a technology standpoint, that does not affect their productivity or quality of work.

Suits will find ways to mismanage any kind of employee. Even in India for example, the Mercedes Benz plant in Pune consistently ranks near the top in their quality tests (much higher than US plants). I suspect it has something to do with Mercs being sold for roughly the same price in both countries.

You certianly get what you pay for - with a little margin of error :)

Cheers!

Difference

[SilverHatHacker]

While from a formal point of view it is impossible to distinguish between software developers from the oil.

When software developers screw up, they don't leave a billion barrels of their product on the shores of Louisiana.

Re:Difference

[Saeed al-Sahaf]

When software developers screw up, they don't leave a billion barrels of their product on the shores of Louisiana.

I take it that you have never heard of the Video Professor...

Re:Difference

[LynnwoodRooster]

Unless the cause was an error in programming some system that failed.

Re:Difference

[meow27]

"When software developers screw up, they don't leave a billion barrels of their product on the shores of Louisiana."

when software developers screw up. people from the wild arise and exploit it leaving thousands or millions (depending on software or even OS) gwt infected and/or damaged.

Re:Difference

[AHuxley]

Thinks back to the Therac-25.

Uhhh, I don't think it has the power to do that.

[Anonymous Coward]

At least with federal taxes. Georgia's limited state's rights can't usurp federal institutions like the IRS, so I don't think this will even work.

Translation

[awtbfb]

It might be the Google translation, but...

Perhaps it would be less confusing if translated into Swedish Chef.

Re:Translation

[0olong]

Really? Did you you even read the Google translation? I think it's pretty damn good for machine translation. At least it seems to have improved a lot since a few years ago. Despite the crap AI and NLP tend to get from /., the field has been quietly evolving behind the scenes in very significant ways...

Re:Translation

[Anonymous Coward]

The correct translation is:

"My hovercraft is full of eels."

Re:Translation

[Hognoxious]

I think it's pretty damn good for machine translation.

Yeah, and Grumpy is pretty damn tall for a dwarf.

I could barely tell what the target language was supposed to be.

Is my source code safe in a third-world nation?

[Anonymous Coward]

I'm well aware that most outsourcing projects end up being huge disasters. It's obvious why that happens.

But even assuming it was possible for these third-worlders to develop software well (which, of course, it isn't), how can I be sure they'll respect the privacy of my source code? Will a contract alone really be enough to ensure that they don't deliver the code to me, and then turn around the deliver it to my competitors, for a fee?

Will I have to perform a complete audit of all code they create, just to ensure they haven't slipped in any back doors, for instance?

At least in America, there are laws and a somewhat-reliable justice system that can help enforce the contractual terms that the parties have agreed to. But do such institutions exist in places like India and Georgia? Not that I'm aware of. We always hear about corruption associated with such places.

So I'll continue to develop my code in America, even if it is slightly more expensive.

Re:Is my source code safe in a third-world nation?

[Joce640k]

Take warning from this: http://thedailywtf.com/Articles/The-Russian-Plan.aspx

Re:Is my source code safe in a third-world nation?

[ageoffri]

You use technological controls. Company I support at work has a 3rd party developer in India. The area the developers work in is very controlled, first there are no printers. Access to the development area is restricted to people working on that project, typical policy of no cameras allowed. Then everything is done over a system similar to Citrix, so nothing is stored locally. All code is on US based servers run by the company I support. I've never been there but one other policy is nothing except people leaves the room without being destroyed. Take notes on paper, they get shredded. No cell phones in the area. Does this give 100% control, nope, but it does give a pretty high level of control.

Re:Is my source code safe in a third-world nation?

[Anonymous Coward]

Lol, ceiling cat is watching.

Do you really expect that citrix and keeping all code on US-based servers will secure you?

Even if you do body-searches of everybody leaving, how do you ensure nobody hides anything in body cavities? I do not want to work in a workplace where I am subjected to body cavity searches whenever I leave work.

This lolcat is amused about how naive you are.

Re:Is my source code safe in a third-world nation?

[dbIII]

At least in America, there are laws and a somewhat-reliable justice system that can help enforce the contractual terms that the parties have agreed to.

Ask Airbus how that worked out in the USA when they hit some government assisted industrial espionage on behalf of Boeing. The answer as always is don't let your crown jewels stray into a place where you can't contact your local police and get them tried in your local court. It's still a huge undertaking to get justice if it's not in your own country even if there is a decent justice system.

Re:Is my source code safe in a third-world nation?

[Hognoxious]

If a programmer wasn't smart enough to circumvent your wanky security I wouldn't want to employ him.

