It’s been my observation (from a position once removed) that Indian programmers of real quality tend to cost about as much as American programmers of real quality. When you pay less for programmers (Indian or American), you will tend to get less-experienced, less-trained, less-skilled programmers. Depending on what you want done, of course, this may not matter - but I’ve lost one job to cheap indian programmers who susequently did not get the job done properly, hamstringing the company, and am secure in my current job because my current company previously tried cheap indian programmers that didn’t get the job done, and so they’re not likely to try replacing me with a cheap indian programmer any time soon.
Does this mean that indians are incapable of programming well? Not at all. The most it means is that cheap inexperienced unskilled programmers in india have an easier time wooing american companies, because the american companies mistakenly think everything is cheaper in India, due to the magic of being across the ocean.
While I haven’t read this entire thread I thought I’d add these things with the hope it’s not be repeated.
Recently heard at a conference from the Dept. of Labor:
There are more IT workers in India than there are TOTAL workers in the US.
Another item heard recently:
If you sit for a living, you are vulnerable. Vulnerable = potential victim of globalization. This is good news for countries on the rise, but bad news for countries that rose some time ago.
I personally am in the winter of my working days, most all of which have been in IT.
I’m glad none of my kids have expressed an interest in a careeer in IT.
This is, obviously, quite false. The high end estimate I can find for IT workers in India is 2.5 million, which is fewer than the number of workers in New York City.
You must have mis-heard this. There are a few million of IT workers in India compared to around 150 million workers in the US.
As for the general point, offshoring doesn’t really destroy US jobs it just shifts them around, the same as international trade in general. The most visible impact is the US jobs that are initially lost but not the jobs that are created indirectly. For one thing, US companies will save money through offshoring which they will either spend on something or return to shareholders. These shareholders are mostly American and will likely spend it somewhere in the US economy creating jobs. Secondly Indians or Chinese or Bangladeshis will usually use the dollars they earn to buy US goods or US financial assets which will also lead to job creation in one way or another.
The key to a productive economy is to adjust the job structure as economic conditions change; for example when there are new exchange possibilities. Sometimes the best way to produce X(say low-end software or shoes) is to import X from another country in exchange for Y(say aircraft or bonds). In essence you are still producing X, only now indirectly instead of directly. Why waste resources producing X directly when you can do it better indirectly?
There are innumerable potential jobs in the US which could be created given sufficient resources. Perhaps more teachers to provide high-quality individual attention to students. Or more nurses for an ageing population. Offshoring can free up resources which will ultimately flow to those potential jobs. Of course you want to keep your economy as close to full employment as possible and make sure your workforce is well educated. Those are the relevant policies that are needed rather than protectionism.
>>This is, obviously, quite false. The high end estimate I can find for IT workers in India is 2.5 >>million, which is fewer than the number of workers in New York City.
>>You must have mis-heard this. There are a few million of IT workers in India compared to >>around 150 million workers in the US.
You are correct. I must have mis-heard this number. Sorry.
Lantern’s comment about how we should create more non value creating (and often openly worthless/parasitic) jobs like teachers and nurses using wealth potentially obtained via offshoring is a good illustration of what is wrong with economic thinking today in America. If we send all economic processes overseas and stop giving Americans an opportunity to get experience in productive jobs, American economy will eventually collapse down to the level similar to India. With a small minority of government employees and professionals with resumes built up during good times and a large number of impoverished, unemployable younger people. Moreover, the professionals and the businesses will eventually be heavily taxed to support the various entitlements of the poor and the government and hence driven to emigrate. E.g. what is keeping msmith537 from emigrating together with his entire company if he apparently sees no value in American workers? (he is seriously wrong, IMHO, but he is a free man and who is to stop him from acting on his beliefs?) Indeed, I would not be surprised if he would not hire Americans even for the same salary that he pays to the Indians because he, and many others like him, have convinced themselves that Indians are better, just as their lying resumes claim.
