'Offshoring' meets its enemies

[Shawn N]

An article on new bills being passed preventing outsourcing. 13 bills banning outsourcing are in the works. Discuss!

<edit>NOTE: I'm not concerned with auto manufacturing, clothes fabrication, or shoe assemblys. I'm really only talking about IT (and other white collar jobs) outsourcing, nothing more.</edit>

[Shawn N]

Another example of why I'm against outsourcing.

[MartinLiss]

Let's assume that both the USA and CheapLaborOnia make widgets. Let's also assume that a widget-maker in the US makes $40/hr and a CheapLaborOnian doing the same job makes $5 per hour. Disregarding cost of materials, if it takes 4 hours to make one widget a company in the US will spend $160 to make one while a company in CheapLaborOnia will spend only $20. If the CheapLaborOnia company sends it's product to the US they can probably sell it for $40 and still make a nice profit even considering shipping costs and tarrifs. Which country's company do you think will sell the most widgets and which country's company will be able to stay in business? It's a global economy folks and unless the US isolates itself completely we are going to have to learn to deal with it.

[Foxer]

The US are generally isolationists and offshore sourcing makes economic sense to an individual or too a company, but in the large national sense, it drives up unemployment and that's never good.

[debbie_82]

Someone, explain to me outsourcing please?

[Shawn N]

And what of the quality of the widget Martin? And what happens when the user needs help with your widget? You're oversimplifying the issue.

debbie_82: Outsourcing is when companies (mostly from the US) hire companies in other countries where they can pay workers at wages that would be illegal inside the country (a.k.a. sweatshop).

More than likely, if you're in the United States trying to get into the IT business, you're biggest competition will be coming from India.

[debbie_82]

Why India?

[Wally Pipp]

Originally posted by Shawn N
And what of the quality of the widget Martin? And what happens when the user needs help with your widget? You're oversimplifying the issue.

What about it ? You pay for it therefore you decide whether its quality is sufficient, don't you ? That's everyday trade. Don't like it ? Find another supplier.
And if the user needs help set up a call desk (if you do it in the US you'll create jobs) or a help desk website.

Simple as that. And it's not because a US citizen can't get by on $5 a day than an Indian citizen can't. If goods are too expensive to produce in one country the company shifts its production to regions where it's less expensive. What's wrong with that ?
It's not because it's a US firm they ought to be forced to stay in the US at all times you know.

We could also reverse it : a brain drain. Talented people from India are lured to other nations by the prospect of bigger pay and better life.

So if you stop outsourcing then stop the brain draining as well. But both are consequences of the global economy and can't be stopped by national legislation so learn to live with it.

[si_the_geek]

Originally posted by Shawn N
And what of the quality of the widget Martin? And what happens when the user needs help with your widget? You're oversimplifying the issue.

many companies have worked like it for years, the majority of components in our computers come from places in the far east. so do lots of other products that dont bio-degrade (eg: toys, televisions).

the quality hasn't been an issue in most cases, and the service issues can be resolved in many ways that most people are happy with. The easiest for the company is just to give you a replacement, they can also have "service centres" in individual countries too (as companies like Panasonic have), or even sell through stores who will take on the burden of repair themselves.


and just because they are being paid less than you would, it doesnt mean that it is a bad thing for them - in lots of countries that work like that the majority of "well paid" people work for foreign companies. It might not be much in your country, but the cost of living varies greatly from country to country, so their lives can be significantly improved from what seem to you like bad wages.

Originally posted by Wally Pipp
We could also reverse it : a brain drain. Talented people from India are lured to other nations by the prospect of bigger pay and better life.

So if you stop outsourcing then stop the brain draining as well. But both are consequences of the global economy and can't be stopped by national legislation so learn to live with it.

I completely agree. for many years countries like india have been loosing lots of their talented people to countries who can offer more money. We shouldnt deprive another country so we can have better staff in ours, but we also shouldnt stop people from moving to other countries if it is what they really want.

[MartinLiss]

Originally posted by Shawn N
And what of the quality of the widget Martin? And what happens when the user needs help with your widget? You're oversimplifying the issue.

debbie_82: Outsourcing is when companies (mostly from the US) hire companies in other countries where they can pay workers at wages that would be illegal inside the country (a.k.a. sweatshop).

More than likely, if you're in the United States trying to get into the IT business, you're biggest competition will be coming from India.

Sure I oversimplified, but I tried to be objective. As for help with the widget, where do you go to get your foreign car repaired, or for that matter your TV or DVD since 90% of them are made outside the US? As for the sweatshop issue, yes that sometimes happens, but most of the time the people who make the widgets make a good, competitive wage for the country they live it.

[MartinLiss]

Si, I hadn't read your response when I was writing mine. It's interesting how similar they are.

[run_GMoney]

Originally posted by MartinLiss
Let's assume that both the USA and CheapLaborOnia make widgets. Let's also assume that a widget-maker in the US makes $40/hr and a CheapLaborOnian doing the same job makes $5 per hour. Disregarding cost of materials, if it takes 4 hours to make one widget a company in the US will spend $160 to make one while a company in CheapLaborOnia will spend only $20. If the CheapLaborOnia company sends it's product to the US they can probably sell it for $40 and still make a nice profit even considering shipping costs and tarrifs. Which country's company do you think will sell the most widgets and which country's company will be able to stay in business? It's a global economy folks and unless the US isolates itself completely we are going to have to learn to deal with it.