Come to Georgia, IT companies!

[Culture20]

Suffer cyberattack from Russia, and potential real attack! Two for the price of none!

Re:Come to Georgia, IT companies!

[GioMac]

Georgia doesn't have direct communications to Russia, no fiber-channel to it, but to EU, to make attacks possible, at least you must have nice channel for it and if you will success, maximum you will get is attack on web site, not on the organization internal services and servers. It doesn't give anything to attacker.

Re:Uhhh, I don't think it has the power to do that

[Anonymous Coward]

Durrr, you're a moran.

"We are all Georgians now"

[Anonymous Coward]

- John McCain (2008)
- Eric Schmidt (2010)
- Steve Ballmer (2010)
- Larry Ellison (2010)

Labor is a bigger cost than tax

[sjbe]

Yeah, you have lower quality work, but in many cases it is easily offset by taxes.

Taxes are a big deal but I've worked pretty closely with a lot of global sourcing and taxes are usually pretty far down the list of why companies outsource. Labor cost is by FAR the biggest reason in most cases. Labor for most companies greatly outweighs any tax burden no matter how profitable the company becomes. Some companies locate their headquarters outside the US for tax reasons (Tyco for example) but this is getting harder.

The main thing about taxes is it punishes you for being successful. The more successful you are the higher you have to pay in taxes.

The "main thing"? Taxes are nothing more than a punishment for success? Seriously? I don't think you've ever tried to start or run a company because the REAL punishment is a company that loses money. Having to pay tax because my company is successful is a problem I welcome with open arms.

The foreign workforce is usually decently educated, cheap and willing to work long hours because the standard of living is lower.

Educated? Generally yes. Cheap? Sometimes if it can be managed efficiently (not always possible) from a long distance. Long hours? Not in the top 20 and apparently not as long as those in the US.

Someone being paid US minimum wage in the US can hardly even afford rent, the same pay gives a person "middle class" status in third-world or developing countries.

Technically true but you need to learn about purchasing price parity. Goods don't cost the same everywhere. Also there are people who are equivalently poor in any country you care to name.

Re:Labor is a bigger cost than tax

[phantomfive]

Labor cost is by FAR the biggest reason in most cases. Labor for most companies greatly outweighs any tax burden no matter how profitable the company becomes

Don't underestimate the role taxes play in labor costs: payroll taxes alone can be an extra 10% on the top. In IT, employees often pay 1/3 to 1/2 of their income in taxes. Taxes aren't the biggest expense, but you can't ignore them either because they figure into labor costs.

Re:Labor is a bigger cost than tax

[AK Marc]

In IT, employees often pay 1/3 to 1/2 of their income in taxes.

As an IT employee making in the top 10% (apparently I was just inside so I'll just claim 10%), I paid less than 1/10 of my salary in federal income taxes. When you count all directly paid taxes (federal income tax, state/local income, sales and property tax, including a house and a separate piece of investment property) I still paid less than 1/5 of my income in taxes. So I don't see what the problem is. Are all those people renting, so they don't get deductions for mortgages? Are they not putting anything into a 401(k)? Sure, a single male living in their mother's basement with no deductible expenses (or living in a very expensive house that's paid off, so paying taxes on the land but no deduction on interest) may have higher rates, but 1/2 would be hard to get to without seriously contrived circumstances. And if you are going to do that, you should contrive them the other way, so that a married blind person over 65 with 100 dependent children (all under 18, he got busy late, but made up for it) making $20k in IT would probably end up receiving more in direct federal payment than they'd pay in tax, so we could call that 2/1 tax rate.

But every time I hear people say "we pay 50% in taxes" it seems to just be wrong. I've run the numbers they claim, and I always come out much lower. It's like they purposefully write larger checks to the government than they need to, just so they can whine about it.

Re:Labor is a bigger cost than tax

[Anonymous Coward]

> payroll taxes alone can be an extra 10% on the top

I have no idea where you live but 10% on the top as tax is a sweet deal. For example, in Estonia, for every dollar you pay as salary, you have to pay additional 69 cents for taxes. No wonder, this country can’t compete any more. Oh, I they have a 20% sales tax too.
So, you waste 16 900 to pay someone 10 000 and they will pay additional 2000 for sales tax on everything they buy (food included).

Re:Labor is a bigger cost than tax

[Anonymous Coward]

NO one pays 1/2 of their income in taxes in the US, and not even in the "communist Canada". Secondly, income taxes of employees have nothing to do with tax burden of the company. Company simply pays the employee's salary and that's a simple expense.

