So how would you prevent offshoring of US jobs

[Mark Herschberg]

Let's suppose for a second that a bunch of people in the US organized a anti-offshoring group. This group had some degree of resources with which to effect their goals. What would you do? Keep in mind, this would be primarily a workers group, because managers/owners/consumers would prefer the lower cost goods.
Remember, of course, that the companies aren't static. If you tell Microsoft, for example, that it can't outsource to India, it could create a shell company in Canada which does outsource there.
--Mark

[HS Thomas]

I'd say the threat of off-shoring is having the desired effect. People are updating their skill sets rapidly.
Then there's the question of quality. Who is going to ensure that everything is as specified. Boom-time for Testers / QA analysts.
I don't know how well-placed the developing nations are for indemnity insurance if it all goes belly-up. Surely , shareholders will be interested in securing their interests. The US is well known for sueing at the drop of a hat. Boom-time for the US legal eagles.
Between the Testers , QA'ers and the legal guys there will be a lot of work left in the US .
Any developers left will be working on real cutting-edge work.
No use voting the politicians responsible out of office. Your system is so complicated it'll take more than 10 years to build a case against them.
Anti-offshoring groups are better off getting a good lawyer. There must be laws protecting workers rights. I've heard of cases where the person laid-off has to train the new recruit/ H1B visa holder taking over their job.
Off-shoring is necessary to a certain degree. But it ought to be done the right way to make it economically viable for all.Consider how many re-trainings there are likely to be a single job when just investing in the first guy may have paid off in the long-term.
I won't be surprised if the net effect would be to create more jobs than ever before all round.
The resources just wouldn't have been there to sustain the growth in the US alone. The belief that this is the right thing to do must be sustained . Senior Management must be held accountable and be seen to be creditable.
[ July 28, 2003: Message edited by: HS Thomas ]

[Nathan Thurm]

This actually prompted me to look out on the web for what's currently out there already. I think we might get some good ideas and a feel for the lay of the land from these two links.
www.techsunite.org doesn't seem to have much of a discussion forum, but at least is probably the most activist web site on the web right now currently addressing some of the issues that we're facing. One issue that they're attem pting to address right now is why the bill in New Jersey that was intended to prevent state government work from being outsourced overseas. (This bill arose out of a situation where the contract for software to produce welfare checks was given to a company in Arizona which turned around and outsourced the work to India prompting the outrage and ultimately the proposal of this bill by a state senator there, a Democrat named Sharon Turner). The site was also educational.
If you go to freerepublic.com ( a prominent conservative site) to see what this politically active site is doing and thinking, and do a search on 'outsourcing' you'll find many articles on outsourcing and reaction including:
Techies see jobs go overseas - Opposition to offshore outsourcing beginning to grow
http://www.freerepublic.com/focus/f-news/922002/posts
Outsourcing, visa curbs not in US interest: Congressman
http://www.freerepublic.com/focus/f-news/921165/posts
If you have a couple hours , this post prompted a good deal of thought from the forum on this site. Many of the diehard conservatives on this site we're saying that they would vote for whomever addresses the outsourcing issue, even if it's a Democrat. I agree, whichever side addresses this will get my vote.
This will be the issue of the 2004 election, in my opinion.

[John King]

Originally posted by Mark Herschberg:
Keep in mind, this would be primarily a workers group, because managers/owners/consumers would prefer the lower cost goods.

The jobs of first line and upper middle level managers
are also in danger.
A country's strength is based on
the knowledge and production. Offshoring high tech job
is offshoring advantage of competition. So offshoring
is hurting the owners and customers in the long run.

[Mark Herschberg]

Originally posted by John King:

The jobs of first line and upper middle level managers
are also in danger.

True, I was refering mostly to executives.

Originally posted by John King:

A country's strength is based on
the knowledge and production. Offshoring high tech job
is offshoring advantage of competition. So offshoring
is hurting the owners and customers in the long run.

History might suggest otherwise, but I don't want to side track this discussion. Want to start a new topic?
--Mark

[Billy Tsai]

get a few thousands people are protest infront of congress and the White House

[Andres Gonzalez]

[Mark:]So how would you prevent offshoring of US jobs
I think no country can compete against India in terms of money paid to employees. The only way to prevent offshoring (from any country, not only US) is to demonstrate that we are proactive, productive, generating new ways of doing things (in terms of software developement (applying things like continuous integration, testing, MDA, AOP, etc.., anything that shows innovation and productivity). In essence, that we are different from the others, and that we are worth the money we're getting.
most of the terms I mentioned are not innovate anymore, but it's just an example
If we don't provide value to our employers then there's no reason to pay 60k a year for a developer where in India you can pay $4k.
Note that I'm not against India, it is just an example. These guys are damn bright.
[ July 27, 2003: Message edited by: Andres Gonzalez ]
[ July 27, 2003: Message edited by: Andres Gonzalez ]

