Posted on 05/14/2008 5:37:08 PM PDT by AmericanInTokyo
US slump to prop up India as next offshoring hotspot 14 May, 2008, 0750 hrs IST,Chiranjoy Sen, TNN
BANGALORE: Belt-tightening by global technology giants—a fallout of US economic slowdown—is likely to reinforce India as the most preferred offshoring destination. Top technology firms are actively moving part of their workforce from the US, UK and European markets to lower-cost destinations.
They cite availability of local talent, better delivery and conducive enviroment as key offshoring reasons. While they may not admit it, firms would be looking at stepping the gas on offshoring to curb bloating costs and to lift margins.
Networking and telecom software major Nortel, for one, has recently decided to move almost 1,000 jobs from the US and the UK to low-cost , high-growth destinations like India, China and Mexico. The move is aimed at both restructuring business and reducing costs, Nortel Networks global services president Dietmar Wendt told ET.
The company plans to double its $2.1-billion global services business over the next three to five years with a significant portion coming from multimedia and contact centre services. “India is critical to grow the business and the largest percentage of the job shift will be to India, ” says Wendt.
For Andy Green, who took over as Logica CEO in January, two of the main drivers to revitalise the firm has been to double offshore and nearshore headcount to 8,000 by end 2009; and a significant drop in costs resulting from a reduction of 3% of overall headcount.
And, the lynchpin of this strategy, which is expected to drive Logica’s growth to above-market levels from end of 2008, will be the 1,500-seater second site at Chennai. The plan to deliver abovemarket growth is funded by a £110 million restructuring that will lead to cost savings reaching an annualised £80 million from 2010.
To boot, software services major CSC had announced sometime back that it was shifting more UK jobs offshore in an effort to control costs. “Moving positions to India will give software companies higher leverage on costs but there are other key business drivers such as focus on revenue creation, increasing productivity and efficiency that will be a major determinant of the shift, ” says Symphony Services managing director Ajay Kela.
might be a good one for the Asian ping list...just thinkin’ aloud....
Nothing new here, jobs have been going to India as fast as they can be shipped there.
indeed. and it may indeed accelerate
I’m sure there are a lot of good programmers in India, but as a percentage, it is much lower than the US. I can tell you that many of the Indian student I’ve seen cannot program their way out of a paper bag. But they are polite and speak good English. In any case, the cost savings is probably going to be largely an illusion.
i think for example much of hollywood movie support is going to end up in india or elsewhere...post production, writing, graphics, special effects, this/that and the other.... let’s see
I want to see import taxes on all software authored overseas. It is millions of dollars of corporate investment. Doesn’t matter that it is “imported” through a wire. It is manufactured and assembled overseas.
I also find it crappy that American corporations won’t let employees stateside telecommute but they have no problem employing people on the other side of the globe and communicating with them by shared computer desktops and teleconferences.
Well Peter Jackson brought digital effects production to New Zealand. Hollywood movies have been shot in Canada and Eastern Europe to avoid stateside union expenses.
precisely. but I meant, a lot more of that, a lot more.
“In any case, the cost savings is probably going to be largely an illusion.”
Yes, but bean-counters can always make the numbers work to make it look like a profit if they really want to.
I’m surprised that off-shoring is increasing. With the dollar so low it hardly makes sense anymore, especially with the difficulties in communications, specs, etc. It’s a very inefficient way to put products together.
Did not you know that an MBA from a Ivy League school, gated community residence, and a private yacht slip allows one to be able to do that?? /sarc
To all the gleeful Indians,.... you’ll get yours. Just wait.
What is interesting is that the number of graduating elite IT-background young management and specialists in India coming out of the IITs (India Institutes of Technology) are increasingly saying they will stay in India for their careers, rather than going to the American Dream. The numbers are going down more and more it seems.
Bump
Hmmm. We get new H1b folks at our place almost every week. No slow down here. They may know there tech but there english communication is very lacking.
With the way movies are turning into computer cartoons, the “old” way of making movies is going by the wayside.
