Outsourcing - who's been affected?

[rehmwa 2]

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If the skills of a US engineer are so lacking that they are easily replaced, then they lose their jobs to someone better.

I never said that and it has nothing to do with it.

For the last 8 years, IT has the option of hiring US C++ programmers or Indian ones for $15 less an hour.

Identical skills, 1/6th the salary. The US people have the competitive skills, that is not the issue. I don't know how many times I need to repeat that.

But BV's point is, the US people have to develop better, not identical, skills or why should any company pay 6 times as much for the same thing?

We do it everyday in our daily life (hire the cheaper kid to mow the lawn, go to that great restaurant that's just a better bargain, use coupons). Why would you think a corporation should hold different financial values than we do as individuals? And I also don't want to pay more for those services and products from those companies.

Your position would drive us to an isolationist economic policy and price controls on everything. Now that is a frightening prospect.

We can only stay on top if we are smarter and work harder than the other countries. Since they also have humans in the workforce, it's not an easy battle. Any other path will more quickly lead us into obsolescence.

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[billvon 2,454]

>No, it means companies NOT firing long term employees to hire
> newer ones overseas because they are more recently out of school,

Yeah it does. That's been happening for 200 years here in the US. Management makes a tradeoff between lower salaries for new workers, and higher salaries for more experienced workers. Companies that keep everyone forever fold when other companies, with much lower expenses and new ideas, outcompete them.

>NOT reducing employee salaries to increase those of managment . . .

Depends on the company. If your company does this and you don't like it, quit.

>and NOT passing laws to make it easier for US based companies to
> shit can their work force with no warning and open up shop in a 3rd
> world country.

I'd agree they should give their employees warnings, but if you insist that US companies maintain 100% US workforces, then it won't just be part of the company that loses their jobs, it will be the entire company that folds. Manufacturing in the US simply cannot compete with offshore manufacturers.

We did something similar. We spent hundreds of millions building cellphones and infrastructure equipment for CDMA to prove it worked. There was no way we could build cellphones in California and compete with Kyocera, so once we proved CDMA could work, we sold off the cellphone and infrastructure divisions. Turned out to be a good move; the one thing we can do with CDMA profitably is make IC's, which we do.

[bodypilot90 0]

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Oh, and yes, by the way, I drive a Ford -

well I ask about the group as a whole.

[PhillyKev 0]

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I wonder how many of you IT people are running around in import cars?

Number of US auto plants operated by Chrysler = 8

Number of US auto plants operated by foreign car companies = 8

http://www.epa.gov/air/opar/auto/company.html

US brand cars manufactured in Mexico:
Chrysler: PT Cruiser and Dodge Ram.

GM: Chevrolet Avalanche sport-utility vehicle, Silverado pickup truck and Cavalier compact car.

Ford: Escort and Focus

"Japanese automakers recognized the cost saving opportunities in Mexico as well, but instead built factories in the American South. "

Mexican auto workers earn about $150 for a 44-hour week, a third less than minimum wage in the United States

http://www.detnews.com/2002/autosinsider/keepup/b03-383907.htm

[LuvToFly 0]

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Oh, and yes, by the way, I drive a Ford -

well I ask about the group as a whole.

That may be, but I think it is very relevant to your statements about IT people since I am the one who started the thread on this topic.

"The helicopter approaches closer than any other to fulfillment
of mankind's ancient dreams of a magic carpet" - Igor Sikorsky

[PhillyKev 0]

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We do it everyday in our daily life (hire the cheaper kid to mow the lawn, go to that great restaurant that's just a better bargain, use coupons).

But they're competing on a level playing field. One of those kids mowing the lawn isn't getting his gas subsidized by opium farmers. One of those restaurants isn't using underpaid illegal immigrants for employees (ok, maybe they are, but then I wouldn't go there) I don't care how much cheaper they are.

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Why would you think a corporation should hold different financial values than we do as individuals?

I don't, my financial values are find the best bargain I can, with the exception of not buying from companies that use foreign, low wage labor when a domestic or equitable vendor is available.

