Unfortunately the IT company I work for is in the midst of moving many jobs to India (and possibly China). The math is very easy. An American engineer costs the company over $60/hr. Someone in India costs $20/hr. If you’re a CEO selling IT services, you are very apt to take the option that allows you to sell services at a very low rate. Therefore you offshore.
And if you’re a CEO buying services, patriotism usually isn’t a good enough reason to pay extra and have to explain that to Wall St. The only viable solution, other than protectionism, is to wait until the cost of resources offshore don’t offer the 3:1 advantage they do now.
You forgot the additional $60/hr. the boss has to pay you top fix the crap that Apu coded so that the original business purpose for the program is achieved.
Virtually my first year at my current company (2006) was rewriting tons of SAP programs and interfaces that were so screwed up by our SAP implement or’s outsourcing company in India, that my company tried to get most if not all of their money back for this part of the project.
My friend who worked for Philips and is now a contractor for IBM says that IBM's main staff is in overseas and that the quality of work is below that of dog crap. He says Philips now regrets laying off their entire IT staff and go with IBM consulting.
I agree with your assessment. Revising our labor laws would reduce the cost of employment here so I think the changes would have an impact on offshoring. However, CEOs react to the overall costs so I still think offshoring will be attractive in many situations. I believe that CEOs are reacting to political risk here. The pro labor and pro litigation bias of the rats frightens CEOs so they factor political risks into their cost models. No CEO wants to deal with unions, trial lawyers, and populist politicians.
I think some USA IT professionals would work for a lot less than $60/hr, but there are a couple of problems:
1) Employers assume that US workers are prohibitively expensive, and don't get far enough in the employment process to even ask them how much they will work for.
2) As businessprofessor posted above, the government will not allow individuals to work as a contract worker directly with a company, so the employer has to pay overhead to the agency.