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Long Term Effects of Outsourcing 628

simulate writes "There have been several postings about outsourcing and offshoring in the past few weeks. Is outsourcing just a fad? In Outsourcing Programmers is Bad Strategy for Software Companies author Michael Bean compares offshoring to the enthusiasm for Internet startups in the Nineties. He claims that outsourcing programmers is bad for companies not because of the programmer layoffs, but because technology companies lose their capacity to innovate. Offshoring is a mistake when technology companies confuse operational effectiveness and strategy." I don't think the comparasion to Dot Bombs is entirely accurate - the trend to globalization overall has been going on for decades. Still interesting piece.
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Long Term Effects of Outsourcing

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  • by CreamOfWheat ( 593775 ) * on Monday January 05, 2004 @09:31AM (#7880632)
    f you're building an innovative software company, you need to retain your best and brightest programmers internally. Software companies entirely based in India can successfully innovate over the long-term, as can US companies or companies based anywhere else. It's this recent trend of US software companies outsourcing all their development that's bad strategy.
    • by sdcharle ( 631718 ) on Monday January 05, 2004 @09:44AM (#7880721) Journal
      That's nice, the problem is something like 99% of IT people don't work for innovative software companies. They work for banks or insurance companies or pharmas or telecoms or whatever.
      • by sql*kitten ( 1359 ) * on Monday January 05, 2004 @09:58AM (#7880847)
        banks or insurance companies or pharmas or telecoms or whatever.

        You are joking, right? If you knew anything about IT (hint: there's a lot more to it than the web) you would know that finance, pharma, telco etc are in the driving seat as far as advanced IT goes. Why do you think Sun, IBM, Oracle et al are selling the top-end kit to? Any company that can use technology for competitive advantage will drive (i.e. pay for) innovation to happen. Finance and telco created a whole new industry, data warehousing, which forced the development of mass storage, fast networking, massive parallelism. Pharma created a whole new branch of computer science, bioinformatics.

        The innovation that happens in the public eye is trivial compared to what happens in corporate cubicle farms and data centers.

        The reason Western software is innovative is because it is driven by the needs of Western companies. The reason India doesn't innovate is because (aside from Western companies outsourcing to it) it doesn't have large or complex enough domestic businesses competing with each other to push IT as competitive advantage.
        • by CrazyTalk ( 662055 ) on Monday January 05, 2004 @10:07AM (#7880912)
          Advanced IT at banks? In my experience (having worked as a consultant for a major bank and as a FTE for a Financial Management company), fianancial insitutions are way behind the curve technologically, because they are by nature very conservative and don't always need the latest and greatest (along with the associated risk). I know one place still running code originally written for Windows 3.1. Why? Because it works.
          • by Anonymous Coward on Monday January 05, 2004 @10:25AM (#7881036)
            Depends on the department, really. For bread-and-butter transaction processing, sure conservatism is the norm (and a good thing, if you ask me - many fad-of-the-moment Java/XML/OOP idiots don't realise how important ACID and transactionality are).

            But Quantitave finance jocks in other departments do some seriously wacky stuff for technical analyses and Financial Instruments

            MS does well in part because it's the brandname such stock market people see when they're using Microsoft OLAP and MDX (SQL RDBMS tables are two dimensional, MDX is n-dimensional, limited only by computing power. Needs LOTS of computing power.). OLAP and MDX are things that most computer geeks haven't even heard of. They don't realise that MS does in fact do some very interesting stuff.

          • Advanced IT at banks?

            Or perhaps the reason that banks have more old code and old systems sitting around is because they were among the very first adopters of IT. The fact that a company maintains the same code base for several decades doesn't mean that they are somehow inferior. It means they have a longer lifecyle in mind than flash in the pan companies.

            BTW, just judging from web sites, banks tend to employ more advanced encryption, have larger databases, etc., than your typical web site. Of course,

        • by Shimmer ( 3036 ) <> on Monday January 05, 2004 @10:27AM (#7881055) Homepage Journal
          You missed the point.

          These companies might be innovative, and they might even be creating innovative software, but they are not "software companies", and hence the outsourcing option is a viable one.

          The great-grandparent post claimed that software companies (i.e. companies which produce software for profit) cannot outsource. The grandparent post pointed out (rightly) that such companies employ a tiny fraction of all software developers.
        • by emil ( 695 ) on Monday January 05, 2004 @10:40AM (#7881154)

          ...for reduced ability in India that many westerners don't realize.

          India is a caste-based society. In recent times, the lower castes have been throwing their weight around in their legislature.

          Of particular concern is that they have implemented a "graduated" admissions policy in their universities. An upper caste member might not be able to get into a school with a 90% score on the entrance exams, but a lower caste member may be assured admission with a 70% score.

          Because of this type of (reverse)discrimination, many upper caste individuals of means leave the country to obtain education and work elsewhere. While India is a big country, the trend is concerning, and western outsourcers should be aware of it.

          • by YetAnotherAnonymousC ( 594097 ) on Monday January 05, 2004 @10:44AM (#7881190)
            Of particular concern is that they have implemented a "graduated" admissions policy in their universities. An upper caste member might not be able to get into a school with a 90% score on the entrance exams, but a lower caste member may be assured admission with a 70% score.
            But enough about the United States; what were you going to say about India?
            (+1 Snide, here I come!)
          • India is a caste-based society. In recent times, the lower castes have been throwing their weight around in their legislature.

            The caste system is breaking down fast. We adopted a little girl from India recently. Used to be that adoption was unheard of in India because you could never be sure which caste the child came from. But there has been quite an upsurge in adoptions by Indian parents in the last decade. This breakdown, though, is mostly a middle class urban phenomena. While there is a large
        • The innovation that happens in the public eye is trivial compared to what happens in corporate cubicle farms and data centers.

          Nothing innovative ever happens in a "corporate cubicle farm." Period. Truly innovative, entreprenuerial people leave the "corporate cubicle farm" as soon as they possibly can because risk-averse middle management has made it clear they have no use for competent, creative people.
          • Tell me about it. My 16 years of experience made me a shoo-in to get hirted at my last job, but the moment I started working it was a liability.

            They wanted an assembly-line grunt worker who did brute-force unintelligent development and didn't ask questions. Any time I stepped out of line (by suggesting more efficient ways of doing things, suggesting anticipating performance issues rather than ignoring them until it was too late, or generally attempting to use any software development idea invented in the
        • by pkphilip ( 6861 ) on Monday January 05, 2004 @11:20AM (#7881464)
          Just something about myself - I am an Indian - I head the technology division at my firm based out of India - I am also the lead programmer.

          I have worked in programming jobs for over 9 years now.. both within US as well as many other nations across the world. Right now I am living in India.

          All I see in this discussion group are rehashed stereotypes. Let me address these;

          Misconception 1 - American programmers are better.
          Not necessarily. Indian programmers aren't necessarily better either. The averages are about the same. But there are exceptional programmers in both camps and then there are a lot of duds.

