Offshoring

[derrickb52]

Our boss recently sent out this link, regarding the offshoring/outsourcing dilemma. I'm not sure why the HELL he would send it to a bunch of programmers...

Did I really need to be thinking about this?

[Bryan]

This topic ranks up there with tenure in my book.  It makes my blood boil and I'd rather not discuss it.  I prefer to make (most) of my arguments level headed and intelligent.*




*granted I fail greatly at this sometimes.

[Tyler]

It's an interesting idea that because the US has tried so hard to help the conditions in the workplace, i.e. minimum wages, working conditions, benefits, etc, and the more that becomes mandated, the better offshoring looks to companies.

As a com sci grad of SIUE, I am relatively aware of the fact that many of our jobs are being outsourced, and now working and being around the business world more, I hate to say it, but it does make sense.

Keeping working in the US greatly raises the bottom line, and the higher the bottom line goes, the higher prices go, the more people must pay, and they will have less money in general.  It's the same with minimum wage.  Sure it's great to raise the federal minimum wage, but all that will do is increase the prices of Big Macs and Whoppers.

I love America.  I think I live in the greatest country in the world.  But as a business person, it's all a matter of dollars and cents.  It's cheaper, much cheaper, to offshore.  

[Brad Nunnally]

I read an article on outsourcing to the US in Wired magazines a couple of weeks ago. It projected stuff like education, manufacturing, and even some computer jobs that are being sent to the US. What surprised me was the fact that by 2020, the stuff being in-sourced will be higher than the stuff that gets out-sourced. Being someone who is in a position to get hitched with someone who will be going into the education profession I am thrilled that education jobs might be being sent to US.

[Peter Motyka]

I guess I've gotten over the whole doom and gloom factor of off-shoring and done some research to put the phenomena into perspective.  From this article (http://www.cio.com/archive/110104/peer.html), and many others on the web, it is clear that companies are not shipping entire information system engineering departments overseas.  The type of work that leaves the US appears to be less complicated programming that seems less like engineering and more like mass code generation that will eventually be automated by advanced development environments.  To be quite honest, as I continue through my IT career, I find pure programming roles pretty unattractive and prefer to do design and architecture work.  It seems like design and architecture are more natural to the software engineering discipline.  As a comparison to other engineering disciplines, how many building architects do you know that actually get their hands dirty helping build the structure they create blueprints for?  Very few I bet...

[raptor]

I must agree that most of what I've seen about programming outsourcing is mostly lower-end stuff.  But on the flip side, and in response to the comment that outsourcing helps lower the bottom line I ask one question.  If the companies save SO much money by outsourcing where does that money go.  We as the consumer sure as hell don't see it. It ends up in the pockets of the rich corporations, CEO's, and other corporate heads.  

It has happened in more than one case that a cheaply produced, inferior foreign made product ends up costing more that a quality product made right here in the US.

As an example, I'm sure most of you know very little about the steel market being as we are computer nerds, geeks etc (Bryan no posts about stereotyping please).  The only reason I have an outlook is because of my father's machine shop. Lately my father has had to constantly raise the prices of his products that we proudly fabricate in my backyard,USA because of China.  Major corporations and businesses are industrializing China for cheap labor. All of the new construction has make the price of steel and all other metallic products sky rocket.

Thank You, Corporate America.

-Scott

[Tyler]

Much of the savings is passed on to the consumer.

For example, Walmart is famous for outsourcing production of it's items, especially clothing.  The shirt in Walmart that costs $9.95 would proabably cost $19.95 if produced in the US.  American consumers have grown to depend on these cheap goods.  No matter how much someone wants to help the US economy, many people simply cannot/could not afford the higher prices of US-made goods.

[raptor]

For this same reason Walmart is famous for putting more American businesses out of business than anyone else.  So now that the cost of my shirt is $9.95 instead of $19.95 I can easily afford it.  Anyone can do the math that makes sense. But what about the American workers that used to make the shirts for the company that Walmart put out of business?  There is no difference between $9.95 and $19.95 for them, they can't afford either one.  

There is also the quality factor.  My $19.95 shirt may have lasted twice maybe three times as long because it was a quality product.  Now the Chinese 5 year old getting paid a quarter and hour to make shirts couldn't give a flying rat's behind whether the shirt he made lasts 2 years or 2 days.

Whenever the only people left making shirts are outsourced countries there will be no competition.  Quality will no longer exist.  We won't have an option of what we can buy it'll be the affordable poorly made blue shirt or the affordable poorly made red shirt.

I'm not going to even touch on the moral issues of foreign labor.  

We as the consumer simply cannot afford to afford an outsourced product.  At what point will people realize that if we keep buying foreign made goods that none of us will have jobs.  NO job, No money, NO consuming, NO matter how affordable it is.

Scott

[Tyler]

I think the quality of the shirt that the foreign worker makes matters greatly.

Jobs in these countries are hard to find.  A worker is EASILY replaceable, so he/she would work that much harder to keep his/her job.

Now please do not get me wrong, I believe child labor is wrong, and I believe that American companies should keep American people working in America.  However, I do not think that Joe Consumer is ready for that bloated price tag just to say it is "Made in America".

[Jerry]

I recently read an ACM Communications article (sorry I don't have the specific reference) that said quailty control was a very serious problem with offshore programming. This is much more serious problem with computer programs than it is with shirts. It's not whether the offshore program will last longer, it's whether it will work at all.

