Take This Job and Shove It

New at Reason: Worried that your high-tech job might be on a slow boat to Bangladesh? Jeff Taylor is skeptical of the fad for white-collar outsourcing.

Comments

[Oliver Mellet]

While true that the real costs to the outsourcing company are higher than what the Indian programmer puts in his pocket at the end of the day, the real reason jobs are going overseas is that these large Indian contract firms in Bangalore and other places have already shown that they can be as productive, if not more so, than their American counterparts. The catch is that the work that these firms are begin asked to perform is mostly assembly-line type programming, where all the difficult decisions have already been made. The client company often designs and specifies the work to be done down to the last "OK" dialog before ever handing it off to India (or Russia, Romania, or wherever) for implementation. All the most crucial work like actually determining what kind of product to build and how it should behave never leaves American shores.

[Tim Stich]

Jeff,

I noticed you lambast the old Total Quality Management (TQM) fad at the end of your article. I got the warm fuzzies out of that. I fondly remember a job I had at Dell as a contractor in their new TQM department. The program was taught by an ex-army Vietnam spook who trained to be a preacher. He was quite the consumate two-faced optimist bullshitter. The whole show was run by a micromanaging dipshit who no doubt was moved into that position to minimize damage to other, healthier company organs. I lasted about three weeks as I recall. Good times.

[Anonymous]

http://www.businessweek.com/magazine/content/03_05/b3818001.htm

"In a recent Gartner Inc. survey of 900 big U.S. companies that outsource IT work offshore, a majority complained of difficulty communicating and meeting deadlines. As a result, predicts Gartner Inc. Research Director Frances Karamouzis, many newcomers will stumble in the first few years as they begin using offshore service workers."

http://tugboatpotemkin.blogspot.com/2003_07_27_tugboatpotemkin_archive.html#105946147914530510

"So, on the whole, it's very hard for me to imagine a die-hard libertarian being happy at a yum-cha. I think Mongolian barbecue would suit them better. The trick there, of course, is to know how to really pack your bowl."

[pixar]

i.e. no different from designing a Disney or MacDonalds toy here, and have it be stamped out by cookie cutters in China.

You didn't really think that that "Made in China"-embossed gizmo on your desk was actually designed in China, did you? Or that the software that runs one of the utilities near the clock on your task bar down there, was actually conceived in Singapore or Taiwan?

[jack]

If your job gets outsourced, you could always become a commodore 64 programmer:
http://newyork.craigslist.org/mnh/sof/14244364.html

[Brad S]

joe - you're absolutely right. Reality is that our public school system routinely turns out so many outstanding students of the hard sciences that prospective employers have to shoo them away.

fredH - true enough. Our graduate (and to a lesser extent, undergraduate) programs in these fields do attract the world's best and brightest. And guess what? Quite often, the most sought-after instructors in said programs are foreigners (i.e. NOT products of American public schools).

FWIW, I'm not trying to bash teachers. There are many excellent teachers in our public schools - I'm lucky enough to be personal friends with several. I'm bashing the broken system.

[Kevin Carson]

Ivan:

There corporate system is statist to its core. There's little more separation between big corporations and the state than there was in Hjalmar Schacht's German economy. If being free not to buy something is the only standard of a "free market" (despite R&D and half of other operating expenses being subsidized, the state providing a guaranteed market for a major part of a company's output, and the market being cartelized by regulations), then any economy not directed by Gosplan is a "free market." Might as well dismantle the libertarian movement and go home right now, because we already live in a free market utopia. Rooty-toot!

[Jim]

I don't know if the school system is to blame for the lack of scientists and engineers (compared to foreign countries anyway) - I understand the sheer joy libertarians get at any excuse to bash statism, but last time I checked the schools in Russia, western Europe and Japan that supposedly turn out so many scientifically literate students are also run by governments. Personally I think it has a lot to do with economic incentives. It is hard to be an engineer or scientist or computer programmer. It is probably easier, in general, to sell real estate or work in advertising or marketing or one of the 'backslapping golf' careers mentioned above. Here in America, where our business climate has not been entirely fucked up by goverment micromanagment (relative to other countries) there's probably more decent paying jobs in these other fields relative to the ones based on the hard sciences. Then of course there's the feast of plenty available to lawyers here that you don't get in other countries with a more sane civil court system, but that's another story. Those on the margin on choosing one career path over the other may choose the liberal arts direction more here than in countries where getting a job as an engineer may be one of the few higher paying employment opportunities available. Also the medical profession may attract more intelligent folks here since we don't yet have a socialized system that takes the profit motive out.