That's also assuming that the overseas company would do the right thing, and sell it for the lower price. But if they see the local competition is selling their product at a higher price, and they offer their product at a price slightly lower than the local retailer, they see even bigger profits.

They aren't going overseas to sell their product cheaper. They're going overseas to see a bigger profit.

[si_the_geek]

Originally posted by MartinLiss
Si, I hadn't read your response when I was writing mine. It's interesting how similar they are.

scary! do you think becoming a moderator has changed me?

na, I've always tried to see things from both perspectives.

Originally posted by run_GMoney
They aren't going overseas to sell their product cheaper. They're going overseas to see a bigger profit.

it depends on the company.. some keep prices low, some raise their prices to nearer the competition. Even if the prices rise, it isn't always down to greed - it might be offset by other things such as import taxes, or building a call-centre/support-centre in the target country.

[Shaggy Hiker]

I agree with what run_GMoney said, but I wonder why it was said at all? Surely you aren't saying that companies have any obligation to sell at a fixed profit margin? Companies sell for as much as they can get for their goods. That's really what is expected of them. Sure, this outsourcing can increase their profit margin. That's capitalism. If you don't like it, tax em.

[run_GMoney]

I was only responding to what I thought was an implication that a company moves overseas to sell a less expensive product when in reality and in most cases, it's to increase profits.

*EDIT - And I don't necessarily disagree with this practice. What bothers me is a story I heard of a small town of around 2700, most of whom worked at large factory. This factory decided they wanted to move their plant to Mexico, leaving practically the entire town jobless. Even after employee offered to take pay cuts and the government offered tax relief and compensation. Those instances in capitalism are just sad to me.

[powdir]

Those instances in capitalism are just sad to me

Thats capitalism. Like it or change it but don't expect the rewards it can bring while denying others a chance at them. And since capitalism IS essentially market driven why shouldn't a business move production overseas and then re-sell to it's nation of birth at profit? In a freemarket that IS perfectly acceptable (if morally questionable) practice

Marty's example might be simple, but then again so are the principles of capitalism.

...and by the way. Outsourcing is nothing new. Since the industrial revolution we have sought to maximize output using minimum resource. So what makes IT moving east so surprising??

Adapt or die...

[MartinLiss]

Originally posted by powdir
...So what makes IT moving east so surprising??...

Outsourcing like getting some disease is one of the things that only happens to other people, until it happens to you that is, and then it's "surprising".

[Shawn N]

The reason I find the IT outsourcing trend so surprising is that previous outsourcing was done for blue collar jobs. Jobs that anyone with or without an education could do. IT is a white collar job - a job that takes a well qualified brain to get accomplished.

If companies were outsourcing to India because, for some reason, Indians are able to code better than Americans as a whole, PLUS they do it cheaper then I could understand. But that's not the case! How many times do you hear about the sh*tty coding, sh*tty tech support, sh*tty accents, etcetera etcetera?

If outsourcing was such a brilliant plan, then why is Dell's exodus only bringing them back to The States? It's because the people at the top, the people who care about nothing more than the bottom line yet make the major decisions, have no clue what's going on when a program is being written. To them, they think it's all the same since, in the end, the product is essentially nothing more than a picture on your monitor.

[Shawn N]

Originally posted by Wally Pipp
We could also reverse it : a brain drain. Talented people from India are lured to other nations by the prospect of bigger pay and better life.

So if you stop outsourcing then stop the brain draining as well. But both are consequences of the global economy and can't be stopped by national legislation so learn to live with it.

How is that the US' problem? Go ahead and reverse it, smack it up, flip it, and rub it down - whatever you want. But in the end, do not make the US a villain because we've somehow become a migration point for anybody that wants to make the best of their lives. How about this as an answer to your problem: QUIT THE WORK VISAS. Let each country make their own economy.

To me you're talking Globalization.

[OrdinaryGuy]

Originally posted by Shawn N
The reason I find the IT outsourcing trend so surprising is that previous outsourcing was done for blue collar jobs. Jobs that anyone with or without an education could do. IT is a white collar job - a job that takes a well qualified brain to get accomplished.

If companies were outsourcing to India because, for some reason, Indians are able to code better than Americans as a whole, PLUS they do it cheaper then I could understand. But that's not the case! How many times do you hear about the sh*tty coding, sh*tty tech support, sh*tty accents, etcetera etcetera?

If outsourcing was such a brilliant plan, then why is Dell's exodus only bringing them back to The States? It's because the people at the top, the people who care about nothing more than the bottom line yet make the major decisions, have no clue what's going on when a program is being written. To them, they think it's all the same since, in the end, the product is essentially nothing more than a picture on your monitor.

So Indians do sh*tty coding and have sh*tty accents?

Indian accents may be difficult to understand for many in the US but Indians doing sh*tty coding is ridiculous.

