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The Almighty Buck

Offshore Outsourcing Threatens Offshore Outsourcing 859

theodp writes "India offshore tech support companies may soon face job losses as U.S. companies such as IBM, Intel, Hewlett-Packard, Oracle and PeopleSoft explore countries with even cheaper sources of technical labor, including Romania, Russia, Hungary, the Czech Republic, the Philippines, Singapore, Thailand and Vietnam. Concerned that outsourcing might be outsourced from India in the near future, a Bangalore call center owner said 'It's hard to know where it will all end. Is there a country where people will work for free?'" There's a Newsforge story about the same subject.
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Offshore Outsourcing Threatens Offshore Outsourcing

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  • by mao che minh ( 611166 ) * on Friday June 06, 2003 @08:56AM (#6131337) Journal
    Darn, and I was planning on using this year's tax return to fund my own Indian-based software company for a year. That could have paid for like, what, 8 Indian developers?

    Oh well. I can always fall back on that SCOX stock.....oh wait.....

  • by Violet Null ( 452694 ) on Friday June 06, 2003 @08:56AM (#6131340)
    It's really hard to come up with anything else to add to this story. I mean, did anyone _not_ see this coming? Global companies will do what's cheapest...and there will always be someone who'll be cheaper than you.

    Now, when they start outsourcing management...that's when I'll be happy.
    • I told you so... (Score:5, Interesting)

      by composer777 ( 175489 ) on Friday June 06, 2003 @09:30AM (#6131657)
      I have commented on this before to the people on slashdot promoting free trade. I told them that this was not about helping the people of India, and as soon as they got too "uppity" the corporations would drop them on their face and move somewhere else. See, folks, this isn't about helping out poor countries, this is about making corporations rich. It's not about exporting capitalism, it's about importing a 3rd world standard of living, which is why so many people around the world are against this. It's about making a market place, a product out of entire countries, whose populations are shopped by corporations, much like individual slaves were shopped for in the early United States. The message in return being sent to Americans isn't,"Thanks for helping us get to where we are.", but instead was, "Other countries are out-competing us, you better start working more hours." Of course, what they don't state explicitly, is that you are simply competing with another branch of your employer in a different country.
      • I've got to raise a point here that really bugs me when I hear people talk about "Evil Corporations" versus "The People" (or similarly how most of the world likes "the American people" but hates our "Government". I'm not questioning that governments or corporations can do shitty things, what I'm saying is that "corporations" and "governments" don't do shit, PEOPLE do shit, and I don't believe that some people are better or worse than other people. Everybody is a nice guy and an asshole. I am the American
        • by dpilot ( 134227 ) on Friday June 06, 2003 @10:02AM (#6131971) Homepage Journal
          I fear I can't completely agree with this. There are too many cases where an organization, be it corporation or government, really does exhibit behavior that's different from its constituents. Look at an organization as a sort of life form built out of people, just like people are life forms built out of organs and cells, etc. Members will do things "for the organization" that they just wouldn't do on their own, or for themselves.

          IMHO, there is a real difference here.
        • I am the American government. I am the Democratic party and the Republican party. I am the CEO of AOL. I am the Nation of Islam. I am an Indian worker at a cheap plant in Bangladesh.

          I am Stephens sense of moral outrage.
        • by FatAlb3rt ( 533682 )
          Good points. It's easy to point the finger at seemingly faceless corporations. Here's a question to ask ourselves - do we shop only at Younker's or Macy's, or do we feel it's better to save money and shop at Wal-mart? Probably not the best analogy since the exporting of labor brings about a patriotic argument as well.

          But that brings up yet another point - don't point fingers at corporations about how they have no loyalty to the US workforce, and then drive home in your fsckin' Honda or Toyota.

          Sor
          • by JCMay ( 158033 )
            Uh, I am as much a fan of American cars as anyone, and hated to see the demise of the GM F-body cars (Camaro and Firebird). However

            Honda builds their boxy Element SUV in Ohio. [wsjclassroomedition.com]
            Oddessey Minivans come from Lincoln, AL [dtcseusa.org]

            On the other hand, my 1995 Pontiac Firebird is from Quebec and my wife's 2002 Chrysler PT Cruiser is from Mexico.
          • by jedidiah ( 1196 )
            The problem with corporations is that we tolerate, neigh EXPECT immoral and unethical actions out of them. The corporate structure exits specifically to sheild it's members (and investors) from any direct responsibility.

            Thus, you have an entity that is expected to act in a commpletely amoral manner AND shields it's members from the adverse consequences of this amorality.

            It should be no surprise to anyone that a corporation will tend towards evil.

            It's expected too and it's individual contributors are shie


        • Just like some people dont like big government, some dont like big corperations, and its for the same reasons. You dont want all the power to be in one persons hands.

          If you want people to stop begging the USA for money perhaps we should help them start their own businesses in their own countries instead of forcing our businesses into their countries, I dont know any arabs who asked for Mc Donalds to expand there, in fact it pisses them off.
      • by CommieLib ( 468883 ) on Friday June 06, 2003 @09:59AM (#6131927) Homepage
        Horsehockey.

        First of all, if anyone actually said business is about saving the world, then you were stupid for believing them. Of course its about making corporations rich! And let's not obfuscate things, it's about making individuals rich, stockholders specifically. Which is awesome! That means that they were able to present someone with a better alternative use for their dollars than anyone else at a moment in time.

        Anyway, the whole free trade thing...I live in Texas. I'm tremendously concerned about: <MASSIVE SMARM>
        • the orange grove picker jobs that have been exported to Florida
        • the snowmobile rental jobs farmed out to Colorado
        • the Chicago tourism jobs exported to Chicago...


        Come to think of it, I'm a programmer living in Dallas. I'm very concerned about all of the IT jobs that have gone to Austin and Houston. Perhaps I'll petition my local government to restrict companies from farming out jobs to them.</MASSIVE SMARM>

        Here's the point: I pursue those restrictive policies, and so Austin does too. Or Florida, or whatever. Of course, Florida wouldn't care about the orange grove jobs they'd lose to Texas, so they'd do something like Texas-produced steel, or something we specialize at, just like Chicago specializes (duh) in Chicago tourism.

