India extends IT outsourcing boom

phantom

Hmm... people in West probably wont be able to buy and that market will be saturated. But then again as spending power of Indians and Chinese is increasing, these will become the future markets for these products.. and hence the economy will fuel itself then.

passingby

my friend, people in the west always represented a bigger market than in Asia. Number 1, there is a lot more money in the west than in Asia. Asian markets are controlled by Western markets. I don't think the American markets will ever allow the Asian markets to take over.

allowing the industry to boom in Asia only leads to making those economy more prosperous.
but in the wets people won't have money to fly to far off places for vacations, which led to the many airplane companies to go bankrupt, nor they won't buy new cars, which led to GM motors to lay off so many people, nor they won't have money to buy those new cell phones, that all those telecom companies are producing, etc.

Asian people don't have the money to consume those products at the same rate as the western people. hence that is why there is recession in the west!

phobal

It's supply and demand. India has a cheaper labour force, the West has demand for it, boom. It's the beauty of Free Trade and unlike what the lefties think, people in the West are the individuals that get it worse, however more people benefit than those suffer, and really, all that happens is there's a redistribution in the labour force.

There was a story in the Hindustan times on May 25th about how there are lesser and lesser amounts of students in IT in the West because of fear that there are no jobs for them, when really, there still is demand for US IT workers, and quite a high demand now.

You state that Asian markets are controlled by the US (because everything is controlled by the US, apparently). So, when Japan sunk, why didn't the West?

There isn't really a recession now, that was a while ago. Airlines folded because of yes, a recession, but they had stupid inefficent labour-forces. The Airline industry shows more of an Industrial restructuring than signs of recession. Same goes for GM.

Asians are starting to gain the capacity to possess the consumer goods that they produce due to the higher level of GDP and GDO in their nation states. Everyone in India has a frickin' cellphone!

Globalisation isn't the reason of a recession. That's just an easy cop-out and excuse for all that's wrong (cough, see chomsky). Free trade just means redistribution of labour forces and realization that each country must specialize what they're best at in order to run economies of scale rather than trying to be the jack of all trades.

Paagla Dashu

That could well be your experience .......but in reality in most companies real decisions are made by shareholders ....i.e. people appointed by shareholders. A CEO exists purely at the pleasure of the shareholders and managers do not make the real decisions - they implement them. Clients - yes - they do have influence on decisions - but then most clients are also happy to get goods/services at lower prices the prerequisite for which is lower cost. It all starts with most of us looking for the best airfare deals, hotel discounts.......cheapest rickshaw fares.....human nature.....

Outsourcing is happening NOT simply because of lower costs though.....this is an interesting take on the other reasons.

phobal

FINALLY someone who has it right .
Outsourcing is for specialization which LEADS to lower costs. If India ONLY does IT and the US ONLY does manufacturing and Canada ONLY does Oil, and Africa ONLY does Food (which results in whiney European farmers to lose their government handouts for doing nothing), the world prospers and things are done for a lot cheaper.

passingby

wouldn't be so positively sure about this, if I were you.

A company exists for many reason, and one of them is the costumers and how big are their sales. shareholders come next. they invest in the company.
but if the company sales go way up, more people will invest and more shareholders.

if you have an idea and you sell it and you will get a lot of costumers and many sales and a lot of money, you will get people interested in buying your shares. it all starts on how much your products are selling.

you 're telling me that if your company is not making any money, your shareholders will stick around anyways??? I don't think so, they will leave. but if you are making money, you will attract more shareholders.

look at Nortel, their sales went down, not that many people bought their products. what happened? their stock went down.
I think costumers play a bigger role in a company than the shareholders.
shareholders come in second place after the costumers.

