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The Future of Outsourcing in India 274
aaditeshwar writes "Economist has an article on the current and projected state of outsourcing IT and other business processes to India. The biggest problem seems to be that the talent pool of skilled workers will not able to keep up. Currently there are about 700,000 people working in IT and outsourcing, which is likely to grow up to 2.3 million by 2010, but only 1.05 million new graduates will qualify from local colleges in the next 5 years leading to a shortfall of 500,000 workers! All this despite the fact that almost 2.5 million students graduate in India each year." From the article: "In IT the growth in Indian exports is expected to come both from the software market, and from 'traditional IT outsourcing'--such as the remote management of whole systems, a market now dominated by the big global IT consultancies. This is expected to rise from 8% of Indian sales now to about 30% in 2010, while software-development's share will fall from 55% to 39%. In business-process-offshoring, the big industries will remain banking and insurance. But rapid expansion is also expected in other areas, like legal services."
Eastern Europe? (Score:5, Interesting)
Since some of them aren't employed, they're part of the burgeoning spam/trojan/virus/worm market that has been growing over there. Organized crime too.
Once the Companies have run out of Indian workers to shift jobs to, they'll move to Eastern Europe sooner or later.
And by Eastern Europe I mean former Soviet Block countries & their neighbors.
Re:Eastern Europe? (Score:2, Interesting)
I tracked him down and he is now an exchange student in Auburn, NY.
Re:Eastern Europe? (Score:3, Insightful)
Re:Eastern Europe? (Score:2)
Or they might stop whining altogether. At that point, they might just realize that there isn't any large source of cheap labor they could get at if only they could convince the gov't/some other group to let them go after them. No convincing could make people appear fro
Re:Eastern Europe? (Score:2, Interesting)
Face it. Programming has gotten only so much easier. The demand for software increases. As more software is produced, it acts less like a machine, and more like 'media'. That predicts high demand for programmers for a long time. The pay won't be as high, but the demand will be there.
Other countries as well (Score:3, Funny)
They seem
Re:Eastern Europe? (Score:2, Insightful)
Yes, and they are riding the outsourcing wave as well (and good for them!). But they are focusing regionally - the eastern European states are mostly getting work from west European companies, and the Baltic states are working with Scandinavian companies. Skype was started by a couple of Swedes and has/had a lot of their developemnt in Estonia, for example.
I don't think there is that a large surplus pool left over for, say, American or Japanese companies when
Re:Eastern Europe? (Score:3, Funny)
Translation:
In Soviet Russia Companies Outsource YOU!
Re: (Score:2)
Why lump " IT and outsourcing" together? (Score:4, Interesting)
It is ALL outsourcing. Why separate IT from, say back-office banking, insurance and other tasks...
Heh, or are they trying to distinguish "IT" from trivial paper-pushing.
Re:Why lump " IT and outsourcing" together? (Score:4, Insightful)
Next Target (Score:4, Insightful)
Re:Next Target (Score:2, Informative)
Re:Next Target (Score:3, Insightful)
Re:Next Target (Score:2)
More likely less wage disparity between countries.
Re: (Score:3, Insightful)
A free market needs freedom to work. (Score:3, Insightful)
It all depends of freedom.
Everyone in the USA and Europe already buy all their stuff from China. Unless you count a second rate OS and other increasingly made abroad IP, I'm not sure what there is to buy from US anymore. I wish it were different. IP is a tenuous export at best, but it's a bogus one when it's based on imported research.
All
Re: (Score:2)
Re:A free market needs freedom to work. (Score:3, Interesting)
It is only a matter of time and how hard it will hit the rest of the world economies.
When it is over China will finally be a free nation.
Re: (Score:2)
Re:Next Target (Score:4, Insightful)
Up to a certain extent. First, many countries we outsource to have little to no labor laws. Workers are forbidden to collectively bargain with their employers, which gives employers the upper hand in dealing with "problem" employees who say that working 80 hrs/wk for $.50/hr just isn't cutting it.