[Paul Pullman]

There will be no way to stop the train or preventing the train from moving. The pie is going to getting smaller and smaller. The average wage is going to go down and level off. The population of IT students will be decreasing as many 2nd, 3rd, and 4th tierd school's computer sciences/engineering programs will be shutting down. However, the ratio of foreign students will be increasing and most, if not all, of thes CS students will be heading back home right after school or hired by foreign consulting companies to work here. H1B visas will be no longer an issue while L1 will serve its intended purpose, bringing corporate VPs of software development (and other executives) from a foreign country to work here for a period of time. The most recent announcement from MicroSoft that 1/3 of the 5000 new jobs will be offshoring should convince you this scenario. There will be no techies left for any level of management. I am not saying this is going to happen overnight. But believe it or not it is the trend, just starting to climb.
Why should we lobby, unionize or do whatever? We want to keep whatever we have now for as long as it is possible. Every person currently involved in any stage of software development is in the same boat in my opinion. We are all one of the apples, or oranges, or whatever of that same tree.
Paul

[Mark Herschberg]

(The following stated not as the moderator but as the topic author.)
I'd like to keep this topic focused on what people could do. We've got plenty of debates about whether offshoring is good, or bad, and what the future may bring. I was hoping to focus this topic on just the "what if" situation if a large group could be assembled. Some people have been pushing for petitions and unionization. In this topic, I want to discuss what they actually think can be achieved by such efforts.
--Mark

[Gregg Bolinger]

I don't think there is anything that really can be done, at least as far as the product goes. Something has to be done that will make the client want to stay in the states. But this has to go beyond the product. Maybe this intails more traveling by the company to visit clients face to face. I don't know. This is a tough one. I don't know the cost of living in India. But I know what it is here. And it is a lot. I have to assume that cost of living in India is cheaper only because India companies are able to underbid US contracts substantially. And their employees get paid less. Either that or Indians are willing to take jobs for so little money because there are no other alternatives. And they, just like us, have families to support.
Key things I think a company should do that could gain those concracts that are going to India
1. Become more personal
2. Lose the store front - if they are willing to outsource to India, why do you need a fancy office to impress potential clients.
3. Be willing to work for less
4. Have products ready. Create products that are ready to be deployed with minimal customization
5. Sell products CHEAP, then make up for in support. Those that don't need support aren't wasting your time anyway. Get your product out there. If they don't need support, they tell people your product is well written. If they need support, they will pay for it. And support from State Side companies is easier to handle than over-seas support.
Just some ideas. Don't know if they really go along with what you are wanting from this discussion.
[ July 27, 2003: Message edited by: Gregg Bolinger ]

[Paul Pullman]

Originally posted by Andres:
The only way to prevent offshoring (from any country, not only US) is to demonstrate that we are proactive, productive, generating new ways of doing things (in terms of software developement (applying things like continuous integration, testing, MDA, AOP, etc.., anything that shows innovation and productivity). In essence, that we are different from the others, and that we are worth the money we're getting.

A few months ago, Scott Ambler had a piece discussing some of these on Software Development magazine. I wasn't convinced. We have the talent to develop new ideas, new products, and all the new stuffs. Most of the times, however, other people had the ability to fine tune those stuffs and we started losing grounds. Two exceptions on top of my head are NASA and Boeing. They are in the industries that are so capital intensive that no country or countries have the financial resouces to support their competitors like US government can provide them.
Paul

[Andres Gonzalez]

Originally posted by Paul Pullman:
A few months ago, Scott Ambler had a piece discussing some of these on Software Development magazine. I wasn't convinced. We have the talent to develop new ideas, new products, and all the new stuffs. Most of the times, however, other people had the ability to fine tune those stuffs and we started losing grounds. Two exceptions on top of my head are NASA and Boeing. They are in the industries that are so capital intensive that no country or countries have the financial resouces to support their competitors like US government can provide them.
Paul

Hmm.. so you agree with what I said?