Labour costs are by far the most significant cost of almost all companies that actually do something. There are examples where that may not be quite true, like an ISP, but those examples are not common.

Companies pay taxes on *profits*. If they have profits, they pay taxes. If they have loses, they get their taxes back from previous years.

If you look in the US, there are MANY small businesses where owners don't pay themselves a lot so they don't go out of business. These people are not complaining about taxes because they pay none. Only people that complain about corporate taxes are people that never actually run anything.

Re:Labor is a bigger cost than tax

[sjbe]

In IT, employees often pay 1/3 to 1/2 of their income in taxes.

No they don't. The highest tax bracket in the US is 35%. To be in the 33% or 35% tax brackets you have to make over $100,000 per year. Over $200K if married and filing jointly. No one pays 50% of their income in taxes even in the highest tax brackets. Some but not most IT employees do not make six figure incomes.

Taxes aren't the biggest expense, but you can't ignore them either because they figure into labor costs.

Of course not. But companies don't generally move operations because of tax which was my original point. It might tip them between two otherwise equal options but total cost of labor and logistics are far bigger considerations most of the time. Tax is only an issue if they are profitable and hence a second order concern.

Re:Labor is a bigger cost than tax

[phantomfive]

You have to include state and local taxes (and social security, which is something). In some states, with everything added in, it can get close to 50%.

Former Soviet Republic of Georgia To Become I...

[Jim Efaw]

Is it a bad sign for my sanity that, when I read this in the RSS feed as "Former Soviet Republic of Georgia To Become I..." my first thought was "Former Soviet Republic of Georgia To Become Iowa"?

"here's-a-hint-one-of-them-is-black-and-sticky"

[Sovetskysoyuz]

And the other one is a fossil fuel

Re:Former Soviet Republic of Georgia To Become I..

[ae1294]

Is it a bad sign for my sanity that, when I read this in the RSS feed as "Former Soviet Republic of Georgia To Become I..." my first thought was "Former Soviet Republic of Georgia To Become Iowa"?

I'm very sorry but you have a brain tumor, and it's terminal so smoke if you got'em...

Summary is wrong

[eugene2k]

The news article is about Georgia becoming a tax haven for IT and also about taxation problems IT companies in Russia are facing. The quote is from Russian officials speaking about the IT industry in Russia, not in Georgia.

Former british colony of USA,

[piotru]

unlike an ancient nation of Georgia, will not become an IT tax heaven. Oh sorry, forgot some former subjects of english king have to say "Paris, Europe" to know for sure...

How to distinguish software developers from oil

[jayveekay]

Oil floats on water.
What also floats on water? Witches!
Software developers are invariably male (just look at slashdot).
Men are not witches.
Thus software developers do not float.

So, to determine whether to tax it (non-IT) or not tax it (IT), throw it in the ocean (or Black Sea).
If it drowns, it is IT, so don't tax it. If it floats, clean it up and send the bill to BP.

QED.

When your expense can't be offset against tax

[Anonymous Coward]

I am in Belgium, I pay nearly 60% tax, just in social security and income tax. My Belgium costs largely come from the remaining 40%! Rent, food, car repairs, you name it, it's isn't claimable against tax.

So you can argue that tax on profits isn't a punishment, but I am taking a loss on this contract and it's the tax that's causing it! Not only that, once I leave (finally found a job outside Belgium), my taxes will be adjusted for previous years and I will receive another bill from this joke of a country.

I'd stop working now (why should I work when there's no profit), but then I'd still have to pay social insurance as though I was working.

So I'm looking at a small loss, or a big loss, but either way I'm taking a loss on this job. The Tax is the key problem here, the economy is a mess, they can't cut spending because the French part won't let them, they can't keep business there because the taxes are too high. They can't keep running a deficit because the EU won't let them.

Romania has this for years

[fatrocker]

About 4

Re:Romania has this for years

[GioMac]

Yeap, but what about regional grow and other taxation problems, what about neighbours, what about price you have to pay to employees?