Second, with increased wealth comes increased demand for energy, as energy consumption directly correlates with wealth. Everyone always likes to say that globalization and freer markets will allow people in all corners of the world to have the same quality of life as Americans. As of now, we don't have enough energy to allow everyone to live like those of us in 1st world countries. Hell, we can't even find a way to feed everyone, much less generate electricity for everyone. Of course, one would hope we can find a way to meet the world's increasing energy needs, but oil production is nearing its peak, and we've not found any viable alternative. Even if nuclear fusion came on-line tomorrow, the fact that Wal-Mart sells $10 t-shirts is because of suppressed wages in the countries that make them. To put it another way, how much more do you think your new P4 processor would cost if it was fabricated in the USA?
Re:Next Target (Score:2)
Not many countries left (Score:2)
This doesn't mean that the quest for the most effective labour for the lowest price will end, of course. It just means that that lowest price will rise.
Re:Not many countries left (Score:2)
Re:Next Target (Score:2)
Not till it gets to, say, Somalia.
No limit to greed!!! the latest injoke. (Score:2, Funny)
They were old buddies from Engg college, and they were together for a college reunion..
For no apparent reason, they went into this zoo and passed a monkey.
Being in the same business and from the same college, there was a little bit of a peer competition going on between themselves - they couldn't resist testing themselves against each other -
especially the Infosys guy said to the others: "Why
their market is red-hot (Score:5, Interesting)
In my opinion (14 years of consulting), the India craze did cause a significant dip in rates for US people but even couple years ago we already were scratching the bottom of the barrel. I think the shortage of programmers is a global thing and caused by primitive immature tools and processes and outsourcing is not a magic bullet. My typical client cannot coordinate people across the room let alone across the ocean.
Re:their market is red-hot (Score:3, Insightful)
Re:their market is red-hot (Score:2, Interesting)
I long for the day (Score:4, Funny)
Re:I long for the day (Score:2)
Re:I long for the day (Score:2)
Re:I long for the day (Score:2)
Lot of assumptions in prediction of "short fall" (Score:5, Interesting)
The unemployment rate in India is still staggeringly high, and the couple of million jobs that *might* be created will be quickly gobbled up.
I suspect that the industry agenda is to continue to have a huge surplus of applicants (or even increase the applicants to positions ratio), so that they can put a downward pressure on the salaries. I'd call it Walmart-ization of the IT (and non-IT) outsourced industry.
S
Re:Lot of assumptions in prediction of "short fall (Score:3, Informative)
My point is it's not like the US where someone can sit at home, get a computer, and learn computer skills quickly. Someone in India has to take the time to learn computer skills somewhere. I'm not sure where the qualified applicants
Re: (Score:3, Insightful)
Re:Lot of assumptions in prediction of "short fall (Score:5, Insightful)
I go through at least 40 or 50 resumes in the US (Metro NYC area) to find one person worth hiring. And these are resumes that have been supposedly pre-screened by headhunters. Resume counts mean nothing if those tens of resumes represent poorly skilled people.
Supply and demand (Score:2)
In other words, a shortfall is not a product of a particular society or of outsourcing, it is a simple product of economic forces. Or, at least,
Re:Supply and demand (Score:3, Interesting)
The most screwed-up economies are the ones that are the most regulated. India's economy before 1980 was very regulated and very screwed up. It would take a year to get a permit to import a computer, thanks to trade protectionism. Now India's eco
Meanwhile, Bill Gates (Score:5, Interesting)
Does anyone wonder why few Americans want to take up programming any more as a career? There's no jobs for them - the corporations crying about a lack of programmers refuse to look to the US to hire any.
And when BPO hits the banking sector, you can kiss the security of your identity goodbye.
Re:Meanwhile, Bill Gates (Score:2, Informative)
"There's no jobs for them"
You mean there's no job for "scripters/programmers in Java/Perl/VB.NET (for fun)/gamers/hackers/*nix lovers etc" who don't have the fundamentals of computer SCIENCE right. Programming is NOT computer science. Bill Gates wants more computer SCIENCE graduates. Not programmers!
You think just because you can program you have an edge?! I can guarantee you IQ for a programmer isn't necessar
Re:Meanwhile, Bill Gates (Score:5, Insightful)
Oh, that is very true. I've interviewed many people to work for me and my boss has ordered me to turn them down in favor of waiting for more experienced people to come along. When that doesn't happen, THEN we hire the best inexperienced one in the bunch.