[HS Thomas]

Outsourcing Examined
Here is Scott Amblers article for those interested. I wish Management would read it and show some credibility. There seems to be a lets "Try it and see" attitude. "After all we don't have any statistics to do any measuring by. Lets collect some statistics and have something to study." And failure is a large part of that statistics.
Off-shoring is a management job-creation excercise. Meanwhile techies have to eat dust.
Legal protection of worker's rights is a positive way to keep in check such cavaliar attitudes by management. This will have to be done case by case. Usually if the US sets a precedent the management elsewhere take heed and assume that it soon follows elsewhere.
I am not sure if the EEC's Supreme Court has a similar power to influence.Probably only within the EEC.
Nathan has posted some good links on workers group activists in the US. Don't know of any in the UK other than the Professional Contractors Group and they are more engaged in battle with the Tax department who are taxing this group of workers out of existence by making it difficult for employers to employ them economically.
Agreed, that it is up to the IT workers to set some professional standards also.There will still have to be some off-shoring to create the climate for product development in the West.
Interesting how Scott Ambler and every other methodologist are engaged in selling their wares to China, India etc. at the same time.
regards
[ July 28, 2003: Message edited by: HS Thomas ]

[Tim Holloway]

There are still some who think that the West can come up with some sort of compelling technological edge that will make up for prices differentials that go from 2-to-1 to 10-to-1. Forget it. There's no magic chemical elements in the soil of North America or Europe that make us some sort of "supermen". The IT industry is based on the free flow of knowledge, and thanks to the Internet, there's virtually no place knowledge can't flow.
And you'd better be darned glad of it. Sun transferred their core Java programming tasks to India over a year ago. Who does that give the edge to?
I think there's 3 ways that (in theory) the offshoring issue could be addressed.
1. By action within the labor community
2. By action from the government
3. By action from consumers.
I'm going to write off #3 right now, since it's hard enough to convince the American public to buy American-made shoes, much less anything as intangible as software. The other two, as you can see are pretty horrible. I'll let you add a 4th way, if you can figure out any way to accomplish it (getting companies to voluntarily NOT offshore).

---

Item #1. One organization making a lot of noise that hasn't sofar been mentioned is the Seattle area division of the Communication Workers of America relating to IT. I can't remember their name offhand, though.
Programmers have never been very fond of unions. Software people are all about creativity and flexibility and unions are characterized by the opposite. Also, software people tend to identify with conservative/libertarian philosphies, which, in turn, are more bound up with Management than with Labor, and Management would generally find life a lot simpler if Unions had never been invented.
Then again, Management has always had an uneasy relationship with Software Development, since technically we're supposed to simple be mindless automations producing code like hamburger from a meat grinder (with apologies to the Hindus among the audience). But in fact, code is not generated on an assembly-line basis - it is very much a self-shaping activity and even the most junior of programmers makes dozens of administrative decisions every day (and must, or nothing would ever get done). One of the great appeals of offshoring is, in fact, the idea that you ship the work off to a "factory" and get bacfk a product. Which is just as fallacious when the work is done in Asia or Africa as it is when the work is done in Europe or the Americas. Programming is programming, and so far, no one's discovered a culture or a society that handles the job in a significantly different way.
I really have my doubts about Programmers and Software Architects lining up on the picket lines next to the Longshoremen, though stranger things have happened. What would be more interesting is if something emerged more along the lines of the medieval trade guilds. There is some precedent for this - their are writers guilds, and President Reagan was head of the Screen Actors Guild before he fired all the PATCO members. Though the SAG is bound up more in the 20th-century Union structure than the old guildhalls were.
Actually, as far back as the early days of "permatemping", I'd wondered if maybe software developers shouldn't be reorganized more along the lines of CPAs, as independent external services, rather than as employees. What we have right now is a legacy of the "big iron" mainframe days. Few private individuals had the resources to buy all the requisite tools back then, and therefore had to work within the resource owner's contraints. Now we do much of our work on PCs, and IBM's moving towards distributed on-demand computing. The only compelling reason for a company to keep an internal IT software staff is because if its knowledge of in-depth day-to-day internal business processes. In the present climate, companies don't place much weight on that (to their peril, I think), and we compound the problem by being turned too much inward to be demonstrably part of the day-to-day operation.
The biggest problem with labor organization of any kind is that while we could conceivably make life a lot more difficult in this country, that's not directly addressing - and, in fact, exacerbates - offshoring.

---

Government. Ugh. The ultimate blunt object that soils all it comes in contact with. You know the song. Twenty years ago, we'd just lobby to slap a tarriff on overseas labor to make it cost-compete with local talent. Overall, I think that this is still one of the most viable solutions. However I doubt any single solution will address all problems. In addition, thanks to all the free-trade action done over the last decade or so, it would be a lot harder to pull off.
While some have said that all a MNC would have to do is relocate out of the US to dodge government actions it doesn't like, in practice, it's not only expensive to do so, but in many cases, would alienate their markets. And while GE may find India a wonderful place to hire labor, you might note that few senior execs are rushing to move their residences there, despite the lower cost of living.
The US steel industry is an interesting case in point. Steel is a product "critical to national security" (software isn't ). It gets all sorts of federal protections. Despite this, the US steel industry is still pretty well shrinking. However the blow to the American labor force has been ameliorated somewhat in that thanks to the various protections, instead of an implosion, the domestic steel industry has been (more or less) slowly deflating. Which at least reduces the misery somewhat.