[billvon 2,454]

>One of those kids mowing the lawn isn't getting his gas subsidized
>by opium farmers.

Well, the Chinese aren't getting their oil supply protected by the US military, so it all works out. We do have the cheapest gas in the world.

>One of those restaurants isn't using underpaid illegal immigrants
>for employees (ok, maybe they are, but then I wouldn't go there)

But how would you know? Wal-Mart was doing that for quite a while.

[Mirage63 0]

AAAAGGGG.

Listen trying selling office supplies against Office Depot, try selling copiers against Danka or Ikon. None of it is easy, but it's doable. Jobs will come and go. IT's the way our econ. works.

It won't change so the person who is being effected has to.

But hey I sure like to skydive

[PhillyKev 0]

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But how would you know? Wal-Mart was doing that for quite a while.

Right...and I don't shop at Walmart.

[kallend 1,661]

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AAAAGGGG.

Listen trying selling office supplies against Office Depot, try selling copiers against Danka or Ikon. None of it is easy, but it's doable. Jobs will come and go. IT's the way our econ. works.

It won't change so the person who is being effected has to.

But hey I sure like to skydive

Well, it's very difficult to outsource jobs like shoeshining and bagger at the grocery store. Even kintergarden teacher is difficult to outsource. Maybe we should concentrate in these areas and leave IT to the Indians.

I don't know what it's like in other universities, but well over 50% of our CS graduate students are from Asia. I suspect IT is going the way of the TV manufacturing business.

...

The only sure way to survive a canopy collision is not to have one.

[panzwami 0]

Interesting reading today, exactly on point:

http://www.washingtonpost.com/wp-dyn/articles/A56316-2004Feb19.html

Matt
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[nathaniel 0]

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IT outsourcing in not like that at all. You don't get a better product because you went outsourced off-shore. You don't get less problems, certainly not better reliability, nor better communication with language difficulties.

What could possibly make an individual such as you or me a better judge of that than the free market itself? I don't think you want to propose Planned Economy.

I hate to say it, but Trust in the Invisible Hand. Exceptions can be made on a case-by-case basis...

nathaniel

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[nathaniel 0]

But it works both ways. It's one market now. When there's growth there it adds demand to the equation -- on both sides of the ocean. Right now the so-called problem is an excess of supply in these places. In IT it's easy to see how it's self limiting.

Like I said, I dont think wages will ever get back to where they were in the dot-com heyday...but the point is it's not a bottomless pit we're facing.

Perpetuating the us vs them theme devolves into xenophobia when the trade barriers go away. This is, I think, where the theme of free trade bringing democracy comes from...

All this said, there will be a few implicit trade barriers, such are natural results of domestic policy differences between trading nations. I believe that in particular circumstances these justify trade penalties or subsidies.... Privacy, environment, workers rights, etc. I'm aware that the UN and related supra-national bodies exist to address these very issues...tho they've not yet made enough of an impression on me to say whether they'll be enough.

nathaniel

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[nathaniel 0]

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But telecommunications, data management, and other forms of infrastructure are not location dependent. With high speed data communication lines one could house their data anywhere on the globe - and still function. That's why this thread was targeted towards the IT industry.

On the contrary, I believe that certain IT services are highly location dependent. The speed of light is only so fast. Travelling in a great circle around the earth, it will take in the [edit: sorry, decimal place was off] dozens of milliseconds to make it to the other side and back at the speed of light. This neglects processing time. 50-100 ms is well over the threshold of what humans can perceive. For interactive applications, esp when processing is involved, it can be too much. So, for these applications, IT services are geographically constrained.

Add all the overhead like actual distance, electro-optic conversion, processing time, routing ineffciency, vendor agreements, QoS, etc, and it becomes a real problem.

Try playing Quake on a server in Russia (assuming you're in the US) and the effect will be unmistakable. Europe, and even distant parts of North America are appreciable. At university I saw 500ms latency to Russia, and 200-300ms latency to Europe. 50ms or so to parts of Canada and the west coast. And before someone suggests this is trivial, let me point out services like this

nathaniel

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[LuvToFly 0]

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So, for these applications, IT services are geographically constrained.