Invest in georgia

[GioMac]

At first Georgia is fast gworing with economy, out of corruption, ZERO mafia (some in here sad that russian mafia is in georgia, i guess georgian mafia is in russia :) ):
From 2003 to 2010, after rose revolution georgia get:
1. GDP grow from 12%
2. Industry income grow for a 1200%
3. Building industry product grow for a 800%
4. Overall grow of trading 600%
5. Communication sector grow - 400%
6. External turnover grow - 900%
7. Import grow - 900%
8. Export grow - 500%
9. xternal debt rose by only 10%, in 2003 was 600 of common income, now is less
10. Average salary grow - 600%
11. Unempoyment grow - 14% from 12%, even after 2008
12. Corruption ranking - from 133th (near russia) to 58th

Literacy Level - 100% (only one and #1 in ranking)

Ease of doing business Ranking:
2009 rank - 16th
2010 rank - 11th

1. Infrastructure
2. Workforce availability
3. Culture of working
#4. Political stability
5. Religious stability
6. Social stability
7. Corruption
8. Legal system

Georgia is missing only political stability because of attacks of instable neighbours, but according to US military bases establishment - now it should be ok. Regarding others - Georgia is trying to get very close to the EU, so country is changing its legal system and standarts according to EU requests.

Mentality - out of USSR, hating USSR, hating Staling, working, learning, management, clean, literal, educated, traditionally guests are best friends, beer :)

IT/telecom access technology grow (@home result you can feel):
Y2002:
Dial-up, 1 hour = ca. 0,4 USD, 56k
Mobile: 2G, ca. 0,2 USD per minute

Y2010:
ADSL/ADSL2+ (one of the first countries implemented, available even in villages) = unlimited, 50 USD per month
Fiber to the home (available almost everywhere in big cities) = unlimited traffic, 100mbps to gbps local connection, 10bmps - 100mbps global, 50 USD per month
4G WiMax Mobile = unlimited traffic & speed, 50 USD per month, closing due other technology evolution
3.75G EV-DO CDMA Mobile = unlimited traffic, up to 3mbps speed, 30 USD per month, ca 70% coverage
3.75G UMTS Mobile = ca 50% coverage, 100% in cities, 0,02-0,3 USD per MB
2.5G GSM EDGE = ca 90% coverage (available everywhere), 0,02-0,3 USD per MB
Dialup - not available :)

Someone said something for labor cost, ok, if you believe that IT guy cost is big in georgia (actually its both - there is a scaled price range), then you can get additional workers from neighbour countries like armenia and azerbaijan, or even take indian guys in there...

Some ad videos:
http://www.youtube.com/watch?v=ynihqPoG0Wk

Capital:
http://www.tbilisi.gov.ge/index.php?lang_id=ENG&sec_id=1
http://www.youtube.com/watch?v=ax5xPZ5BZOA

Batumi (second growing city), was in communistic ruines, now growing:
http://www.youtube.com/watch?v=3HOa15Inzr0

Banking grow - oh, don't tell me about that, you can even compare to EU, especially in social needs like searching for ATM, absolutely no problem

Re:Invest in georgia

[Anonymous Coward]

The only problem seems to be the little wars the country fights left and right with neighbors who just dont want to be part of the little empire. But in the these hard times you can alway chew on your tie when your business transforms into rubble.

Re:Invest in georgia

[Dr.Syshalt]

Add regular blackouts due to power outages and ugly local chicks.

Re:Invest in georgia

[GioMac]

Talk is cheap. Show me the code. (c) Linus Torvalds

Georgia is exporting it's power. For Y2013 exports in energy will gain it's average potential and will power entire Caucasus region.

As of new government there is no power outage, from second month of it's official election. Power outages were produced for fuel - to give more money to Russia and feed local x-president's mafia, that's all. Energetic system is modernized, cables are replaced, power stations aren't failing.

Regarding chicks - quite inaccurate i may say :)
Me, like others here - in very much doubt that you are aware of local chicks. If you can not get the beauties with your brains, you only can spend money and the only thing that you get is a hard to find, candle searched five dollar prostitute, it is your problem and a sign that in Georgia prostitution, unlike in CIS countries (I guess you are from there) is ~0 and not needed at all, we've got Girlfriends for that :)
Do not shame your country and yourself and do not impersonate so ridiculously. No need to spoil the posts with angry trolls.
We know, we understand the difficulties you have in CIS, we know, mentally Russians cannot accept the truth that Georgia HAS bypassed obstacles ahead of it, but with respect, just do not have a way of failure.
For friendship and understanding.

Georgia is brightest illuminated country in X-USSR:
http://www.youtube.com/watch?v=QCEfEXuzYfc
http://www.youtube.com/watch?v=oXULPXu-6kA
http://www.youtube.com/watch?v=3AaqF8f3FeU - even a building equipment is under light, where else?

This is fact that i can provide, what did you provide? Nothing.

Viva friendship!

Bork! Bork! Bork!

[bigdaisy]

[T]he-a meeen deefffficoolty... is tu determeene-a vheech oorguneezeshun is zee IT cumpuny, und vhet is nut: 'Vheele-a frum a furmel pueent ooff feeoo it is impusseeble-a tu deestingooish betveee sufftvere-a defelupers frum zee ooeel.

