Posted on 07/31/2003 6:08:32 AM PDT by Wolfie
Offshore Lore -
Myths and facts of white-collar out-sourcing
Last week in a story one-part Pentagon Papers and three-parts F***ed Company, The New York Times jumped into a debate that has been simmering for several years in tech circles—the off-loading of jobs to places like India. You can bet that more stories and plenty of political interest will follow.
Relying on smuggled-out tape of a con-call between top IBM managers, the Times gets credit for taking the story beyond bulletin boards, happy hours, and places like F***ed's sister site, InternalMemos. The Times also wrangled some absolutely jaw-dropping quotes that indicate corporate honchos expect to be able to bluff their way past questions about moving high-paying jobs offshore without anyone calling them on it. It is a dangerous gambit which could produce the worst of all possible worlds: some sort of government hurdle requiring companies to demonstrate a "need" to out-source.
Take this howler from IBM spokeswoman, Kendra R. Collins, "It's not about one shore or another shore. It's about investing around the world, including the United States, to build capability and deliver value as defined by our customers."
No, it's about working the cost side of balance sheet in search of profits; revenues have been flat for two years and show little sign of improving. This is what good managers do, and there is no reason to be ashamed of it if you truly think you are going to make the company stronger.
But the catch is that out-sourcing is being embraced without much sign that it will actually make high-tech firms, particularly software companies, more effective. Highly collaborative, imaginative work might suffer in the hands of technically adept but inexperienced programmers.
The Times also passes along some dubious information on the actual cost of Indian outsourcing which makes the pay gulf between the U.S. and elsewhere seem impossibly wide. Stephanie Moore, vice president for outsourcing at Forrester Research, claims that "crackerjack" Indian programmers can be had for $5,000 a year. That might be close to what the programmers see, but it doesn't represent the cost to a U.S. company to outsource.
According to people who actually negotiate outsourcing contracts for a living, your costs are more like $22 an hour for each warm body once all the third-party finders' fees are paid. An experienced programmer's take in India would be around $11,000 out of total cost of over $40,000. That's still quite a gap from the $60,000 an American might demand but once the all-important question of productivity is factored in, it may not be much of a bargain.
Simply put, once you leave the U.S. you are leaving behind the world's best, most proven pool of programmers. That's is not to say that there aren't excellent programmers in Russia, China, India, and elsewhere. But large-scale, world-changing software development ain't easy. The Net bubble devalued just how hard it is to build neat technology. Shawn Fanning is the exception that proves the rule.
Or as one software engineer who has worked with out-sourced labor for years puts it, "If software development in India is so great, why don't they have a single software company worth a crap?"
Another veteran software developer thinks corporate planners across the industry are delusional and that the matter is somewhat self-correcting. "Your dealing with people who are too smart to just sit back and train their replacements," he tells me. Still, he thinks we are in for a period of flux as out-sourcing plays out as the latest management fad, like TQM or worshipping Jack Welch.
We found this out in my company over that past several years. There was this huge push to have our programming done in India. The data we received back from them was crap. We had to do more work to it once it got back then if it had been done here in the states. Also, the turnover rate in India was incredible. You never dealt with the same person twice. We have backed off from outsourcing. As companies try this, they too will learn the hard way.
To get the dollars in, something has to go out the door. Whether it has any quality, usefulness, or value is a detail that can be offset by increasing the amount of bullsh!t you throw out the door with it.
To that end, they are more than happy to lower standards and costs by going offshore. Customers are happy to see the price go down. Everybody is happy until someone has to actually use the piece of crap.
LOL! Good point.
I hope this offshoring trend comes back to bite them in the rearend.
It will. And we stand to profit handsomely to fix all the crappy Indian code.
And any time you have to rehab someone elses code, no matter where it was written, it will almost always take longer than rewriting it from scratch. Management doesn't usually understand this, either.
Computer code is like a picture of the inside of someone's head and their thought processes. Some people can get the code to work but it's so scrambled that it's impossible for anyone but them to read and understand. I've looked at a lot of spaghetti code and sometimes wondered how the authors ever could figure out how to get dressed in the AM ::lol::
I've been in IT about 15 years, total. I've seen all this stuff come and go - Six Sigma, TQM, onshoring, offshoring, insourcing, outsourcing. This trend doesn't worry me too much in the long term, but I think we're in for some rough sledding in the short term.
LQ
The best part of it was that the software programmer on our staff here had no idea what the heck I was doing.
If the quality of overseas labor is so bad, it undoubtedly will. Unfortunately, the offshoring trend is not discouraging the millions of people who are wasting their money on "computer training". I don't care if offshoring completely stops, the companies return, and a thousand new IT companies sprout up. There are too many people looking for tech jobs.
Community Colleges and certain specialty schools are luring unwitting workers into paying exhorbitant fees for various certification programs. Run an ad for a LAN Administrator and you'll get hundreds of qualified candidates. Run one for a radiologic technologist, and you'll get maybe two people. People should pay attention to what's going on out there.
Then clearly you need a better software programmer.
This is very true. The dot com boom made the career look like an easy ticket to a million bucks so everyone and his brother tried to jump into it. The problem, too, is while there are a lot of people looking they often aren't very good and/or don't have any real experience ("Paper MCSEs"). And even some of the people who have experience just suck (we have some of them working at my company - they're too hard to get rid of).
I don't directly hire people but I have helped my bosses interview before. I always look for the people who really understand what the button they're pushing actually does to the system. There are thousands out there who can push the buttons, but only a few of them actually understand why they should push that button or what the effect on the system will be.
LQ
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