What do y'all think of offshore outsourcing of technically skilled labor? have you or people you know been affected by it? have you used it in your own businesses? Is it good for America? Is it good for the world? Is it good for the industry? Is it good for consumers? Short vs long term benefits and consequences?

2/28/2009 10:31:51 PM

we outsource manufacturing and cheap labor to the world, and they outsource higher education to us

2/28/2009 10:33:24 PM

We have started to outsource some development and testing, and have seen mixed results. We have a much larger business partner and they rely heavily on outsourced development and testing (Israel and India at least). Part of the outsourcing is to us actually, but I'm pretty sure you mean off shoring.

3/1/2009 1:35:25 AM

^^ with the higher ed part, so true. We really should start capitalizing on it.

3/1/2009 8:20:29 AM

I'm seriously considering outsourcing all the writing work for my PhD dissertation. I'm really in love with the idea of of sending a box of notes and data to India and getting a dissertation back a few weeks later. I would actual pay handsomely for the service.

3/1/2009 10:08:42 AM

a related topic message_topic.aspx?topic=531074

3/1/2009 11:32:56 AM

outsourcing and offshoring are natural extensions of economic and technology developments, in my opinion. As americans we already outsource a variety of functions to specialists -- i pay someone else to cut my hair, to prepare food for me, etc.

There isn't a blanket answer to "is it good or not" because outsourcing is just a tool that can be good in some situations but not in others. And any outsourcing decision that may be good for you is bad for someone else.

3/1/2009 11:36:44 AM

^ i think the OP's intention was to discuss outsourcing technical jobs to another country that paid lower wages - where he has the same skillset as someone in india but the job is given to the guy in india because in theory there is no need for the work to be done locally and will cost less in the long run - even more specifically when the guy in america already had the job and is let go in lieu of hiring a new guy in india

3/1/2009 11:40:18 AM

^ In that rare instance, outsourcing is undeniably benefitical for all mankind. But not all outsourcing goes to underpaid foreigners capable of doing the job as well as it needs to be done. Many companies find themselves being penny smart and pound foolish.

3/1/2009 3:29:31 PM

I have a problem with it purely based on what I've seen from it. I have worked with two companies, one that was directly outsourcing, and the other which I work at now, that has to work with another outsourced group as we are both third party in this case.

In both cases the decision was made based totally on the contract costs, and in the end in both cases people here are stuck fixing the problems that are created by people there. As for where I am working now, it goes so far as to extending deadlines because their code is always wrong and comes in for integration late, and in unorganized pieces. I've already heard of a couple companies who have come back to working with local groups because they have the experience in a particular area of code writing and skills far beyond what is being offered overseas.

Two good examples can be seen in my personal experience. My supervisor now charges twice as much to fix their code as he does to just let us write it properly the first time (not exactly but close). In my last job we had a guy from India that could write a page of SQL code faster than anyone else in the office.. but my friend could write the same code much better in half a page or less.

3/1/2009 4:55:35 PM

Quote :

"The education system is not serving students as it should. Times have changed and education has not. In a country where free market capitalism is so highly regarded, a free market, competition, and meaningful experience are missing from the most fundamental development period of our children. Complacency is valued and experience is not. I propose a 3 pronged plan in innovating and streamlining education. The first prong, which is the most fundamental, is to get corporate sponsorship and involvement in education. Companies will be welcomed to have influence on education, by providing funding and equipment; companies earn the right to have material and skills vital to their future employees taught in public schools. For example Cisco would donate a computer lab of *nix based machines and several pieces of Cisco hardware. In return the school district will subsidize the cost of an instructor of networking with the program culminating in certification of the students. Junior and senior years, the students would be eligible to work on projects directly with Cisco and earn a wage. Cisco increases their potential employee pool in the United States, reducing the need for outsourcing and reducing training costs. These advantages are mirrored for several schools. The corporate sponsorship must be regulated and stay non-competitive and advertisement free. "

I thought it was a good approach to fixing the root of the problem. Americans are pigeon holed into going to college and then come out demanding college money. The problem is that education rarely prepares them to do college money work, and a company must then train and refine them. (no one coming out of ncsu csc with coding experience ONLY from ncsu csc is prepared to write anything worth any money) The temptation to go offshore is just too great with the current state of education care.

