Outsourcing Evolving 270
Shree writes "An article at NYTimes suggests that the outsourcing mantra is shifting to reasons of hiring global talent, tapping new potential minds and amassing top global human resources. Its not just software companies trying to save a buck by outsourcing; now its about Berkely trying to hookup with Tsinghua University and institutes in India, and companies like IBM and Microsoft looking to setup R&D labs in Asia."
And people wonder why. (Score:5, Insightful)
whatever they say... (Score:5, Insightful)
We've been doing this for years (Score:5, Insightful)
Personally I'm pretty annoyed that we can't recruit locally, but basically our graduate recruitment program cuts fairly deeply into the available pool of graduates (ie we recruit more thickies than I'd want to). The truth is, you have to be bright and motivated to do well in an engineering course, and when you leave, there are far more superficially attractive options than working for people like me.
I've been thinking... (Score:5, Insightful)
But what I'm beginning to see is that the real problem is the cost of housing in the West.
Yes, everyone bitches about high gas prices, health costs, etc (which all seem tend to be trumpeted by politicians with alterior motives), but these won't bankrupt you. Housing can destroy you financially if you aren't careful.
If housing was cheaper, I would be okay making a lot less than I do now. However, I'd personally be screwed if I made much less than $100K (rent is over $2000/month in my very plain, old neighborhood in California). I don't really spend much on anything else.
I'm approaching middle-age, and this is the number-one factor that I face trying to safely raise a family. Frankly, health costs pale in comparison as to how much I have to pay even to rent a halfway safe home.
I think the financial industry has pulled a fast one on us, and are milking average folks dry. The environmentalists don't help either, with their 'smart growth' policies (i.e. 'no growth').
Re:whatever they say... (Score:4, Insightful)
The American executives who are planning to send work abroad express concern about what they regard as an incipient erosion of scientific prowess in this country, pointing to the lagging math and science proficiency of American high school students and the reluctance of some college graduates to pursue careers in science and engineering.
Imagine that, EXECUTIVES who are overpaid and underworked are criticizing the scientists who they force to work long hours for pay that while not exactly meager, comes nowhere near theirs. And of course, when things go wrong, it's always the workers' fault, NEVER EVER the saintly executives who were only looking out for our well being, and well, can you blame them if they want a couple of million for leading a company into failure, after all a guy's gotta eat....
Too bad GM didn't take a line from Nissan and sack the top managers and replace them with someone from the outside. Would have taught a lesson to all the other CEOs who think they can just sack a company for all it's worth and jump ship with a golden parachute while pointing their fingers at the drowning workers and saying, "it's your fault!"
Or maybe I'm just cynical
Buh-bye (Score:3, Insightful)
While Western politicians and activists babble about all that, big business is just going to cut to the chase and hire from whichever countries have actually managed to come up with educational systems that churn out needed skills, rather than waiting for this reform business to work itself out.
So dear politicians and activists, please by all means continue to wrangle in endless debate over the issues, because meanwhile your societies are the ones who may be left behind wholesale, while the fluid business interests bypass you altogether.
Re:And people wonder why. (Score:4, Insightful)
Most people coming out of university programs in countries like India are actually trained in a very narrow part of the subject. This is fine for a actual "techie" that does a very narrow job, but anyone doind R&D or such needs more. (note that many people from "western universities suffer from the same, but there atleast you can find the other type fairly easy)
How to tell whether you're outsourcing (Score:1, Insightful)
Re:24 hour development (Score:3, Insightful)
Besides, if they just wanted 24 hour development, hire a night shift. You know, like US based hospitals, police, and factories do. I'd be willing to work nights for extra pay.
Myth? (Score:2, Insightful)
It's even worse for US -> India than it is for UK->India, at least our timezones cross over a bit. I've seen simple questions been ping ponged across time zones for days, which would have been resolved locally in 5 minutes.
"Result: Projects get finished in about half the time"
Yeah right.