        To an economist, this is a real head shaker. This whole sequence I'm talking about is called reciprocity [freetrade.org]. It's a solved problem in game theory. The only people who argue about it are people who haven't read and understand the solution, i.e., 90% of the whole world, unfortuately.

        Now that I've kind of dropped a nuke on this whole argument, I'm going to pull back a bit. There is such a thing as hidden costs in free trade. I obviously understand fundamentally that free trade is a Pareto optimal [gametheory.net] solution for nations, and yet, I don't think we should trade with China under certain circumstances. Why? Because the cost of goods carries a moral cost borne in production not represented by the price. If I buy a shirt from China, I'm not entirely sure it wasn't produced by PoliticalPrisonCo (motto: where products are made by people who think like Americans!) I'm open to the idea that that factor might exist elsewhere. I don't, however, see that factor in dealing with India.
        • by IamTheRealMike ( 537420 ) on Friday June 06, 2003 @10:53AM (#6132526)
          I obviously understand fundamentally that free trade is a Pareto optimal solution for nations, and yet, I don't think we should trade with China under certain circumstances

          .... and this is why free trade does not work and is inherantly unstable. It's a classic prisoners dilemma scenario - all it takes is for one state to restrict some trade to get a leg up over the other, before EVERYBODY has to do it in order to stay competitive.

          This can be clearly seen in the French governments illegal blockades on British beef. Years after they were taken to court and found to be blocking imports for no valid reason, they are still doing it, because otherwise their rural farming communities would go bankrupt (and agriculture is a powerful voter influence in France).

          The same is true of steel import tariffs imposed by Bush.

          So, we can see that fundamentally the concept of free trade is broken - like most of classical economics, it doesn not work in the real world, and to pretend it does is to deny reality.

          Most "real" economists have realised that free trade is not something that should be preached, because despite best intentions it has simply become an abused idea. "Free trade" in practice meant the ability for the US to freely export its goods, but not the other way around (and Europe is just as bad in many respects). This has led to crippled economies in the third world.

          So, to say it's a "solved problem in game theory" is correct - it's a solved problem in theory only. In practice, it's not a solved problem and people are looking at alternative economic constructs to help increase wealth and distribute it more fairly (see the work of Lietaer and Gesell for some examples).

          • by CommieLib ( 468883 )
            Congratulations. You've just defined reciprocity.

            Ahh, Slashdot. The home of the irrelevant truth. I'm not arguing that countries don't engage in trade restrictions, I'm arguing that according to game theory those decisions are contra bono.

            Saying that the concept of free trade is "broken" because it's not always practiced is like saying that the idea of health is "broken" because people smoke. I don't "deny reality" to say that it is bad to smoke just because people do smoke.

            Next item, crippled third w
          • by Beliskner ( 566513 )

            So, to say it's a "solved problem in game theory" is correct - it's a solved problem in theory only. In practice, it's not a solved problem and people are looking at alternative economic constructs to help increase wealth and distribute it more fairly (see the work of Lietaer and Gesell for some examples).

            Yes. The trickle-down effect doesn't work, the rich must be taxed. Only celebrities spend their millions on job-creating trickledown hobbies. Most rich businessmen who are assumed to partake in trickled

        • Horsehockey.

          First of all, if anyone actually said business is about saving the world, then you were stupid for believing them.


          That's EXACTLY what was said when NAFTA was found out in 1994 before the Clinton administration rammed it through Congress. It was marketed as being beneficial for Mexicans and Americans. It was pushed as a way of exporting capitalism and American values to Mexico. So far, Mexico has been devastated, and so have the Americans who have relied on those "bad" jobs.

          Of course its
          • Clarification (Score:4, Insightful)

            by composer777 ( 175489 ) on Friday June 06, 2003 @11:18AM (#6132769)
            We Trade for Imports

            Yes, we do trade for imports,....

            Unilateral Free Trade

            This is a joke, the aim of our corporate government is not to get imports into the US, but to get our corporations into their markets, which is why they only trade with countries that trade with us.

            Ok, it seems like the two quotes are contradicting each other. By "we" in the first statement, I mean the people of the US. In the second statement, I am referring to the corporate government, whose motives are different, IMO. There are also two kinds of imports, which I didn't necessarly make clear. There are intra-corporate imports, which is what corporations want, and their are imports that come from foreign companies which is what the rest of us Americans should desire. The reason we want the latter, is because foreign companies will typically return more of the profits to that country, which will mean higher wages for countries we trade with, which means more consumption by that country and more money flowing back into the American middle class. Intra-corporate imports means lower wages, and the profits get returned to that company and it's investors, who will simply hoard that money.
      • Your comment defeats itself. If a country can undersell India, it is likely that the income from GlobalCorp, Inc. will have a greater impact for good there than it had in India.

        I *personally* saw a group of Romanian engineers designing car parts for an American company. They were getting paid $400-$500 per month. You might say it's deplorable to do that. What if I told you that the average Romanian income was $100-$150 per month at the time? All of a sudden it's not so bad.

        The point is that they are not
      • by Bob Uhl ( 30977 ) <eadmund42 AT gmail DOT com> on Friday June 06, 2003 @11:41AM (#6132986) Homepage
        See, folks, this isn't about helping out poor countries, this is about making corporations rich.

        One would think that more than two centuries after The Wealth of Nations was published this sort of dark, superstitious nonsense would have been extinguished by the light of reason. Sadly such is not the case.

        The beauty of a market is, provided that fraud is not allowed, the greed of all paradoxically leads to the betterment of all. Yes, the corporation wishes to spend less, and so goes with a cheaper supplier of the same good. Well, guess what--that's better. If B can produce the same as A for less, then it is a waste of one's money to use A; it's also a waste of A's time. Going with the cheaper supplier rewards those who do more with less; it is economical.

        You know this, I'm certain. Who does not shop for the best prices on groceries? Why is it bad for an employer to shop for the best prices on labour? Of course it's not.

        There is the law of comparative advantage to keep in mind as well. If A is better at X and B is better at Y, then it is best for A to devote all his time to X and B to devote all his time to Y; this ends up yielding far more of both X and Y than otherwise. If India is better at call-centre staffing at the US is better at R & D or at finance, then it is best for India to focus on call centres and the US to focus on R & D or finance. This yields more call centres (a good thing) and more research or financing (also a good thing).