But now, as far as I've seen, this is true of all sectors.
Any job, even retailers like Target, demand years of experience first. Even if you have a degree, they want experience, too. Having a degree only means you are more competitive with other experienced workers.
No job except the lowest end of food service will ever hire someone without experience now.
Re:Meanwhile, Bill Gates (Score:3, Insightful)
I'm not sure if you meant to write employee loyalty, but you hit the nail on the head.
I'm a junior executive in the telecom industry (a bit over 300 staff, and a total budget well over US$100M), and as every person with financial responsibilities can tell you, year end is budget season. I attempted to increase the amount of my training budgets to "grow" more talent internally (both technical and management), rather than always looking
Re: (Score:3, Insightful)
Re:Meanwhile, Bill Gates (Score:2)
If the main thing that you have to offer is "loyalty", well, I'll hire the guy with skills over you, every time.]
Why can't a person be both skilled and loyal? Going by your morality, a person skilled enough to work for you, might instead start their own c
Re: (Score:2)
Re:Meanwhile, Bill Gates (Score:2)
You're totally wrong about that. Loyalty is important in all aspects of things. It is a cornerstone of honor and personal integrity. Sadly, all you care about is contracts and dollars. Once the world of business - employment included - degenerates to that, you have descended into a level of decadence that i
Re: (Score:2)
Re:Meanwhile, Bill Gates (Score:2)
A company is not a country.
But a company can be a community. In my informed opinion, a company that is also a community has a much better shot of long-term success than a company made up of unmotivated loner mercenaries.
Skills being equal of course. At the end, you can only be a great employee if you both have the skills and can be a member of the community (a good culture fit).
Regards,
Ross
Re:Meanwhile, Bill Gates (Score:3, Interesting)
Re:Meanwhile, Bill Gates (Score:3, Insightful)
The problem with that is really two fold. One, you have employees who *don't care* about the company. They are more likely to cut corners, or tell potential customers that they might get a better deal elsewhere, or just slack off.
Heck, where I currently wo
Watch out for the responses: (Score:3, Informative)
"Internet ID theft is far more prevalent"
etc.
Just so you're well armed for these responses...
Here is the tale of two data centers, one in Australia and one in India.
In Australia, a data center manager and its employees are paid more than people overseas; consider what it would cost to bribe them a year's salary. And moreover, they are under the relatively watchful eye of law enforcement. If they steal personal inform
I don't get it... well I do, but I don't (Score:2, Interesting)
Re:I don't get it... well I do, but I don't (Score:2)
Re:I don't get it... well I do, but I don't (Score:2)
But of course they did not rebel in the US. If other countries rebel then the companies will move everything to the US or be %100 based in India and they can save even MORE money.
Re:I don't get it... well I do, but I don't (Score:2)
If X = "oil" or some other physical commodity: There will never be a shortage of oil because the price will simply rise to meet demand; the market balances itself.
If X = "programmers" or some other laborer: There is a huge shortage of programmers because we don't want the price of programmers to rise until the market balances itself.
Re:I don't get it... well I do, but I don't (Score:2)
slashdot needs spell checker... (Score:2)
The numbers do not lie (Score:2)
"2004 saw 220,000 fewer employed U.S. electrical engineers than in 2000, despite falling unemployment, according to BLS data." http://www.todaysengineer.org/2005/Sep/pulse.asp [todaysengineer.org]
Notible things are that the US Department of Labor statistics which are stating that there are more engineering jobs are really not tracking that. They are tracking that a person who has an engineering degree and worked as such until he/she was laid-off simply has a "job" (any job, flipping bur
One would hope (Score:2, Interesting)
At the megacorp where I worked we trie
Re:One would hope (Score:2)
You may not realise how right you are. I've been doing some variety or other of work between the western world, India, and China since 1998. I hate to say it, but it is true: the good engineers from India and China move to the West where they get paid a lot more, live a hell of a lot better lifestyle, don't have to bride government officials to get a drivers license, and generally chase the "dream." The ones that can
Im a programmer... (Score:3, Funny)
Education? (Score:2)
This leads me to one thing I've been very curious about. How are companies checking the credentials of people overseas? I know there are quite a few people (some I've had to deal with), that I can't beleive they got any more than a 'boot camp' type training. With all the movement between companies over there, I can see how people would get lost in the shuffle and keep working.