I hired someone in India to write me an automated backup system for mssql, IIS and my windows servers. He did within a day for a fraction of the price. He was Microsoft certified.

[Wally Pipp]

Originally posted by Shawn N
How is that the US' problem? Go ahead and reverse it, smack it up, flip it, and rub it down - whatever you want. But in the end, do not make the US a villain because we've somehow become a migration point for anybody that wants to make the best of their lives. How about this as an answer to your problem: QUIT THE WORK VISAS. Let each country make their own economy.

To me you're talking Globalization.

So ?

Look buddy, if I can produce software in India for a fraction of the price in America then I'll bloody well let the Indians produce my software. They have the necessary skills, the knowhow and the means to produce it cheaper. That's business. Full stop.
Every country is making their own economy. It's just that India right now is attracting business from overseas.
I don't hear you complain when say a japanese car manufacturer decides to build a plant near you because it's cheaper to build cars in the US than in Japan.

[Slaine]

My experience of outsourced indian programmers is that in fact their technical skills were superior to the in house programmers. Most errors were introduced due to the inhouse analysts being unable to write decent specs.

The language barrier was an issue, but it was not insumountable.

[OrdinaryGuy]

Originally posted by Shawn N
Let each country make their own economy.

I'm against a ban on outsourcing simply because it goes against globalization... something that is creating far more jobs in the US than outsourcing is taking away

If the US closes its doors to foreign software services, the US can expect heavy import duties on a range of US products across europe and asia... What would that mean? The unemployment rate would climb higher than that of the great depression...

If you don't know what economics is Shawn, then shut up. When you call for a ban on outsourcing, you should understand what the consequences are going to be. You should also understand that outsourcing is essential for small businesses. They'd shut down if there was a ban.

[powdir]

It's because the people at the top, the people who care about nothing more than the bottom line yet make the major decisions, have no clue what's going on when a program is being written. To them, they think it's all the same since, in the end, the product is essentially nothing more than a picture on your monitor.

um, yes the end product IS simply nothing more than a picture on your monitor. It would be defeating the purpose to expect everyone to have a low level understanding of what's going on. They all have their jobs to do after all. Do you fully understand (or care) how your microwave/car/central heating works. I doubt you take much notice really.

If companies were outsourcing to India because, for some reason, Indians are able to code better than Americans as a whole, PLUS they do it cheaper then I could understand. But that's not the case! How many times do you hear about the sh*tty coding, sh*tty tech support, sh*tty accents, etcetera etcetera?

How many times do you hear about sh**ty coding in general. PLUS if you pay peanuts you get monkeys. That's one of the thin lines capitalism walks (in simple terms)

consumer perceptions also shift over time. Those making the decisions about where to base their IT offices will take that into account. Another cost/benefit exercise. So the benefits in quality perceived by by locating locally might outway the costs in doing so. Next month that might change.


The reason I find the IT outsourcing trend so surprising is that previous outsourcing was done for blue collar jobs.

With all the high level tools out there now much of IT is now available to all.


How is that the US' problem? Go ahead and reverse it, smack it up, flip it, and rub it down - whatever you want. But in the end, do not make the US a villain because we've somehow become a migration point for anybody that wants to make the best of their lives.

Eh. I don't think it's about that at all. Labour mobility is another central tenant of capitalism. America was built on immigration and isn't there something on the statue of liberty about welcoming those who seek opportunity?


How about this as an answer to your problem: QUIT THE WORK VISAS. Let each country make their own economy.

A rather naive argument me thinks. Do you think the US would survive without the world market? Just think about the consequences of this.

Like i said in a capitalist/free market economy you must adapt continually to survive economically. It has been ever thus.

[Shawn N]

Something interesting:

Kerry is opposed to outsourcing. He says that companys that outsource should be taxed, apparently to the point where the overhead benefits are overcome by the money due to the governmet.

Bush seems to be for outsourcing out of interest of major companies.

[nkad]

Wrong, wrong.. that article is a load of crap. He just states that there 13 bills are in the works. That article is dated January 28, 2004: 1:47 PM EST

Anyway, the goverment can not and will not do any sort of all out ban on this. However, they have put insentives in place (such as tax breaks) if compaines fulfill their IT department needs within the US first. I'll go look on whitehouse.gov to see if these 13 bills are accurate. I sure as hell never heard about it.

[hellswraith]

Originally posted by nkad
Wrong, wrong.. that article is a load of crap. He just states that there 13 bills are in the works. That article is dated January 28, 2004: 1:47 PM EST

Anyway, the goverment can not and will not do any sort of all out ban on this. However, they have put insentives in place (such as tax breaks) if compaines fulfill their IT department needs within the US first. I'll go look on whitehouse.gov to see if these 13 bills are accurate. I sure as hell never heard about it.

Better yet, go to whitehouse.com

[nkad]

I know its a porn site, no ****. Whats funny is that my local news station advertised the white house website as "www.whitehouse.com".. Yeah they had some pissed off people.

[hellswraith]

I am suprised the gov doesn't do anything about that. Do you know how many people go to whitehouse.com, even when they know it is whitehouse.org....
I type it in all the time just from the habit of putting .com on the back of all addresses.