          Misconception 2 - Indians are not innovative.
          One of the aspects of being in a developing world is that budgets for research and development are always very hard to come by.. But not any more. Indian companies are throwing money at research and development now...Everyone here knows that the service industry for pure outsourcing cannot last for ever.. So there is a desire to innovate and get into new areas.. to innovate as much as possible when money is not a problem. This is not just true of India - look at China, see how fast they are innovating .. in all fields. See the number of headlines on Slashdot about new products under development or new ventures being planned. You didn't see this much before, did you?

          I have played a lead role in a very large project for an American publishing company - this project would not have had the slightest chance of even taking off the ground if it weren't for our team.
          The American end of the programming team was quite antogonistic when we started - had some really racist remarks thrown my way. But within a month, we had won their confidence and I have had multiple mails from the same people about what wonderful work we had done. One of these projects later went on to win a Java Developer Journal award.

          PWC was involved in another part of the same project and there was a desire within the American programmers to have PWC thrown out and have us take their place. NOTE: Not from the management but from the programmers. The only reason this didn't happen was because there was an ex-PWC chap in the management team.

          I have worked on other projects as well which were being managed and programmed by American teams - which were floundering. Since we have taken over, these companies now have a product they can sell.

          This is not to say that we haven't had failures - we have had our share. But please don't make it seem like we are incompetent idiots who can only obey orders and even then do the job badly.

    • Management (Score:3, Insightful)

      by blunte ( 183182 )
      The root of all evil is management. Amongst their other problems, they often can't tell a good developer from a mediocre or bad one.

      Many developers suck. Most management can't tell which ones to keep. Thus, they toss them all out and try their luck at the foreign labor.

      I'm no statistician, but maybe if you hire 3X as many foreign workers and let chaos do its thing, you'll come out ahead. Or maybe that's their hope.
    • by daviddennis ( 10926 ) <> on Monday January 05, 2004 @10:31AM (#7881094) Homepage
      I just bought a cheap house in an upper middle class area of Los Angeles for $428,000. I was very lucky; houses that inexpensive don't come around just every day, at least not in a civilized, livable part of LA.

      This is an example of the horribly bloated costs associated with hiring American workers. Just because I bought, and can afford, a $428,000 house doesn't mean I'm a better high tech worker, or that I'll work better or harder for the company. It's just a matter of the crushing overhead of living here.

      How does that make people more innovative?

      Why can't Indians start their own software companies, write their own software and compete the heck out of us?

      If I were starting a company that needed a lot of programmers, I think I'd leave the country to do it.

      • Winchester, IN (Score:3, Informative)

        by battjt ( 9342 )
        You don't have to leave the country.

        Our median house value is $67,000. lo cIndex=5667

        Joe Batt
      • by frostman ( 302143 ) on Monday January 05, 2004 @02:45PM (#7883464) Homepage Journal
        You hit the nail on the head.

        Of course, India isn't the only place you could go - Hungary, where I live, is also a great outsourcing destination, even if it's a bit colder.

        Or you could go to a smaller place in the US, away from the coasts, and cut your labor cost a lot as well. That might be nicer for you if you wanted to stay in the US and take advantage of its IT infrastructure, honest postal employees, and such.

        But when I look around and see that here in Budapest I can hire a talented, experienced, multilingual IT professional for about the same as I would pay for an entry-level data-entry clerk back in San Francisco...

  • effects (Score:2, Insightful)

    Long Term Effect? I don't have a job.
  • by Anonymous Coward
    oh, gee, is outsourcing just a fad? .. i dunno .. is money grubbing on the part of corporations just a fad?

    idiot :p
  • But... (Score:2, Funny)

    by Anonymous Coward
    As long as the companies keep their creative, winning, trend-making management teams, they'll manage to stay innovative! Won't they?

    Those guys have MBAs. They must be smart.
    • Re:But... (Score:5, Interesting)

      by MisanthropicProggram ( 597526 ) on Monday January 05, 2004 @10:20AM (#7880994)
      I'm in a MBA program and my professors stress that out-sourcing strategic assets is a very bad idea. Because, you never know where your IP will end up - regardless of which country/company you out-source it to.
      The trend we're seeing is people who are just looking at the their numbers, which were probably fsck'd up anyway, and not at the long-term ramifications to their IP.
      I just finished a class last semester that drilled into our heads that projects can be calculated in ways that will show them to be profitable, or calculated another way, to be unprofitable. Unfortunately, there's a lot of people out there who think accounting is a science.
      • Re:But... (Score:3, Interesting)

        by Waffle Iron ( 339739 )
        Unfortunately, there's a lot of people out there who think accounting is a science.

        I learned this point first hand decades ago when I had a summer job working for the head accountant of a manufacturing firm. Most of the job involved hand typing numbers from mainframe printouts into spreadsheets on a PC. (The kind of task Perl would eventually be invented to handle.)

        However, part of the job was to adjust the magic "fudge factors" in the spreadsheets until the results matched their expectations. Each kind

        • Re:But... (Score:5, Insightful)

          by MrResistor ( 120588 ) <> on Monday January 05, 2004 @12:29PM (#7882129) Homepage
          Each kind of product had quite a few fuzzy parameters like "overhead", "scrap percentage", and other strange acronyms I didn't understand... I don't think it was even possible to determine a single correct value for these numbers, so my choices were as good as any.

          This is exactly the problem: the people running the business don't understand what the business does or how it does it.

          If you were to go down to the manufacturing floor and ask them what the "scrap percentage" was, I'll bet 90% of them could at least tell you how to figure it out; they'd point to a bin full of bad parts and say "count those, and then divide by the total number produced". "Overhead" is a bit more tricky, but it still isn't some magic unfigurable "fudge factor". the only thing that makes it difficult to calculate is the fact that everyone is lying about their numbers to make their department look better. (Notice that I said "lying", not "manipulating". I don't believe in double-speak.)

          The only thing keeping accounting from being a science is the lack of integrity in the people practicing it.

  • by soluzar22 ( 219097 ) * <> on Monday January 05, 2004 @09:36AM (#7880661)
    While I don't think it's what you're referring to precisely, there has been a considerable move to outsourcing customer service call-centres in recent years. I think that in some cases this has led to a much higher level of customer service from the companies concerned. That's outsourcing taken care of. Offshoring, or moving the business outside of the UK (in these cases) has been considered lately as well. This seems to be having the opposite effect, as the new centres in foreign parts are staffed with inexperience workers without the requisite communication skills. It's going to continue as a trend though. Because it makes money. Cost rules all these days. No one cares about the service level, just about the profit margin. Right?
    If I seem a little hostile about this particular trend, it may be because the jobs of a few people I know are under threat as a result of it.
    • Dell has recently made the smart move and relocated all their business class call centers back in to the US from India. The bottom line comes from Pleasing customers. Cutting costs is not the only way to generate revenue. I expect to see more companies follow suit, atleast when outsourcing to non-english speaking countries.
      • by segment ( 695309 ) <sil.politrix@org> on Monday January 05, 2004 @09:55AM (#7880823) Homepage Journal
        bottom line comes from Pleasing customers Sorry to rain on your parade, but I'm sure there are plenty here who'll differ with you on Dell pleasing their customers. As for outsourcing, those on the Sunmanagers list can definitely vouch on this statement, and I in no way mean to offend anyone. For all the outsourcing going to India, I have to wonder whether American companies are losing more in the long run considering the type of quality of the work of the inexperienced.