I don’t think that offshoring is the only or even the main problem of America today. Not so intelligent, not so humble managers like msmith537 as well as the even worse folks running the government are a bigger one. But it is, nevertheless, one of the trends that works to destroy the national economy in the long term.
We can get U.S. educated engineers and M.B.A.s in China for half price. Often the same ones that spent years here in the U.S. working on H1-B Visas. Why WOULDN’T a company outsource?
I’m living my life so that when my income is cut in half when I need to compete with people in India and China (and it will come) I can.
Supposedly in many industries it is already happening in China after only a decade or so.
The reasons I have heard of are
Raw materials are making up a bigger % of total costs in manufacturing, reducing the % devoted to labor and the savings thereof
the currency in China & India is going up while the USD goes down
Wages grow dramatically in developing nations and barely here. In China they grow at about 10-15% a year. I think wages in manufacturing for a migrant worker are now at $300/month. Domestic wages grow at 2-3% a year.
Transportation costs are going up due to higher oil prices
Countries like China are being forced to improve their labor, quality control and environmental standards due to domestic & international pressure, raising the prices
It’s important to note that you don’t need to wait for wages to rise in third world countries for jobs to be created in the US. In fact the process of losing jobs in one sector happens at pretty much the same time as jobs are created in another sector. It’s just that the latter are not nearly as visible as the former.
For example suppose a company offshores some of its manufacturing or software to a third world country. This could mean:
a) lower costs which are passed onto consumers who pay lower prices. The money that they save, they may spend on some other product which could to create jobs.
b)the company earns higher profits which it distributes to shareholders who spend it creating jobs
c) Chinese or Indian companies have dollars which are usually used to purchase US products or assets. If China purchases bonds this means lower interest rates which will create jobs in various interest-sensitive sectors. Obviously Chinese imports from the US will directly create jobs.
We can’t say exactly for sure where the jobs are created but logic and data does tell us they are in fact being created. For example Ross Perot talked about the “giant sucking sound” in 1992 and since then globalization has moved faster than he ever imagined. However the unemployment rate for most of the last decade was actually lower than 92. It has fluctuated up and down because of the business cycle of course but in general there has been no upward trend at all over the last few decades. During the 90’s it fell steadily even as globalization reached new levels.
A lot of that is because of timing. 2000 was the peak of one of the greatest expansions in US history. 2010 is near the bottom of the greatest recession since the Depression. Obviously the job numbers from from the first to the second is going to be misleading. Here is a chartof the private sector employment numbers which gives a clearer picture of what actually happened over that period.
An anecdote I have posted here before about something coming along to bit someone in the ass.
The company I work for is a huge fan of outsourcing. They once sat me down and asked me to manage a team of Indian statisticians telling me “I don’t think we will ever hire an Amercan again doing what you do” - it fell apart as they realized that Indian peeps were not nearly as good as they thought. {In addition, I got to hear a huge bitchfest a couple years ago when the dollar was weakening and they bitching about the huge ‘raises’ the India peeps were getting }
However…
That doesn’t apply to other areas, which have been outsourced with a vengence.
This anecdote is about Mary - who discovered outsourcing about 4-5 years ago. This was great! she said. She worked hard and tirelessly outsourcing most of here area. One day, after work, she was telling me how great it was. How the cost savings were tremendous. She had layed off about 20 people (most of here area).
I remember asking…why stop where you did?..why not outsource…you? I bet someone from India could do your job for 1/10th your salary…saving the company a couple hundred thousand a year! heck…they could probably even do it better because they are with the India team while you are back here.
{I said it much more diplomatically }
I saw a glint of fear in her eyes…immediately squelched. OF COURSE, they can’t outsource ME! I’m important! I add value!
Less than 1 year later she was layed off. Her position is now in India. She actually cried her last day. The bitch layed off about 20 people…caused much misery and she CRIED when she was led to the gallows she made? No sympathy here.