The big picture is the real center here (Score:3, Insightful)
The real problem is not quality or quantity of graduates in the science fields, it is the fact that governments have not caught up to the information age with their legal and business practices standards. Giving companies tax breaks for this or that but not taking into account hiring practices is one of the things that has upset the balance of wages and outsourcing. All this political rhetoric about colleges is just political posturing. The real changes need to be made at the business tax and law level of things. The government can give incentives to companies that don't outsource... but then that would be taking easy money out of their pockets... it is all about money, but not for business, its about money for government and political figures.
When businesses are given the right incentive by governments through taxation and regulation, they will pay for in-country talent, and those jobs will again carry prestige, thus garnering the admiration and adulation of students planning for their futures.
It was fine to enforce equal hiring practices by race, but for some reason its not okay to make companies biased toward hiring citizens of the country they are registered in and pay taxes in. The big picture is that politics is screwing the west for the short term gain.
The dotcom bubble and bust showed that there are times when a guy coding in his mom's basement is as good as a 120k/year engineer... businesses are still learning that the dotcom boom is over, and getting quality work and workers again costs money. It doesn't matter how many people you hire in India, there are costs associated with communicating with those workers, and instilling pride in those workers to do the kind of job that gives the company the reputation that they want.
Right now, there are tons of call centers in India (we all know and hate them) and in the interests of business, even Indian companies are outsourcing to China (of all places) to cut costs because that is the only incentive that business has... cut costs, make profit... Its time for government to step in and realign incentives for companies. Yes, labor is often cheaper, and regulations or lack thereof makes doing business overseas cheaper.. but for the same reason that, say, poisoning the environment is wrong in California, its also wrong in Yogoslovia and India, and governments should not support businesses that are involved in such practices with tax incentives etc. That would counter the effect of a flatened business world.
Well, that is the gist of it anyway.... "its the government's fault" more or less...
Okay, go ahead and show me where I'm wrong now
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Re:And people wonder why. (Score:5, Insightful)
In that case, you can feel free to go work in a US meat factory. It sounds like your dream environment. Workers are daily wounded or killed, they have no benefits whatsoever, they have the most basic of pays, the very idea of unions is ludicrous. It's the least protected work environment in the US with the least benefits. Maximizing shareholders value at its best.
Nowadays if office or factory equipment is reasonably safe to use, doesn't irradiate you or chop your hand off at a whim, it's because of those damn workers that demanded too much. Don't you think safety goes against the bottom line ? In the short term it certainly does. And what matters nowadays except the short term ? People in Wall Street can't count beyond a couple months anyway.
Sure, let's have a level playing field, leveled at the bottom. The chinese have factories with truncheons to motivate workers, fine, truncheons for everybody, we wouldn't want those poor western businesses to suffer now would we ?
It's not as if anyone was paying the price except for the actual population of your country. Except of course for the happy few very top execs who will keep on enjoying their insane lifestyle.
It's nice that suicidal sheep like you (still spitting "communist" like a good brainwashed 1950s TV watcher) are still alive and well. The abusive corporations still have sweet days ahead of them...
In the mean time I'll stick to Europe where we're still trying to do something around it.
Blasting the Indians (Score:4, Insightful)
Let the slashdot readers go back to blasting the Indians and the asians. How pathetic and incompetent they are, if it was not about the prize they would not get anything to do, we are so great they are so bad, blah blah blah
Re:And people wonder why. (Score:4, Insightful)
Anyway, drive business away from where? America? Everything you're wearing right now and 95% of the computer you're looking at was made in china or SE asia by american owned megacorps. The business that can go away has already gone. The car dealer down the street isn't going anywere, the local kwikemart isn't going anywhere (unless walmart undercuts them out of business), people will still need to buy things and as long as that is the case businesses will survive and prosper.