It's not quantity of IT workers I see as t
Re:Education? (Score:4, Insightful)
On the plus side... (Score:2)
Re:On the plus side... (Score:2)
See people, a person can help themself if they will only learn the wonderful concept called Capitalism. There's no need for the governm
A slightly different angle (Score:4, Interesting)
During our recruiting so far, we're seeing a yield of approx. 5% after all interviews and testing, but that is prior to them coming into the PRC. We've gone thru nearly 4,000 candidates since Sept.
For the record, I'd source domestically, but mgmnt. wants to curry favor with the home countries, so the burden to fit them in is on me. At least the bonus program is in my favor
Re:A slightly different angle (Score:3, Funny)
Depends (Score:3, Interesting)
I think a few things will happen.
Government will have to figure out how to tax those people, the outsource loophole, the company doesnt have to pay insurance, workers comp or benefits. The biggest problem is we outsource work for one of the high end middleclass sectors and drop the pay in 1/2 to 1/3 when the cost of living stays the same in the US. While those people offshore dont pay local taxes. When enough people start feeling the money crunch, expect some laws passed.
Software programming will be cheap, you can buy custom software quickly. I know some web developers who work with a couple outsource groups who just send the specs, and the company sends the completed software. While its not perfect, its cheaper and only takes 20-30 days. Good enough for first generation software.
And last, there will be some scandles about IP issues and copyrights.
Re:Depends (Score:2)
And so they are not high end middle class any more. Problem solved.
Government will have to figure out how to tax those people, the outsource loophole, the company doesnt have to pay insurance, workers comp or benefits.
I think you don't understand who tells the government what to do.
Re:Depends (Score:2)
Re:Depends (Score:2, Insightful)
They do pay the taxes, insurance and other benefits in the country they outsource to. And with a very hot labour market over many years, and the countries growing wealthier, those costs are increasing and faster than in the stable industrialized countries the companies are based in.
In any case, all todays large companies are largely borderless. Most do not ha
Re:Depends (Score:2)
Some aspects of companies are borderless, like support. But then if companies want to do business in the US, we can always put tariffs on them for playing foul.
Last I checke
Re:Depends (Score:2, Insightful)
The ones who work in the BPO sector or the IT sector are basic code monkeys.
Those who do make it into all those MS/Ph.D programmes are genuinely skilled - cutting them out will only ensure that R&D programmes experience a shortfall. And that one-advance-in-AI-to-make-outsourcing-redundant, that becomes so much further off.
Re:Depends (Score:2, Insightful)
Gee, how about hiring people in the US? (Score:2, Insightful)
There's plenty of geek talent in the US for the hiring. I wish these companies would hire in the US and help the US economy instead of throwing the money overseas.
Arrrgh.
-Z
Re:Gee, how about hiring people in the US? (Score:3, Insightful)
Because it's cheaper, maybe?
There's plenty of geek talent in the US for the hiring.
Will you work for $5K per year, no holidays, no vacations, on a 60 hours per week schedule?
Re:Gee, how about hiring people in the US? (Score:2)
(and yes, I believe in the whole free-mar
From a purely monetary sense, they'd be crazy to. (Score:2)
Disclaimer: I hate this situation with a passion. I've trained the outsourcer that replaced my friends, stuck on conference calls with people that have no interest in the product, just getting more business.
BUT
From a money-only view, the US manager's job is only to cut costs. It's where their bonuses come from.
Therefore, they COULD hire from the home country, and be expensive. OR they could get an outsourcer to do it, and get a huge bonus. AND if you're smart, you hire a middle-of-the-road outsourcer th
Cute, but obtuse. (Score:3, Interesting)
When dealing with something as complex as economics, nothing is quite as simple as "So, how do you like it now?". Outsourcing of jobs from the United States to India doesn't just mean more money in India, period. What it actually means is less income in the United States to afford the pro
How was it working out though? (Score:2, Insightful)
Comment removed (Score:4, Insightful)
cost vs benefit (Score:4, Interesting)
A straight E1 circuit (2Mbps) to the Internet is about $4000/month, and about $3000 to install. (All prices in US dollars) Not cheap, but not bad.
