India extends IT outsourcing boom

passingby

how many new grads from IT do you know? I know many. and I also know that many of them did not find jobs in the last years. there are not that many jobs in IT these days, trust me. not as much as how many IT people are out there.
and the jobs that are there now days are lower paid that what they use to be.
I know all this for a fact since I do work in IT and I have been working in IT for about 5 years now.

cyberhippie

Fairly put Merchant now if I may I'll examine some of those points of view from another perspective!

I've already put forth the reasons for the wages in the west being substansially higher than India!
These wage costs do not only benefit the workers they benefit all businesses from the local deli to companies like Sony where the workers of the west spend their money! So though the costs are high, proportionally there is more money flowing back into the system!
The health costs are obcene in America, but why is that? Well first of all as were all frequently reminded the population is getting older and the techniques employed in medicine ever more complicated!
This comes at a cost and certainly benefits society as a whole but in all this again, profit rears it's ugly head, medical appliance companies, doctors, private hopitals, etc benefit from this money and of course everyone is making a bit on it, inflating the costs I think
In this the American worker is powerless, the costs are set without any questions or debate! Plus of course there is the moral issue of whether a rich country should provide health care for it's citizen, I think it should!

Lastly the reluctance of people to work for minimum wage is understandable as I'm sure in America as in Europe minimum wage doesn't go too far with day to day cost spiraling upwards, many see these jobs as last resorts!
However I also think this reluctance is over stated last I looked in Scotland and Holland there wasn't a call center job to be had!

Your point about a burgeoning pool of science grads in India in comparison to Americas declining one may well be true, of course the recent losses in American science grads could be attributed to young people making career decisions, after all, there are increasingly less tech jobs, so I imagine prospective students are redesigning their life plan to accomdate this i.e. don't do science!

My point here is why do need to outsource to plug into India's wealth of talent in science??????? I seem to remember the best and brightest were only too happy to bring their talents to America!!!
Which if I read your theory right would have provided the needed zest that you say lacks in the American tech field?
Also I think tech boom might be a bit premature, core banking and business applications are great but I doubt whether these fields will move many mountains, they are also quite limited markets!
India is yet to provide us with something we regard a a global must! As such they lag somewhat behind the achievments of Silicon Valley in it's heyday
That is not to say that India cannot provide us with something that changes comsumers lives, but I feel their a way of from being a Nokia Intel or microsoft!!

Merchant sorry I seem to have disagreed with everything you've said I'm not being argumentative for the sake of it I have though long and deep about these things and though I realise my leftie leanings may cloud things a little I cannot quite believe that outsourcing is a logically thought out business plan designed specifically to help either India or the west I feel the real winners will be the "usual supects" with the rest of us pecking at the left overs and the pickings will be substantially better in India!

Merchant

I think we actully agree, cyberhippie.

It's important to think of outsourcing not as some dark practice foisted on America to its detriment, but simple market forces shaping business in the way they always have. Friedman makes the point that part of India's success lies in the fact that it didn't have to develop, build, or pay for the connectivity it now enjoys. The US did. American companies sold off those assets, like undersea fibre optic cable, for pennies on the dollar at the end of our tech boom. Indian companies just bought them as at a fire sale.

Point is that outsourcing was only going to happen when reliable, instant, real-time affordable communication could be counted on. Clip those cables and there's no outsourcing.

India's service economy and China's labor one are really two different things. China manufactures goods more cheaply than any American company ever could, and plenty of American companies have moved their operations to China. That's an obvious net loss of jobs to America.

India's services sector doesn't have to be seen in the same light. Jobs were plentiful under Clinton not only because more companies were hiring but because all that economic activity, bouyed by tech, created myriad opportunities in--and this is important--fields not directly related to IT. The game just got bigger and bigger, and whether you were a graphic designer, lawyer, delivery guy, or caterer, you benefitted.

There are fewer jobs in the US because our economy is stagnant. Yes, it's hard to get a job in IT but the reason isn't solely because jobs have gone to India. How much money are companies pouring into R&D? How much venture capital is going into IT? These are important things, and they directly affect job growth. Also, the US is still digging out from the overcapacity it developed during the boom. Plenty of people went into IT because times were good. Now times are hard, and they still have their IT credentials.

cyberhippie

Wonderful, no I'm not getting at you crvvrl this is generally excepted ethics within the business world, if you believe in that kind of thing!
So where's the logical end to this, you can't stand still whilst a competitor outsources and makes bigger profit so you follow suit, all very practical in a business world take on things eh!
But if everybody follows suit to compete that's you me and passingbye up the swannee without a paddle!

The big cop out, it just my job, a kind of get out of jail card I have no moral reponsabilities period, the fact that this is the world we live in doesn't make this anymore justified! People should be seen in a better light by companies who are only alive today because of the efforts of a workforce and their consumer spending. They are not bits of machinery to be scrapped on a whim! This stinks, turning your back on the people who helped make you the company you are today!
Wrap it up how you like this is pure treachery for profit! Of course big business are so lost in their own egos that they think they pulled this of all on their own!

