The “fad” will end once the cost of outsourcing a particular task overseas reaches an equilibrium with the cost of doing the same task domestically. Companies will eventually figure out which tasks makes sense to outsource and which ones don’t.
Or until wages for a particular job in India start to approach parity with Western salaries.
If you worked for a buggy-whip manufacturer, would you expect to see protection against the auto industry?
The benefits of shipping certain IT jobs overseas should be obvious. Speaking as a manager/management consultant type, I’m looking at the big picture and the company (or department) as a whole, not your individual job. My offices might be in New York City where our clients are. But it’s way too expensive to build a call center in NYC for a hundred people to sit and answer phones all day. And there’s no reason to build it in NYC anyway. So if I have to open a call center somewhere else anyway, why not open it in India? That’s money I can put into whatever is the main focus of my business.
Even if you had proof of this, companies typically don’t directly hire their overseas workforce. They work through outsourcing firms.
my point exactly, Mr. Consultant Type. You don’t have to go on record personally believing the lies of a particular Indian resume. Instead, you go on record believing the lies of an Indian exec who works for an Indian company who promises to do the project for you by employing “highly experienced employees”. So you have just conveniently shifted the responsibility for accepting the resume lies while fulfilling the 1st commandment of modern American management “thou shall not hire a man without a resume with 5 years of experience in the precise keyword that we are concerned about”. And it doesn’t even matter that the folks who end up doing the work most likely have little such experience either (lies on the resume or lies of the contractor about his employees or technical incompetence of the contractor that prevents him from figuring out just WHAT is the appropriate experience for any given project) and are often too dumb to do it even if they do have it. As long as we all pretend that they will do a great job just as promised and as long as the American company is not yet bankrupt, the show can go on.
They actually asked about their doubts? My biggest problems with farmed-out code have been:
(farm in Spain for a company in Spain; farm in India for a company in Switzerland) the geniuses who decided it was cheaper to farm out hired a fixed amount of programmer-hours/month for every month in the project. In reality, there are periods where the coders’ work is to bring coffee and pray real hard that the functional analysts won’t ask for anything too weird, and others where the functionals’ job is to make sure the coders’ supply of extra-strength espresso/chocolate doesn’t dry up.
(Both cases above, plus in-house Indian programmers in Switzerland) Completely disregard specific instructions. For example, when receiving a request for three documents which are identical except for part B (of four parts labeled A, B, C and D), and the request specifies that, the analyst-programmer would give each document to a different programmer, who had a different style, used different ways to pull, manipulate and display the data for A, C and D (leading to differences in how those parts appear in the document, and even in which data appeared)… and two of whom do 3) below as well (the specs they have received from the so-called analyst-programmer say “A: see specs for CoA”; they haven’t received the part about the document called CoA)
When in doubt (farm in India; one Spanish in-house programmer in Spain; Indian in-house programmers in Switzerland and the US) stop. Don’t say anything. Just stop. When the functional asks “how’s my stuff coming along?”, take your sweet time to reply and then say “there appears to be a problem”, without specifying what… go on in the same vein, ensuring that unless the functional knows beforehand he’s dealing with one of these types, the work will take easily 3-5x as much as it would have if the doubt had prompted an email/IM/phone call of “hey, where it says ‘bold’, does it still have to be Arial 10, only ‘bold’?” (and yes, there have been doubts along those lines stopping the work for several days)
The actual advantage of using Indian IT is that you have the ability to “follow the sun” and have someone who is awake in their daytime handle what you hand over to them while you are off. If you have team members in the US, India, Manila, and Beunos Aires, you can have plenty of overlap to collaborate and then hand over issues as the day progresses. The 24 hour team can also make efficient use of limited resources. If you have software license per concurrent users, you can get more out of it by having someone use it at all hours.
It seems really difficult to hold onto good people in India, the wages were so low that companies can afford to entice those with actual experience away from the jobs where they gained the experience. This has led to enough of a change in pay that some US corporations are looking elsewhere for cheap IT. India is now a mid-cost location, as wages etc. have increased so much in the last decade. Also the recent economic woes have finally made some realize there were hidden gotchas, like layoffs not being as easy or indeed always legal.
Manila and Beunos Aires are the new hot outsourcing low cost centers. BA is especially tempting for American companies now as the people there are in a near time zone. There are data centers in Iowa and the western US now including some on reservations, giving new meaning to Indian outsourcing. The cost of living in middle-of-nowhere-US is so much less than that in large metro areas, that the savings they can offer is substantial.