        Ok I'm tired so I'll try to explain a bit. The majority of posts I've been seeing on the Sunmanagers mailing lists are often questions as dub as "How do I reebot my e450 thank you Jawalahar!", and that's scary. If I'm saving say $400 for outsourcing but paying $200 in downtime because an admin is a moron, $100 in downtime waiting for the idiot admin to get a reply from a mailing list, where is the savings? $100 you say? What happens if I lose customers while my business is down?


        Date: Fri, 2 Jan 2004 14:11:29 -0500 (EST)
        From: Sundaram Ramasamy <sun!!>
        To: sunmanagers@!!
        Subject: sendmail mqueue files


        Solaris mail server mailq command shows only two request is waiting.

        But /var/spool/mqeue has 81 files, Some of them 1 year old can I delete
        these file?

        Again, apologies if it seems I' nitpicking but I'm not, I just notice the majority of questions that are for one: easily resolveable to an experienced admin, easily resolveable via googling, are posted by people in countries that American chooses to use for outsourcing.
        • by CrankyFool ( 680025 ) on Monday January 05, 2004 @10:39AM (#7881153)
          Thank God someone else noticed it.

          About two months ago I emailed the owner of sunmamanagers with a request to see if there's something we could do about the suspicious flood of incredibly newbie and elementary questions we'd been getting lately, all from Indian-sounding names I don't really care that they're Indians, but for Christ's sake, Sun Managers used to be about "I'm an experienced sysadmin and this absolutely strange thing that isn't covered anywhere is happening," not "I need a script that will do . Please help."
          • by multipartmixed ( 163409 ) * on Monday January 05, 2004 @12:01PM (#7881848) Homepage
            > Thank God someone else noticed it.

            Um, me three. It's come to the point where I don't even want to post real sunmanagers-type questions because I figure somebody who can't even install RAM in a 420 will try and answer me.

            I think we need sunmanagers-karma points or something. But then it would probably degenerate into expertsexchange (where bad advice is dispensed at least as often as good.. which is worse than it being all bad!)
      • Yeah, I do wish they'd move their residential call centers back as well. After having an old power supply on a Dell Dimension Pentium II 350 break down, I decided to try and keep the computer running, and wanted to see if I could get an OEM power supply from Dell.

        I call their tech support number, and get a guy in India, after indicating what I want, I go to their sales department which appears to still be back in the states (American accent anyways). After saying that he can't help me, he transfers me back to India for tech support. After which I just hang up...

        Ultimately I searched the web and found someone who does sell Dell Parts including for the older computers.

        However Dell gets a Failure mark from me on this, which will affect how I buy my computers in the future. If I can't even get a straight answer about a power supply, can I get a straight answer about other issues that I could have? All I really wished for was a "Yes this is how you order your power supply" or "Sorry this power supply is no longer offered" sheesh...

        Did some of this have to do with the fact that one part of the company was in India, and the other part of this was in America, and nobody really knew who to talk to, so I could get a straight answer? Probably...

        Anyways herein another issue is realized, collaboration becomes more difficult. It is harder to instruct people on what to do, and what not to do when they aren't in the same place, and instead are half a world away. They don't go to the same management briefings, the support people never hang around the water cooler with the sales people, and in general are the last to know in any such policy changes. Thus would be the least likely to know where I could get a power supply.

        Anyways I've vented enough but hope I've provided enough insight on to the difficulties of Outsourcing vs. In-House.
    • by gorfie ( 700458 ) on Monday January 05, 2004 @09:45AM (#7880731)
      From what I've heard, they only did this for their corporate lines... OptiPlex & Latitude. If you call in for support concerning the Dimension or Inspiron lines you will still have a great deal of fun trying to communicate effectively. Of course, corporate purchases account for 85% of their sales from what I read...
    • by Lumpy ( 12016 ) on Monday January 05, 2004 @10:12AM (#7880943) Homepage
      The other part is that corperate officers are not skilled enough in running a company.

      when you plan for the future you plan and project for 5 years... today they dont care about anything but how we look next quarter.

      Short sightedness is creating this phenom.. and it's due to non-leaders being in leadership roles.

      we can get inkjets for everyone instead of a new pair of color laser printers as it's cheaper this quarter.... to hell with the fact that within 1 year we will spend more in ink than the cost of the 2 laser printers and the supplies to run them for that time period.. don't laugh, that was the last manager's meeting's topic... to buy 30 $39.00 inkjet printers instead of 2 HP color laserjets.

      we will continue to see companies fail and further deth sprials until these companies start getting leadership that actually has a clue how to run companies/business.
  • Tech Consulting (Score:5, Interesting)

    by smd4985 ( 203677 ) on Monday January 05, 2004 @09:36AM (#7880664) Homepage
    Has this guy ever worked for Accenture or PWC Tech Consulting? Those guys essentially have a few people do the design, write some high level code documents, and then hand it off to some code monkeys for assembly (oftentimes recent college graduates who didn't know squat about programming until their corporate training kicked in). So his argument isn't good - companies can still keep the design close to home and then outsource the assembly to India or China.

    FYI - I worked for Andersen Consulting (now Accenture) so I know how those guys do business. I left after two months :) .
    • Re:Tech Consulting (Score:5, Insightful)

      by sql*kitten ( 1359 ) * on Monday January 05, 2004 @09:48AM (#7880763)
      So his argument isn't good - companies can still keep the design close to home and then outsource the assembly to India or China.

      Yes, but in the industry, Accenture is a byword for disaster. Every project they get involved in runs vastly over budget, is late (sometimes years late) and often doesn't even do what it was supposed to in the first place. NIRS2, anyone? Accenture (and the rest of the Big 5, EDS, etc) is a vampire feeding on the clueless... their slick suits sell gargantuan consulting and systems implementation projects to managers who are intimidated by technology. They'd get laughed out of the building if they pitched to the savvy (free tip: if any big consulting firm pitches to you, make it a condition of signing a contract that the people who do the pitch will be working full time on the project. Watch them squirm, because the consultants business model requires that they dump cheap newbies on you to free up the experienced to sell more engagements).

      I worked for Andersen Consulting (now Accenture) so I know how those guys do business. I left after two months

      Yeah, I used to be a management consultant too, so I know all the tricks :-)
      • Re:Tech Consulting (Score:3, Interesting)

        by Anonymous Coward
        Yes, I would agree. I work currently with Accenture (Accenture Technology Solutions to be exact).

        I am a recent college graduate, and i was astounded by the amount of non-programming related majors that work here, as full time programmers. Psyc, Social work, Art, yeah, every except CIS, CS, other related programming majors.

        ps, you can also tell by reading the code that someone who dosen'tknow what is going on, was the one wrighting it.
      • Re:Tech Consulting (Score:4, Informative)

        by johnnyb ( 4816 ) <> on Monday January 05, 2004 @10:08AM (#7880916) Homepage
        When talking to a senior J2EE developer at EDS, I was shocked to learn that he hadn't even heard of JBOSS (that was about a year ago). In addition, their UNIX SysAdmins don't always know UNIX very well (they don't understand what Zombies are, and don't understand how deleted files that are still open can be contributing to disk space filling up).