Why should business assume that it has a god given right to only take from society and not be expected to return something? You pay taxes to keep your neighbourhood clean and get your trash taken away, is it not reasonable to expect that a business should pay taxes to help maintain the neighbourhood that allows it to make a living? That $9bn profit that Mega Corp made last year was squeezed out of the pockets of the people in society. They only exist under the sufferance of that society; why should they not be expected to put some of that enormous amount of money back into the society?
A business is part of society, not an isolated entity who's only action is to take money in return for goods or services. Not only is every employee of that company a part of that society with rights and responsibilities towards it, but the company itself is legally an individual with the same rights and responsibilities. It's unfortunate that many businesses don't see this and largely try to avoid their responsibilities while at the same time going to extremes to enforce and extend their rights.
As a business owner myself I'm glad to see that I'm not the only who sees all of this. Under programs such as http://www.onepercentfortheplanet.org/ [onepercent...planet.org] companies are voluntarily paying extra tax for the benefit of others. OK some are doing it for PR reasons, but most are doing it cos they genuinely feel that their government is not doing enough or they just want to contribute more. Hopefully as the old style business dinosaurs die out, the new breed will appear and take a more rounded view of the world.
Re:And people wonder why. (Score:3, Insightful)
why-macro economic efficiency. (Score:3, Insightful)
The real reason for outsourcing is macro economic efficiency. In true free trade its the last denominator that companies can do nothing about internally as its an external factor.
Like it or not its the reason why china should not float their currency and the reason why countries like Singapore have managed to survive in a very competitive technical sector. In countries Like the US,UK and Australia you may pay an engineer more but the engineers themselves don't benefit due to the high living cost. The high living cost is attributed to the high proportion of non-productive sectors in an economy compared to productive sectors. Productive sectors would include the likes of Engineering,manufacturing, mining,agriculture while non productive sectors are largely the finance sector and bureaucratic sectors. In essence productive sectors support the non productive sectors(eg you cant eat money if there are no farms).
I will give you an example of what has happened in Australia recently. In the last 10 years the cost of house ownership(and thus rent) has gone up hugely. Incomes have gone up to match, but once the cost of paying for a house is taken into consideration, what is left over in the income has not gone up, often down. Take two people bidding for a house. In order to get the desired house each bidder goes to the bank to secure the loan. Thus due to bidding competition each will try to obtain the highest possible loan possible but from the same bank. Thus the bank increases the price of housing by giving larger loans and increases its profits due to interest on the loans. In the end the productive sectors of the economy must provide high pay jobs to support the high value loan to provide the bank with a profit.
So why should a company pay for bank/financial sector profits when in a country with a lower cost of living they could pay the same amount and the engineer would benefit much more as they would actually retain the wealth. Otherwise if the company does pay the engineer less the engineer would still attain an equivalent living as one on a much higher income in a high living cost country.
Take a country like Singapore for example. Here the government heavily controls housing. Singapore doesn't have much choice if you look at the population density however they have benefited greatly due to maintaining a low living cost. Essentially the government here controls 90% of the housing as government housing. In order to get his housing you get a government loan which is not designed to make the government profit. They call it subsided housing, but its not really subsided. The prices of houses cover the construction cost, they just don't provide profits to the financial sector through high interest loans that artificially inflate house prices through competitive bidding.
The result is you can hire an engineer for a lot less in Singapore than you can in the US and the engineer still has an equivalent life.
The second example is China. As a developing country china has a very low cost of living. In much of the country no one expects to gain a high level of profit from housing. As a result in these areas you can set up a manufacturing company and by default be competitive due to low living costs. Should the Chinese government float their currency, from the point of view of foreign-non Chinese currency, the cost of living will rise dramatically. Through this rise, locals would suffer from an increase in relative living cost due to the lost competitiveness. They only institutions set to gain are the financial ones as they will make massive profits of the rise in the Chinese currency. That profit has to come from somewhere and thats the productive sectors of the world economy. i.e. engineering.