3/2/2009 2:10:46 AM

Quote :

"Two good examples can be seen in my personal experience. My supervisor now charges twice as much to fix their code as he does to just let us write it properly the first time (not exactly but close). In my last job we had a guy from India that could write a page of SQL code faster than anyone else in the office.. but my friend could write the same code much better in half a page or less."

Was the guy from India paid by the line?

3/3/2009 7:52:24 AM

Sadly no. The company was pretty big and the decision to outsource was probably made by several non-technical people based on the fact that they could write a lot of code really fast for cheap... The worst part is that the company rotated people in and out from different contracts, as well as rotating them over here. So just when we got a few to understand what was going on they ended up working for a different business.

Also like half of them had to go back so they could get married through arrangement (like ~35yr olds). Their parents would put adds in the papers while they were over here, then the company they worked for had to move them back overseas and allow them to stay in India so they could marry. If they were lucky they would get pics of the girl before moving back. One of my friends told me a good story about one, the guy got here and started to live openly gay..then he had to go back and get married to some girl his parents had picked out. I'm sure that is going nicely

3/3/2009 9:35:24 AM

I worked for a Consulting company that specialized in outsourcing and I see it as good for productivity reasons. Most companies don't outsource everything, they just utilize it as a cheap form of labor that can work on testing and other functionality throughout the evening and early morning hours while US workers are sleeping.

[Edited on March 3, 2009 at 9:39 AM. Reason : d]

3/3/2009 9:38:46 AM

yeah, unfortunately their testing sucks too. I've had to deal with a large group of them now that don't know how to successfully test a thing. Meanwhile they replace an in house group for the company we contract with that was made up of people who had actual real world experience with the applications we tested. So they sacrificed knowledge and experience for cheap labor. Which is why our company now spends twice as much time fixing problems or chasing red herrings that are actually setup issues on their side.

Oh yeah and their test scripts are so bad that our team has actually written up defects on them. They were literally so messed up that whole packets would never have passed. Which begs the question... what are they actually testing?

3/3/2009 9:56:58 AM

Outsourcing is ultimately going to kill our earning power. Today, the advantages of outsourcing are hit or miss. Sure, you lower your development costs, but you might spend the difference in fixing the increased number of bugs in the code. Eventually, the skillsets of the workers in developing countries will catch up or even overtake those in the western world.

At that point we'll reach a point where the West loses comparative advantage to the developing countries. There is no reason to pay a person in one country more than a person of equivalent education/skills in another. This will be disastrous as incomes in the western world fall markedly to equalize with the rest of the world.

This is already starting to occur -- IBM, as has been discussed on TWW, is offering workers in the US/Canada to either take a severance package or relocate to India and work for local salaries. It's only a matter of time before companies begin to slash wages locally.

The only way to avoid this would be to keep third world countries third world countries. Maybe that duded in TSB is onto something -- let the radical muslims take over the rest of the world and keep them living in the 5th century.

3/3/2009 10:02:28 AM

Quote :

"This is already starting to occur -- IBM, as has been discussed on TWW, is offering workers in the US/Canada to either take a severance package or relocate to India and work for local salaries. It's only a matter of time before companies begin to slash wages locally."

slightly disingenuous because this is targeted for citizens of those countries that were brought over by ibm to work in the us, but i see what you are saying

3/3/2009 12:03:12 PM

Quote :

"Sure, you lower your development costs, but you might spend the difference in fixing the increased number of bugs in the code. Eventually, the skillsets of the workers in developing countries will catch up or even overtake those in the western world."

This is pretty much my take on it. Right now there are some obvious flaws with offshoring and my personal experiences working with offshored labor have ranged from annoying to infuriating. There's a technical / educational deficit which limits the quality of engineering and development that's been outsourced, and there are certain language skills issues which negatively impact customer service experiences when less technical support positions are outsourced.

I expect neither of these obstacles to be constants. As long as there is economic motivation for employers to offshore jobs that job availability will motivate overseas workers to improve their technical repertoire and English language skills.