        The message in return being sent to Americans isn't,"Thanks for helping us get to where we are.", but instead was, "Other countries are out-competing us, you better start working more hours." Of course, what they don't state explicitly, is that you are simply competing with another branch of your employer in a different country.

        Hey, you have no right to a living. Why should anyone pay you more to work less? It's insane, like buying lettuce for $50/head. That's what competition is about. It's rough, but that's Real Life.

        • One would think that more than two centuries after The Wealth of Nations was published this sort of dark, superstitious nonsense would have been extinguished by the light of reason. Sadly such is not the case.

          Capitalism is not constant. The capitalist economy we have today bears little resemblance to the economic context in which Smith wrote The Wealth of Nation.

          The beauty of a market is, provided that fraud is not allowed, the greed of all paradoxically leads to the betterment of all.

          Most of the re

        • Re:I told you so... (Score:3, Interesting)

          by LazyBoy ( 128384 )

          The beauty of a market is, provided that fraud is not allowed, the greed of all paradoxically leads to the betterment of all.

          You have to disallow more than fraud. You have to stop companies from buying laws that prop up their business model or otherwise aid them.

          And while "the greed of all" may lead to the lowest prices in a perfect market, this may not be "the betterment of all".

          Hey, you have no right to a living. Why should anyone pay you more to work less? It's insane, like buying lettuce for $5

  • Price? (Score:4, Interesting)

    by onion2k ( 203094 ) on Friday June 06, 2003 @08:57AM (#6131346) Homepage
    So stop competing on price and start offering a good, high quality, reliable service that people will pay a little more for.
    • If a company can get the same or better quality at a lower price, why not?
      • Re:Price? (Score:5, Interesting)

        by eggstasy ( 458692 ) on Friday June 06, 2003 @09:06AM (#6131446) Journal
        Allow me to ammend that:
        If a company can churn out the crappiest possible software at the cheapest possible price in the least amount of time, and then have their marketing department convince Joe CEO that their software is the "LEADING!!", "BEST-OF-BREED!!", "INNOVATIVE!!" solution... *shrugs*
        Will someone please illegalize marketing? kthxbye.
  • by Anonymous Coward on Friday June 06, 2003 @08:58AM (#6131355)
    Is there a country where people will work for free? Yeah, the GNU.S.A.
  • by aldousd666 ( 640240 ) on Friday June 06, 2003 @08:58AM (#6131363) Journal
    This reminds me of the story of Saudi Arabia and mideastern oil. Way back around the turn of the century, there was no great oil industry in the Arabian Peninsula. They were trying to find something to do with this deset wasteland. Then, the US comes in, offers to pay the countries (then Saudi Arabia was the focus) 1 penny per barrel exported, all drilled by the US, worked mostly by US oil workers. Now, we see what has come of this situation... Should we be as worried about tennis shoes and cheap nylon jumpsuits?
  • Other reasons... (Score:5, Interesting)

    by SerpentMage ( 13390 ) <ChristianHGross@nOspaM.yahoo.ca> on Friday June 06, 2003 @08:59AM (#6131373)
    I think there are multiple reasons here...

    Most of the countries named have an actual infrastructure. EG I doubt Romania, Russia, Hungary, the Czech Republic have electricity problems.

    Many of the Eastern European countries are not that far away from the Western markets, with some actually joining the European Union.

    All in all it just makes for simpler business....

    Funny though... (in an ironic sense)
  • Is there a country were people will work for free?

    What percentage of the contributions made to the OSS community are effectively made "for free"? While I approve wholeheartedly of the concept of open access to the source code, and the idea that once I've bought something, I can do what I like with it, the fact that the industry moves more towards no cost software makes me wonder what the job prospects are going to be in the future. Is there a better model of providing the freedom of source code while no

    • Re:Free software (Score:3, Interesting)

      by zakezuke ( 229119 )
      How much money does a typical large company pay for software?

      500 clients at $80 a pop for the os = $40,000
      500 clients at $300 for some applications $150,000

      Every 3 years per major release of windows.

      Or?

      Pay one human who's part of a open source project who fixes bugs and submits fixes @ $63,333 yearly, only diffrence is, you get them first.

      Any company with 500 machines or more is going to have some form of help desk or software support contact. You could spend your money and actually buy a comercial pr
  • by PhxBlue ( 562201 ) on Friday June 06, 2003 @09:00AM (#6131386) Homepage Journal

    India offshore tech support companies may soon face job losses as U.S. companies such as IBM, Intel, Hewlett-Packard, Oracle and PeopleSoft explore countries with even cheaper sources of technical labor, including Romania, Russia, Hungary, the Czech Republic, the Philippines, Singapore, Thailand and Vietnam.

    What's good for the goose is good for the gander. American employees hopefully won't lose any more jobs than they have already; but it kinda sucks for the Indian employees who are going to be out of work now.

    The biggest problem with a global economy is that it caters to the lowest common denominator. The second biggest problem is, you more often than not get what you pay for. I have to wonder if American IT companies are even concerned with the quality of their technical support anymore?

    • by davidhan ( 539718 ) on Friday June 06, 2003 @09:24AM (#6131606) Journal
      it kinda sucks for the Indian employees who are going to be out of work now.

      Maybe this will lead to an explosion of Indian blogging.
    • by TopShelf ( 92521 ) on Friday June 06, 2003 @09:29AM (#6131647) Homepage Journal
      "The biggest problem with a global economy is that it caters to the lowest common denominator. "

      Or put another way, one of the great things about the global economy is that jobs can migrate to those that want them most. This is an interesting phenomenon to see, really - after decades of IT/IS endeavors increasing efficiency and achieving headcount reductions across a variety of fields, American IS professionals are now facing the same pressures themselves (myself included). While the recent currency weakening might slow the tide, this appears to be a permanent shift.