A 2xE1 (4Mbps) jumps to over $10,000 per month.
Once you hit DS-3 which is scalable in the sense that once you have the circuit installed ($17,000 one-time fee), you can go from 0-3 Mbps to start all the way up to 45Mbps, your rates go from $16,000/month for the 3Mbps up to over $80,000 PER MONTH for the 45Mbps.
Depending on what you're doing there, the straight E1 isn't that bad, but you really can't pump that much data through it. The ds3 prices are through the roof. Plus, I've been told that the infrastructure there is so bad that shit fails
Now if you're truly outsourcing all of this and therefore feel that you don't eed to worry about the sunk costs, fine, but when you pick the cheapest-of-the cheap bid, that most likely means that they have a crappy DSL out to the 'net that goes down at least once a week for 24 hours at a stretch. "sorry, couldn't {manage your network | take your callcenter calls | upload those CAD files you REALLY REALLY needed by 8AM the next morning} because our local loop was down because some dude running a backhoe trying to upgrade our highway system just yanked our a thousand strands of fiber."
Oh yeah, there's also the problem that India gov't managed-monolopy telcomm says that you can't terminate out-of-country VoIP calls into the Indian PSTN. So now you need either two phones on every desk, or softphones, or ??. Again, two infrastructures for them to manage. (If, of course, they feel that their wageslaves^H^H^H^H^H employees need to be able to call locally while at work.)
My guess is that as these hidden 'costs' start to surface, and as the cost of labor increases in India, people will start to move on to the next cheap area. Lather, rinse, repeat, wait a few years, and everything balances out (or so the economists in the group would say??)
"We don't want another India" (Score:2)
So, we need to find companies to outsource to in countries that won't have a lot of competition.
They didn't mention telecom costs. In India, everybody wants the stuff, so they can charge what they want. But if you go where there are no companies to compete with, you bring new jobs, the government will pay for your telecom.
Re:cost vs benefit (Score:3, Insightful)
more shortage talk (Score:2)
It's a different angle on the same old labor shortage song and dance. As another poster pointed out, if India can't supply the labor, another country will and they'll do it cheaper. There's still a vast supply of labor in the world.
U folks have talked about so much(little) stuff.. (Score:5, Interesting)
Anyway what do you folks say? ------- Apologies for typos and bad formatting - NO TIME.
Re:U folks have talked about so much(little) stuff (Score:3, Interesting)
I've worked with indian programmers and they are decent to good.
Couple points.
1) Yes the indian system is so hard that many commit suicide. The japanese used to do this to, once their standard of living came up they got lazy like americans and said, Why are we sacrificing our children to advance- we have advanced far enough.
2) Yes the indian system is hard, so we are seeing the best and brightest- there are only so many best and brightest- as a result wage increases of 18% were
Re:U folks have talked about so much(little) stuff (Score:3, Insightful)
Conclusions about the convergence of China and the US are left as an exercise to the r
Re:U folks have talked about so much(little) stuff (Score:4, Interesting)
For example, in the US, we might allow folks who make an "A" to go to a special school.
And once enough "A"'s had applied, the school would be full.
In India, you would take a test, and the top 70 scorers get to go- even if 180 of them made A's. Not first come first serve- the top.
I have been told that that concept starts early- by the end of highschool you are either going to a trade school, going to college, or ineligable for further education- all the basis of testing.
It's very harsh and a lot of high school students commit suicide when they realize their life is over before it started (they should probably come to the US instead of killing themselves- here if you have drive you can always succeed).
But that means, that the people who make it through college, are smart and exceedingly driven compared to a similar groups of americans who were not culled so severely.
But it's like a mono culture vs a sexual culture.
If the environment is well defined, they can master it. Once we are thrown back into an undefined environment, it may be different.
But do -not- under estimate indian programmers- a lot of them are competent and they are getting experience now.
Remember Japan (Score:3, Interesting)
China and India are different. I'm just talking about India here.