---

Of course, my real concern isn't merely loss of jobs in the IT industry. That would be bad enough from my point of view. What is much worse is BPO. If we jettison jobs but can move workers to other professions, that's OK (national security notwithstanding). However, if we can't invent some new professions at a suitably high rate, we'll end up with massive unemployment, domestic discontent, stress on the democratic process, stress on the world economy (thanks to our unusual weight in the world ecomony), and a host of other ills.
Actually, I lied. I enjoy IT far too much to want to move to another profession. But that's another matter.
Just my 92 paise.

[HS Thomas]

Just my 92 paise.

Tim , if you are really stuck for a profession , you'll make it big time writing.
Your post put me in mind of a piece I was given to read from an American writer - for the life of me I cannot think of his name.
Not Bill Bryson . Kind of a time travel writer with a socio-political bent. Sorry , I meant slant. I wish I could remember his name.I think he wrote a column for a national newspaper too.
regards
[ July 28, 2003: Message edited by: HS Thomas ]

[Jon McDonald]

Mark,
Are you asking how a large organization would change policy to stop offshoring (e.g. lobbying, court challenges, PAC Funds) or what types of policy changes this organization would support (e.g. tarifs, penalties for companies, unions)?
If it is the latter, a couple of ideas come to mind (I don't know whether they would work, or be benificial to the country in the long term). The first could be a policy preventing Federal agencies from granting purchase contracts for software that was produced, in whole or in part, offshore. Software would have to come with documentation concerning who built it and where it was built. Now, of course, companies could lie about it. However, with stiff penalties for defrauding the government, they would be much less likely to do so. Also, disgruntled former employees, who were laid off as a result of illegal offshoring would be more than happy to sell their former employer out to the Feds. The result of this would be that companies that offshore would be locked out of the lucrative U.S. Government market.
Second, one could impose a tax on software sold (or income aquired from software sold) in the U.S. that was created, in whole or in part, offshore. This would make homegrown software more economically competitive in the U.S. to offshored products.
The likelyhood that these measures would pass congress is low. Also, there are questions as to how this will adversely effect U.S. software companies in the foriegn marketplace. The first problem is that other countries would probably put matching restrictions and tariffs regarding the sale of software produced in the U.S.. The second problem is that because U.S. software companies do not have access to the world pool of labor that other companies have, their products might not be competitive with software produced outside the U.S. even if other countries did not impose matching tariffs.
Strong development practices, like the ones mentioned in the Scott Ambler article in previous posts, might minimize the second problem, but not the first. What do you guys and gals think?
Jon
[ July 28, 2003: Message edited by: Jon McDonald ]

[Mark Herschberg]

Originally posted by Jon McDonald:

Are you asking how a large organization would change policy to stop offshoring (e.g. lobbying, court challenges, PAC Funds) or what types of policy changes this organization would support (e.g. tarifs, penalties for companies, unions)?

I'm asking what they see happening. As a believer in the free market, I've found most protectionist bills, historically speaking, to have backfired in the long run.

Originally posted by Jon McDonald:

The first could be a policy preventing Federal agencies from granting purchase contracts for software that was produced, in whole or in part, offshore. Software would have to come with documentation concerning who built it and where it was built. Now, of course, companies could lie about it. However, with stiff penalties for defrauding the government, they would be much less likely to do so. Also, disgruntled former employees, who were laid off as a result of illegal offshoring would be more than happy to sell their former employer out to the Feds. The result of this would be that companies that offshore would be locked out of the lucrative U.S. Government market.

This I could believe would work to some extent. The goverment is the ultimate 800 lbs gorilla, so people are willing to play by its rules. Still, it's only a small section of the market. Also, what if Microsoft thumbs their nose at the government? Linux certainly isn't developed only within our borders. NetBSD? Still, I think MS will want to sell to the government and so this strategy will protect some number of jobs.

Originally posted by Jon McDonald:

Second, one could impose a tax on software sold (or income aquired from software sold) in the U.S. that was created, in whole or in part, offshore. This would make homegrown software more economically competitive in the U.S. to offshored products.