Note that this is all based on relative comparisions, because even the engineers and scientists from other parts of the world are trying to get over here since they can get paid better in the US than anywhere else.

[pong]

Yes, as a 1982 throwback, my job got outsourced, too.

I'd love to fool around with 64K RAM systems (Sheesh, I feel old!)

I also like POKING around old, dusty Commodores. (I've got all the time in the world now, which I'm sure this work will require.)

For my efforts I look forward to getting "compensated" with a copy of Boulder Dash and a double-sided disk puncher. (Wheeee!)

Boulder Dash? I was hoping for at least Pacman.

Seriously. That's what they offer!

http://newyork.craigslist.org/mnh/sof/14244364.html

[J Canuck]

It could be worse. My brother keeps asking if I have the time to work on his Amiga

[Ivan the Lovable]

>>There corporate system is statist to its core.

Compared to Cuba? Japan? Germany? This means little outside some comparison.

>>There's little more separation between big corporations and the state than there was in Hjalmar Schacht's German economy.

"Big corporations" is the key word there. Define "Big." Wall-Mart Big or Big Lots Big? The US economy, "statist to the bone" as it is, has a large small business componant. The market still functions and functions well, despite the "tyranny" of state funded roads. It is amazing that freedom exists at all, given the 2000 history of government-run roads!

>>Might as well dismantle the libertarian movement and go home right now, because we already live in a free market utopia.

Hilarious -- what libertarian "movement" exists?

And who said that free markets lead to utopia? How about this: fuck movements and fuck utopias. If libertarians believed half of what they said they would not be so busy bitching online about the evils of statism and would be out working the market! (I know that this statement also applies to me).

[Warren]

From my personal experience;

Indian software engineers: Some of the best there is.

Russian engineers: Deduct all years experience and four years education from what they claim to convert to American equivalence.

Anyone with a Ph.D. from anywhere: Pure dead weight.

[Jeff Smith]

I read an article in the Guardian last week
when I was in England lamenting the loss of
great jobs in British call centers [sic] to
India. The phone calling part of survey
research in the US is also moving to India -
though they do train them to have American
rather than British accents.

Jeff Smith

[JDM]

from the article: "Highly collaborative, imaginative work might suffer in the hands of technically adept but inexperienced programmers."

This is almost the problem. Writing code is a small part of actually producing software. The process of figuring out exactly what you want a computer to do, and then actually making it do that takes lots of face to face collaboration to get everyone on the same page.

The results of one project I worked on that was partly outsourced to Romania were not pretty, and had to be scrapped and rebuilt locally. (Warren will be happy to hear that the Romanian team had several PHDs working with it. Kevin will be happy to hear that the decision was largely dictated by the gigantic multinational corporation who had recently purchased the company. Anyone with an axe to grind against nationalism and nepostism will be happy to hear that my companies CEO at the time was from Romania.)

Until there is a way to communicate as effectively with people on the other side of the world who are from another culture and speak a different native toungue, outsourcing software jobs is problematic. Inexperience is a big part of the problem, but it's possible to get inexperienced people to contribute to a project, as long as they aren't running the show, and as long as they have plenty of access to people who know what they are doing.

Projects which are well specified, such as communications protocol software, can often be found overseas (especially from Indian companies) at a fraction of the cost of American produced software, and work as well. In my experience, it's still not worth buying however, since they don't yet have very good support organizations. When there are problems (and there always are) it can be come an exercise in frustration to try and get things fixed because of the time zone difference alone. Eventually, this will get worked out, and this type of commmodity software will largely come from overseas.