        Yes, EDS should be avoided. It's like they almost try to not be customer-friendly. They require even the most minor changes go through a 30-day change review process. I understand the need for a change review process, but theirs is particularly nasty, and doesn't do a lot of good (noone actually reviews the changes like they should).
      • Re:Tech Consulting (Score:5, Interesting)

        by irix ( 22687 ) on Monday January 05, 2004 @11:02AM (#7881320) Journal

        I'll second this. It doesn't have to be big projects either, and it isn't just Anderson/Accenture - I've seen it happen with other large consulting companies on smaller projects that could be done with 2 or 3 people in less than 6 months.

        The play is always the same - send in the guys in $2000 suits to close the deal and then dump the specfication on clueless new-grad code monkeys. Not only are the coders terribly inexperienced, but they have not been part of the specification process so they have no information to make good decisions or question anything. A few times in my previous job when I cleaned up from such disasters, looking at the code and documentation produced by these people was almost enough to make you cry.

        More clued in clients would often do as you suggest - make it a condition that you have to have at least some of the people involved in the specification actually involved in implementation as well.

  • At some point.... (Score:5, Insightful)

    by Fleet Admiral Ackbar ( 57723 ) on Monday January 05, 2004 @09:36AM (#7880665) Homepage
    Wipro et al will no doubt realize that they could also offer "outsourced" middle management as well. Imagine being the "CEO" of an instant-bake Indian software company! All you would need is a line of credit to pay the bills.

    This would be similar to the people on eBay who just sell drop-shipped items.

    If you ask me, India is on the way to the Shoe Event Horizon, and it will only take one piece of protectionist legislation in the US to tumble the whole house of cards.

    • by Johnny Mnemonic ( 176043 ) <mdinsmore@gma i l . com> on Monday January 05, 2004 @10:01AM (#7880871) Homepage Journal

      it will only take one piece of protectionist legislation in the US to tumble the whole house of cards

      Or for Pakistan to threaten to nuke them again, as they were doing just a few years ago. The first time a deadline is missed, and money is lost, because of instability in the region, I think we'll see lots of this work come back. Businesses don't appreciate uncertainty.

      OTOH, if outsourcing becomes entrenched enough for long enough, then it becomes in America's interest to protect their stability with our own military force projection; witness Taiwan, or military protection of oil interests in the Middle East. How long until we turn this cusp I don't know--it has to be a factor of how much of their capital investment tax-paying-and-Congress-lobbying American Corps have to lose, and if the cumulative amount is enough to risk sending US boys to die for.

      But that is the final result of India gaining outsourcing dollars--they are liable to become another Taiwan, which means that US boys might well be sent to defend India against China or Pakistan, to protect US Corp's right to unemploy those soldiers when they get home. India must appreciate having another friend in the world, considering China's expansionism and Pakistan's recent threats--so they'll be sure to play this for all it's worth, as soon as US Corps are extended there enough.
    • Theories of specialization dictates that whomever can do the most for the cheapest (meeting some other constraints) will get the job, even if it means doing less in-house, but you then have a dependance upon a third-pary, increasing risks. The question is, do we want to add "Made, managed, designed, admin'd in USA" ? Protectionism doesn't work, unless you're the fat cat on the block, which China is gonna overtake the US w/in the next decade. The US will be another UK in 10-30 years, because it will have
  • by millahtime ( 710421 ) on Monday January 05, 2004 @09:37AM (#7880668) Homepage Journal
    Are we saying programmers in the US are more innovative than Indian, Russian or other off shore programmers?
    • Nope.

      We're saying that outsourcing stiffles inovation because it separates design from the rest of the company. This could be just as true for US companies outsourcing to India as Indian companies outsourcing to the US.
    • by CommandNotFound ( 571326 ) on Monday January 05, 2004 @09:50AM (#7880783)
      Are we saying programmers in the US are more innovative than Indian, Russian or other off shore programmers?

      No, they are (probably) saying that typically outsourcing firms are set up to do grunt work, and the parent company performs the high-level "thinking" work that gets handed off to the contractor. This ignores that fact that lots of great ideas are generated down in the trenches, and since there are now two barriers (geography and the contractor barrier) between the thinkers and the trenches, this source of new ideas could get lost.

      Of course, eventually the outsourcing countries will probably develop the means and confidence to start doing their own design and high-level work and bootstrap themselves above just doing "grunt" work, but that takes years to build the level of infrastucture and reputation needed for that.
      • by mbrinkm ( 699240 ) on Monday January 05, 2004 @10:22AM (#7881009)
        I agree with your assessment 100% and would like to add that the loss of innovation does not come from the location or the individuals doing the work, but from the lack of incentive for the outsourcing company to provide innovative work. I would assume, because I don't know this to be true and please correct me if I'm wrong, that the majority of the firms that receive outsourcing contracts for programming have more than one client that they program for. Because of this they have little to no incentive to innovate for their clients, especially if they are working for two clients that compete. These companies would have ample incentive to innovate in maximizing the programming abilities of their staff, but not in the programms they create. Now if the corporations didn't outsource, but instead opened a subsidiary or branch locations for the specific purpose of programming, the loss of innovation would not exist because the same inncentives of "rising" up through the ranks or the financial incentives of your company succeding still exist. By opening these branches the company could still see the monetary gains of a cheaper workforce while providing the same incentives for innovation that they currently have.

        Yet, there are still significant downsides to "offshoring" divisions of any company, especially programming. One would be the potential of a competitor latching on to this and using it as a "Support Americans" marketing ploy, this worked quite well for the big three auto makers in the 80's, if only short lived. Another would be the long term prospects of your company. Succesful companies are built on hard working employees that prove themselves in the trenches of their respective companies, rising through the ranks to middle and upper management. I don't know of too many companies that survive on exclusively hiring individuals that have no prior experience in their industries. A good mixture of fresh with experienced management is preferrable, in my opinion, but too many of either can be a problem.

        That's my 2 cents.
  • by swordboy ( 472941 ) on Monday January 05, 2004 @09:38AM (#7880673) Journal
    Business Week had a good article [] on this a while back. Problem solved. The water will seek its own level.
  • by Brahmastra ( 685988 ) on Monday January 05, 2004 @09:38AM (#7880674)
    Jobs move where there is cheap labour. Even within the US, Call centers are found in cheaper places in Tennessee, Oklahoma, etc. This is the system the US has been forcing on the world for decades. When it bites them back, they whine and whine and whine.
    • by Anonymous Coward
      The major problem I have with these foreign call centers is that my private information is being shuffled around the world to the lowest bidder.
    • To a point, yes. Until customers get so annoyed that they demand action. Such was the case with Dell, when they moved direct-support lines from India back to the States for several of their consumer models.
    • My job is outsourcing.
      Although we mainly do surplus work for companies who find themselves having to meet many deadlines at once and who's internal ressources are not threatened by us, we don't do the evil outsourcing : )

      There is a place for outsourcing, it is not necesserally (sp?) bad, but it is a tool that must be used wisely, and we have been seeing many cases of this tool being used unwisely recently.

