Outsourcing to India - is it a big deal in your country?

Nowadays, not a day goes by in which we don’t have an article about outsourcing in our national newspapers - very often these stories make the front page too. And it’s been like this for some time now.

Until about late last year, these stories were limited mainly to the IT and ITES industry, but gradually it’s begun to include the manufacturing sector too. Outsourcing to India kicked off in a big way with Indian programmers fixing ancient coding before the Millenium Bug bit, but gradually spread to product development within the IT industry (which is really big business now). It then began to include the call center industry, and soon enough the back-end operations of several MNCs. BPO is one of the fastest growing industries in India now. Outsourcing has now encompassed the manufacturing sector too - several companies have announced plans for, or already have begun, making India a global hub for automotive components. R&D by MNCs is slowly taking off too in a big way.

While this is really good news for us, what with all the new jobs being created and all that foreign exchange flowing in, it’s also making news here because it’s taking away jobs from their originating countries (as opposed to the setting up of new operations to handle additional capacity, for example). Call centers are closing by the dozens in the US and UK and opening by the dozens here. We read of unions in the UK threatening to go on strike to prevent call center jobs from leaving the island, and legislation in several US states to prevent outsourcing of work from state-owned entities to non-americans (read mainly Indians). And so on…

From reading our newspapers, you’d get the impression that the world (rather mainly the US and UK) is gathering it’s forces to prevent outsourcing to India!! Is it really that big a deal in your respective countries? What’s your opinion about it? Do you feel anger, or resentment, or are you resigned to the fact that this might be the way most things are going to end up?

Given I just lost my job because our CIO wants to only deal with CMM level 5 IT companies and there aren’t many (if any) in Australia and the only ones that our Indian CIO wants to deal with are in India, then yes, this is a problem for me personally.

Somewhere in the order of around $1-2 Billion Austalian dollars per year will start to flow to India in around 6 months rather than staying in Australia.

Given the company I (used to) work for is 50.1% owned by the Australian Government I am very surprised that they are letting this happen, but I suppose cheaper rates provides more return on their shares.

I feel anger, resentment, bitterness and anything else that would normally go with losing ones job to a foreign country.

looks like you’re gonna have to change your name…

I’ll take your suggestion under advisement.
I am assuming I will get another job.
Anyone willing to offer? I work cheap (now!).

Here in the UK the outsourcing of call-centres is a biggish issue. This is not only due to the job loses but also due to a general feeling of resentment amongst consumers.

This isn’t because they feel that the aren’t going to get a good standard of service from the Indian centres, more that staff are less likely to relate to the problems/questions of the customers.

My company has already outsourced the majority of its customer service centers to India.

This summer, reliable sources say, they will do the same for our IT groups. That means more layoffs here.

To date, over 20k have lost their jobs with this company.

Yes, it’s a problem. There’s no way an IT professional here in the US can live on what one is paid in India. For the company, it makes economic sense. For the laid-off employees, it means financial disaster.

My brother is a good case in point. He has worked here for 15 years in programming. He’s been told that he’s got a 80 to 90% chance he will lose his job in this next round. He lives frugally (he has to, he’s got 6 children), but he can’t live on $8/hour. Finding another job will be difficult, if not impossible (we don’t live in a very economically diverse town, plus all the other laid-off employees are also looking so there’s lots of competition). And given his family circumstances, he does not have the flexibility to just up and move.

Don’t get me wrong – he’s not angry or bitter or even all that upset. And he knows he and his wife made the choice to have a large family. But he’s also acknowledging how very difficult it will be to recoup from this.

I think the company for which I work is underestimating the emotional toll continued lay-offs are having on the work force. Morale is at an all-time low and the term “bunker mentality” certainly applies. Many groups have the attitude that they will do what they can to keep their jobs and not one bit more.

Those of us who haven’t yet been laid-off have a sort of fatalistic attitude about the situation. When people ask me if my job is in danger, I say, “Well I work for them this week – no guarantees about next week.”

Consumers want the lowest possible prices, and businesses and merchants want to be able to offer them, so they can undercut the competition and increase profits. So in the short term it makes sense to outsource domestically expensive work like IT to countries that have much lower wage scales. This is so obvious it hardly needs to be said.