Merchant

Presumably there are a legion of ex IT workers that could, indeed DID occupy these jobs before outsourcing became the new mantra so before we get towhether a new generation are smart enough, there appears to be a glut of well educated, experiences IT workers who can't get a job why on earth, would that be likely to inspire any young person to sign up for a science degree??
As for willingness well I'm sure these ex IT are pretty bloody willing being as they have families a life and a mortgage! and no job.

Also it's worth noting much of the fine foriegn talent that was a feature of the US tech boom was forced to return to India when they were let go by their companies during the last tech bust, they didn't return to India willingly, for many their green card status only allowed them to look for work in their particular field not outside it since the tech industry went bust there were no jobs in their field and they were forced to return to India!

Interestingly much of this talent is being used again but at a much lower premium!

cyberhippie

Crossed post Merchant! Some good points and yeah I agree India did get this position at virtually no cost to itself! More fool the west!
Basically it's the simple market forces I disagree with these thing are brandished like a list of holy commandments, absolutes that are unavoidable if we are to maintain the status quo. I simply don't agree, these are choices, there are other ways to make profit (though there may not be other ways to increase profits and that's the nub of the argument I think)
We were rolling along quite nicely only 5 years ago (a long time in economic terms I know) the recession hit and with the usual kneejerk reaction, business moved to maintain (increase) profits, this is a theme in recession, outsourcing is only the latest tool and the results are the same, spiraling unemployment just at a time when the country needs all hands on deck!
Often we hear that the recovery of economies should be led by increased consumer spending, decrease in earning power and loyalty to nation and companies during the hard times it would be nice sometimes to see businesses adhere to these self same principles instead of bailing out, at the first whiiff of trouble, on their country, workforce and excaberating a already bad situation !!

cyberhippie

Ok I've ran out of puff now I've said my bit my turn to listen I think!!!
Nice talking with you guys!!

bongdongs

You know what, US should stop ALL outsourcing to India and deport all Indian born/Indian-American/Pakistani/Pakistani-American (heck we'll even take native American) professionals in the US to India.

IMMIDIATELY!!!

Where the f*ck was CEO moral reponsibility all these years when the US stole jobs from rest of the world.

Where the heck are for instance:

Matsushista Electric Reserch labs (MERL) - Boston
ABB product center - Houston
ARAMCO resreach center - Houston
Alcatel - Dallas
Nokia - San Diego, Dallas
Ericsson - San Diego


Where the heck are all the complaining Swiss, French, Finn, Swedish and Japanese engineers? don't they need jobs too? ever talk to French engineers about how bad unemployment is in France?

Nick-H

Never was very hot on economics, but I have to say that Cyberhippie's view of the world is more attractive to me. It was remarked by a previous poster that companies were making profit before outsourcing. The idea that a company can be making enough profit without having to seek more, perhaps at the cost of its emkployees, doesn't seem to feature in management.

I guess that CEO's have two things in mind: their bonuses and their shareholders. It is true that they are, ultimately, employed by and responsible to those shareholders. The sucess of a company can make it easier to atract more capital by selling new shares to newshareholders, but shareholders can't just 'leave' the company. They can sell their shares ...to other shareholders. There are always shareholders to whom the directors are responsible.

One factor of this capitalist share-owning company ownership is that very many of us are shareholders. Even those of us who may think that we have never owned a share ---- paid money (or your company) into a pension fund?
It is these funds that increasingly own companies (making a nice fat slice for themselves, no doubt, but that's another story).

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Just one member of the IndiaMike Mod Team

Merchant

Not that I'm a Tom Friedman apologist, but I did just read his book . . .

In his interviews with CEOs of Dell, Sun, and other American tech firms, they report that it's not about just getting along with decent, if not spectacular, profits. It's about the future of their companies. No industry in the world is more competive or innovation-driven than IT. And these American CEOs say if they could hire Americans to do the work, they would. Indians don't just represent cheap labor (in five years they might not be cheap any more); they offer skills that can't be found anywhere else. China is getting into this game, too, and Microsoft has a research lab there--it's own IT university. The reality is that Indians and Chinese are filing for more patents and publishing more research papers than Americans are.

If American companies didn't have Indian techies working for them, they'd shut down--and Indian, Chinese, Taiwanese, Russian, and other companies would rule the world.

agni5454

Care to give us a source from where you got that info?

__________________
"Human Life without happiness or hope of happiness is not a life, but rather a death in life" - David Swenson The Dignity of Human Life

"History is always a perspective; but numbers never lie"

Merchant

I got it from Friedman's "The World is Flat." I'll have to look up the page number. Book is not in front of me.

agni5454

Thanks I will find that book and photocopy that page....sorry, i am fact concious person...i usually photocopy things and add it to my server to make arguments. .....i guess i am weird

agni5454

Here is something i found on your book merchant.

http://www.hindu.com/mag/2005/06/05/...0500160300.htm

Merchant

It was reviewed everywhere. Plenty of people didn't like it.

agni5454

Why wasn't it well received? (sorry, i haven't read that book yet)