That's not how Outsourcing agreements are made. The outsourcing of applications and application servers is quite prevalent. In North America, many ASP's are vying for business in this arena. But off-shore is in this market too, and the response time is negotiated beforehand as a service level. If the offshore entity can meet that, they would get the business based on bid.

The practice of Service Levels, which include response times for a given application like, say, SAP, is a very common performance metric for corporate enterprise applications. This metric then becomes the measure through which an outsourcer becomes compliant. It is written into the contract as a maximum reponse time which must be adhered to as part of the agreement. It's not about technology delays caused through latency - it's about a corporation determining what is acceptable. This is not a barrier to Outsourcing because it is agreed upon up front. Of course, operations like Help Desks who have traditional low bandwidth operations (reset passwords, enter tickets, etc) and Remote Server Management are common practices wherein the location is largely irrelevant.

None of this though really touches on the concern, which is not capitalism per se - but corruption. Ask any Enron employee who lost everything while those financially responsible for the company pulled a fast one. The us vs. them is forced upon reality by wake up calls like this - it is not the desired course.

The disconnect between what is truthful, and what is being communicated to the employees is where my concern lies.

"The helicopter approaches closer than any other to fulfillment
of mankind's ancient dreams of a magic carpet" - Igor Sikorsky

[Guest]

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Although this is a computer geek question, it's open to any -

Have you been affected, either directly or indirectly by the trend to outsource, particularly to off-shore service organizations, etc?

And if so, how many jobs have you seen go because of that?

Seems that there are just too many people being dumped by this practice that seems to have clear roots in greed - although I only say that because in the corporate instances of this practice I have known first hand - the money "saved" funded increasing raises and retention bonuses for the uppermost - while the less senior crowd got their jobs displaced.

Anyone else ticked off about this?

I have associated the term "Bangalore Torpedo" with those who have lost their jobs due to "off-shoring" to India.

It's been in the news here in WA this week. Some bills are pending in the State HoR to make companies that are bidding on IT jobs for WA ineligible if they have "Bangalore Torpedoed" IT jobs or are shaving costs by doing so. Please see washtech.org.

edit for grammar

mh
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"The mouse does not know life until it is in the mouth of the cat."

[LuvToFly 0]

Thanks Mark!

That link to Washington Tech is very interesting reading.

I think you could repeat Washington's woes across the nation in other states as well.

"The helicopter approaches closer than any other to fulfillment
of mankind's ancient dreams of a magic carpet" - Igor Sikorsky

[jkm2500 0]

I assume that from your post that you have been one of the people to lose their jobs from this outsourcing. I feel bad for you, but it doesnt change life. Life in the IT world appears to be extremely volatile. I would think that it would be better to get job training in another field and make yourself more saleable(sp?).

My point is this, these corporations hire(purchase) employees(products). When they are not recieving a premium product for the premium price that they are paying, they change the product they are buying. That is no different than you buying a cheaper product anytime that you go to the store. The difference is that you got caught in the premium price catagory.

It is easy for the corporations to determine that it is more cost effective to go to a lower standard of product and still accomplish the task at hand. It is not hard to understand this thought process. If I were the owner of a business and I could save(make) a couple of dollars by buying my cheaper products I would. It is how the system works.

The second thing that I would like to comment on is your idea that not outsourcing is a good idea. The world economy is a very real thing. You have to remember that without us bringing the rest of the world to the same standard of living that we enjoy, eventually we will suffer from over-production. It is a simple scenario of supply and demand. Several years ago there was idea tossed around that all jobs should be kept within the home country, and that the government should regulate all the companies. That guy was Karl Marx(Do I need to say more?). There has to be world growth in todays economic atmosphere. DO I think that it sucks? Hell yes, but that doesn't change the inevitable.