      For those who wish to remain in IS, the high ground appears to be in the analyst realm, or heading towards smaller companies that haven't achieved the scale whereby outsourcing makes sense...
      • by composer777 ( 175489 ) on Friday June 06, 2003 @09:40AM (#6131741)
        One of the horrible things about the global economy is that it makes labor essentially a worthless commodity, since the amount of supply far exceeds demand. Due to anti-competitive pressures, new businesses aren't forming to soak up excess demand for cheaper products. Therefore, a few select corporations profit immensely, while the population of the rest of the world gets treated like slaves. But, hey, I guess the word "free" is in "free trade", so therefore it must be a good thing.
        • by Trepidity ( 597 ) <delirium-slashdot&hackish,org> on Friday June 06, 2003 @11:16AM (#6132755)
          Labor supply is indeed far in excess of demand. But your solution seems to be to corner off small portions of labor and exclude the rest so that these small portions of labor remain in demand in their protectionist markets. What this amounts to is making these people "in demand" by relegating some people to an "even less in demand than before" ghetto where they can't even be considered for employment. In short, if the average free-market wage would be $0.75/day (making up numbers here), your solution increases the wage in some countries to $100/day at the expense of decreasing it in others to $0.10/day. Which is pretty much how things are.

          But you claim this is justified?
          • Nope, not at all. I never said that, and I don't appreciate having words put in my mouth. My solution is to encourage business growth, and to encourage a safety net and a minimum wage, which will also encourage business growth. Free trade is about allowing corporations to reward countries with the least regulations and standards of living with money, while countries that try to enforce democracy, environment regulations, and a minimum wage get the shaft.

            This isn't just my solution, it's the solution pro
        • I have no idea how the parent got modded to +5, Insightful, because it makes a fundamental error: it assumes that "Labor" is a homogenous good.

          Labor of some semi-trained person answering a telephone call from an ignoramus who can't open the box his new cable modem came in is not the same thing as the labor of a skilled programmer with knowledge of a technical domain. The supply of one is ample in India and the Philippines, while the other is not. Lumping these together as "labor" misses the whole point.

          If
    • It's not just the quality of their technical support that's going to fall. They're also outsourcing their development efforts, and they're trying to outsource some business functions. I said, months ago, that this would happen. In the future, non-open-source software is going to get worse and worse as companies hire cheaper and cheaper programmers to work on it.

      What worries ME is that it's not just software development firms that are outsourcing -- it's everyone. Banks, manufacturing firms, you name it. So
  • Stay with the times (Score:3, Interesting)

    by Mattygfunk1 ( 596840 ) on Friday June 06, 2003 @09:01AM (#6131393)
    This was always going to happen and it is a good thing. The Internet has opened up possibilities and struggles for every form of business (including being an employee).

    Kill or be killed. Always has been and always will be.

    You can't tell the RIAA to change its business model without by being prepared to do so yourself. Be flexible and keep with the times.

    __
    Cheap website reseller hosting [cheap-web-...ing.com.au] Dragon Action Figures [mibglobal.com.au]

    • by release7 ( 545012 ) on Friday June 06, 2003 @09:30AM (#6131655) Homepage Journal
      Gee, and all this time I though humankind was a step above a pack of wild dogs.

      "Kill or be killed" is not an enlightened guiding philosophy. It is not the principle upon which the United States or any other modern democracy was founded. It's unfortunate so much cynicism exists that this philosophy can become so widespread. It only leads to economic uncertainty, fear, and a life little better than living in a cave wondering how you are going to catch your next saber-toothed tiger.

      Aspiring to be a human is not a right, it's a responsibility.

      • Economic Darwinism (Score:4, Insightful)

        by lpret ( 570480 ) <lpret42@hoUMLAUTtmail.com minus punct> on Friday June 06, 2003 @09:51AM (#6131822) Homepage Journal
        It's economic darwinism. Of course it exists. Of course it's our basic instinct -- it's how we are in our most basic form in all facets of our life. No one is saying it's an enlightened philosophy but it is truth. An inherent truth in any society that is going to get ahead in any terms. It's just that instead of it being a personal darwinism (I kill another human being because he threatens my superiority) it's in a more macro scale -- Company A undermines Company B so that they can stay ahead.
  • Perhaps.. (Score:4, Insightful)

    by Gortbusters.org ( 637314 ) on Friday June 06, 2003 @09:01AM (#6131395) Homepage Journal
    Many of these awesome IT and software development jobs are turning more to be like mechanic jobs. Sure you need some training, but just about anyone can do a half-decent job. Half-decent enough for someone to hire you for pennies in a foreign country!
  • by ardiri ( 245358 ) on Friday June 06, 2003 @09:02AM (#6131403) Homepage
    > explore countries with even cheaper sources of technical labor,

    this kind of thing haunts most developers - and, every company out there who needs to get something done is always seeking for the smaller cost/quick solution for all their projects. its also become common that a lot of developers are lowering their rates just to get work - its not looking good at all..

    meanwhile, i perform consulting services - and, i simply refuse to budge from my standard rate for employment. they pay a little more - but, they will get what they pay for. i have had many clients do development in india, then, come to me - and, for a little bit more they get the product faster, of higher quality - and, are very satisfied.

    the sooner these companies realize cheap labour has its down-falls, the better of they will be.
    • The problem is IT is viewed as a commidty and a cost waster. You do not bring in the company money right? Then why should I pay you?

      Same is true with regular white colar employee's. Time magazine did an article last month about the shrinking pay check. Basically in the 1990's employee's as well as IT were both viewed as investments. Today they are viewed as worthless commidites that eat up costs.

      The problem is many IT managers may agree with you but the CEO is the one saying $300 a month for a programer i
    • by Citizen of Earth ( 569446 ) on Friday June 06, 2003 @09:31AM (#6131667)
      this kind of thing haunts most developers - and, every company out there who needs to get something done is always seeking for the smaller cost/quick solution for all their projects. its also become common that a lot of developers are lowering their rates just to get work - its not looking good at all..

      Software development is not some special industry that is exempt from the laws of macroeconomics. If you don't have some competitive advantage over the next guy or the next country, then, guess what, you're going to have a hard time getting work. I hear that Buggy Whip manufacturing is an industry that's about to boom; maybe it would be a good time for a career switch.

      meanwhile, i perform consulting services - and, i simply refuse to budge from my standard rate for employment. they pay a little more - but, they will get what they pay for. i have had many clients do development in india, then, come to me - and, for a little bit more they get the product faster, of higher quality - and, are very satisfied.