That’s the thing about outsourcing. If we are going to pursue it, let’s pursue it with more rigor. If outsourcing is so good for America…let’s look at outsourcing some of the lower executives…see how it goes. After that…do we really need CFO’s and the like in America? Couldn’t a really smart Indian work better and cheaper?
Sounds stupid…but why? They are smart folks. They can do it. It only sounds stupid to the execs because you only outsource too-high paid prima donnas like programmers and such…not people who do real work like Execs!
I would appreciate it if you did not call me “not so intelligent and not so humble” simply because you don’t agree with my opinion. Aside from being against the rules of the board, it makes you look like an ignorant jerk (instead of just ignorant). Point of fact I have a degree in engineering and an MBA from two highly respected schools in their respective fields and I work as a manager in one of the largest, most well respected professional services consulting firms in the world. So someone clearly believes that I am intelligent enough and knowledgeable enough on the subject to pay me a great deal of money to advise people on it. And by any objective measurement, they would be correct.
Why would we want Americans to gain experience in “productive” jobs that are obsolete and not competetive. **Lantern **is right. The economy would be better served by freeing up those resources to be utilized somewhere else in the economy.
You seem to think that the only jobs that matter are the ones that involve actually creating something with your hands. I say those are the ones that tend to matter least. It is the creation of ideas and the ability to transform those ideas into actual products and services that matters most. If I have an idea for a new invention, what does it matter if it’s put together by a robot, a factory in India, or a magic box? And even if it is, there are still a ton of jobs that need to be performed locally. When I was in B-school I worked in a company that sold and marketed shoes. Not a single shoe was made in the US. But they had a corporate headquarters with 500 people in it as well as several call centers and hundreds of retail stores all right here.
All these “parasite” jobs, as you call them, serve to address some need or want in the economy. Freeing up resources through outsourcing or automation allows them to address more of those needs and wants.
The point that NOBODY has made is: an Indian oursourced employee doesn’t pay:
-SS Taxes
-income taxes
-sales taxes
So, while we save in the short term, we lose because there is nothing coming in in taxes. Plus, we lose the salary paid to the guy in India-it is gone…there is no multiplier of the wages, as would be if they were paid to an american .
So we lose, big time-but the big execs get huge bonuses, so who cares?
That is exactly right. Now admittedly, some companies do find ways to pay their H-1B workers less than the prevailing wage (by being creative with the job descriptions, for example); however, you are bound to find this kind of abuse in just about any labor situation. Moreover, the prevailing wage is simply a lower limit to the H-1B salaries, as established at hiring time. It would be unsurprising for companies pay their H-1B employees more, especially as these people progress through the ranks. (There is at least one informal study that bears this out.)
Why should we have impoverished unemployable younger people? They are perfectly free to:
[ul]
[li]Start a business of their own. The spirit of entrepeneurship is American’s strength.[/li][li]Take advantage of America’s top notch educatioanl opportunties to train for something better suited for the job market.[/li][li]Move overseas as a manager. Even a total yahoo can easily get a managment level job at a call-center. It’s good money, especially given the low cost of living. I know people who have done this and had an enriching experience on several levels.[/li][/ul]
I mean, it’s not like before IT nobody had any jobs! Nor does anyone owe you a well-paid job in IT just because you studied it. You know what? I studied something absolutely stupid in undergrad. Not surprisingly, I couldn’t find a job. Did I sit there and blame others? No. I looked around and chose something else that is more productive. My uncle did the same thing- he was a house painter and was displaced by immigrant labor. He complained a bit, but then he decided just to go to college and become a teacher. He’s happier and wealthier than he ever would have been as a painter.
People need to reshape their careers all the time, for all kinds of reasons. It’s not like outsourcing is some huge unprecedented thing.
Anyway, flexibility in the labor force is one of the reasons why American continues to be an economic leader. Our ability to relocated, retrain, and rethink our economic strategies is our greatest strength, and is the reason why we are the outsource-ers and not the outsource-ees.
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