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- ajb2015, on 10/12/2007, -1/+27How long before megacorps have to stop running from paying people a decent wage while CEOs make off with billions?
- septicmadman, on 10/12/2007, -2/+23Maybe even America! *sigh*
- dangmoss, on 10/12/2007, -6/+25india tech support blows
- Railer, on 10/12/2007, -4/+21China and India are growing at a rate that no longer makes them useful for cheap labor in the near future. Start teaching Africans IT, it's their turn. My guess it will start from south Africa in the next decade, late in the next decade, and move north, bringing increased wealth and stabilization to the entire continent.
- bergur1, on 10/12/2007, -2/+18I would hate to learn a new accent so I can understand what they are saying.
- jivatmanx, on 10/12/2007, -3/+18The problem with china, is that nobody really wants to live there. The entire country is under a giant cloud of unfiltered black smoke and the country is polluted with heavy metals and mercury.
Not fun. - FongoBongo, on 10/12/2007, -0/+14Corporations in general are ruled by one statement:
MAXIMIZE SHAREHOLDER PROFIT
All goals, objectives, plans, atrategies, and activities will have some context to this statement. Right now India is and will be for a long time the Hub for software outsourcing, simply because it is cheap but most importantly they have the infrastructure. You guys are blogging about Africa, keep blogging, not going to happen until they have the infrastructure let alone the stability for investment of that scale. China can't be trusted, quite simply, code of ethics. India is the powerhouse and knows this, they can and will increase their salaries and corporations will comply as long as it continues to maximize shareholder value. - thadesiest1, on 10/12/2007, -0/+10reminds me of the simpsons episode when homer tells the Indian workers about sick days, paid time-off, medical plans etc..
Soon indian workers will demand similar benefits that employees have here in the US and then companies will find cheap labor else where - cybersphere, on 10/12/2007, -0/+10The difference between the US and India, is that Indians can live like princes for only $12 hour.
- etnu, on 10/12/2007, -0/+10That's only partially true. The vast majority of educated people in India come from wealthier backgrounds, and this is largely due to the caste system. The poor people had poor parents, poor grandparents, poor great-grandparents, etc.
The same is true, though to a lesser extent, in the U.S. There's a reason why you don't see all that many black people in the upper class, and it has nothing to do with intelligence, talent, or anything of the sort. Poverty is a vicious cycle that's hard to break. - etnu, on 10/12/2007, -0/+9China is never going to be a huge IT center for anything other than China and other Chinese-speaking nations. American and European MBAs accept India as a place to outsource to because the majority of the IT workers speak reasonable English. IT is not "blue collar" work. You have to be intelligent to do it, and you have to have tight communication between the people writing the code, the people making the designs, and the people making the business decisions.
We've already seen many companies have problems when trying to run product in the U.S. and development in India. Most companies have abandoned that approach, and now the majority of development done in India is also managed and designed there. IBM, Microsoft, Google, Yahoo!, etc. all have significant business units in India -- and, for the most part, they're in charge of the entire product.
Locality matters, and skilled engineers are going to be in demand for a long time to come, outsourcing or not. There simply aren't that many people in the world who are smart enough AND interested enough to do the job. I'd say that less than a quarter of people doing the work today are even capable of writing software on their own (they get by because they work in teams currently), and less than 10% are capable of writing "good" software. You think that's going to hold up against a significant language barrier? Good luck! - vitro, on 10/12/2007, -0/+9In the US a software engineer may expect up to Rs 120000 a month. Even with the costs rising in India that kind of money is a kings ransom. Even CEOs in India don't get that kind of mush. Granted India is getting expensive ,but you can wait for a long time for the cost to rise to ( US ) level, even if it does the Indian govt. will devalue the Rupee some more. The cost is not the only factor, the labor base is. Being the world second most populated country there is an abundance of English speaking labor walking around with PHDs and Masters Degrees. You want to to go to Africa and teach them? ....um the UN can't even deliver food to Africans so good luck teaching them Java ( I concede the last statement may be inaccurate as all i know about Africa is what i see on CNN )
- etnu, on 10/12/2007, -0/+7If you can use an AK-47, you can use Java. Any idiot can write Java code (and, unfortunately, they do). The problem, of course, is that the "suits" don't know a damn thing about quality software, and they'll accept anything that appears to do the job correctly currently.