      But your general point about forcing this kind of globalisation still stands, I just wanted to defend
  • by Slowtreme ( 701746 ) <> on Monday January 05, 2004 @09:38AM (#7880676) Homepage
    This headline in the article sums up a LOT of what my company has found. "Why Some Software Companies are Confusing the Box for the Chocolates"

    The bottom line looks great, when you start digging around your new app, or code you find that the quality is generally missing.

  • by TopShelf ( 92521 ) on Monday January 05, 2004 @09:40AM (#7880688) Homepage Journal
    The comparison of design/assembly splits between manufacturing and software development provided some useful insight, but it's not like companies don't realize this.

    The hard part about realizing the gains from outsourcing is that most firms aren't up to managing such a long-term, strategic relationship in the manner that's required. When the work is done in-house, you can trust that the developers have your company's best interest in mind - when dealing with an outsourcer, their ultimate goal is to extract as much money from you as possible. If done right, it can be worth it, but as we've seen, many firms haven't been up to that challenge.
    • If done right, it can be worth it, but as we've seen, many firms haven't been up to that challenge.

      That is exactly right. Indian companies themselves have this figured out pat down with their experience in the ofshore-model as they call it. For this very reason they are now directly bidding for US contract, competing and winnig against companies like IBM, who are still trying to really figure out the model, and so have higher costs. In fact IBM lists Indian company Wipro as one of its most formidable comp
  • by mydigitalself ( 472203 ) on Monday January 05, 2004 @09:41AM (#7880696)
    "Farming out development to legions of programmers overseas will not create a differentiation advantage. When a technology company outsources software development, that company loses its capacity to innovate and its competitive advantage."

    the author seems to be under the impression that the success and innovation of a product is purely in the hands of a bunch of software developers. this is rubbish. innovation in the software industry is also about building a product to solve a particular problem - and well. if the functionality is well designed (say with some good interaction design) by a US-based company, the specifications can be written up in the US and sent to the Indian shop for authoring. in a well designed component-based framework, the "glue" can be built in the US whereas the components or specific objects can be farmed out at a lower cost.
  • by thewiz ( 24994 ) * on Monday January 05, 2004 @09:42AM (#7880698)
    The largest problem with outsourcing/off-shoring software development is SECURITY. Remember Y2K? Many major corporations outsourced their Y2K work to foreign countries because they didn't want to hire the extra programmers locally to do it. What several companies found when they got the code back was that trojan horses, backdoors, logic bombs, and other nasties in the code in addition to the Y2K fixes.

    NOTE: I am *NOT* saying *ALL* people from other countries are dishonest. You can find dishonest people anywhere in the world.

    What I am saying is that if you turn control of your software code over to someone else, you run the risk of them altering it to their advantage. This also applies to local hires as well, but it's MUCH easier to keep track of what your people are doing locally than half a world away.

    Why do you think that the US Government/Military doesn't outsource? The same with most financial institutions: SECURITY. (Microsoft not included.)
    • by FuzzyDaddy ( 584528 ) on Monday January 05, 2004 @09:54AM (#7880810) Journal
      There's another aspect to this, which is contractual. If you're outsourcing something sensitive or proprietary, or paying for the development of something you don't want a competitor to get for cheap, you write a contract with strict non-disclosure clauses and strong penalties for violating that. Once you leave the US, enforcing these contracts becomes prohibitivly expensive and difficult.

    • The same with most financial institutions: SECURITY.

      Sorry... wrong.

      I've consulted to 3 of the largest banks in Canada, and they DO outsource. Seeing as Canada only has 4-5 banks, that would meant that most *DO* outsource.

      In my experience, it didn't work out in 80% of the work performed (which is why I was called in), due to everything from management issues to lack of technical expertise of the contractors.

  • He writes about the chocolatier specifying the box design, then 'outsourcing' manufacture of the box elsewhere. Well, most software-producing companies do not have that software as their 'real' business either. They want to do whatever it is they do (retail operations, selling hardware, whatever), and the software is a sideline - important, but not what they are _doing_, just like those boxes the article mentions. In fact, the overwhelming majority of all software produced is of this kind, rather than the h
  • by daviskw ( 32827 ) on Monday January 05, 2004 @09:43AM (#7880716)
    Actually I liked Michael's article. It is my experience that while programmers from India and other countries are every bit as technically capable as American programmers they seem to fall down in the design area. Specifically, other cultures produce programmers who aren't quite as confrontational as Americans. What determines a good design for an American product is it's developers initiative at voicing their opinions of what the product should do.

    Design in America is confrontational. It has to be. That's what makes American software products good. When a company takes it's core software and ships it overseas it looses that drive from employees to make the software better.

    This is not to say that software developed elsewhere cannot be good but it does mean that software developed in India must use an Indian model for design and development if it is to be successful. For an American product competing on a slight technological advantage this is bad.

    HP, as a sidebar, tends to outsource end of life stuff to India.

  • by GeckoFood ( 585211 ) <geckofood AT gmail DOT com> on Monday January 05, 2004 @09:48AM (#7880760) Journal
    Having just come from a company that was rabildly outsourcing, we saw a different backlash of the outsourcing problem. The execs were outsourcing everything they possibly could, even when it made no sense. However, the company was still not going to be positively improved financially by this happening. What everyone remaining on staff could see is that it would boost short-term profits just long enough for the execs to rape the company with fat bonuses just before bailing out. That's apparently another popular trend.
  • Outsourcing (Score:4, Interesting)

    by orionware ( 575549 ) on Monday January 05, 2004 @09:50AM (#7880775)
    What we've found during the six month trial of hiring outside programming help this is what we've found:

    o While Indian programmers (we used 8 different ones for 6 different projects) may be perfectly competent to produce software to spec, they usually ALWAYS built it to spec and NEVER brought up any issues they might have found in the process. Either they didn't see a flaw in the design or just figured it would be job security if they changed or fixed the ap later.

    o We had no luck with Russian programmers (We had went thru 4 of them and none could complete the project they say they could have)

    o American (We used 10 of them for 8 projects) outsourced programmers communicated MUCH better with their project managers and usually offered suggestions to how we might want to change the app to make it better or more efficient. The applications developed stateside required less QA and went to market faster.

    Is this a good enough sized sample to make judgements? Maybe not. But good enough for us.

    After the six months, it just didn't make sense to outsource, howerver if we do again, it will be domestic. The shortterm costs may look good but a 33% savings per hour usually gets lost in the longer development cycle.

    • Re:Outsourcing (Score:3, Interesting)

      by hey ( 83763 )
      Could it be that American programmers spoke the same language as the managers so were better able to communicate.
  • by MaximusTheGreat ( 248770 ) on Monday January 05, 2004 @09:51AM (#7880786) Homepage
    ... in the normal sense of the term. Outsourcing implies farming out the job to some other company. On the other hand the examples that the article gives about Hewlett-Packard and Oracle employing the programmers in India as in-house employees. So, the capacity to innovate still remains within the company, though it moves outside the US. So, I don't see how the argument works for most of the bigger companies like HP, Oracle, IBM, GE, TI etc. etc. who run their own operations in India, and do not outsource to other companies as much.