The article also pointed out that US companies are having difficulties getting foriegn governments to enforce patent laws. This turns out to be an even bigger issue.

One source I do have that says the job market will grow regardless of offshore programming is the U.S. Department of Labor's Occupational Outlook Handbook. If you are interested in gearing yourself to the hot growing markets in CS check it out:
http://www.bls.gov/oco/home.htm

[Peter Motyka]

Shaming foreign nations for shady labor practices is quite contradictory coming from an American. We have a history of labor problems ourselves, slavery, child labor during the industrial revolution, and other unethical labor practices help build the U.S.A.  If anything, China, India, and other booming manufacturing centers are only lending from the examples of industrialized Western nations.  This type of accelerated economic development usually serves a primary goal, increasing the standard of living of a population.  I imagine as China, India and other nations continue to develop, child labor laws and other human rights legislation will naturally address the atrocities that help build an industrialized nation.  I'm not defending these actions, I'm only saying that we did it, why can't they?
See: http://www.kentlaw.edu/ilhs/curricul.htm#contents

Now back to offshoring...  There are well-documented instances of quality issues with large-scale software products developed in an offshored process.  In my opinion, this is due to a communication breakdown.  While we all try our best, requirements gathering and documentation tasks are usually slighted in favor of architecture and engineering type tasks.  If requirements are not well communicated, teams across the globe will likely develop software that is off target.  Most environments I've worked in value face-to-face design and review sessions to validate software products are meeting the needs of the business.  The offshoring model offers very little in terms of this sort of communication and is a major factor in dissuading firms from pursuing it.  See: http://cse.stanford.edu/class/cs201/projects-03-04/offshoring/failures.html

Also, I see little threat posed by offshoring to ambitious IT professionals.  If you conduct your career like a skilled laborer and pursue little or no higher education and training, you will likely fall victim to outsourcing.  However, if you pursue graduate school, professional certifications, and aspire to advance through the ranks of an organization, you will likely succeed.  For those that want to sit in a corner and write code for a living, perhaps you should consider a flat in Hyderabad and become acclimated to higher temperatures.  Of course, this is in exception to brilliant engineers that author premium code for specialized purposes.  However, an average programmer like myself offers little competition for offshore developers.

It may sound hash... but it's survival of the fittest out there.  Evolve.

P.S. Regarding the patriotic attitude towards globalization, here is an interesting quoteâ€Ã,¦

â€Ã...“Patriotism is your conviction that this country is superior to all other countries because you were born in it.â€Ã,
-- George Bernard Shaw

[raptor]

Here's an interesting fact: IBM laid of 13,000 in the US, but were able to hire 14,000 in India.  Hmmm.... evolution or lower wages.  You figure out the reasoning.

[John Paul]

pmotyko wrote:
  For those that want to sit in a corner and write code for a living, perhaps you should consider a flat in Hyderabad and become acclimated to higher temperatures.

Welcome to HYD. If anyone needs relocation assistance contact me.

FYI:
Hyderabad is cooler than you think. Here are today's temperatures for comparision:

Hyderabad, IN 75...86 F  
Chicago, IL 73...90 F  
Edwardsville, IL* 75...98

JohnPaul
Hyderabadi by choice

[Jerry]

JohnPaul
Hyderabadi by choice

Hey JohnPaul! Great to hear from you!

Maybe you can give us a better picture of the employment picture in India (we only get our information through the media filters).

I read one report that says the need for trained programmers in the Indian tech job market are pushing salaries upto the same levels as their U.S. counterparts. This might be an interesting effect of globalization. Would you say that there is an increased quality of lifesytle for tech workers?  Or are increased wages for tech workers causing problems for the Indian economy.


 

[John Paul]

I am glad to share my views on this subject. On the average a programmer in India gets paid about 1/5th of what his counterpart in US gets i.e.if you convert his pay into $$$$$$$$$. If you consider his purchsing power it is much higher than that. This increased pay has lead to increase in a class of society called "upper middle class".

But should Indian economy be weary of this class? Nope, in fact they contribute to the economy. The increased spending of these programmers create new opportunities. For example the tremedous growth of domestic airline and tourism industries in the last decade can be attributed to this class. After working for a few years most of these programmers no longer will be willing to work for a pay but want to be CEOs of their own small firms, creating more jobs. The competition among Indian cities like Hyderabad, Bangalore, Chennai, Pune in attracting big tech corporations has led to rapid growth in infrastructure in these cities.

On offshoring, if the cheap labour is the only reason, India may not be the best destination. Over the years Indian tech industry has matured enough to withstand the global competition in Business Process Outsourcing(BPO) and continues to lead in this area.

What I find lacking in the big Indian tech companies is that they never invest in developing new products themselves but are satisfied with the servicing contracts they keep getting from other countries mostly from USA. Maybe this improves in the near future and these companies start making products under their own brand names.

JohnPaul
(self proclaimed)
Hyderabadi Ambassador to SIUE


FYI:
The Indian Economy is currently one of the fastest growing economies and might be a good destination for investments.

Now hiring in Hyderabad!
Intel
DLF Universal Ltd
Infosys
iSOFT
ICICI Bank
Microsoft Technologies
Lucent Technologies
...
...
My longest post ever