According to PayScale.com, the Median salary for a software engineer in Bangalore with 10 years of experience is over $27,000 a year. In the U.S. as a whole it's about $65-70k, and in big software hubs like Silicon Valley it's around $100-120k.
Now, here's the rub:
- There's a twelve hour time difference between the U.S. and India. If you're lucky, you've got maybe 4 hours to "work together" on any given day.
- The marketers, business development, and other business units aren't going to move to India. That means that during important meetings, the developers (in India) aren't going to be well-represented. This leads to unreasonable requests, unrealistic goals, and overall poor input.
Software is not like factory assembly. You can't have one person come up with the complete plans for building something, then ship it off to whomever can put it together the cheapest and fastest. You need constant collaboration between designers, engineers, and business people to make everything work.
The cost of Indian workers doesn't have to come anywhere close to the cost of U.S. workers for it to no longer be a good economic proposition. If cost were the only factor, companies based in Silicon Valley would be employing people in Ohio and Michigan at half the cost of the SV engineers. Once the average costs gets over around 30% of the American equivalent, nobody's going to care about outsourcing, because there are way more significant "costs" beyond someone's salary.
Of course, Indian engineers shouldn't worry one bit. India's economy is going to continue growing, and as such they'll be needed to develop software for the Indian market. Eventually, the best and brightest will realize that being wage-slaves to corporate America is robbing them of their lively hood, and they'll start their own Indian mega corporations. The U.S. has 300,000 people, and less than 1% are employed in this type of work. Assuming India has similar ratios to meet their own demands, that means that India is going to need at least 10 million (or more) to fill the need.
Everyone needs to stop this petty fighting. Intelligent people who are engineers are going to, on average, have an easier time finding a good job than just about any other occupation, no matter where they live. No, this doesn't mean you're guaranteed to always have work no matter what, but it does mean that you'll be a hell of a lot better off than people who chose other career paths. Now shut up and write some code. - GoldenGopher1, on 10/12/2007, -2/+9As an IT project manager, I have to say that I am quite dissapointed with off-shore software development. The quality is terrible. Sure, I can pull the communication card - language and distance - but I honestly feel that those who are development 'consultants' out there are only there becuase they aren't as talented as the folks running the companies.
In this game, I would have quality over quantity any day. - ruspecnaz, on 10/12/2007, -6/+13Soon South Pole will be way to go! Penguins ....
- cybersphere, on 10/12/2007, -5/+11You simply can't generalise. India's top IT Universities are amongst the best in the world, and Bill Gates has publicly admitted that he can't pronounce the names of his top 10 coders.
The idea that Americans make the best coders is a myth. Indian and Chinese people have been winning many of the top coder contests.
The US education system is a shambles. Just lookup the documentary "Stupid in America". - amal3k, on 10/12/2007, -0/+5Yeah, I'll find out in January whether I lose mine or not. Happy ***** Christmas.
- FongoBongo, on 10/12/2007, -0/+5@ inmatarian
I agree with you, but Capitalism and the way business is done doesn't foster what you say. Creating loyalty, business relationship, productivity? You understand what your saying? Creating loyalty is being the biggest, giving the most return, and offering the best price - that has the consequence for cutting on costs - outsourcing. America is all about getting the biggest bang for your buck, unfortunately that involves finding the cheapest labor - argh44z, on 10/12/2007, -0/+5@Railer
South Africa? Are you kidding me? The cheap labor base is far less than a country like India.
SA Population: 47,432,000
SA Per Capita Income: $12,161
India Population: 1,103,371,000 (you can fit 23 South Africa's in there)
India Per Capita Income: $3,320
Hell, India has about 500,000,000 more people than all of Africa combined. - bickdigg, on 10/12/2007, -0/+4WikiEasy
You're wrong. Outsourcing doesn't give more wealth for EVERYONE: it reduces the gap between countries, by upgrading the poor ones and downgrading the more developped ones.
The unemployment created in developped countries by outsourcing means that less people are paying for more people: the kids, the elder, the unemployed and the help to third-world countries. That obviously weakens educational systems, health services, R&D.
On the other hand, the wealth created in third-world countries extends the life expectancy while the natality remains still very high. Billions of additional customers leads to an even quicker depletion of the Earth's resources, which, at some point may result in global wars/heavy ecological issues.