3/3/2009 12:13:42 PM

We use offshoring, but luckily some of what we do is government and they forbid that.

Recently someone in accounting sent out an email to me and about 10 other coworkers. It accidentally had all their rates/hour.

US Worker 1: $55
US Worker 2: $65
US Worker 3: $60
US Worker 4: $65
Indian coworker: $30
Offshore coworker: $18
Offshore coworker: $18
Offshore coworker: $7.68
Offshore coworker: $7.68

We fucked.

3/11/2009 1:53:07 PM

Bobby's post: Referenced post above

Bobby, unfortunately what you are saying just isn't true. It makes two assumptions that are both false, in the near term and in the long term.

First, it assumes that developing countries will reach parity in skills and abilities. This won't happen. It's not a matter of education, it's a matter of culture and governance. Korea, Japan and Taiwan all have reached skill parity with the US decades ago. We outsourced lots of labor and development there for decades.

As a country develops internally, it's skills AND demand for those skills increase. And the latter increases much faster than the former. There is plenty of historic precedent to show that the net effect of this is equalization of income to the upper market, not toward the lower market. The ploy being presented by IBM is retarded, shortsighted and will not last.

Second, it assumes that economies are static. The inherently aren't. And they are all inherently linked, as we are seeing from our own housing fallout which has crunched the world. Development will never disappear from the US landscape, but it will absolutely shift from the way we see it today. Change happens, it's neither good or bad, it's up to us to see it and use it to our advantages.

3/11/2009 3:15:17 PM

^ Yeah but are they actually knowledgeable? I mean I'm sure the ones I work with are pretty cheap too, but judging by the work they turn in.. I wouldn't pay them nearly what we get paid either. They turn in high school or college level code.. the company pays them as such. Maybe if they turned in professional level work, they'd get professional pay.

3/11/2009 3:18:30 PM

^

Or worse they work on something that is technically good but doesn't adhere to the design of the underlying system, and can't be used, so you end up spending months trying to integrate two wholly unrelated system until management decides to scrap it and have you rewrite it from scratch.

Then you end up paying US * 3 months + Indian Dev * 6 months + US * 6 months.

3/11/2009 4:19:48 PM

^ and ^^

again, it's not an issue of ability. It's an issue (largely) of culture. I've worked with a few outsourced groups in India and Pakistan. They deliver exactly what you tell them to make. It's the same situation with manufacturing in China. They build EXACTLY what you tell them to.

Quality means different things to us, versus them. To them, quality is following exact requirements. To us, quality is following the intent of those requirements.

If anything, I've found that outsourced code is much better structured, documented and grockable (generally, there have definitely been exceptions), because of the level of formality in place. The only big downside to outsourcing projects is velocity. You need so much formality in place, that adapting to change is difficult, which doesn't work well for projects with a lot of unknown elements.

3/11/2009 4:29:28 PM

^ I would love to work with whatever group you had then. The group we had to work with missed deadlines. Gave us pieces of code (instead of a complete turnover as required) well after the turnover dates and in some cases right up to the day before we were supposed to be finished with integration. The code itself was not to spec, and was also written horribly. Their were so many GOTOs that our programmers can't come close to respecting them as peers. They have both written specs and biweekly updates on how the code is moving along in development and still can't seem to handle the work they are getting (even though we still do 80 percent of it).

Not only were their programmers horrible at keeping to spec, but their testers were just as bad at writing and executing proper test cases. They would block copy and paste many test cases to try and get things done quicker, which inevitably led to bad cases since the scenarios never completely matched the expected results(as I stated previously). It was quite obvious that they turned over the test cases without having actually run them and then when they made fixes they once again copied and pasted so that there would be something else wrong in the fixed version.

[Edited on March 11, 2009 at 4:45 PM. Reason : .]

3/11/2009 4:43:20 PM

Quote :

"If anything, I've found that outsourced code is much better structured, documented and grockable (generally, there have definitely been exceptions), because of the level of formality in place."

you would not be saying that if you've worked with outsourced code to some where like Romania. fyi

3/11/2009 4:47:49 PM

Quote :

"Outsourcing is ultimately going to kill our earning power. Today, the advantages of outsourcing are hit or miss. Sure, you lower your development costs, but you might spend the difference in fixing the increased number of bugs in the code. Eventually, the skillsets of the workers in developing countries will catch up or even overtake those in the western world."