But if too many countries do this in a developed economy, where we have not only higher wages but also higher prices for most things, then so many people will lose their jobs that it affects the overall ability of the domestic, developed economy to provide consumers, to buy the very products that the outsourcing companies want to sell. So the trend to outsource reaches a point of diminishing returns, or so I would think.

But I have yet to hear a high profile CEO suggest that they accept this reasoning.

It’s a big deal here (Canada) but not so much as it seems to be in the States.

The publishing company I work for has outsourced SGML (soon to be XML) coding of documents to India for the past 3 or 4 years now. We are now expanding this outsourcing to include merging new materials into existing files, and keyboarding material not submitted on disk.

In one respect, this has been a great help, because it means that we have less mind-numbing coding to do and therefore have more time to do actual editing.

On the other hand, it means that we have fewer operations people on-site (loss of jobs), more hassles in communications (only the chosen few get to communicate with the management in India, so problems can take a long time to resolve), and occassional foul-ups with language confusions (keyboarded documents with transpositions in English). There doesn’t appear to me too much resentment yet, but if the trend continues to migrate operations to India, things could get nasty here.

On the positive side, the people at the company we work with in India are very friendly and helpful.

Hi gouda. In the UK offshoring is not yet a huge deal, but I am confident it will become one within a few years.

Our main complaint is that Indian competition of this type is unfair. If it was a matter of India being able to do a particular job better or faster than us, then obviously it’d be fair enough that you won the contract. But it is impossible for us to compete with you guys on price alone. It’s not, as is frequently suggested, that we’re not trying to greedily protect obscenely high salaries (not that I’ve ever had one anyway); it’s more that housing, income tax, etc is criminally expensive here. And that’s not our fault, there is nothing we can do to change the cost of living in the UK, and that’s why it’s unfair.

Then there’s the blatant insult to the intelligence routinely trotted out by companies, that offshoring is ‘essential to their survival’. It’s invariably the case that a company doing significant offshoring is already making large profits and just wants more and damn the consequences for anyone else.

Then there’s the shocking attitude and treatment companies have given to existing employees by the thousand. These giant organisations see not a shred of responsibility to anyone but their shareholders, and that’s what really makes my fists itch.

Then there’s the social cost of growing unemployment. I don’t think it’s started to register here yet - as if the monthly figures can be trusted anyway - but I am sure it will do as offshoring grows and grows.

Then there’s the fact that in moving everything to India they’re basically exploiting poverty. When you and your new employers are paying the kind of tax we have to, to provide half-decent healthcare and social support for all, then it’ll be one step closer to fair.

And while I’m sure you’re doing alright out of all this, and good luck to you by the way, I expect there’s a lot of Indians who aren’t in I.T. who are starting to notice that the cost of everything is spiralling up around them while their income remains constant. I have no cite for this of course, maybe you gouda can tell me if you’ve noticed any inflationary effect of all this?

In answer to your question, I personally feel intense anger and resentment about this issue, but please do note that it is all exclusively aimed at a growing band of treacherous corporations busily sacrificing all for fatter profits. I have no beef with the recipients of the bounty, Indian or otherwise.

Oh, God yes. Almost all of my best and oldest friends are IT folks, and they are panicking. At the moment, it’s generating a decent-sized part of my livelihood, but on the other hand I know my job isn’t immune, either.

So far many of my office’s clients aren’t taking advantage of it (as far as we know), but a few are, and the political and administrative fallout from that has been pretty hardcore. Inevitably some of the Indian personnel on a project will need to come to the U.S. to liaise with the U.S. side or implement the system they have developed, for which they need work visas (either H-1B or L-1B in most cases), and in some cases the consular staff who normally adjudicate visa petitions will simply decide that they don’t qualify for the visas. There is no official avenue of appeal from the discretionary decision of a consular officer, so the Indians are simply screwed, no matter how well-qualified they are or how much the U.S. company wants/needs them.

It’s going to get much uglier, I fear, what with with legislation not matching reality in many cases, and BCIS/State Department personnel doing what they feel is right instead of following the letter of the law. It’s been a VERY frustrating work environment the past year or so; no matter how well I line up my ducks, there’s always the chance some consular official will blow their heads off with a shotgun.