I would like to be optimistic like you are, but as a young European engineer, all I can foresee is: paying for people unemployed due to outsourcing or move from third-world country to 3rd world country all my life, following outsourcing. - chicbicyclist, on 10/12/2007, -0/+4@dimitri
It is simply because it is much more profitable for talented young ones to work for an outsource company than work for an unproven start up. And the infrastructure just simply isnt there Once the dynamic changes(i.e. working with an outsourcing company becomes less profitable, government starts investing in more innovative areas), then we'll probably start hearing about what you were looking for. - dimitrisokolov, on 10/12/2007, -0/+4
Sophisticated tools? Half the Java world is working on class path issues as we speak. - ultradust, on 10/12/2007, -3/+7Isn't the Philippines going to be the new IT Outsource capital?
- inactive, on 10/12/2007, -0/+4Bangalore is quite a problem, but I think it will be time before companies actuallly start moving outside India as such..Because, there exist a lot many more cheaper locations inside India, and they will move through all these places before moving out.
For example, Chennai, Hyderabad, Pune, Mohali, Kolkata are some of the places where a lot of IT companies now have set up office.. - amal3k, on 10/12/2007, -0/+4I work in Dublin. In the last week, Vodafone have announced 500 jobs will be lost to an unspecified location, Xerox will most likely cut 1000+ (!) jobs to relocate to India or Eastern Europe, Creative have moved production of the Zen to Hungary and I believe the French language tech support group of HP have already moved out to Tunisia.
This is mainly due to the imminent expiry of an incentive made to big multinationals in 1998; that being huge tax breaks for these companies, which is scheduled to end in 2008. Hence, they are all planning to up sticks and move to cheaper climates before the big bite.
I believe many more will follow suit in the next while; Dublin has become quite the hub for multinational companies. The industrial park I work in houses Creative, Xerox, Symantec, IBM and some other guys who I forget, Ebay are down the road and Google/Yahoo and the others are around the city centre. There is potentially a huge amount of jobs about to be lost in the region, all because companies are focusing on cheaper costs as opposed to the quality of the work being done.
For example, the company I work for provides everybody with computers pimped with 256 mb of RAM, and have over 800 people all connecting to the same Citrix server, located in the States. Honestly, it takes 15 minutes for my computer to load in the mornings, a further 5 or 10 if you need to get your apps open.
I'm praying they don't roll out Vista anytime soon... - ZenMojo, on 10/12/2007, -1/+5Capitalism would work, except capitalism is hindered by globalization, not bettered by it. The reason is that the landscape is unnavigable by your average worker, which ties him to one economic range while freeing up corporations to pick and choose their workers.
In true capitalism, all workers could negotiate for their contracts and companies would be forced to deal directly with them. Instead, workers can only negotiate with whatever companies that their governments let them, whatever companies they can afford to find, etc. - inmatarian, on 10/12/2007, -3/+6And the problem with hiring a good american staff is? How about a little faith in a couple of good american engineers. We may cost more than foreigners, but we're in the next office, you can walk over and talk to us, establish a business relationship, create loyalty, foster productivity, and all of those traditional values that seem to have disappeared as of late.
- hackwrench, on 10/12/2007, -0/+3If they keep trying to stop internationalization to run it's course, it will take longer.
- updog65, on 10/12/2007, -1/+4I've worked at two companies that outsourced overseas. Both times each outsourcing company also worked for our competitors and it failed both times.
It's hard to build a company when nobody has a real stake in its success. I wish companies would focus more on corporate culture instead of the bottom line. Both places I worked at traded culture for savings and now both are failing. - inactive, on 10/12/2007, -0/+3@dimitri
could be true..because, I dont expect you to have worked for Adobe or Google either.You might have, in all probability would have worked for freaksoft, and your co-workers might not be any better than your own self.. - Rojer64, on 10/12/2007, -1/+4that is so true. I remember back in the early nineties when european companies were outsourcing jobs to Ireland. The country would also attract new companies with unbelievable social advantages : workmanship was ... cheap. Even state funded.
That's how it goes : now irish jobs get outsourced in Asia. Indian jobs in Chine.
The only country it can stop is Hell. Things are going to far this time : welcome back to the 19th century rules. - etnu, on 10/12/2007, -2/+5Since when do software companies compete on price? Let's make a list of big software & services companies and the relative costs of their products, shall we?
- Microsoft. A majority of the engineers are U.S. based, though they have teams in virtually every reasonably stable country on the planet. Software prices are reasonable for the average middle class Westerner, but out of reach for most of the developing world.