But a few flops like Speed Racer made by people who never understood what made a franchise work in the first place can pull the plug on the computer.
“What is interesting is that the number of graduating elite IT-background young management and specialists in India coming out of the IITs (India Institutes of Technology) are increasingly saying they will stay in India for their careers, rather than going to the American Dream. The numbers are going down more and more it seems.
You can’t touch IIT types for under $150K plus bonus.
The corporate programming outsourcing is done by high-school grads who have taken a two-week training course.
Something that I can’t get over...
Government imposes high operating costs for a company that does business in the US. So the company decides to lower costs by moving their production off-shore.
Everyone is surprised.
The “solution?” Demonize and further increase the costs on those very same companies for trying to save on their operating costs in the first place.
Of course it’s silly to wonder exactly what might happen if the government were to set up a system that actually encourages businesses from moving to the US, rather than encouraging them to move away.
Mark
It has been my experience that those offshore types can write code but they just don’t seem to get the why of it.
Management, in a stroke of pure genius, concludes that American workers just aren't very productive, and their solution to the problem they created is still more offshoring.
At my company, I’ve seen more Indians being hired stateside as well (with a longterm goal of offshoring). At some point that has to be biased hiring for domestic positions, to hire predominantly those with ties to India.
I've been telecommuting in some form since 1983. I gave up a company office permanently starting in 2000. I've worked for 3 U.S. corporations over that time frame. It's a matter of whether your company values your services.
The distinction is not lost upon yours truly.
I think as gas prices go up, there may be more openness for this again.
I got caught in a bad position of trying to obtain work-from-home capabilities right after the company (in relatively new hands) instituted a new security policy to prohibit people from working from home on privately owned machines. The existent employees were grandfathered if they already had that setup.
It seems foolish to be the only one in my department commuting into the office on Friday and communicating online/by phone with everyone in my team.
Years earlier a certain computer manufatturer used to adverise on tv how to “work from home” using the latest technology on their computers. But that corporation didn’t actually support that scenario for their own employees.
It is old thinking. They want to see the bodies in the seats. Or at least know that someone somewhere MAY see them sitting in a seat. Even if the team works online all day in several states.
Most of my current work group is in Arlington, VA. Many others are spread across the U.S. We make periodic software deliveries at customer locations around the U.S., so we get a chance to work in person for a few days. The rest of the time we use e-mail and teleconferences. A common Linux box behind the company VPN serves as an SVN repository for project code. I own my Windows and Linux boxes and pay for my own network. The company covers the more costly tools such as MATLAB.
Well, it’s not particularly inefficient — it’s no different than a team spread across the US.
Offshoring to India has been going on for some time. The problem is that supply of competent IT people has not kept up with demand and costs are growing.
The problem is that you can throw two Indian programmers at a job that one U.S. programmer could do on his own, and still save money.
The current school of thought is that if a resource doesn't need to be in the office to accomplish the work then they don't even need to be on the continent to do the work. Anyone currently telecommuting for a large corporation, especially an IT services firm, should get themselves into a client-facing position. Now.
They don't have to. The jobs are coming to them, courtesy of the same U.S. companies that used to bring them here.
Those 'high operating costs' are also known as 'salaries'. And companies don't need government regulations to know that they can replace a U.S. programmer with an Indian one for about 40% of the cost.
Again, companies should be paying an import duty on software authored overseas.
The Left is so damned concerned about “fair trade” coffee and tea.
How about “fair trade” tech work that gives proper pay grade and benefits to those doing the work?
Dodging the continent for cheap labor means a lot of engineers have put their time and money into a a degree with little hope for a return on their investment.
And future generations of engineers and IT people will be discouraged from pursuing the degrees for the same reason. We'll become a nation of lawyers and salepeople. The arguement used to be that it was the old jobs going overseas and why protect the buggy whip industry when we should be preparing for the 21st century. Well, those 21st century jobs are all going overseas as well. Usually starting there.
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