Thus when you see outsourcing, don't blame the engineering companies- they are in a loose loose scenario. If they don't, they loose due to foreign competition, if they do they will fail due to a faltering local economy.
Blame the non productive financial
Re:24 hour development (Score:4, Insightful)
Wow! What a huge advantage! I mean, since ALL Americans HAVE to go to sleep between 6 PM to 6 AM this rules! Seriously, theres this thing called "shifts" that can do the same thing. And if you ever had to deal with India in software outsourcing you would know the horrors of working 12 hour days so you can reach one of the sleeping bastards by phone for a phone conference.
Result: Projects get finished in about half the time.
Not true. Anyone who has done software projects knows that they are usually given unrealistic schedules and changing requirements (scope creep). I once, to great humor, watched a local project with serious issues go overseas. The outsourcing company supposedly threw swarms of software engineers at it and were still unable to complete the project. No matter how many people you have its impossible to reach a goal if the goal is undefined.
Besides, there is also the financial benefits of cheap labour that outsourcing brings.
Trye. Cheap labor means company makes more profit and the stock goes up. Executives, who usually recieve stock in the company as "rewards", make more money. This means executive can buy fancier boats, cars, and houses. A win-win situation for them.
Some might say that outsourcing isn't nice to those working at home base
Everyone around is effected by outsourcing, not just software engineers. You see home based software engineers pay taxes, eat at restuarants, buy items from stores or the internet, etc. etc. That money goes in to the community which in turn pays for other peoples living and general area welfare (like fixing roads with tax money). Now to be honest, software engineers are not that numerious to make a serious dent. But India, and China for that matter, are moving to outsourcing other types of jobs. Indians generally target the higher paying jobs. Go to a hospital in a larger city and figure out how many doctors on call don't hail from the U.S. Theres not a shortage of doctors, its just that hospitals are businesses too and cheap labor makes the executives happy. The complaint that there is this "shortage of talented labor" by companies can be correctly translated as "shortage of cheap labor with sufficient degrees".
Re:And people wonder why. (Score:2, Insightful)
Read a little bit of recent history. Particularly enlightening would be to read something about the industrial revolution, as a lot of the regulations we have now are a product of that age. A market based economy has distinct and clear advantages, primarily that it does a good job of getting goods and resources to where they are needed.
But it's the hight of foolishness to assume that the optimal system is one in which the market is as free as possible. One only has to consider the implications: If you decide to allow the free market to determine everything, with no kind of social controls (laws, government), then if the demand is there (and history teaches us it is), you will have slave trading, child workers, private police forces, etc etc. Further, certain controls need to be put into place to prevent monopolies, which destroy all of the benefits of a free market economy, discarding all of the benefits of a free market economy for the sake of a wealthy individual or few.
The fact is that free market thinking must share credit with democratic processes for the economic and technological advances we currently enjoy. One could also call thes socialist processes , but this has become a kind of anathemic word in the modern world.
It makes total to sense to allow the masses of people to determine what appropriate and safe working conditions are, as well as to group together to exert some influence on their wages. Private interests, corporations, seek to maximize their profit margins. If you don't place some constraints on this, it will lead to instability, not to mention to horrible pay and working conditions for the people who are actually responsible for producing the goods or services the corporation is manufacturing. In a well functioning democracy, the government is the method by which the non wealthy masses can exersize some power. The rich and powerful already have plenty of power and influence, so it's important to have a mechanism to balance that out.
What I'm trying to say here, is this kind knee jerk government bashing is poorly thought out, and not helpful.
In physics, in order to understand a system, we usually look to the extreme conditions first, since these offer a certain amount of insight into a system, and are often easier to solve, being subject to certain simplifications. One can apply this to this outsourcing issue. Consider the following case: We have a system of production where the methods of production are controlled by a single entity, or a very small collection of entities who often cooperate when they have interests in common (they can compete with each other in other arenas, this is irrelevant to the scenario in question). In that case, these companies could force people into accepting an unfair wage, little better than slavery. By cooperating together they can agree to wage fixing, similar to price fixing, which is illegal. This is in fact what happened in the early industrial age. You have people living in misery, while a very few had it great.