I've yet to see a tax law without a loophole. Heck to big enough players, COngress will create special loopholes for them. I really doubt this would work. In my current project, I use JClass Chart. This is a simple little widget to create charts for me. It is ideal for production offshore, because it is a generic, isolated product. Now when I sell my software for $100,000, do I have to pay tax because I spent $2,500 on some pre-fab widget? What if legally only lease the other software. What if (, I don't buy the software, but instead go to India, buy a OCR-friendly book containing the source code (this company does sell source code) fly it home, and "type" it in within US borders.* You culd probably do the same thing with the byte code directly.
*This has been demonstrated to be legally viable. The crypto community has used it to avoid US export laws. Here, you simply take the code and fly the book outside the US, the code, when scanned it, is therefore created outside the US and never technically exported.

--Mark

[Al Newman]

Originally posted by HS Thomas:


Tim , if you are really stuck for a profession , you'll make it big time writing.
Your post put me in mind of a piece I was given to read from an American writer - for the life of me I cannot think of his name.
Not Bill Bryson . Kind of a time travel writer with a socio-political bent. Sorry , I meant slant. I wish I could remember his name.I think he wrote a column for a national newspaper too.

Either PJ O'Rourke or Dave Barry, I think you're thinking of. Probably the former.

[HS Thomas]

Yes ! That's the one. PJ O'Rourke. Well spotted.
The CEO of the Sofa sounds typical.
regards

[HS Thomas]

While on the subject of books, consider :
The Art of Political War And Other Radical Pursuits by David Horrowitz.
"The Art of Political War was described by White House political strategist Karl Rove as �the perfect guide to winning on the political battlefield.�"
I would be more interested in protecting workers' rights. Companies should realise that spending $25/hr rather than $50/hr will prove more costly 9 times out of 10, so offshoring is not necessarily economically viable.
Also , the loss of development(designing , testing, programming) and domain knowledge along with component-based and on-demand computing hastens new questions about putting the business at risk.
Mark raised an interesting point about the cost of widgets (components) and taxations on them. When it all adds up, it may be too costly for some businesses. the consequence is that business will have to also innovate from within.
A Company that off-shores and does not have an innovation department in-house should be viewed as worth less than one that does ( corresponding drop in share prices).Everyone's in business for themselves.
regards
[ July 29, 2003: Message edited by: HS Thomas ]

[Tim Holloway]

Originally posted by HS Thomas:


Tim , if you are really stuck for a profession , you'll make it big time writing.
[ July 28, 2003: Message edited by: HS Thomas ]

What, because I can't give a short answer to anything?
Thank you for the compliment. I've had other suggest that as well, but the biggest problem there is that writing's 3 times as much work, but not as much fun as software. Still, desperate times may call for desperate measures!
I'd thought about doing Talk Radio, but it's hard to be either angry enough or ignorant enough

---

I suspect that government projects are where the bulk of the counter-offshore work will be, at least at first. Which depresses me, since I'm not well-suited for the government employee mindset.

---

Food for thought, from the USA Today article cited elsewhere in this forums:

Flat-panel screens are no longer made in the United States," says Harris Miller, president of the Information Technology Association of America. "You would have to recreate those industries in the United States, and those industries would exist for only one client, the Department of Defense," he says.

Hitler and Hirohito made one fatal mistake. They declared war on the US 50 years too soon. Now Japan could take us down without firing a shot.

If Japan, Korea, China, Malaysia and Indonesia all got mad at us at once, they could destroy US morale by choking off our supply of big-screen TVs!

---

The use of tarriffs and quotas in international trade has been discussed before and will be discussed more, I'm sure. Here's an interesting thought, though:
One of the few ways that you can get restrictions to stick in thes mostly-open market days is when the offending party is "dumping". That is, the companies in the offending country are getting government subsidies that permit them to escape some of the production costs. Actually, in India, what you have is closer to anti-dumping. By not providing infrastructure, they keep the cost of living much lower than in countries where we take paved streets, reliable electricity, and other such amenities for granted. They don't have to charge tax for what they don't build, after all (yes, I realize that some US infrastructure is built with private funds, but a lot of it originally wasn't).
As an example, in Bangalore an average of 60 IT people die per year in traffic accidents (they really track this stuff by profession?), roughtly 75% of them die on one particular road. Some of the local Indian IT companies are reportedly looking into privately improving it just to keep from having to recruit replacements for the fatalities.
So Bush was right - lower taxes can bring prosperity!

[HS Thomas]

More doom and gloom.