    For example of innovations in subsidarys outside US see
    and the slashdot story /043220 0&mode=thread&tid=187&tid=98&tid=9 9
  • by Anonymous Coward on Monday January 05, 2004 @09:54AM (#7880815)
    Where does Linus Torvalds come from? Do all major contributions to Linux come from the U.S.?? Remember Gupta, Magic and other good software that made it big some time ago before M$.
  • fair analysis (Score:3, Informative)

    by Anonymous Coward on Monday January 05, 2004 @09:54AM (#7880818)
    the article isn't perfect, but then nothing is. Most software development isn't about innovation and most of the website development is cookie cutter. Like others have said, this type of work should be out sourced. But managing outsourcing is significantly harder than people realize.

    The percentage of development work that is truly innovative is relatively small, but the article is correct. Out sourcing the "innovative" parts of a company is very dangerous and will lead to more problems. From first hand experience, innovation comes from interaction between the developers. Very few individuals can cook up innovation in box all by him/herself. Can innovation happen in an outsourced model? Sure it's possible, but it's going to be considerably harder. This is why companies like Oracle, MS, Intel and others are expanding their divisions in India and china. They maintain tight control because it's not out sourced to another company. Companies can offshore their R&D, they just have to open a division in a foriegn country. For better or worse, that's reality.

  • Weird... (Score:5, Insightful)

    by devaldez ( 310051 ) <> on Monday January 05, 2004 @09:54AM (#7880819) Homepage Journal
    This somewhat mirrors my comments [] from four weeks ago.

    Based on my trip, I don't think good programmers should worry. More importantly, if you have the skills, you are way ahead of your Indian counterparts right now (emphasis on right now). Keep improving your skills and becoming more and more expert and you will continue to be employed. Focus on fad languages and "me too" web designs and you're putting yourself in front of a train. I can't tell you how many people in India listed C# and Java as their primary languages...C'mon now, we all know that those are good for small things and prototyping, but they aren't languages you write OSs or such in.

    Offshoring and outsourcing are not bad in their own right, but managers who think it is a panacea will be bitten for their lack of vision. The world is going to be global. Get used to it. Recognize that we AREN'T worth more than Doctors and other professionals.

    Every profession, when it is in its infancy, has the potential to create very wealthy people relative to the norm. After a time, those new professions become common and the lucre standardizes lower than originally expected. Our incomes in the West will decrease somewhat. I think it sucks, too. That said, the cost-basis for India is growing geometrically now (from 4k to 7k to 18k in five years). Guess what? Those programmers in India who are good are unwilling to be without the amenities that you are I take for granted...good phones...broadband...etc. The infrastructure must grow and that costs you have to pay them more...and costs grow.

    Get over it, grow in your profession, become an expert and highly sought-after. It doesn't matter where you matters what you know and can demonstrate.


    • Re:Weird... (Score:3, Interesting)

      by stevew ( 4845 )
      This is a very cognizant post - couldn't say it better myself. I work for a company that DOES outsourcing of high-end technical jobs. My assessment right now is that to send something in my particular space off to staff in India you have to give them a specification that has every detail spelled out, i.e. not that much innovation required or allowed.

      In 4-5 years when these guys have been through three,four or five big projects and they have learned the ropes...LOOKOUT!

      They now have the tools, the infras
    • Re:Weird... (Score:5, Funny)

      by alumshubby ( 5517 ) on Monday January 05, 2004 @10:45AM (#7881199)

      When I used to daydream that one day, technical writers would be as valuable to a company as programmers, this isn't quite what I had in mind.

  • by Noryungi ( 70322 ) on Monday January 05, 2004 @09:59AM (#7880851) Homepage Journal
    Here is also an interesting article about Wal-Mart [] and its influence on its suppliers... Globalization seems to be pushed forward by a few, for the benefits of a few....
  • Bad for US too (Score:3, Informative)

    by Ba3r ( 720309 ) on Monday January 05, 2004 @10:00AM (#7880867)
    Follow this train of logic: If more and more software jobs move overseas, then there will be less drive to join an industry where you are paid a mediocre wage for complex work. Thus there will be fewer students enrolling university programs in the industry, and thus universities will cut back on software departments. Ultimately the very infrastructure of the nation's software industry will be severly reduced. No follow similar logic in the country that was offshored too, and the reverse happens.
  • by aggieben ( 620937 ) < minus caffeine> on Monday January 05, 2004 @10:03AM (#7880882) Homepage Journal
    I don't think the comparasion to Dot Bombs is entirely accurate - the trend to globalization overall has been going on for decades.

    That's not what he's talking about; it doesn't matter where the programmers are. The point is that if the programmers aren't really part of the company, the company is less likely to have the capacity for long-term innovation.
  • My solution. (Score:5, Insightful)

    by Raven42rac ( 448205 ) on Monday January 05, 2004 @10:23AM (#7881019)
    I saw the proverbial crap hitting the fan and started looking for a job that is "impossible" to outsource. For example, I am an on-site Network Administrator/Engineer/Hardware Tech/Telephone Tech/Help Desk/All Around Nice Guy. No way in hell someone from India can do that job. Sure, they can tweak scripts or change passwords, but can they replace a CPU fan or install RAM? I do all that stuff, and I bring in candy. What more can a company ask for? Well, unless you are a Diabetic that is.
  • How long until (Score:5, Insightful)

    by onyxruby ( 118189 ) <[ten.tsacmoc] [ta] [yburxyno]> on Monday January 05, 2004 @10:27AM (#7881058)
    How long until the pseudo companies in India decide to simple become full fledged name brands in themselves? Not only are we training them how to do our customer service, programming, back office, and research, but were also teaching them how to run fortune 500 class companies. They already have the expertise, how long can it be before we start seeing Indian versions of our established corporations.

    They can skip the normal growing stages of setting up the megacorp, because they already have it. Offices, research, staff, software, it, they lack everything but the name - right now. Once some of these companies lose a contract with our corps, theirs nothing to keep them from setting up their own shop under their own name. This is the next trend in outsourcing - megacorps themselves.

    There is NO compelling reason for these companies not to do this. They are making large profit from back of the house, it's inevitable they'll want the profit from the front of the house as well. The irony is that these large corporations are training the competition and replacements and most dont even see it coming. Is it arrogance that causes people to overlook this inevitability?
  • A little perspective (Score:3, Interesting)

    by andy1307 ( 656570 ) * on Monday January 05, 2004 @10:28AM (#7881081)
    Indian IT exports(total) = 10 billion$. That's just a small percentage of the US IT industry. Even with all this doom and gloom, the majority of software is still written in the US. There isn't a finite amount of programming work to go around. If some work is done in India, it doesn't mean the amount of work being done in the US goes down.
  • Could be a cycle (Score:5, Insightful)

    by sphealey ( 2855 ) on Monday January 05, 2004 @10:33AM (#7881108)
    When I lived in Chicago in the late 1980s, there were several large organizations that tried the 100% outsourcing model. By the mid-1990s they were all trying to rebuild their in-house IT capability, albeit not at the level had been before. General Motors went through a similar cycle (although there they only brought about 20% back in-house) for the same reason: they found that communication and friction problems overwhelmed any theoretical advantages (cost, specialization) of going out-of-house.