- Adobe. Same story as Microsoft, but the majority of their products are either free players or extremely expensive development tools.
- Apple. Mostly employs in the U.S. Software is relatively cheap, but it only runs on expensive proprietary hardware which is manufactured almost entirely in China.
- IBM. Big, ugly, stupid, expensive software, made by huge teams all across the world.
- Google. Majority of employees in the U.S., significant employment abroad (especially India). Almost all products are free.
- Yahoo. Same story as Google
- Oracle. Only has one product that doesn't suck (the database), but it's expensive (arguably worth the cost for the time being). Mostly U.S. based engineering.
- First Data. Virtually no real competition, prices are "high" as a percentage of what they do, but low enough to not cause much concern by customers.
The trend continues. as you move down the list of software and internet companies. Price is only a factor when you have competition, and most software products have no real competition. - amal3k, on 10/12/2007, -1/+3Fair point, but dugg down for excessive pompousness.
"The simple truth is that if you were valuable enough you wouldn't lose your job" - not entirely true. I could rattle off names of loads of people who have been deemed valuable by other high-profile companies, whereas their original company valued costs over quality.
I think you don't really know what you're talking about to be honest; take a look at the companies coming back from abroad because of their customers' fury at dealing with people who can't understand them or by poor internal work ethics; fraud and misuse of company information spring to mind.
Cost-cutting is the one and only reason companies consider outsourcing, period. There are no other benefits to be obtained from moving to a cheaper economy. Also, I don't think it's only people in the west who think they have a right to a job, it's everybody with motivation and skills that can be applied to said position.
And I believe the phrase is "lazy guts". - drakethegreat, on 10/12/2007, -1/+3It seems to me that companies are also learning there is a difference between development and IT. Just cause these countries have people good at Tech Support does not mean they have enough quality trained developers that can put together a good product. The call centers can be placed pretty much anywhere but moving the actual product development to other countries is a lot riskier and it seems that is what most companies are having problems with since ultimately no matter what country you are in, its hard to find good programmers because its simply not that easy.
- SniperSlap, on 10/12/2007, -0/+2Outsourcing off-shore just plain sucks no matter how you cut it.
You end up paying a quarter to half of what you would to get a skilled on-shore employee to do the work. Then you pay the full amount plus a bit more to the skilled on-shore employee when they have to fix it. It doesn't make any sense.
It's one of those things where you can see the CIO going "rah rah rah, I save us money - look at this!"
He discloses only the figures of outsourcing and then hides the fixum costs in the payroll for on-shore IT employees. - etnu, on 10/12/2007, -1/+3You must have never worked at any company of significant size if you think the VPs are the ones with "brains". VPs are chosen because they're yes men who the higher ups can trust to do exactly what they want, not because they're specially gifted.
- globular, on 10/12/2007, -0/+2No. The next stage is countries like India and China moving up the chain. Their workforce becoming more talented and competing for the higher level and more demanding jobs. The lower end will go to other cheaper countries like those in Africa.
Thats when the real trouble starts. Right now it's only the back-office that is taking a hit. When the middle/front-office improves over there as well - thats when you should be most worried. They are pumping out hundreds of thousands of engineers and techs each year. As they get better and better there is no way in hell the west is going to be able to compete at todays levels. - inactive, on 10/12/2007, -0/+1The weak spot with outsourcing is communication.
Outsourcing took off with India because many Indians grow up speaking English.
That isn't the case with other countries with educated employees willing to work for low wages. - kiranhk, on 10/12/2007, -0/+1lets take a simple example..
if you have a product which is made in America by american workers but costs 3 times more than the same product made anywhere outside US, which one would you buy.
this basically comes back to Survival of the fittest. Whoever adapts to the changing world will reign supreme.
when we invest our $ into the shares of the companies we expect to make more money from our investment but how will the companies make more money when the rest of the overheads dont come down.
what i am trying to say is its not just IT that decides whether to outsource or not.. its also the other industry domains which affect/get affected by high costs - Optimaximal, on 10/12/2007, -2/+3I'd hardly say South Africa is a good target for outsourcing. It's in a financially better state than the majority of third-world countries.
- polymorphist, on 10/12/2007, -0/+1@zenMojo
Are you friggin' kiddin' me? Capitalism always strives for maximum profit...that's the definition...if you can't deal with it - tough...that's the way it is...