One question

[elrous0]

Do I have to actually live there?

Re:One question

[julesh]

Another question: have they closed the obvious loophole?

(Create two companies, A LLC and B LLC. A LLC performs any random trade you want, and hires B LLC to design an IT system for it. Arrange the accounts such that B's fees are at least as high as A's profit. Extract profit as dividend from B, tax free.)

Re:One question

[GioMac]

We two are not only person on this world who can think of that, including Ministry of Finances of Georgia, I'm sure they have an idea on that, at least they will gain experience from other countries as they usually do :)

Mathematical equations and stuff

[Hognoxious]

I'm always wary of figures for growth. Start from fuck all and growth is infinite.

I've seen the adverts for Georgia[1] on BBC World (or maybe it was CNN), and they go on about being "most improved" in some measures of honesty. All that means is that quite recently they were even worse.

[1] Yes, countries advertise on those channels. Don't get me started about "Malaysia, truly Asia!".

Re:Mathematical equations and stuff

[GioMac]

Let's say then that Georgia is on a higher level in all that than CIS countries (Georgia isn't in CIS).
Of course there was worse situation than in all other CIS countries.

Comparison isn't infinite or absolute, it's a difference, pretty good for this example.

Let's take a look:

Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan

Who has better situation in there? I'm not talking about other countries, CIS will be enough as example.

Re:Mathematical equations and stuff

[Dr.Syshalt]

Just stop spreading bullshit. I've got relatives there. The country is still piss poor - no wonder its citizens still go to Russia to get a job and send money home.

Re:Mathematical equations and stuff

[GioMac]

Talk is cheap.
"I've got relatives there" is typical acronym used by Russians, I don't believe in that, need facts from life :)

Georgian citizens don't go to Russia, they just can't and won't, if someone is still living in Russia, it's just because of relatives (like me) or just because some of them cannot leave "Soviet mentality" and cannot live with their brains - they want to steal or they are in the pyramid of "Vor v zakone" mafia. They cannot steal in Georgia - it's impossible due current stable situation (no corruption) and there is no mafia (abs. 0). Russia is poor for that - it will allow illegal movements, so, they go there, in worst country. That's all.

Regarding income and money - be sure, 2000 USD in Moscow is same as 1000 USD in Georgia - it's cheap country and everything is cheap and easy loving in there - cars, business, living, happiness, studying, talking with Police et cetera. According to this and average data - average net income in Georgia is higher for averagely everyone. + oh, don't remind me about social situation like insurance and etc.

From Georgia, with love :)

The citation is about Russia, not Georgia.

[egork]

Russian is my mothertongue and Google has an acceptable translation of the article (originally in Russian). The OP has got the citation in a wrong context. Second part of the article is almost completely dedicated to the situation in Russia and its dominant oil export industry.

FYI: Some are talking about the "oil damnation" of the country in Russia a.k.a. as Dutch disease. Good news is that current Russian President openly aknowleges it in a way. Shifting weight of the Russian export from natural resources to the innovative and industrial production is a topic for active discussion in Russian media. This is the context of that problem.

Pearch reserves?

[egork]

So if you'd need to impeach Obama, Georgia is a place to go to?

Yahoo Oil Inc.

[wiedzmin]

I foresee a whole bunch of oil companies buying small IT companies in Giorgia and becoming their child companies :) What's that? We make billions of revenue from oil? So, we also make websites for medium and small businesses - see? :)

Tax facts

[sjbe]

Disclosure: I'm a certified accountant.

Secondly, income taxes of employees have nothing to do with tax burden of the company. Company simply pays the employee's salary and that's a simple expense.

Not true. FICA taxes are shared between the employee and employer. Furthermore the only type of company that pays tax as a company is a C corporation. All other types of corporate tax are actually passed through to the shareholders and are paid as personal income tax. Also don't forget about the administrative cost of withholding and reporting all those taxes. That is a significant cost to the company as well.

Companies pay taxes on *profits*. If they have profits, they pay taxes. If they have loses, they get their taxes back from previous years.

Again, not correct. If a company can declare a capital loss in some cases they get a deferred tax credit which they can use to offset future tax obligations. They do not get a refund of any kind.

Only people that complain about corporate taxes are people that never actually run anything.

I can't begin to tell you how much complaining I've heard about corporate tax by management of corporations. It starts with the fact that owners of C corporations are effectively taxed twice on company profits - once at the corporate level and again at the personal level.

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[vpanuva1]

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