cyberhippie

Don't you mean finally someone who agrees with you???
Lower costs, simply mean more profits for share holders if you agree with that being the driving force in the world, then yeah OK it's a good thing!
Outsourcing isn't a new thing big companies have beeen moving operations around for better productivity, lower wage costs etc for years!
Funny thing is I can't remember these savings in manufacturing being passed on to the general public, fat cats getting fatter yes, lower costs for the general public no!
Make no mistake about it this is profit driven, there is no grand plan to share the manufactoring wealth globally! When 20-30-40 years down the road Indian workers become too expensive it won't matter about their work ethic, talent, or superior skills they are too expensive ...............next!!!
As for your idea that somehow the world is going to become a giant coop with each trading block specialising in IT or whatever... dream on son the comglomorates are only starting to see the profits that can be made in low wage economies! Your job could be next.
It's a quaint idea that gigantic companies like Intel Lever etc etc are sitting in boardrooms around the world planning a lovely future for us all. They are planning to grab what they can where they can and bugger everyone.
That you have fallen for all the propoganda regulary served up by corporate monkies is fine but don't try and jam it down the throats of people who see it differently!
If profit is the only reason that anything gets done in the world then I'm afraid Canada might not look like such a good proposition for your kids!
It sounds so logical and straight forward doesn't it, companies make big profits off the back of a low wage economy and then somehow that money finds it way back into our local economies.
The facts are that outsourcing is only a tiny part in the new Indian economy!! The big strides in the Indian economy haven't only been brought about by a few hundred thousand IT jobs!
The India economy is so much more than that! So the money now flowing to places like Boeing isn't all inward investment money from the west (a rather arrogant take on the Indian economy) in short these contracts could very well have been signed with or without outsourcing!
I also notice there is no place for loyalty in your capitalist take on the world, people are only assets in your world, who should be happy that Mr fat cat even gave them a job in the first place, and they certainly have no right to complain about outsourcing as they are just too damm greedy and signed their own death warrent!
The fact that wages are high in the west is for a reason! First it costs to live in the west!! every step of the way your money is whittled away by banks, interest rates, double taxation.
Secondly high wages created what we know as the west, without disposable income the whole consumerist dream just fades away.
These high wages did afford us a lot of good times in the way of consumer durables holidays etc but at the same time it kept the whole Capitalist boat afloat!
And made a lot of peopel obcenely wealthy!!
As western nations our thanks for this is being told that in the face of new eastern markets, we are expendable, sure an economist will list a thousand and one bullshit reasons as to why we should be happy about this but for myself I'll take a lot of persuading!
The eastern markets are ripe for the picking now and represent a new set of oarsmen to keep the capitalist boat afloat the old crew are left with life jackets that don't inflate.
As I said if you think this is what we are here for then we're doing rather well. Personally I think businessmen who put profits before their workforce and local society stink and nothing will make me think otherwise!
Let's not forget profits were made before this shift to finding the cheapest wages, however in the minds of rampant capitalist the profits are never enough!
Economists and business men will shroud this shift in all sorts of wonderful ways that make them seem honest and with principle, only looking out for the western economies!!
I think it can be summed up in one word GREED!

Merchant

As noted above, Tom Friedman's new book "The World is Flat" is about this phenomenon, as is the documentary he did for the Discovery/Times channel in the US.

One of his points is that outsourcing is not a race to bottom--but to the top. Indian companies are offering complicated, sensitive, high-end solutions to American companies, which requires a great deal of trust. Everyone knows about the call centers and thinks that's the end of it--Indian kids on the line, working for far less than an American would demand. But that's just the tip of the iceberg. Indian companies are doing tax returns for Americans, providing supply chain management to major companies, customizing software packages for big businesses, doing computer modeling and design for Hollywood. The list goes on.

cyberhippie

I agree Merchant, India does all of these things and probably does them rather well but do they do these things better than we in the west COULD do or are they just cheaper???

LaContessa

A close friend of mine has just been made redundant from a huge City bank who has chosen to outsource pretty much everything from the accountants, legal department, secretarial support, Marketing department and a whole host of other roles to India. And they were honest, it was about cutting costs, they had no option.

My colleague believes that one day that the so called "cheap" outsource options offered in India will suddently increase tenfold in costing, once Indian companies realise they hold the reigns with regard to expertise...and then the western companies using these outsourcing options will either have to cough up much more cash for their services, or start looking at cheaper options elsewhere.

Merchant

Both. India has vastly more science graduates than we do in the US (and our number continues to decline), plus American employees are extremely expensive. Employers have to pay for health insurance, which is often around $500 per month per employee at a minimum. That's a ton of money. Also, Americans are unwilling to work in call centers for minimum wage, and the strata of society that would work in that field lacks the polite polish that Indians are instilled with.