If this was definitively true, i'd think companies would easily be able to show where money is being burned to off shoring. BUt this doesn't seem to be happening. Why is outsourcing continuing if it actually costs more?

3/11/2009 5:06:58 PM

Quote :

"you would not be saying that if you've worked with outsourced code to some where like Romania. fyi "

I work daily with teams from Bulgaria and Turkey. Both are ridiculously good.

There are terrible developers in every country.

dubus The real question is why in the hell do you continue to work with that firm after all this? There are thousands of contract development companies, why in God's name would you continue with one that is obviously terrible? It sounds like someone in YOUR organization screwed the pooch in the first place by approving them for the contract.

3/11/2009 5:35:03 PM

^^ because in the short term it is saving money. You do get an instant price break on all your long term development contracts. Which looks good on paper. Until you realize over time that the short term "fixes" many US companies will have to make on the code you get back start to add up. Then you'll get companies coming back to the US for some of their long term contracts because they will (hopefully) get it right the first time and lower the need for short term "code cleanup" contracts.

[Edited on March 11, 2009 at 5:37 PM. Reason : ^]

3/11/2009 5:37:23 PM

Actually Noen if you read and understood my previous posts you'd see that our company doesn't have the choice. We are integrating the code as a vendor ourselves and being forced to work with another vendor who is outsourced. We never had the option of approval. And if you continue reading my other posts you would see that in hiring those programmers and testers they put many good people out of work here who were actually doing things right more times than not.. unlike the outsourced group we now work with.

I did work with a company as an intern before now that had hired in outsourced, and let me tell you. Their code was just as bad as what I am seeing now. As an intern I had little sway in what was going to be done (hence me leaving for this job).

At my current job we are working for US and UK companies(ironic we are outsourced work ourselves ) but when working on UK contracts we are able to conform to their needs and expectations, which these Eastern outsources don't seem to be able to do for US companies. Not to mention the fact that because they do so much wrong and require so many rewrites, we still end up having quicker turnaround times than they do on any code we write here.

3/11/2009 5:45:29 PM

^all I can do in response to that is :carlface:

Being a vendor always sucks balls. But the thing is, you get paid regardless. Sucks that you've had such shitty experiences with outsourcing. It all reeks of horrible upper management, but it's always the low man on the pole that gets shit on.

At least you are affirming our case even more, that outsourcing isn't going to make our jobs disappear in the long term

3/11/2009 9:18:32 PM

That much is true, especially with the lot I've seen. Yeah one of the good things about all the defect tracking we do during development and testing is that it shows quiet obviously at the top who had to make the fix. And the more of them that have the outsource company name on the the better we look . Even some of the people we work for in the contracted company (the one we are vendors for) know that we are the ones getting things done and pulling them along. I get the feeling that they are pressuring their superiors to keep an eye on this stuff to see if there really is cost-benefit to it. Who knows, if we do a good enough job and they don't, maybe we'll win the whole contract and be able to expand .

3/11/2009 9:33:06 PM

Outsourcing of any kind is done badly in most cases --- NOT JUST FOREIGN OUTSOURCING. The organizations that rely on outsourcing as a magic bullet are stupid, anyway. If your company is looking to outsource to any lower cost developer, it most likely means that you are about to be a part of some Dilbertian mismanagement.

Outsourcing to other Americans might actually be worse because you know they aren't the best the country has to offer. At least with foreigners, there is a possibility of snagging good talent at a low price because retarded immigration barriers are keeping valuable people out.

[Edited on March 11, 2009 at 11:43 PM. Reason : .]

3/11/2009 11:38:49 PM

Quote :

"Being a vendor always sucks balls. But the thing is, you get paid regardless. Sucks that you've had such shitty experiences with outsourcing. It all reeks of horrible upper management, but it's always the low man on the pole that gets shit on."

I'm pretty sure that upper management had nothing to do with the spaghetti code the Romanians wrote for my company that we are now fixing piece by piece. Everything about their code demonstrates that they really have no clue what they are doing.