I’ve been thinking of starting a GD thread on whether the workforce should indeed be truly global, but haven’t quite collected my thoughts yet. It’ll be interesting to see what this thread dredges up. I don’t begrudge anyone, regardless of nationality, the right to earn a good living, but the reality is that the differences in the economic structures between the U.S. and India are such that a U.S. worker simply cannot lower wages to Indian levels and expect to eat and have a roof over his head, let alone a middle-class lifestyle.

Mind you, I have no idea what to do about all this.

Eva Luna, Immigration Paralegal (primarily employment-based)

It indirectly affected me when I was working. Our QA department needed to grow, and it was quickest to outsource to India. However, the workload couldn’t be pushed offshore completely, and so my job was never at risk.

I did end up with the habit of staying up until nearly midnight for IM chats with the India team to answer any of their questions, though …

Gah! That was supposed to read, “if too many companies do this…”

Watch out, Indians! One day, many of your jobs will go to cheaper workers in some as yet undetermined trade-free zone.

In the US, there is a great deal of bitching and moaning about jobs going overseas. Some complain that companies are exploiting worker who have few or no labor laws to protect them. Some complain that overseas outsourcing hinders economic development in the homeland. Some complain that they are losing their jobs. Some complain that they have to work weird hours (like me and Ino). Additionally, there are occasional news stories about foreign workers employed in the US being held over a barrel because of their Visa situation.

All seem like fair complaints, but who knows what the solution might be?

Personally, it does make my blood boil when I see a giant corp take zillions of dollars worth of benefits and advantages based on the idea of its “economic contribution” when the lion’s share of its operations are, in fact, far far away.

Actually Rueben, incomes in India are going up in general. The thing is, like I said in the OP, what started off in the IT industry is spreading to other related and even non-related industries too. People are gradually getting richer, and inflation has been pretty much steady at under 5% for several years now. More people are spending a lot more money than they ever did. It’s not all rosy, but it is getting better.

For examply, the company I was working in until recently was manufacturing engine components for india’s two-wheeler industry. But recently they’ve become Piaggio’s global supplier for a few components too, and at the time of my leaving, Yamaha Motors (Japan) came to them

An article on the subject from last week’s Business Week that’s been making the rounds of our firm…they’ve done an irregular series of stories on this and related issues, and are one of the few mainstream publications that seems to have a grip on the significance of U.S. immigration policy in practical terms.

http://www.businessweek.com/smallbiz/content/jun2003/sb2003066_8575.htm

In other news, many Americans, Canadians, and Brits (particularly IT workers, for some reason) don’t really understand economics all that well and can’t be arsed to learn.

Actually Rueben, incomes in India are going up in general. The thing is, like I said in the OP, what started off in the IT industry is spreading to other related and even non-related industries too. People are gradually getting richer, and inflation has been pretty much steady at under 5% for several years now. However, it is true that people in the IT industry still do make more than those in the other industries - but whether that will translate into a higher cost of living for all Indians in general, I do doubt - the nature of our economy and politics wouldn’t allow it. Not for a long, long time. I can assure you however, that they aren’t exploiting poverty - call centers here, for example, pay very well! I’m actually envious of those working in call centers. Incidentally, I’m an automotive engineer, not an IT guy.

For examply, the company I was working in until recently was manufacturing engine components for india’s two-wheeler industry. But recently they’ve become Piaggio’s sole global supplier for a few components too, and at the time of my leaving, Yamaha Motors (Japan) came to investigate whether they could manufacture a few components for them too, for their gobal range of motorcycles. Salaries in the company have reflected the growing sales figures. And this company isn’t the only one to be thus affected. Like I said, outsourcing has spread beyond just IT.

I did have a particularly disturbing experience with outsourcing trend. Though I’m not an IT guy, I do have lots of friends who are. One of them told me how he was sent to the US for training in a particular technology. He went through the training period, came back and trained a whole bunch of his colleagus in that technology, and eventually the entire work load relating to tech was transferred to his company in India. The very same people who trained him lost their jobs to him and his colleagues. I’m happy for my friend and all that, but I can’t help but wonder how any company could do that to it’s own employees. Shocking.