    The problem is, in the 1990s there was still a pool of people for these orgs to use in re-insourcing. If large quantities of work move from the US to India, both current and future IT experts will move to other jobs and not be willing to return. Which could prevent a continuation of the IT insource/outsource cycle which realisitically has existed since the 50s.


  • But writing innovative software cannot be done on an assembly line.

    I think there is a step before "writing" software that is easily overlooked. And that is figuring out the Requirements of the system to be designed. This is where I believe the innovation lies. A lot of good code has already been wasted chasing bad problems - unless you believe that those "objects" have found reuse elsewhere in large quantities.

    The people who identify the need and then figure out the "requirements" are better off in the US as they are close to the problems there. Many offshore programmers who have never seen a scanner at a checkout of a grocery store are ill-equipped to understand all that might be required of the checkout counter in the real world. But once someone identifies what is required, then it is possible to put together a solution. The solution can be academic and the solutions depend on who has framed the problem - but the solution then is not as hard. What is hard is understanding what the problem is. Understanding what the requirements are.

    While outsourcing boxes improves chocolatier Jean-Marc's operational effectiveness, he would never consider outsourcing chocolate production because he would lose his core differentiation advantage.

    Coke and Pepsi do just that. They have bottlers all over the world - and they still have been able to maintain the "secrecy" of the recipe. The point in operational excellence is that you have to not only look at the process of improving the manufacture of the product, but also its delivery and logistics. At a certain stage of his business, it is conceivable that Jean-Marc's might be like Coke/Pepsi. Outsource the chocolate production to supply worldwide.

    Unlike software, it makes sense to outsource the manufacture of clothing and toys. Most of the cost of clothing and toy manufacturing is in the assembly, not the design.

    Wrong. Most of the cost of clothing is in the inventory and predicting the fashions. Have you seen how many shirts go unsold for every shirt that you buy ? I can bet that keeping the inventory, getting rid of old fashions, and other marketing battles cost much much more than the shirt itself. The cost is mainly in the movement of information about the shirt - what is required, where is it required, when is it required, how much is required, etc. All this outweighs the cost of manufacturing at the assembly line in influencing the margins eeked out from the clothing business.

    Programming is like design and nearly all of the costs of creating software come from writing the program, not the assembly.

    Again, I believe the first step is understanding the Requirements. Then is the design. nhen is the coding. Then is the debugging. Then is the testing. Then is the recoding. Then is the etc. etc. A lot of these steps don't need "innovation" - they require competence.

    The game is about requirements. One who can understand the requirements are, and can understand that the business benefits of implementing the solutions are more than the technical costs of implementing them - is going to win. That is the real innovation.

  • by Ars-Fartsica ( 166957 ) on Monday January 05, 2004 @11:17AM (#7881436)
    Once again the innovation whipping-horse is trotted out so we can convince ourselves that Asians are nothing more than low-wage automatons.

    The Europeans used to think Americans were all dirty farmers. This myopic thinking was as harmful to them as this thinking is to us. If there is a motivation to innovate, Indians and Chinese will step up to the plate just as North Americans would. You are not special.

  • by SkewlD00d ( 314017 ) on Monday January 05, 2004 @11:21AM (#7881471)
    The cost to automate code generation must be more than hiring a bunch of indians at $.10/hr. Otherwise, someone would have developed an efficient symbol input system, or maybe the technology to develop such a thing has not yet appeared. In any event, technology should reduce the cost of capital, and the efficiency of designing and manufacturing, and reducing the theoretical min time-to-market (TTM) (time from idea to first deliverable). But, automation allows for greatly reduced flaws (since computers do exactly what they're told to do) and increased harmonization and flexibility. Also, having more people working on a project increases complexity and possibilities for confusion and errors by increasing the number of communication paths (N! paths if their are N people that can talk to each other).
  • by Fjord ( 99230 ) on Monday January 05, 2004 @11:24AM (#7881503) Homepage Journal
    I'm not concerned with software companies offshoring, I'm concerned with the bulk of the software related jobs being outsourced. The amount of IT support jobs vastly outweighs the number of job working for software companies. There's a million companies in other industries (government, bank, insurance) that need IT to run their operations. These companies don't do IT for a living, and don't need the same competative edge. For a bank, it makes more sense to outsource to a campany that handles other bank software because of the experience the 3rd party company has.

    It is this large bulk of jobs going overseas as people become more and more effective at managing international projects that has me diversifying my income this year.
  • by cyranoVR ( 518628 ) <> on Monday January 05, 2004 @11:49AM (#7881735) Homepage Journal
    It's nice to have an article discussing the theoretical reasons why outsourcing code is bad long-term - complete with quotes from Michael Porter (Competetive Strategy). However, what I really want to see are some case-studies demonstrating how outsourcing software development actually hurt a specific company (i.e. took them into a slump or resulted in lost marketshare).

    Instead, the author can only present the statistics about HP and Oracle doubling their outsourcing legions. Not very encouraging...
  • by er333 ( 32834 ) on Monday January 05, 2004 @11:58AM (#7881816)
    the trend to globalization overall has been going on for decades.

    Quite a lot longer [] than that. Actually, the level of global economic integration is not much higher today than in 1913.

  • by GreatBallsOfFire ( 241640 ) on Monday January 05, 2004 @12:04PM (#7881877)
    Those who fail to learn from the past are doomed to repeat it.

    I'll readily admit it. I'm old. I've been in this business for nearly thirty years. I've seen a lot of changes, but I don't want to concentrate on IT history. Instead, I want to talk televisions.

    Back in the day before most slashdotters were alive, there were American companies that designed and manufactured televisions. First, manufacturing went overseas, and it was managed from the US. Next, middle management was moved because it made more sense to manage the plants using local talent than trying to do it from the US. After all, time differences, cultural difference and just plain cost was enough to justify it. What this did was educate new competitors, and mentor them so that they didn't have to suffer the pain of starting low on the learning curve. Guess what, companies like Admiral and Motorola, who were leaders in home televisions are either gone, as in the case of Admiral, or dropped the product entirely, as is the case with Motorola.

    This was not necessarily a bad thing, as it ended up benefiting the consumer, and helped spread wealth overseas. However, there is no one capable of designing a TV that could compete with the imports in the US today, except for those individuals working on HDTV, which was mandated by law.