3/12/2009 12:46:17 AM

^^ In my case they outsource to us BECAUSE we have the talent and experience. The software we work on was originally developed under some of the programmers we have working here now. So they are basically just building on their own code, or that of their friends. Of course we don't try to be low cost as you mentioned.. more a good deal for the money.

I don't think the immigration keeps people out, depending on the circumstances. The company I interned with signed with an Indian company, and then moved about 15-20 of them over here and put them in a room together. When one went back, they sent another.. and there were a few that were disseminated into the cubes with everyone else to work alongside. Didn't seem to have trouble getting them in.

3/12/2009 9:11:22 AM

Quote :

"again, it's not an issue of ability. It's an issue (largely) of culture. I've worked with a few outsourced groups in India and Pakistan. They deliver exactly what you tell them to make. It's the same situation with manufacturing in China. They build EXACTLY what you tell them to."

I was saying that in my case, involving an Argentinian team and a very large Indian team they built the requirements. Then there was no error checking in the final product for the front end and they rebuilt a lot of the objects already in place. They had our source, and instead of using Foo and FooDAO they wrote new classes IndianFoo and IndianFooDAO. The product was ok from a stand point of, I looked on the internet about web development and followed the standards exactly. It was horrible in the case of following our way of doing things and integrating into our systems. It flat out didn't work and it was wholly separate from our main application.

3/12/2009 10:04:31 AM

Quote :

" At that point we'll reach a point where the West loses comparative advantage to the developing countries. There is no reason to pay a person in one country more than a person of equivalent education/skills in another. This will be disastrous as incomes in the western world fall markedly to equalize with the rest of the world."

And there is no reason for a person to work in one company for less than an equivalent job in another company. Wages follow productivity; as foreign workers gain parity with American workers, achieving similar productivity, then their wages will rise to match. This does ignore price effects: if the supply of cheap productive workers is literally limitless, then companies will bid down prices making falling American salaries buy more stuff. But that is absurdly unlikely, as wages in China were already growing at a fast clip and deflation has not been the norm for this round of globalization.

[Edited on March 12, 2009 at 10:35 AM. Reason : Woops, Noen called it above.]

3/12/2009 10:35:02 AM

how's that working out for the manufacturing industry?

Silicon Valley may be the next Detroit.

3/12/2009 1:43:05 PM

Are you suggesting that without outsourcing, industrial firms would not be hurting during a severe recession where durable goods purchases are down 30+%?

And what does outsourcing have to do with manufacturing? Last I checked, that was not called outsourcing, but importation.

3/12/2009 2:08:41 PM

^this is true, but there is also the addition of the fact that Silicon Valley is not the center of all things quite like it used to be. With everything that has gone on lately in the software/hardware industry, many companies are popping up everywhere in the US offering competing technologies. So it's not so much that Silicon Valley is doing bad, therefore American technology is.. the way the auto industry seems to be with Detroit. (though it still does house a large percentage of the major players)

As for the actual manufacturing itself, yeah you kinda have to outsource before you can import.. so that part is kinda going downhill. The problem there is I haven't experienced a reduction in manufacturing quality for my hardware... so that seems to be something they can do.

[Edited on March 12, 2009 at 2:38 PM. Reason : .]

3/12/2009 2:35:33 PM

Quote :

"how's that working out for the manufacturing industry? Silicon Valley may be the next Detroit. "

Manufacturing of what? That's the equivalent to saying "farming industry", or "energy industry".

Manufacturing of raw goods in the US is gone. Manufacturing of components in the US is gone.

But the growth of high-tech manufacturing sectors has been booming in the US for over a decade. Everything from Fab's to Solar, biomedical, nano-tech, alternative materials, you name it. Damn near all of the bioplastics in the world are manufactured in the US.

Same thing has happened for many high end industry sectors. Furniture, audio/video finish manufacturing, home goods, have all experienced very healthy growth over the last decade.

Yes it took a while to adapt, and the OLD way's of manufacturing methodology are gone, but there's a lot that popped up in it's place.

3/12/2009 4:01:52 PM