But as long as the people who are deciding what new software ought to do are located here, the people who make that happen will have to be here as well. Since it's these implementors that produce the next group of decision makers, it's hard to see too many software jobs going anywhere.

[Brad S]

My family bought me my first computer, an Apple II+, back in 1979. That thing weighed about two tons, had two floppy disk drives sitting on top of it, a daisy wheel printer (dot matrix hadn't become the big thing yet), and no monitor. We had an Atari converter that we used, along with a GE television, to get the picture. And I quickly learned BASIC programming. If I didn't have my current job, I'd probably be doing BASIC programming, and I'd probably be getting paid in copies of Boulder Dash and pouches of Big League Chew.

[Girish Maiya]

I can't believe it - a bunch of libertarians bemoaning the free movement of jobs to a place where they can be done more efficiently. All software doesn't change the world - most of it is routine - bug fixes, incremental changes etc..
Currently, that's the stuff that's getting out-sourced.

Also, I'm surprised at the low quality of Taylor's article. He says that the cost to a US company of hiring an Indian programmer is $40000 - his only source for this information is "people who actually negotiate outsourcing contracts" - who are these people? How many did he talk to? Were they all from the same company? What about those companies that set up their own offices in India (like Microsoft, Oracle, Sun, Cisco, IBM, HP, Compaq, Motorola etc)? Do they have the same cost structure?

Taylor also quotes an American "software engineer" as saying "why [doesn't India] have a single software company worth a crap?" This software engineer is obviously the most unbiased source for information, isn't he? About Indian software companies, Taylor might be surprised at the quality of these places - did he visit one? How about Infosys (NSDQ: INFY)? Or Wipro? Or Motorola India (the first Motorola office to be certified CMM Level 5). Or Tejas Networks (www.tejasnetworks.com) doing cutting edge work for Sycamore Networks.

India certainly doesn't have companies like Microsoft and IBM, but it has plenty of companies like Accenture, CSC, and EDS. What exactly is the difference between hiring 20 EDS engineers who sit in their home office and hiring 20 Indian engineers sitting in Bangalore? how important is face to face interaction? Can you quantify it? And is it worth the difference in cost?

I was working in the US (on the hated H1-B) and lost my job (which was most likely exported to India). I got over it and I suggest that all you "libertarians" get over it as well.

[Russ D]

Part of the reason this grunt programming gets outsourced (either domestically or overseas) is that the people asking for the programs don't want some punk programmer questioning the intelligence of the requests and designs. There's a lot of petty jealousy that comes up when a programmer spots a huge logical flaw and the higher-ups don't generally take kindly to suggestions and questions from the peanut gallery.

I guess this means we won't have to hear any more bitching about there not being enough H1-B visas now.

[Russ D]

Another reason this stuff gets outsourced is because there are a lot of shitty programmers running around. There's no escaping them. They're all over India and Russia, too, but they cost less. If you're gonna get stuck with low quality, may as well not pay as much for it.

[Jim]

The situation Oliver describes is similar to what I have experienced in the automotive industry. There are a lot of people working here from eastern Europe or India for significantly less money than the typical American engineer or designer, but they typically have less experience in automotive and/or have difficulties with effective communication due to language or cultural differences. Thus, all the hard decisions are made by the experienced, highly paid employees and the 'grunt work' gets done by the inexperienced American or imported foreign labor. Those foreign employees that eventually prove competency equal to or better than that of their American coworkers also find jobs that pay comparable salaries.

Another problem with foreign outsourcing is that there has been a long standing shortage of engineers and technical people in the US. There is a growing pool of talented people in other countries but still there is nothing near the numbers of such people as you find in America. Thus outsourcing may supplement shortages here but I don't think it will lead to replacement of workers here. It may depress wages, but for the reasons noted above I think it will be limited in its effects.

[Kevin Carson]

I agree with Tim Stich. TQM and all other management theory fads suck.

Every few years, everybody piles on the bandwagon for another theory fad that in some way involves "getting out of the way," or streamlining the process so workers can do what they know how to do without interference. And every one of these "empowerment" theories, when actually implemented, in practice looks like just another form of Taylorism.

Know why? Because they're all carried out BY BOSSES!