I would propose that outsourcing is a tendency in this direction. It's a tool that takes power away from the individual workers to barter for a fair wage from their employers, and gives additional power to the corporations. Just as price fixing is a perversion of the free market system which harms the system, one can consider this kind of activity as also breaking the system. It's my opinion that currently the corporations hold too much power over their employees as it is. Of course, if you believe it's the other way around, this is what we should be discussing, and it perhaps it could lead to some kind of progress.
But just saying "govt is bad", and "we should tell corporations what to do" ac complishes nothing.
Re:How to tell whether you're outsourcing (Score:5, Insightful)
The same applies to international workers. The question to ask is "What is the buying power of the salary provided". If a senior level engineer in India is making the same salary as a junior level engineer in the US, you might think they're getting paid less. From a payroll perspective they are. But the buying power of that quantity of money in India is substantially greater - in fact, the overall quality of living for someone collecting 65k per year in India is going to be much higher than someone collecting twice that in the US.
Outsourcing shouldn't be defined based on salary. Whether or not a job is outsourced should be defined on this simple question - Is the job in the other country a new job, or was it a position that previously existed elsewhere that was relocated without the prior occupant? In other words, did someone in the US lose their jobs so that jobs in India could open? If not, then its simply global expansion. Take for instance Microsoft - Microsoft has been hiring like crazy in India, China and Ireland. No one in the US is losing their job for these positions though, so no job is being outsourced. An international company is simply growing in international locations. IBM on the other hand laid off a substantial number of engineers in the US, and hired a large number of Indian programmers to fill the positions priorly held by Americans. Those jobs were outsourced.
no, they can't (Score:3, Insightful)
The supply of mathematicians doesn't magically increase just because you decide to pay them more. If there are 10000 available mathematicians in the UK and 20000 are needed, then 10000 jobs must be outsourced, no matter how much the UK employer decides to pay.
And a population of 60 million people only produces a limited supply of highly-skilled mathematicians, no matter how much education you throw at them.
Re:Economic fundamentals (Score:3, Insightful)
The scientists came because they were fleeing Europe, not because we had open arms.
Re:Economic fundamentals (Score:3, Insightful)
Back up both of these arguments (the necessity of paying off the national debt and why we're on the brink of hyperinflation) with facts.
http://mwhodges.home.att.net/debt.htm [att.net]
But it's not just government debt, it is total debt and obligations in the US economy, and the fact that were going thru a technology and offshore service induced deflation - which means that there won't be the pay base to prop it up. When push comes to shove, there will only be two options, massive cascading defaults on debts or massive hyperinflation to put so much money in the economy so as to try and devalue the debt. (which will actually make the debt problem worse, but they don't know that yet) They will almost certainly try to choose inflation over depression, but they will end up getting both.
This is silly when we can purchase their services from overseas without the burdens of naturalization. That's the whole point of outsourcing: you can purchase services from overseas in fields where you use to have to hire locally or literally import the talent through immigration.
burdens of naturalization? It might be a burden on the applicants to do the paperwork, but not on society. The more free they are, the more empowered they are to get results.
Same 'old line: Blame the Students (Score:2, Insightful)
I don't blame the students. Who wants to bust their ass to compete with $5/hr engineers in Cheapbuckistan? We need carrots, not sticks. If you have an academic knack, then being a lawyer, financier, or even a business manager is more lucrative in comparison. Compared to other options, sci/tech pays poorly in the US. People choose careers based on their comparative options. Sci/tech is a better option in Cheapbuckistan than being a lawyer or biz manager, for example.
Further, most of what is taught in school is not even used much in the real world. Many practicing engineers will tell you this.
Re:Blasting the Indians (Score:3, Insightful)