At one point of time I believed that a significant share of the world’s manufacturing (of everything) will gradually shift to China and India - it’s already happening. But now it’s now just manufacturing, but also the R&D work of the kind which some years ago would have been unthinkable of. Intel is opening a chip R&D center here, GM and Bosch are setting up engine R&D centers, Hyundai is making India it’s global manufacturing base for some of it’s models. The list is long, and it’s getting longer.

Actually Rueben, incomes in India are going up in general. The thing is, like I said in the OP, what started off in the IT industry is spreading to other related and even non-related industries too. People are gradually getting richer, and inflation has been pretty much steady at under 5% for several years now. However, it is true that people in the IT industry still do make more than those in the other industries - but whether that will translate into a higher cost of living for all Indians in general, I do doubt - the nature of our economy and politics wouldn’t allow it. Not for a long, long time. I can assure you however, that they aren’t exploiting poverty - call centers here, for example, pay very well! I’m actually envious of those working in call centers. Incidentally, I’m an automotive engineer, not an IT guy.

For examply, the company I was working in until recently was manufacturing engine components for india’s two-wheeler industry. But recently they’ve become Piaggio’s sole global supplier for a few components too, and at the time of my leaving, Yamaha Motors (Japan) came to investigate whether they could manufacture a few components for them too, for their gobal range of motorcycles. Salaries in the company have reflected the growing sales figures. And this company isn’t the only one to be thus affected. Like I said, outsourcing has spread beyond just IT.

I did have a particularly disturbing experience with outsourcing trend. Though I’m not an IT guy, I do have lots of friends who are. One of them told me how he was sent to the US for training in a particular technology. He went through the training period, came back and trained a whole bunch of his colleagus in that technology, and eventually the entire work load relating to tech was transferred to his company in India. The very same people who trained him lost their jobs to him and his colleagues. I’m happy for my friend and all that, but I can’t help but wonder how any company could do that to it’s own employees. Shocking.

At one point of time I believed that a significant share of the world’s manufacturing (of everything) will gradually shift to China and India - it’s already happening. But now it’s now just manufacturing, but also the R&D work of the kind which some years ago would have been unthinkable of. Intel is opening a chip R&D center here, GM and Bosch are setting up engine R&D centers, Hyundai is making India it’s global manufacturing base for some of it’s models. The list is long, and it’s getting longer.

I work (actually used to work - just got laid off) for a consulting firm that is increasing its focus on helping corporations outsource to India and a few other places. It is currently a very big deal to corporate executives who are getting bombarded every day by firms touting the economic benefits of taking this route, and a very big deal to the professionals in positions most likely to be outsourced. It has not quite become a “crossover issue” - something the entire public is aware of due to media immersion - but it is front-and-center for all affected players and may be a crossover issue soon.

As someone currently struggling with my personal situation and emotions, I can state that it is hard not to take this personally and feel very threatened by it. Having said that, and thinking longer term - global economies, both on an individual and overall basis, need trade to flow freely, whether that means goods or jobs. The more protectionist a country is, the more likely it is putting in place a barrier that limits trade and therefore its competitiveness. The more “central control” a country is (i.e., communist states, Japan) the more they are likely to make a decision that limits the ability of natural trade forces to evolve an economy, enabling it to thrive and grow.

All of this means that a country needs laws and regulations that ensure that workers are not being exploited and trade is not being manipulated illegally, but if those things are in place, then the flow of jobs to lower-paying geographies is a logical opportunity that a business should take advantage of where appropriate. Over the next few decades, wage gaps may shrink so this arbitrage opportunity will lessen, but by then some other opportunity will arise. If a country, like the U.S. in my case, wants to stay thriving over the long term, it has to be careful in limiting that type of trade force - while it looked like we were going to crash in the face of Japan’s dominance in the late 80’s, only because we allowed trade to flow and poor performing companies to fail did our economy evolve and position us to be strong in this new information age…

Having said all of that, I am out of a job, and it scares the shit out of me. I only hope that I get a job reasonably soon - all the long-term perspective in the world doesn’t put money in the bank, even when I know it is best for our economy over time…