I'm not against capitalism, though...I think it's the economic disparity really drives the world instead of hinder it. - Rojer64, on 10/12/2007, -1/+2If capitalists weren't so dangerous, heavy on the planet and first hand war mongers, their naive beliefs would look refreshing.
Being naive doesn't justify supporting a policy that leads the planet to short term ruin and the economy to a dreadful collapse.
This is why I have to digg down a refreshingly naive comment. Sorry dude, you just need to grow up. - inactive, on 10/12/2007, -0/+1As I mentioned before (and surprisingly got dugg down) outsourcing only brings short term gain. It looks extremely good on paper, however it alienates the customer base and makes ongoing support a nightmare. The only ones benefiting long term from outsourcing are companies that pick up projects that Indian programmers left off and salvage what's salvageable. From my experience almost every decently sized IT outfit goes through what I call childhood disease when someone discovers that Indian graduates have supposedly the same degrees in Computer Science as folks in USA, Israel, Ireland, or New Zealand, but can be paid tenth of what they are paying their current team. The engineers are assembled in the ballroom and instructed as the last order of business to prepare detailed specifications for each component. Then 90% get pink slips and leave.
At some point remaining 10% starts envying those laid off. - "Do you know what inventory object is?" - "Sure". After another half hour of hopeless assault on mental barrier over the phone- "Do you know what inventory object is?" - "Sure". The time is running late. - "Do you know what inventory object is?" - "Yes." - "Ok, explain me, what is an inventory object" - "Hmmmmmm... I am not sure...". - "Ok, it is hopeless. Please copulate with somebody else's brains. I resign." And then, a realization creeps in. You get what you pay for. If the deal is too good to be true, it probably is. BSc from Bangalore Institute of Technology is not exactly the same degree as the one from Duke, Technion, or MIT. Those guys have flashy credentials and they are ready to work for peanuts. The problem is they deliver as they are being paid. Literally.
And this is where the rescue and recovery firm comes into play. - bynddrvn, on 01/13/2009, -0/+1Whatever, I work in a big four accounting firm. I will be discrete and not mention the name, but FOUR or so years after we started our Indian labor group and it has NEVER been profitable! Yes, the labor is cheap but unreliable and NOT even close to the quality that was advertised. Top management was sold a steaming pile of horse flop and everyone who sold it, laughed all the way to the bank.
- inactive, on 10/12/2007, -1/+2It will move wherever it is cheapest. Who knows, maybe in 60 years it will move to mexico, maybe even middle-east.
- Spyntek, on 10/12/2007, -0/+1@ globular
Ok. How about I found out about your company and go to your CEO and have a chat with him and inform him of the value of outsourcing (or insourcing if you are in the US.) I tell him that I know of this company that can provide the same services required to run his company at lower costs and he/she will get a huge bonus from the shareholders for saving the company a lot of money.
Then, next month, you are in the unemployment line. The next job you find I can do the same thing over and over again.
And if you respond by informing me that your job can't be outsourced, fine. There are companies that provide insourcing. I am sure that there is someone from China or southeast asia who is will to relocate and work for 1/4 of your wages.
I bet you won't be talking ***** then *****. - chicbicyclist, on 10/12/2007, -1/+2You might wanna advocate for border-less societies while you're at it. I'm serious. It's about the only way to quicken the eventual spread of wealth during globalization. Any country that purposely isolates itself will find itself on the losing side.
- argh44z, on 10/12/2007, -2/+3"India is just as big of a mess (politically) as is China"
That's hardly true.. There are some problems sure, but for a country of it's size and population, it's remarkable that it's worked. Outside of villages in some parts of the country where century long traditions still are prevalent, there is hardly any prejudice against lower caste (and it's caste, not cast) people in cities. In large cities like Bangalore, money rules everything. People don't care what caste you are, as long as you can make them money. India, unlike China, is a stable Democracy. - JaJangMyun, on 10/12/2007, -1/+2http://youtube.com/watch?v=6yS9AtFgWmE
I wouldn't understand a word he says, but he should answer the calls. Having that music playing while on hold would be a definite plus, too. - manicdvln, on 10/12/2007, -1/+2Outsourcing is temprorary. All those companies who fled overseas will come back eventually. By 2040, even China will be out of steam. The next multi national corporate craze won't be wages but regional sponsored subsidizes and who gives the best incentives for companies to stay. That's the next step in corporate finance.
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