      Well there you go. As long as your salary is justified by your productivity, then you're in good shape. Cheaper is not always better.

      I suppose there are activist types who think that the development of the third world is morally wrong--that they should be dirt poor forever. That's what's happening here. The high-tech industry in India is becoming sufficiently developed that it is starting to demand higher wages. For companies seeking the lowest possible price, they may begin to find it elsewhere, until 'elsewhere' becomes sufficiently developed also. But, there are more factors to consider than just price.
  • by LostCluster ( 625375 ) on Friday June 06, 2003 @09:02AM (#6131405)
    A quote from the original Wired article...
    Farhat Gupta, owner of several Bangalore call centers, said that little attention is paid to technical training, as "all the answers are always on the computer screen in front of the workers. We exist for people who do not want to use the Internet themselves to find their own answers."

    The only time I ever call technical support is when checking the manual and web doesn't get me the answer. If the person on the other end of the line has no more information available to them, what's the point?
  • The almighty pound sterling too...especially for call centres [theregister.co.uk]. I'm not sure who really benefits from this trend long-term, apart from the people who get the jobs overseas (they're usually quite well paid compared to their fellow countrymen/women). The customers hate the thought of talking to someone thousands of miles away, so Indian call centre workers are taught British regional accents and given Anglicised names. You can fool some of the people some of the time but...
  • Cycle of Poverty (Score:5, Interesting)

    by laetus ( 45131 ) on Friday June 06, 2003 @09:03AM (#6131413)
    Personally, I think the multinats are on to something. They're cycling through countries, creating artificial "boom-bust" cycles in employment.

    Take for example, the automobile industry. In the early 1980's, the US auto industry had some of the highest wages/benefits for auto manufacturers in the world. Alot of those jobs went overseas to Japan/Korea who (at the time) had lower wages (and better quality). This depressed US wages. Now, the reverse is true. Both German and Japanese automakers see that US wages are lower and have located plants here.

    So goes it with IT. US coders were first to the trough and wages went up. Then the multinats moved to India who trained their people well and had low wages. Indian coder's rates go up and now the multinats are headed for Eastern Europe. As tech wages get lower in the US and we refocus on quality, the multinats will move coding operations back here and the cycle with start anew.
    • by kin_korn_karn ( 466864 ) on Friday June 06, 2003 @09:24AM (#6131600) Homepage
      Yup. About the only way to win is to own your own business and screw your fellow Americans. We live in a society built around sociopathic greed.
    • by samael ( 12612 ) <Andrew@Ducker.org.uk> on Friday June 06, 2003 @09:44AM (#6131769) Homepage
      However, at the end of each bit of the cycle, the areas are richer than at the start.

      Thre are now more educated people in India, they have a better economy and they've got moer infrastructure than before.

      As the money gets pumped from place to place, there's a gradual (and slow) increase in the quality of living.

      Eventually you run out of people who will work for rice and you have to step up to paying a slightly higher amount, and the big cycle begins again.
      • Re:Cycle of Poverty (Score:3, Informative)

        by davesag ( 140186 )
        Eventually you run out of people who will work for rice and you have to step up to paying a slightly higher amount, and the big cycle begins again.

        An alternative is to artificially inflate your prison population and force people to work for their daily bread. The USA is the world leader in that game. I note with interest the 13th Amendment to the United States Constitution reads:

        "Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted,

  • Is there a country were people will work for free?

    Does Russian Vodka count? Seriously though, this is interesting as it's always fun to see the current King Of The Hill get booted off by somebody who works harder or cheaper than the current "King". Honestly, I'm not going to feel too bad for anyone in India who loses their job because of some big company's management decision. All I can say is, "Welcome to my world, Assad."

    On a side note, at least in the gray-to-blackhat community, the Russians and comp

  • 'It's hard to know where it will all end. Is there a country were people will work for free?'

    It all ends when USA employees begin paying to work at companies based in India.
  • About time... (Score:5, Insightful)

    by bigattichouse ( 527527 ) on Friday June 06, 2003 @09:04AM (#6131425) Homepage
    Now, the surprise on so many faces - "how can they do that to us", "how will our workers eat?", "We have so much labor, and they are moving operations to some backwater 3rd world country" ... will now be coming from New Delhi instead of New Jersey...

    When your business consists of undercutting others, and providing services to willfully "outcompete" someone out of a job, don't expect pity.

    As a piece of advice I once heard goes: "If you are stupid enough to date someone who dumped someone to be with you, don't be surprised when you get dumped, too."

  • by LearningHard ( 612455 ) on Friday June 06, 2003 @09:05AM (#6131431) Journal
    Elbonia, lovely Elbonia
  • by Omega ( 1602 ) on Friday June 06, 2003 @09:05AM (#6131434) Homepage
    It's what's known as the race to the bottom:

    Once one company gets their employees to go along with a heath care cost increase or a salary cut, the other companies will rush to offer just as low pay and benefits. They call this "competitive" compensation. So if the jobs can be outsourced for cheaper, then the majority of businesses will all race to find where that is. It happened with manufacturing jobs, it is happening with service jobs. I don't really know what (if any) jobs are "safe."

    Also, don't think this automatically translates into lower prices. It doesn't make the products better or less expensive, just cheaper to make. How much in lower prices do you pay for your Nike tennis shoes made in Burma?

  • by Mysticalfruit ( 533341 ) on Friday June 06, 2003 @09:06AM (#6131452) Homepage Journal
    "Is there a country were people will work for free?"

    Yes, such a country exists. However, to be part of this country you need to have a big needle stuck in the back of your head and your whole body gets submerged in Astrolube. Your then stored in this "pod" where this "dream" of your life is pumped into your brain by a big computer.

    Now, in this dream your actually answering the phone and solving technical problems and you only "think" your getting paid for it. In real life, that money is getting collected so that more people can get plugged into the machine to make them more money...

    There was this dude who realized it was a dream and managed to wake up. He now cleans the floors in the building that holds all the people and the big computer. We hear him wanding around go "Damn Red Buritto..."
  • by supernova87a ( 532540 ) <.moc.liamtoh. .ta. .1relpek.> on Friday June 06, 2003 @09:07AM (#6131460)
    It's not pretty, but this is what globalization and capitalism is all about. As people get more prosperous and affluent, they're less willing to work for rock bottom prices any more. Others undercut them and take their place in the food chain.