    My point is that the US lost not only its ability to compete in these areas, but companies themselves. If history does repeat itself, companies like Oracle will disappear altogether, similar to Admiral, and companies like HP and Dell will change their product concentration in order to survive, similar to Motorola. The consumer will probably benefit, as computers manufactured in India or China will be cheaper, thanks to cheaper local software available for these systems. But is this technology that propelled one of the greatest economic growths ever, something we want to loose?
  • Innovation not key (Score:3, Insightful)

    by swb ( 14022 ) on Monday January 05, 2004 @12:12PM (#7881963)
    Innovation isn't key anymore, it's pure market dominance that's the business goal any more. First you lock in your customers to make it difficult to switch vendors, and then you eliminate your competitors so that switching isn't even an option any more. Lock-in and market dominance make it impossible for any new competition to enter the market. Once you've established dominance, just start increasing prices, lowering quality and limiting chocies. Pretty soon you make the smallest number of products at the highest possible price and they HAVE to buy from you.

    This is the new goal of business. It used to be "how can I come up with better new products and get them to market", now it's all about manipulating the market itself. I wouldn't be at all surprised it there was an MBA course entry somplace like this:

    "Submissive Competition: Maintaining the impression of a competitive market by allowing small competitors. In today's intensely Government regulated business environment, market dominance is often seen as an illegal monopoly. This course will teach you how to control small competitors to keep them from threatening your dominance yet convincing regulators your market space has healthy competition and freeing your business from potentially damaging litigation and regulation."
  • by totierne ( 56891 ) on Monday January 05, 2004 @12:20PM (#7882057) Homepage Journal
    Friend or foe? Call me neutral.

    Most of the readers and contributers see Offshore Outsourcing to much lower waged coutries a threat.

    The Indian programmers in India are too busy working to read and write to this thread.

    I am almost neutral as my job in Ireland relies on globalisation from the United States, but is at risk from the globalisation to India and China.
  • by poot_rootbeer ( 188613 ) on Monday January 05, 2004 @12:27PM (#7882114)
    I don't think the comparasion to Dot Bombs is entirely accurate

    Then post a comment stating such, like the rest of us do. Your opinion doesn't belong attached to the story submission, even if you are Hemos.

    And in the last article you put up, you saw fit to append your own insight too -- you said that Okokrim is the equivalent to the RIAA. This is simply factually untrue. The commenters who immediately corrected you got modded up -- but how come we couldn't mod your comment down?
  • by Tablizer ( 95088 ) on Monday January 05, 2004 @12:28PM (#7882118) Journal
    If measuring the cost is more important than measuring the result, then offshoring looks better on paper. Many companies use brute-force hack-it-til-it-works because it does eventually get you what you want after several iterations.

    Offshoring makes it easier for organically-grown hack-til-works companies to keep doing it the same way. Good planning and understanding the customer is harder to recognize, harder to meausre, etc. Accountants can't track that and companies tend to ignore what they can't track. In the end it seems such companies just end up paying the user more to keep them because they are the only ones who know how to work the resulting hackware.

    It looks like a mess, but it seems to be the primary development model because way too many companies do it and survive somehow. The market seems to favor swamp guides over true engineers.
  • by Ex-MislTech ( 557759 ) on Monday January 05, 2004 @02:18PM (#7883206)
    First let me say that yes I am biased, I am an american .

    I can be considered further biased because me and ALOT of
    ppl I know have lost their jobs to it .

    So in the best objectivity I can muster here are some reasons
    I think it is bad .

    1) Money sent outside the US for third world labor stays there,
    thus money that used to pay ppl here, to pay taxes, to buy
    food, to further employ americans in a trickle down effect is gone .

    2) If we were to pay US workers third world wages, and have
    third world labor laws, we would be breaking US law .

    *** So are we gonna lower minimum wage to 50 cents/hour ???

    3) If you did pay lower than minimum wage to workers, would
    they all have to be sponsored by the government and go on welfare
    and increase the already burgeoning working poor caste .

    4) The value of the dollar has been steadily falling, what are
    the implications on real estate, US investments, trade ???

    5) Huge layoffs create bankruptcies, repossesions, forfeitures,
    and broken homes, and broken marriages . Money being one of
    the top 3 reasons for divorce .

    6) Even with a increase recently in GDP not seen in 20 years,
    little to no hiring is occuring .

    7) Companies that reveal their internal secrets overseas may
    just find new foreign companies making their products for even
    less, after the plans were just copied by former cheap labor .
    With no recourse thru US patent law, etc etc, they experience a
    TOTAL loss of market share as the foreign government chooses to
    support their own ppl .

    8) Unemployment figures do not count those that are no longer
    eligible for checks , they are no longer considered unemployed .

    9) The US cannot compete equally on unequal ground, we have a
    huge tax overhead, and cost of living here is too high to
    compete with countries that have poor humanitarian labor laws .

    10) US companies are going overseas and thru negligence are
    creating disasters like Bhopal in India . They act above the
    law and thousands die from it .

    The so called race to the bottom has negative aspects that
    I feel will create even more hate for the US, within and
    without and there is already a sense of a Elitist class in
    this country .

    The funny thing is they expect to be protected by some of the
    poor they pay to serve in the military, but in recent polls
    soldiers were ask if they would defend the rich against
    an uprising of the poor, you can guess the answer .

  • by Bandit0013 ( 738137 ) on Monday January 05, 2004 @02:37PM (#7883384)
    I'm a professional developer and at first I was pretty hostile towards the idea of jobs like mine being outsourced. I've come to some conclusions though about outsourcing in general:

    -If you have a rock solid spec, outsourcing is fine. You get the best price for labor, everyone is happy. Sadly a rock solid spec is a mythical creature in my experience.

    -"Real" programmers over time will do just fine. During the IT boom, remember all those ads by IT training companies saying "switch careers to a lucrative IT job!". Well, alot of people went and were trained to be programmers and got positions in the industry who really aren't good programmers.

    Those of us who are good at what we do and like what we're doing are well aware that a certain "type" of person makes a good programmer. Anyone who got into the business because of salaries or the promise of a cushy job really doesn't belong here. Programming is a mixture of art and science, it takes creativity, a desire to explore and expand your boundries, and a logical mind. It's definately not a 9-5 job, you need to have a passion for it!

    Outsourcing is the latest thing, there's going to be some casualties of good programming talent until the market stabalizes and companies figure out what does and doesn't work. In the meantime, we will see less people entering the field who shouldn't be here, and also many less experienced (and less "suitable") people changing careers out of IT. Toss in the demographic loss of the baby boomers starting to hit retirement age and you have the formula for solid demand for good programmers.
  • long term trend (Score:5, Insightful)

    by ajagci ( 737734 ) on Monday January 05, 2004 @02:49PM (#7883509)
    Realistically, "outsourcing" just is the situation when software development is cheaper in India but their US-based management doesn't want to move there. The long term resolution to that is obviously not that software development comes back to the US, the long term resolution is that management also moves to India (or wherever).

    It's really not that different from what happened in the electronics industry after all: initially, parts came from Japan, then whole devices, and now the companies themselves are Japanese. And it was the same with cars and computer hardware.

    What should the US do? There is really only one choice: if it wants to retain its strong economic position, the US needs to start the next revolution in a different field. Maybe that's biotech, nanotechnology (whatever that is) or the commercialization of space. But anybody who wants to claim a leadership position can't lean back and say "we'd just like to lean back for a while and relax on the strength of the jobs we already created".

If I have not seen as far as others, it is because giants were standing on my shoulders. -- Hal Abelson