Let's be brutally honest: we only outsource to India the dumb shit of life. They are like the Migrant Mexican workers, picking our vegetables or mowing or lawns or making the beds in the hotels: it's just some dumb shit we don't want to do. Calling to dink around with your account or reschedule your flight is just some other dumb shit we don't want to do, so we give it to cheapies cause, you know, what the fuck.
So, if I was India, I would be extremely scared, because one significant advance in artificial intelligence means everything in India gets re-outsourced to robots. Let's face it, there's nothing an Indian can do that you can't do yourself on a website, barring mere technical limitations.
Dig it?
universal (Score:3, Insightful)
Simple as that.
I don't care how many degrees from whatever school you have. If you can't see past the quick buck to real problems and their solutions you're just a tool in my eyes. People look down on Indians and Chinese because they're a dime a dozen [literally and figuratively] but what makes you think your neighbours in your comp.sci classes are any more competent to do productive work?
I'm all for making money but only off things of value. Otherwise you waste a lot of time trying to sell [re: market] things of substantially lower value [re: intel processors] just to make sure you can stay in business [re: partner with Dell].
Tom
Re:universal (Score:4, Interesting)
Literally, we had 10 staffing agencies give us over 10k people to screen. The requirements were as follows :
Must speak english fluently,
Must have a degree in computer science,
Must have call center experience.
out of the 10k that showed up
All in all
'I am actually fluent in english, and I really have my degree - I may only have 1 call center listed on my resume, but I actually worked there - and you can call this number [which was in the UK] to verify that I was employed.' He then went on to tell me that he was SURE that lots of people had impressive references, and said they had degrees etc, but that in India - there was a whole black market of places that would sell you certification for whatever you needed to get a job.
out of the 10k people they sent us, we barely got 50
My personal favorite was a guy who MUST have been 80, who repeated 'Yes, I am perfectly fluent in English.' over and over, no matter what we asked him. [Including when we told him he could leave the interviewing room.]
The impression we got from the people we hired, was that we were paying very well for a call center, and that many people figured that we would be hiring like any other call center - basically, anyone that breathed. So they just did what they always do, get papers that could be attached to a form that is sent to the US showing they were qualified, and apply for the job.
Apparantly MOST US and British companies don't actually do what we did. They just hire a local guy to staff their centers for them. Who normally train folks to just read a set of scripts. Anyone will do. [Normally this fellow will take bribes from people desperate for work - to give them the priveledge of working.]
So when you ask what makes me (personally) think that a guy in a US college class would be more productive, My answer is that at least I have a very high certainty that he really is trained in what his degree is in, and if I am skeptical, I can verify the college is accredited, and call them to check his facts. I can call his previous employers, and although leagally they can't tell me if he was a crappy worker, they can at least verify that he DID work there, and the dates he worked there, how much notice he gave, and what his salary range was.
He may not work as hard, as some guy in india who REALLY needs the $2 a day, and he may not be as cheap
wonderful employment news (Score:2)
In other news .. (Score:2)
Re:The job turnaround time is very short in India (Score:2)
Re:The job turnaround time is very short in India (Score:2)
And then the PHB's in charge of HR translate it to "Must be a Black Belt(tm) in Object-Orientated(tm) Perl process methodologies."
Re:The job turnaround time is very short in India (Score:2)
Perl is all about making things easier on you. So is OOP. So someone steeped (i.e. two years of experience) in an OOP language is going to immediately start using that approach in perl.
If they're not, then:
1) They don't really get the point of using OOP, so they're not really going to use it in such a way that other people can use it to
Are you feeling motivated now? (Score:2)
Everyone at that company who can will immediately find another job, and they'll be left with the dregs, probably the very people they didn't want to keep in the first place.
I wouldn't go so far as to find another career. Just find a company that values you as an employee, and doesn't rub your face in the obvious (engineers are cheaper in India).
What a clueless fuckwit that guy is.
Re:Are you feeling motivated now? (Score:2)
The point was, that no matter what skill level we possess, our customers won't pay for it. If we could get a ferret to answer the phone, and do it for cheaper than India, we'd do that.
I personally believe the point is to make customers stop calling, because no calls is cheaper than crappy calls.
The arrogance that the customer will buy on cost, no matter how they're treated, is ama