There seems to be the idea nowadays that process can triumph over talent and ability. Process can help many things, but it hampers too as noted by other posters. It is not uncommon for someone to decide they are moving an operation overseas, and have the current US crew document what they do and train the newcomers who have no experience at all. The idea is that the scripts prepared will handle everything they need to do. Time and again I see this and also see the slow or not so slow degradation of service. Unforeseen and forgotten issues raise their ugly heads and since the new crew doesn’t actually understand why they do what they do, they can’t really troubleshoot well, and what is worse, they will ignore all warning signs they have not been specifically told to watch out for. They might not even realize that they are caused by things that they are supposed to be responsible.
Well, by the same token, why should my country continue to give these corporations any kind of tax break? I’d like to see the 100% tax breaks to companies that keep all of their operations in the U.S. I’d also like to see the companies that leave Americans to the unemployment line to have to pay a $5000 annual penalty for each job shipped overseas (The ceiling would be 10% of the workforce). The influx of money may add some solvency to rapidly depleting unemployment benefits (a situation that these corporations selfishly contributed to). Now, if Google likes India and China so much, just move there and be done with it. Ciao.
It is clear to me that the U.S free market is so saturated with foreign workers, that Americans can’t even get a job speaking English to other Americans. The corporations would rather ship those jobs to someone who learned to read “See Spot Run” in 10th grade in another country. This all strengthens my opinion that the government should find useful shit for these people to do. The free market has failed as evidenced by the 30 million underemployed/unemployed people in the U.S. Let the government step in, please.
So it’s a failure of the free market if the unemployed are Americans instead of Indians? Complaining about the quality of the work being done is one thing (let the outsourcers judge that for themselves), but I hate this flavor of protectionist talk; it always comes off as rather xenophobic (or at least, offputtingly selfish). If Indians can do the job more efficiently (e.g., meeting the employer’s needs at lower cost), then of course the free market will prefer to employ them, for precisely the same reason that phone companies now use computers rather than hiring switchboard operators (Oh, how unfair! Surely there should be a law!..).
Are you proposing that corporations not be allowed to purchase any supplies (which is to say, anything) from any country other than a particular one to which they declare allegiance? Are you proposing that international trade should be eliminated?
Put another way: Would you consider it a good thing if California passed a law punishing corporations headquartered there for having any operations located elsewhere (e.g., punishing Google for having offices on the east coast)? Or do you consider the current trans-state labor situation to be the one which makes the world better off on the whole, even if it means workers are guaranteed less special status by virtue of their location of residence and are accordingly subject to a larger range of competition for jobs?
Well, I’m talking about the U.S not India. The employment of Indians shouldn’t be concern of Americans nor should it be used as a measuring stick of how well the free market system is working the U.S. I’m not very familiar with China and even less so with India. But I feel that the employment of Indians and Chinese is the responsibility of their respective governments not by the goodwill of American corporations.
I should be clear that I am not against outsourcing. I just think the IRS should provide no tax breaks or loopholes for these corporations. None. Zilch. Nada. They should pay 100% of the taxes due no matter what. I also think that every U.S employee dumped by these companies should be forced to contribute to something to the unemployment kitty box.
No problem with this. My issue is only with firing Americans to give their jobs to a cheaper counterpart in China or India. In my view, it shouldn’t be cheaper to outsource, and if it is, the IRS ought to lay additional down taxes to make outsourcing less palatable. If the corporation doesn’t like it, they can move to India where taxes are lower.
Sorry, it’s not clear to me what you mean with that penultimate “No problem with this”. Do you mean you would have no problem with one state punishing its corporations for having operations in other states as well?
Also: Do you have an issue with firing Americans to give their jobs to a cheaper machine?
Well, the obvious answer is that the benefit is reduced costs.
Let’s say a company saves $1,000,000 on outsourcing. Let’s assume that the quality of the service is the same. Presto, “USA Inc” has saved a million bucks.
That’s the easy bit. Now, this outsourcing will make a number of people unemployed. Depending on the skills of the persons involved, and the state of the economy in general, these unemployed may reduce the “income” of “USA Inc”. If the reduction of income is equal to or higher than the reduction in costs, there are no benefits, and there is a good argument towards disallowing the company to outsource in the first place.