    Sometimes this is a good thing, sometimes a bad thing. It brings economic development to poor parts of the world that can do things better and cheaper. It allocates resources very efficiently. But it also creates a lot of instability and waste of resources at the same time. Look how fast the jobs can be created -- and eliminated. And what happens to the people who used to have those jobs. And do you notice how the countries that take the shittiest jobs often end up with polluted environments as a result?

    Someday, I hope we will come up with an understanding of how we can balance efficient economics and social good.
    • by lpret ( 570480 )
      will we ever get to a point at which everyone's lives will have been enriched? i mean, will we keep leaching off of the lowest paid people and finally have helped everyone?
  • by Baumi ( 148744 ) on Friday June 06, 2003 @09:08AM (#6131463) Homepage
    Let's look at a few trends:

    - Automatization leads to fewer and fewer workers being needed to do the same amount of work, meaning higher profits for the producer.
    - Outsourcing leads to those workers being paid less and less , meaning again higher profits.
    - This, in turn leads to higher unemployment rates and a higher number of workers with low wages.
    - While any individual company might profit from cost-cutting measures, wide-scaled implementation of these measures will lead to too few consumers with enough money to buy the products.
    - Thus, to keep the system going, those profiting from it - the producers - must eventually give back enough of the profits to keep the whole thing going, otherwise the distribution of wealth will be too uneven to allow the system to work.

    (If you happen to be immoral, other possible ways to boost the economy would be forceful destruction of goods and/or workers, which would a) create the need for rebuilding the destroyed goods and b) lower unemployment, because after the destruction there'd be not only more work but also less workers left. This process is commonly known as "war".)
  • by ndogg ( 158021 ) <the@rhorn.gmail@com> on Friday June 06, 2003 @09:12AM (#6131505) Homepage Journal
    Before people start complaining about more people overseas taking jobs, let's realize that this means more people in impoverished jobs having access at better jobs. They may not be getting the pay they deserve, but they will be getting paid a lot better than many of their fellow persons. That better pay in relativity means they will be able to give themselves and their families a better standard of living, which every human being on this planet deserves. This is the goal of free trade, isn't it?

    If we've been smart (this is slashdot, right?), we've been saving money to help us through tougher times. More jobs will always be created.
  • by diabolus_in_america ( 159981 ) on Friday June 06, 2003 @09:16AM (#6131538) Journal
    The history of the textile industry, I think, gives a pretty clear indication where the future of IT is headed, particularly due to the big trend of American corporations to outsource to India over the past few years.

    The textile industry, at least what I consider the modern, industrialized version of it, began in and generated considerable wealth for England. Then, with the promise of cheaper labor, the bulk of textile manufacturing moved to the Americas, specifically the Carolinas, Georgia and a few New England states. The total generated wealth of the industry started to decline at this point, and another disturbing trend started as well. The distribution of the wealth began moving to a smaller percentage of people, namely the factory owners. Again, the prospect of cheaper labor induced the factory owners to move the bulk of textile manufacturing first to Mexico from the United States, then to the Far East from Mexico.

    The important things to remember is that the total wealth generated by the textile industry declined with each geographic hop around the globe, and that fewer and fewer people got a larger and larger percentage of the total wealth of the textile industry.

    How does this relate to IT? Well, considering that in the late 1990's we saw a mass movement of IT jobs for the US to India, and the associated wealth generated by the IT industry decline, I think the example of the textile industry is playing out again. Soon, the Indians who offered such low labor rates to win contracts and jobs away from American workers will be on the other side of the equation.

    Russia, Eastern Europe and probably some African countries will do to India what they have done to America. The sad thing is that while India has been "carpet-bombing" the IT industry in the United States over the past few years with cheap labor and low costs, ultimately they've been laying the ground work for their own, future demise.

    If all you offer is low costs and a cheaper price, then there is nothing to keep customers loyal. As soon as someone else comes along with a cheaper price, your customers will move to them. All because of the trend you started!

    • I am having a hard time understanding what is bad about this cycle. The jobs move away? In America, they were replaced with higher-paying, higher-skilled jobs. The distribution of wealth became less even? Even if that is the case (and there is a lot of information disputing that), the *overall* standard of living became significantly higher. Just because a textile worker wasn't making as much as his boss doesn't mean he wasn't making more than before he got the job.

      The example from America's history is pr
  • by peter303 ( 12292 ) on Friday June 06, 2003 @09:18AM (#6131550)
    To some degree the former colonies of England and America will always have an advantage. These would be mainly India, the Philipines, and South Africa. These countries hve people who learned English at an early age and understand US/UK business habits. Jobs such as customer relations would work best there. Even software development involves a lot of communication. This is possibly why India seems to have beat China and Japan.
  • by mobileskimo ( 461008 ) on Friday June 06, 2003 @09:24AM (#6131605) Journal
    It's a nice theory but you forget that equilibrium may never be attainable. Skill and knowledge starts in a location just as it did with all these industries for autmobiles, programming, etc.

    So the cycle we have today, will be the cycle we have tomorrow, or hundreds of years from now, just with different industries, different technologies and different products. You'll benefit from the countries establishing better infrastructures, but did you really expect some countries to continue their civilizations on candle-power? The employment cycles and people wallowing in corporate migration-mires will continue. People will always be subject to the fear that they will lose their jobs to outsourcing. Infact it will be easier and faster every time as corporations establish a base of operations in all the potential countries, and have accumulated experience from making these shifts.

    One place will always be better than another, in the eyes of a profit-seeker. Making these evaluations and determining the best choice is what executive decision makers get paid big money for, isn't it?
  • I live in Hugary... (Score:3, Interesting)

    by little1973 ( 467075 ) on Friday June 06, 2003 @09:27AM (#6131635)
    and I do not think hugarian IT workers are cheaper than the Indian IT workers, to the contrary. One of the problems my coutry is facing currently is that the workforce is not as cheap as a few years ago. Many corporations plan to move towards east (Russia, China, etc) if the situation does not change. I think the same can be said on the neighbouring countries, too. Workforce in the eastern block is not as cheap as it used to be.
  • by Badgerman ( 19207 ) on Friday June 06, 2003 @09:28AM (#6131640)
    This doesn't surprise me, though it's happened a bit faster than I expected. Then again, that is sort of the point I was going to make . . .