The third point that I would like to make is concerning the article about WA state. How much money are they saving by outsourcing? How much of that money is transferred back to other programs in the state government? How many jobs would it create by not outsourcing? Would there be a competitive company locally to fill the orders? What makes you think that the jobs wont end up in TX as opposed to WA, esp if TX has a company more competitive than any local company.

Finally, I would like to point out that there is a solution to your situation. The question is; are you willing to put up with the increased output that will be expected of you from your employer? The solution would be to downsize the amount of personnel, and increase workloads.....probably for less pay. That will keep the jobs in the US. Tell me what you think. Would it be worthwhile to you to do this?

Josh

The primary purpose of the Armed Forces is to prepare for and to prevail in combat should the need arise.

[LuvToFly 0]

Hey there - thanks for your comments, Josh -

The heart of the matter is missed though. As stated, the central objection is corruption - not capitalism, as stated in my post -

"The helicopter approaches closer than any other to fulfillment
of mankind's ancient dreams of a magic carpet" - Igor Sikorsky

[jkm2500 0]

In this case it sounds like capitolism and corruption go hand in hand

The primary purpose of the Armed Forces is to prepare for and to prevail in combat should the need arise.

[WFFC 1]

Just a comment since I'm one of the 'bad' people who takes IT jobs overseas, the product itself, in my opinion/experience, is just as good as if I were to shop for it here in the states. The code is solid and the client is satisfied with the work done. The world is moving towards a more global economy. The question that should really be pondered here is, are you read for that?

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~~~Michael

[GrumpySmurf 0]

"I agree, but that problem is not limited to companies that outsource. You can bet that as soon as even a US car manufacturer can replace ten workers with a welding robot, they do it. "

While touring one of our plants (OEM supplier for the autos), I asked a similar question about the dependancy on humans - and why not have the MBD put together robots for all the assembly lines - appearantly in alot of cases, the capital outlay up front for development of a robot for a line that will be torn down after a typical 5 year production run far exceeds the cost of even unionized labour, unless its a high volume task that would take a significant amount of time or too high risk for a human to do - such as frame assembly. The robot becomes even more costly if the market starts to soften - labour can be laid off when times are tough, a robot cannot - so you're stuck with the bill for poor forcasting.

Ironicly, overseas programming in India has helped us (our company) alot, we have alot of trouble drawing qualified people to our middle of nowhere part of the mid-West - I interviewed unemployed folk from large cities who turned down job offers simply because they didn't want to move. Right now we are using the Indians strictly for Windoze work that is not our core business - but with the way the market is going for autos, who knows what else might have to be sent over, due to a lack of qualified people who don't mind leaving the convience of the larger cities (why anyone would want to live in Detroit is still above and beyond me).

My job is to gather requirements from the customer, design the system, and see that it is delivered to the customers expectation - including alot of field time during test drives of the vehicles. Though I can and do, write embedded C code, that is a very small part of my job description - sending it overseas would alleviate that burden and free me up to do what I am paid to do. Programming for an S/E is like construction for an architect - while I am sure they can do it, it is not the primary task for what they were trained to do.

[GrumpySmurf 0]

The talk of assembly jobs moving to Toluca because of cheap labour is always entertaining - the big benefit of moving work there may not be so much the salary reduction as it is the pension reduction - warrenty and pensions are the two big killers of profits. Salary is means to an end, it gets you revenue - warrenty and especially pensions eat that up really quick.

Gotta love that new Durango, eh? Doesn't matter how cheap (or not) the labour is, the pair of recalls like it has out are gonna dig into those margins.

[jkm2500 0]

It is inevitable that jobs will go to the lowest bidder, whether it be here in the USA, or overseas. It has to happen in order for capitolism to thrive. The problem is that the rest of the world isnt going to achieve a higher standard of living fast enough to benefit the USA. What is going to happen will be a recession in the USA as we wait for the rest of the world to catch up. Not neccesarily a bad thing, just a thing. The good news is that eventually it will sort itself out, and the world will be a better place. It sucks short term for the USA, but like I said in my earlier post,"there has to be world growth in todays economic atmosphere".

The primary purpose of the Armed Forces is to prepare for and to prevail in combat should the need arise.