Mass Exodus
IBM is predicting that there will be a mass exodus of jobs ( 3 million jobs) from the Western world to the developing world � and they fully intend to be amongst it.
They have forecast that 3 million jobs will leave the USA for the developing world for good by the year 2015.
Once one company in a sector is getting competitive advantage by cutting their costs through going offshore, then the rest have to do the same or be left behind IBM say � and they have no intention of being left behind.
These will not just be the drab jobs that people don�t want to do going offshore any more, but it will be high value jobs like in the high tech sector � especially software development.
IBM claim they have to do it as their competitors like Oracle, EDS and Accenture are already doing it. If they don�t, they�ll be left behind in the mad charge out of the US and Europe.
Political Awakening
They are predicting that it will cause a backlash among the electorate and politicians as more and more jobs leave the shores of the Western world.
The worry for those working in IT in the West is when and how this is all going to end.
They know that they cannot compete on cost with those whose outgoings are in India and elsewhere.
Oracle have already announced that they are doubling their workforce in India.
LogicaCMG have announced that they will be adding 1,500 IT workers to their Indian operation at the same time that they are laying off thousands in the UK and Europe.
Microsoft have announced that they are expanding capacity there as well.
Companies like Xansa are boasting in their financial report that their Indian operation is giving them a great cost advantage over their competitors in the area of Business Process Outsourcing � the growth area of 2003.
Watch With Envy
The software companies who are doing well at the moment are the ones who are involved in offshore outsourcing of business processes. Those not involved in it will be watching the figures of those who are with envy � and guess what they will be planning next.
At some point soon this will become a major political issue in the US and the UK � and politicians who haven�t taken notice of it may suffer the political consequences.
How many jobs will be gone for good by then though?

Boycott these companies and use Open Source Software. Charge these companies heftily to use Open Source software. I am sure people would be interested to keep their high-value jobs on-shore.
PS. I hope I don't have to give up Eclipse by the the same token! That's primarily IBM's , isnt it?
regards
[ July 30, 2003: Message edited by: HS Thomas ]

[HS Thomas]

These reasons apply equally to the US and the UK :

Horror Show
Those that work in IT have watched in horror as they�ve seen thousands of IT jobs being outsourced offshore to places like India. Even companies that have not touched it so far will be considering it.
So, when it comes to the time when the company or client that you are working for is looking at the situation to see if they could benefit from the cost gains from offshoring, it would be as well if you had some ammunition on the disadvantages of it.
1) Unknown Consequences � Too few companies have tried it, so therefore companies doing it at the moment are taking a bit of a risk. Perhaps in a few years time the newspapers will be full of examples where it has gone wrong
2) Political Consequences � as more and more jobs are shipped offshore, this issue is going to higher and higher up the list of important political issues. Unemployment usually is a lagging indicator, and normally starts rising at this point in the cycle. It is going to get very difficult for the government to explain why they are allowing so many jobs to go offshore. Companies that have sent jobs offshore may become the villains of the piece � and their customers may not look kindly on what they have done
3) Fewer Customers � As more and more companies send their systems development capability, as well as other jobs, offshore, fewer of their customers in the UK are going to be able to afford to buy their products as many of them will be unemployed, and those still working will have to compete with the low wages paid to offshore workers. Those that have gone offshore will get the blame for this, and their products may suffer � even if they are a little cheaper
4) Data Shipped Offshore � Many customers are not aware, at the moment, that personal information about them is being shipped offshore. According to trade union Amicus, there may be Data Protection Act implications. Even where there isn�t, the customer�s data is less secure than it used to be, and there will be bad publicity for companies who send their systems and data offshore, when their customers� personal information is misused. Just imagine the publicity if a terrorist got hold of information about a UK customer from a UK company who had sent it offshore. Also what bad publicity it would be if someone in India had stolen someone in the UK�s identity to purchase goods and services
5) Time-to-Market - This is a far more important business driver than cost in normal conditions for most companies. Those that are getting cost advantages now from offshoring may find that their competitors have the more important Time-to-Market advantage on them in the future, as they have their developers onshore
6) Joint Application Development - Those who have their Business Analysts onshore will have the advantage of having them close to their Business Users (who will not be going offshore). During the development of a business system there is always a lot of interaction between users and Business Analysts and this helps greatly to give the business users the system they want � and not what they ask for, or what the Business Analysts think that they want. Joint Application Development, which contributes so much to speedy and accurate systems would not be so easy with offshore developers
7) Analyst / Developer Interaction - Those who have their developers onshore will have the advantage of having them close to their Business Analysts. There is always a lot of interaction between developers and analysts during the course of a project, which helps towards a better system
8) No Reality Check � Because of the culture of Indian developers and others from the developing world, they don�t like to question those further up the hierarchy than them too much. Therefore you tend to get the systems that you have asked for rather than the systems that you want. There is no reality check. In the UK, during the course of a project, there will be so many times that a developer will go over to the desk of an analyst and say �Did you really mean that� resulting in a change to the specification. Indian developers are far less likely to do this. You get what you ask for � no matter how ridiculous it is
Who Will Win?
So, who is going to win this battle? Will it be those that have cut development costs by going offshore � or will it be those that have Time-to-Market and the other advantages from staying onshore?
We can�t tell at the moment. We can only tell during a period of normal economic activity.
So the game hasn�t really begun in earnest yet!
Those that have made the correct decision will be the ones who will reap the most benefits and will be more likely to grow as a company.
The game will really be on over the next few years. Those that have offshored may well find that in gaining cost advantages, they have lost the crucial Time-to-Market advantage.
If so, they�re really going to lose out.
I hope they do!