Girish:

I can't believe it--yet another "libertarian" whose libertarianism consists of a reflexive apology for anything a big corporation does. Libertarianism is about the free market; the current corporate system, joined to the state at the hip, has nothing to do with a free market. Any corporation that depends on corporate welfare and state restraints on competition for its profit margin--and that means most of the Fortune 500--is fair game for criticism.

The Republican Party is three doors down on the right.

[Brad S]

Jim - what this really boils down to is an indictment of our school system. Our schools today turn out plenty of touchy feely morons who are well-prepared to be trial lawyers or liberal politicians. But when it comes to producing workers who can excel in the hard sciences that require logical / mathematical / scientific thought (engineering, programming, etc), our school system comes up short in a big way. This is where India, Russia, et al come in. These nations produce a nice crop of qualified engineers and programmers, and as luck would have it, America's economic position allows U.S. employers to compensate these people better than India or Russia can.

[Anonymous]

Want to know what keeps PC costs so high?

The market for computer chips was once dominated by American companies, but now everyone has gotten in on the act, which is one reason innovation and prices continue to improve. In particular, South Korea hosts Hynix Semiconductor, which makes a wonderful dynamic random access memory chip, or DRAM.

The problem is that this pits the company against US chip maker Micron Technology, which claims that Hynix is competing unfairly by benefiting from government subsidies.

What's the answer?

In a free market, the answer is to improve one's product and become more efficient (a personal note: the only lemon computer I ever bought was a Micron). But when a protectionist administration is in charge, there's an easier route: file a complaint with the government and hope to skew the market in your favor.

That is exactly what American chip makers have done, and they have swayed the International Trade Commission, which has approved anti-dumping duties of 45%, or perhaps as high as 65%, against South Korean chips.

Micron defends its action by invoking the old tired clich? about free vs. fair trade: "These actions validate that Hynix received billions of dollars in illegal subsidies, reaffirms that free trade must also be fair trade and demonstrates our government's commitment to enforce trade laws."

How interesting that Micron finds the company that it tried to buy only last year to be so morally objectionable today. The irony is unmistakable: claiming that its foreign competitors unfairly benefit from government help, the domestic competitor seeks and achieves special government help to keep its profits high! It is the ultimate hypocrisy.

Who pays? The entire technology community, which is marginally more insulated from international competition, and US consumers, who must pay higher prices for computers as a result. South Korea is now appealing to the WTO for redress.

SOURCE: http://www.mises.org/fullstory.asp?control=1283

[joe]

"Our schools today turn out plenty of touchy feely morons who are well-prepared to be trial lawyers or liberal politicians. But when it comes to producing workers who can excel in the hard sciences that require logical / mathematical / scientific thought (engineering, programming, etc), our school system comes up short in a big way."

That must be why there are so few Americans winning Nobels in hard sciences.

Oh wait.

A nice line to bash horrible teachers with, but not in line with reality.

[Ivan the Lovable]

"Any corporation that depends on corporate welfare and state restraints on competition for its profit margin--and that means most of the Fortune 500--is fair game for criticism. "

Yeah thats gotta be it. It can't be because millions of people freely choose to buy their products...

(blame the company? why not blame the STATE? is your anti-corporate bit just so you can maintain your street cred with the commies?)

[fredH]

Brad S:

It's specifically the primary and secondary school system that sucks in this regard. At the college and graduate school level, we have training for scientists and engineers that is the equal of any in the world. Students come from all over the world to study at our graduate schools, and there are plenty of places for them because the lower rungs of the school system aren't feeding them many American students.

But I think the crux of the problem here is that there is little financial incentive for bright American kids to major in science. Why expend all of that effort learning chemistry or physics when you can make much more money by majoring in backslapping and golf and going into marketing or finance?

[JoeyBalls]

The outsourcing trend is the biggest reason I left mainstream IT and got into high tech porn. Face it, this is the only true cash cow on the internet. I don't give a fuck about morals. Why should I when pig CEOs make obscene bonuses for putting their hardworking employees out of a job???!!!

[packard aaron]

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DATE: 05/19/2004 04:36:06
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