    A global economy and global communication accelerate things. The ever-increasing need for IT accelerates people seeking new products, ways to support old products, and development of new projects. Throw these things together and you have a recepie for change and unpredictability - and a chance for uniformity at relatively quick speeds.

    The Outsourcing Raget can't go on forever, and my guess is this is part of the last hurrah (or next-to-last) hurrah for Big Outsourcing Moves. At some point all potential markets will be explored, competition and increasing need will affect prices and skills, and you'll probably end up with the bizarre situation of a global market where IT resources seem relatively alike. I wouldn't be surprised if we saw it in ten years.

    I work for a company that tried outsourcing and got burned horribly (last I saw, 50% of all outsourcing projects fail). Ironically, they found that good organization, hiring good people, and careful cost containment actually saved them money over outsourcing's total costs. They hired more people (at very good wages) and ended up coming out ahead.

    Outsourcing has its place. But my guess is the enthusiasm for it will dip in time, because the speed of change will create homogenization.

    Just my theories.
  • by chia_monkey ( 593501 ) on Friday June 06, 2003 @09:32AM (#6131676) Journal
    What's the hubbub here? Outsourcing is outsourcing. If Company A needs workers, it's going to find them. Perhaps they want someone that can drive into work every day, or perhaps they're fine with someone overseas. Once you reach the "overseas level", does it really matter where overseas they came from?

    Also, consider this. We (the US, other nations using a particular region for manpower, etc) are building up an infrastructure and a skilled workforce in a way by creating demand for workers in that area. The area becomes known as a hotspot, wages (and usually the standard of living) rise, all is well. Then it's on to the next area that provides "cheap" labor.

    And it's not just overseas where this happens. How many US companies are based in DE or NV because of their tax laws (no, this doesn't relate to actual labor but it does have to do with business decisions and where something is based).
  • by Bormester ( 679400 ) on Friday June 06, 2003 @09:56AM (#6131889)
    I run a company in Holland that just does this.. leverage eastern Europe to achieve similar cost levels but better control and quality. Budapest is a 1.5 hour flight from Amsterdam and is in the same timezone. Don't forget, these are the guys that during the communist era were reverse-engineering western technology. I have NO idea why companies continue to develop technology anywhere else.
  • Singapore!? (Score:4, Interesting)

    by ChrisWong ( 17493 ) on Friday June 06, 2003 @10:05AM (#6132009) Homepage
    Why is Singapore included in the list? It's a tiny island-state: you can see the entire coastline from the air. I suppose IBM can buy the entire island to staff one of its minor divisions (I'm kidding!). It has first-world living standards, so that would be the last place I would look for cheap labor. Sure, they speak English, but so do most Americans. About the only advantage I can imagine is having a 12 hr timezone difference is handy for tech support call centers.
  • by $criptah ( 467422 ) on Friday June 06, 2003 @10:25AM (#6132246) Homepage
    I want more outsourcing! In fact, I want companies to start outsourcing managers, exects, QAs, designers, and accountants. I want those people to feel the results of unemployment and I can't wait to see guys in Armani suits bitch about it! Why? Because I want them to feel what thousdands of American IT workers feel right now. I want them to wonder about all the years they spent in college, all the loans, morgages, families, kids and their future. This is how I feel whenever I start cutting out coupons and wonder if I have enough money to pay my rent this month.

    Until the issue of foreign labor hits the hightest steps of corporate ladder nothing is going to be done. The funny thing is that if outsourcing is going to continue at this pace, pretty soon we'll end up in a world where only a few people will have buying power. Both American and foreign workers will not have capital; just watch the world's economy go down the crapper.
    • by Cyno ( 85911 ) on Friday June 06, 2003 @03:00PM (#6134694) Journal
      This is typical. You screw me so I want you to get screwed just as bad. This doesn't solve anything and only makes our environment worse.

      What we need to do is educate the managers, execs, etc. that there is more to life and work than money. That if we work together to take care of eachother that our environment will not be destroyed for the profits of some corporation striving for globalization.

      What you are saying is since globalization is hurting you you want it to get so bad it hurts everyone. But what do any of us know. We're just spectators to one of the dumbest systems ever created.

      I bet 200 years ago when it was created people thought it was brilliant. But looking back at history I think we could have come this far without slavery.

      And just what is slavery? Working for no money. So instead of slavery today we are slowly moving the work to people who are willing to work for less and less. Think of it this way. There was a time when we needed everyone to work. But today we have computerized automation which means we only need a fraction of the work force to produce the same amount of product. So we lay off most of our employees. Now we recognize that some people are willing to work for less than other. And some countries don't have a minimum wage. So we hire people and pay them next to nothing, in effect creating slavery out of capitalism.

      I don't know. I got everything I want so I guess it doesn't really matter whatever happens to all of you. But I think things could be better for all of us if they were different.
  • Serious Sam.. (Score:4, Interesting)

    by Rinikusu ( 28164 ) on Friday June 06, 2003 @10:56AM (#6132574)
    I don't know much about the whole situation, but consider:
    Serious Sam is considered one of the most fun games of late. It cost $20 at the store. The developers are all in the former Yugoslavia. The cost of living in Yugoslavia (and living wages, etc) are *tiny* compared to the US. Not only do they not have to sell a lot of games to make an equivalent amount of money as they would if they were based here in the US, but it proves that there are LOTS of creative and talented programmers elsewhere who can produce QUALITY work and still make a good living for themselves. Personally, I love seeing other countries offer up their best and brightest, it ups the bar for the rest of us. I like the competition!
  • Out of equilibrium (Score:5, Insightful)

    by isomeme ( 177414 ) <cdberry@gmail.com> on Friday June 06, 2003 @12:03PM (#6133176) Homepage Journal
    This is how the world will look for the next fifty years or so. Formerly, markets and labor pools were isolated from one another by transport and regulatory barriers, with the result that standards of living could vary wildly from one part of the planet to another. Now, the barriers are low or gone, which means that the places with lower-priced labor are pulling jobs from higher-priced areas. Of course, this decreases the econonmic level of the former and increases the latter, causing wages to fall in the source country and rise in the sink country. Let this process run long enough, and the whole world will have roughly comparable labor pools working for roughly comparable wages at a roughly comparable standard of living. If we're lucky, we'll get everyone at something close to the current "first world" standard; if not, we'll get a straight averaging of the current world situation.
  • by TheNarrator ( 200498 ) on Friday June 06, 2003 @12:45PM (#6133546)
    The idea that someone will work for cheaper than you will is usually a result of them either being able to do more in their country with less money or that they are more desperate for work than you are.