[ July 30, 2003: Message edited by: HS Thomas ]

[Tim Holloway]

Originally posted by HS Thomas:
More doom and gloom.



Boycott these companies and use Open Source Software. Charge these companies heftily to use Open Source software. I am sure people would be interested to keep their high-value jobs on-shore.
PS. I hope I don't have to give up Eclipse by the the same token! That's primarily IBM's , isnt it?
regards
[ July 30, 2003: Message edited by: HS Thomas ]

I hate to be the bearer of bad tidings, but as the author of a number of open-source efforts, I've no choice. My open-source programs were written because I was getting paid to do closed-source software and/or tech support, the caffeine and junk food consumed in the process came from that revenue as did the equipment I used to create and publish it.
Ever notice how few FOSS apps have Indian authors? Even at today's low prices, a home computer costs a significant slice of what you'd get paid working in Bangalore - a $600 Dell Special weighs in at well over 26,000 Rupees. Which is around 1/10th of a typical Indian Java programmer with 2 years experience brings home before taxes.
If the domestic labor market does in fact evaporate, the free ride oculd be over. I'd have to hock my gear to buy groceries, and no one over there seems prepared to take over for me.

[Pakka Desi]

Originally posted by Tim Holloway:

Ever notice how few FOSS apps have Indian authors? Even at today's low prices, a home computer costs a significant slice of what you'd get paid working in Bangalore - a $600 Dell Special weighs in at well over 26,000 Rupees. Which is around 1/10th of a typical Indian Java programmer with 2 years experience brings home before taxes.

I am sorry I don't quite understand what point are you making regarding how few FOSS developers are Indian. Can you please put it in simple english?
BTW, you got the figures about Dell example all wrong.
The cost of a comparable PC in India is almost double than the cost in US. I checked only a couple of weeks ago and the Compaq laptop that I can get in the US for <1000USD is more than 100,000INR ( == >2000USD) in India.
The salary for 2 yr experienced Java prgrammer is India varies from 15,000INR to 25,000INR depending on the company and the school she/he is from.
The cheapest P4 desktop (local assembled) that you can get is abt 40,000INR and it won't get you more than 128MB RAM, 40GB HDD. Forget about good graphics cards.
The cost of dial up internet connection is 50Rs per hour (including phone charge). Cable or DSL internet is virtually non-existing. Except for the 5-6 metros where it is available it is too costly (more than 3500INR per month).
Kindly do your math based on these figures.

[HS Thomas]

I am sorry I don't quite understand what point are you making regarding how few FOSS developers are Indian. Can you please put it in simple english?

Tim's point was that any free Open source software gets written when there's some spare change in the pocket to take care of living costs.
So Indian (or any other nations) programmers who have a hard time making a living don't contribute to writing free open source software.
Sound the death knell for free Open source software.
But thanks for the figures for making comparative choices!
regards

[HS Thomas]

FOSS never really an option to combat offshoring.
Today's headlines read IBM inks $1.1 billion outsourcing deal . A 10-year information technology services contract with ABB, a Swiss power and automation technologies company. IBM Global Services will take responsibility for the operation and support of ABB's information systems infrastructure in 14 countries in Europe and North America, representing some 90 per cent of ABB's information systems infrastructure. Under the deal, announced Monday, IBM will take over the management of ABB servers, operating systems, corporate networks, personal computers and help desks.

and IBM to invest $1 billion on DB2 development.
FOSS is no-where in such competition stakes.
The company also announced what it described as a unique pricing structure for ASPs. Under the system, the database can be bought at a knock-down price with IBM receiving a percentage of the revenue generated on a 'per subscriber' or 'per transaction' basis.
regards
[ July 30, 2003: Message edited by: HS Thomas ]

[Sudd Ghosh]