India is experiencing its own tech boom, just as the US did 5-10 years ago. It's not just the money. Back in the day, everyone in the US wanted a piece of the tech industry. Young people were starting companies all over the place and lots of money was thrown at them. When I was at a liberal arts college in late 1980s, I think maybe three people graduated with degrees in economics. In the 1990s, everybody wanted to get an MBA. Now, who knows? Indians have been strong in science for a long time, often in pretty arcane fields that are now finding popular application. So there's a bit of fashion that's driving it, too. In the US, we've lost it. And we resent brown people taking our jobs (which they aren't actually doing)--so the media try to turn outsourcing into some evil, unfair, sweatshop kind of thing.

passingby

No 1. the reason the number of IT students declines in the west is because there are no more jobs in that field in the west.
now-days graduates from IT work in shit low paid jobs, because they cannot find jobs in IT. why? because some greedy motherf**er decided to move the jobs to India. many people with families and big mortgages to pay lost their jobs in the west to some new grads in India.
The big trend now in companies to save big by outsourcing to India, is costing the western economy money and makes the people resentful, angry and miserable. but some CEOs are happy with their income.
when the times were good during Clinton, everybody was happy with good jobs. since Bush came into power, there is nothing but wars, recession and misery in the world. why? because the money goes into killing people not into funding the companies to employ the people, give them a job and maintain a good economy.
today world is about some big ass***oles getting richer while so many others are getting poorer. that is what Republicans do to the world.
The democrats care more about the people and since the America represents a big power in the world where all the money is, the money is going elsewhere than in improving the worldwide economy. the money is going into killing the people for oil.

Nick-H

There is No Such Thing as a stupid inefficent labour-force.

...Only stupid inefficent management.

__________________
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Just one member of the IndiaMike Mod Team

Merchant

Passingby, I agree with your politics but not your conclusions.

There should be plenty of IT jobs in the West. Obviously there is a huge demand for such skills, and if American workers were capable of filling them, they would. Part of what's driving high-end, specialized IT outsourcing to India is that Indians are more willing and able to do these jobs in India--instead of coming to the US, which used to be their only option. American universities report the decline, thanks to Bush and the PATRIOT Act, of overseas applicants in specialized sciences, which used to be the core of American technical prowess. People overlook this. America's production of specialists has long been in the form of foreign-born graduates (Indians, Chinese) staying in the US after getting their degrees. Those same people are prevented or discouraged from studying in the US now, and India now offers equal, if not superior, opportunities for technical education and subsequent employment. Indian kids can stay home and join the middle class, instead of emigrating. Americans just don't go into the technical fields in large numbers.

The Democrats aren't exactly out in front on this issue--to their shame and stupidity. John Kerry railed against "Benedict Arnold companies" shipping jobs overseas, and John Edwards, for all his populist appeal, is a protectionist when it comes to trade (so is Bush). There really isn't much difference between the Dems and the Repubs on the outsourcing issue, though they arrive at their positions for different reasons. No one is willing to say that Americans are getting their butts kicked because they are lazy and unmotivated. Fighting wars is fun. Writing code is boring. Not just for the practitioners, but for politicians, journalists, bloggers, pundits, etc. AMERICA RULZ!, remember?

Don't forget, too, that teaching the fact of evolution is being challenged in public schools. How can you learn algorithims if you are being force-fed Intelligent Design? So the Ram-happy Indians will write our code . . .

crvlvr

passingby,

I disagree with almost all the reasons you give. .Some have been pointed out by the other IMers.. But here are my thoughts in your most recent rant..

A lot of students in the west don't choose IT because it is too tough. I know for a fact a nuber of friends of mine who changed major after they got their a$$ kicked in programming 101. On the other hand, the proportion of the foriegn students who receive advanced technical degrees in the US keep increasing. Some of this this has to do with the school systems in the West that do not provide students with a strong base to deal with math & science in college.

This is what the Free Market economy is based on . The US is a big proponent of it, isn't it? The the global market place, multinational companies have to compete on price. Let's say Boeing does not offshore (to reduce cost) and Airbus did -- allowing them to price lower than Boeing. That might result in Boeing losing a Billion $ contract. How do you think that would affect the local economy?
Offshoring has been happening for a long time. Walk into your local Walmart. Is anything made in America anymore? The US is becomming a giant branding/marketing country. CEO's are paid to make money for their company. Unless the govt passes some regulation, they are just doing their job. Are you suggesting govt intervention?

You might be on to something here..