    Therefore, the fact that these jobs are spreading out is caused by the fact that A. The U.S and other countries currencies are overvalued and the same standard of living can be bought for less in a country with undervalued currency or B. The people living in these lower wage countries have big families to provide for and not so great living conditions and would really like to move one step up the standard of living ladder which means moving the person who lost their job in the high wage country a step down on the ladder. Of course with comparative advantage this is not always a zero sum game.

    This is all a big process of equalization of living standards that takes place once people started embracing free market economies and free trade a bunch of years ago. The only thing that makes any difference now is immovable capital like infrastructure and the quality of the legal system.

  • by presearch ( 214913 ) * on Friday June 06, 2003 @12:49PM (#6133582)
    How else do you support those executives at the top that produce nothing of substance
    (and sorry folks, "business decisions" are not items of substance) yet pay these guys
    a Mil a year and up? They sit on each others Boards, upping each other's compensation,
    all enjoying the cash flow circle jerk.

    There's (at least) three ways; theft, lawsuits, and slavery.

    The theft happens in places like manipulating the stock markets and shuffling around
    nonexistent commodities like Enron, or something as simple as lobbying the government
    to allow usury rates of >30% on credit cards, or allowing state-run lotteries and casinos.
    Or, if you're thinking big, invading another country on false pretenses to steal their resources.

    The lawsuits we are seeing with SCO are a good example of the second method. Granted, it's
    one corporation taking from another in this case, but the cost of that will be passed down to
    consumers or compensated for with unemployment because of less working capital. That
    expense rarely impacts executive compensation, which is preserved at all costs.
    Money moves around, yet produces nothing of substance. Maybe this really belongs
    under theft, because that's what it is.

    And then there is slavery. Sure, these people don't work "for free". But even in the US's
    past, the slaves were still fed, clothed and sheltered. You can't kill 'em off or there will be
    no slaves left to produce those items of substance. But when the profit is made from those
    items, only enough is put back to the slave population keep the system working. It's
    happening in Mexico, in Indonesia, in India, and in the US migrant worker camps from
    the Midwest to California. This is, of course, nothing new. The US was made possible
    through the exploitation of others. We saw a bit of change here after the post-war boom
    of the '50s and again in the '90s for a few years but when "money" sees this happening,
    it moves to quickly remedy the situation, usually by installing a Republican run government.

    Here in Indianapolis, there's an area north of the city where they are building these huge,
    multi-million dollar houses. Hundreds of them. Where does this money come from?
    Is it necessary? Steven Hilbert, who ran Conseco has this huge mansion. He was ran out
    of the company for fraud and theft yet he's got his castle. And you've now got this army
    of VP weasels that all think that they too deserve to take one to on hundred million a year
    and bury in in the ground so they, the trophy wife, and the trust fund kids can live like kings.
    Instead of taking the working capital and putting it back into the company, letting people make
    a working wage, they instead believe that they should, indeed deserve, to surround themselves
    with rewards of their greed and cunning.

    That money has to come from someplace, and that's from the backs of those with no other option
    but to be enslaved, or starve. This can't last forever, but it's end is not coming soon. At least not
    until the lease on their new Hummer H2 runs out. At least that's what Rush told me: It's a good thing.
  • by porky_pig_jr ( 129948 ) on Friday June 06, 2003 @01:40PM (#6133964)
    just like in 'Dilbert'.

    Scott Adams was right!
  • I'll work for free (Score:3, Interesting)

    by Cyno ( 85911 ) on Friday June 06, 2003 @02:14PM (#6134208) Journal
    I'm a Sr. UNIX Admin with over 5 years of experience with Linux and some experience teaching this stuff.

    I would work for free if we could all agree to do away with money (or that money has no value) so I could afford to grab food from the local supermarket and live in a small home or apartment close to my job. I don't require a lot to keep me happy. Mostly just musical equipment, computers and tools/books that help me do my job.

    But I know hardly any of you would ever agree to give up your money so its a safe bet I'd never have to work for free. Too bad. I would have let you stay home and watch TV. I only care about getting the work done and automated once and forever. I find myself continually repeating the same tasks over and over again for money, in our current system, but I guess this is what makes more jobs.
  • by heroine ( 1220 ) on Friday June 06, 2003 @02:24PM (#6134273) Homepage
    India has had wage inflation to the point where Indian engineers may one day cost more than American engineers. Keep your dusty old social security card around.

  • by danila ( 69889 ) on Friday June 06, 2003 @03:01PM (#6134718) Homepage
    1) Indian labour is cheaper than Eastern European / Russian.
    2) Russian offshore-development industry is much smaller than Indian one (both in absolute terms and per capita).
    3) There are no significant growth reserves (this also applies to Eastern Europe).
    4) The existance of a few successful companies doesn't constitute an industry (or a threat to India).
    5) Without initial investments you can't create a large IT industry. India did those investments.
    6) There are no real figures that indicate this process of "outsourcing outsourcing" is actually happening.
    7) etc.

    Usual sensationalistic journalism. Bettet than Blair's inventions, but not much better.
  • by Cro Magnon ( 467622 ) on Friday June 06, 2003 @04:16PM (#6135467) Homepage Journal
    While the corporations are outsourcing everything to the lowest bidder, they're forgetting something important. SOMEBODY HAS TO BE ABLE TO BUY THEIR SHIT!!! If all the American workers are unemployed, and the Romanians are working for $100 per month, who's going to buy their shit? At best they'll have to lower their prices dramatically; at worst they're outta business!
  • Offshore Outsourcing Threatens Offshore Outsourcing

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