But there might be alternatives. Let’s say it will cost $500,000 to retrain the affected employees for other jobs. This training will remove the disbenefit of having unemployed (or less productive) people, and will also increase the value of these people for “USA Inc”, and even increase their wages. Everyone wins!
This means that there is a good economic argument for some regulation of employment. In the scenario above, the company which does the outsourcing saves $1,000,000. Retraining costs $500,000. Who should pay for this?
In some countries, the company pays (at least part of) this (eg. Germany). In others, the government pays it all (eg. Nordics). Some other countries don’t care, and let the affected employees manage by themselves (US). Most countries sometimes go for protectionism and disallow the outsourcing.
What the US needs, is good debates about this and a lot of other basic issues. Unfortunately, that just doesn’t seem possible. Nobody can hear the sensible people over all the yelling and screaming from soapboxes.
I don’t really have anything original to add, but I think it might be useful for me to add my voice to the chorus (although I’m not, in fact, Indian).
bugme, first I want to say that I sympathize with your plight. It’s a terrible thing to lose a job like this, and I wish you the best of luck in finding another. You are, indeed, the loser in this situation, at least in the short term. But outsourcing is an important tool for more efficient businesses.
Of course, I can’t guarantee that your company made the right decision here. There will be a lot of factors involved, many of which will only be known after the fact. But the business has to look after itself first, not the well being of each of its employees. At essence, this is about finite resources. If the company can save money by accomplishing the same task, then by saving this money, they are making the most of the finite resources available to them.
And this allows those finite resources to be used in different ways. This allows our economy, and India’s economy, and ultimately the world economy, to take advantage of what little we have to produce more and more. I recognize that this might be small consolation in the present circumstances, but you have repeatedly benefited in the past from this very process. Those benefits are hard to see, but they can be tracked. They show up in the availability of cheaper goods and services for everything, lower prices for everyone, more choices, and ever increasing innovation in the future. You have the short-end of the stick this time, and the brunt of the cost is being borne by you and your colleagues. But the benefits of this process do exist, and they do spread throughout the economy. This type of international service outsourcing is new, but the underlying principle is not. This press toward more and more efficiency is the driving force behind all the prosperity that we see around us today. It’s the same with new technologies replacing workers. For hundreds of years, displaced workers have been complaining about this process. And for hundreds of years, our workers in general have gotten more and more and more wealthy because of this process.
We should not stop it. We should, however, try to mitigate its downside for people like you, as other posters have already pointed out. Worker training, unemployment benefits, etc. Similarly, we should take all reasonable measures we can to restore our own economy to full employment, so that you and others in your situation are burdened in this way for as little time as possible, so that our unemployed, as a resource, are put to productive purposes once again.
Yes, it’s a terrible experience. And yes, despite my lack of knowledge about the costs and benefits of your specific situation, it is nevertheless the right thing for this process in general to continue.
Except that they aren’t. Often they are at least as educated as their American counterparts and twice as motivated. If that keyword is “java” and you don’t have 5 years of it, why should I trust that you can “just pick it up”?
And what do you think happens if you keep driving companies overseas? Who will you work for then?
But not if that machine is called “India” or “China”?
How about if your company outsourced your job to Montana or some other state?
Would you have a problem with keeping your job and taking a significant pay cut? Because that is effectively what would happen with protectionism. No more inexpensive products.
I would like the USA to outsource two other professions to India (or other 3rd-World cheap labor countries):
-politicians: we could get an Indian crook/politician for less than 10% of what we pay for an American!
-lawyers: litigation in Indian courts would be much cheaper than in the USA-lots of savings for us!
Eventually, we could have the Chinese maintain our highways, and let the Indians run our electric grid-think of the savings!
Of course, we can all work for the government!
No, I said “Most countries sometimes go for protectionism and disallow the outsourcing”. I meant that most countries, faced with protests and lobbying, have at some times bowed to pressure and implemented protectionist measures designed to protect their industries from competition from abroad. Sorry if I was unclear. This is especially evident in the defense industry, where most western countries have at times made it impossible for foreign companies to compete. But there are plenty of other examples, like that the EU has had import quotas on Chinese-made shoes.
Most of these types of rules not only protect national industries from foreign competition, but also makes it illegal or impractical for national companies to do parts of their work in other countries. It disallows outsourcing.