Mark-
Will some kind of signature collection, or writing a message to the senators/house of representive help?
I used to get the following kind of message/format from somewhere, so I am pasting this EXAMPLE in case you plan to follow it up and make a generic message which the US IT guys can use. I don't know if this kind of stunts actually work here(I'm just 6 yrs old in this country).
BTW.. I met you in JavaOne-2003(Moscone).
Thanks and regards, Sudd Ghosh
------------
I faxed the following message today to my House Representative, John LaFalce and my two Senators, Charles Schumer and Hillary Clinton. Although I had also e-mailed the same message, I thought it best to follow up with a FAX because the lawmakers are usually inundated with e-mail which may not be read. Faxing is the quickest and surest way to bring matters of concern to the attention of our lawmakers.

If you would like to send a similar letter to your House Representative and your two Senators, you can get the fax number and other contact information by following the procedure described below:
Click: http://congress.org
Type your zip code in the box under 'Elected Officials'. Click: "GO"
You get the pictures of the President , your two Senators and your House Rep.
Click each of the photographs and you get the contact details you need.
The rest is mainly a copying, pasting and printing job. If you would like to make changes to the text of the letter, you can do so.
IMPORTANT: As soon as you are done with, PLEASE RELAY THIS MESSAGE to all your friends and relations resident in the United States.
-----------

[Mark Herschberg]

Originally posted by Sudd Ghosh:
Mark-
Will some kind of signature collection, or writing a message to the senators/house of representive help?
I used to get the following kind of message/format from somewhere, so I am pasting this EXAMPLE in case you plan to follow it up and make a generic message which the US IT guys can use. I don't know if this kind of stunts actually work here(I'm just 6 yrs old in this country).
BTW.. I met you in JavaOne-2003(Moscone).
Thanks and regards, Sudd Ghosh

Hi Sudd, I remember you. :-)
Well, I've never really believed such petitions did much to change opinions (although they can be useful for getting measures on a ballot). But even if you could get change the mind of your reps, what exactly would you have them do?
Natalie, for example, wants to end H1B visas. That's only a few hundred thousand jobs in IT. What other measures would people want to see? Many people seem bitter about it, but I'm not seeing many viable proactive solutions.
--Mark

[Natalie Kopple]

I do not think we have to do anything to prevent job offshoring. International terrorism will be able to keep all jobs onshore from now on. Today's breaking news is the suicide bomb blast in front of the Marriott Hotel in Jakarta, Indonesia. The Marriott Hotel is an American owned company. Apparently, terrorists are targeting American properties overseas.
I wonder if MNCs are still interested in offshoring based on security concerns. I am very scared by today's news. I would not move operations to anywhere close to a muslim country if I was the decision maker of a MNC.

[Tim Cerillo]

Originally posted by Natalie Kopple:
I do not think we have to do anything to prevent job offshoring. International terrorism will be able to keep all jobs onshore from now on.

Really? Can you educate my simple mind why?

[Mark Herschberg]

Originally posted by Natalie Kopple:

I wonder if MNCs are still interested in offshoring based on security concerns. I am very scared by today's news. I would not move operations to anywhere close to a muslim country if I was the decision maker of a MNC.

One way around it is, rather then having IBM open a shop in India, some Indian company, probably founded/funded by former IBM Indian nationals sets up shop and opens an sales office in the US. They work closely with IBM. All this is kept low key. Effectively IBM opened a branch in India, although on paper, it's an Indian company selling services to the US corporation. My guess is terrorists prefer more public targets, like a McDonalds, rather then foreign "shell companies" for US MNCs.
Even if you assume those are just as vulnerable, consider the true cost.
US developement: U dollars
Indian Developement: d% of U dollars, dU
Chance of terroist attack or similar incident: t%
Cost of such an attack: C
Now the code and documentation can be backed up nightly/weekly to US servers. The real cost is simply hiring more people and having them ramp up on the project.
If dU + tC < U companies will still outsources. Roughly speaking, companies estimate d around 10-20%. t is probably less then .01% (the chance that your particular company will be hit). C is on the order of U. This is an approximation, since there is lost time, and the fact that company execs will be less excited about flying to that location to work with them in the future. If the project isn't too time sensative, i.e. the loss of 2-3 months won't totally tank it, then the tC factor isn't significant.
This is an oversimplification. It's not really the threat of the building blowing up that worries people, but rather the personal fear of employees not wanting to go there, even if just once a quarter. It's hard to measure that.
Historically speaking, US MNC's have been doing business in Israel for decades.

--Mark

[stara szkapa]

Originally posted by Mark Herschberg:
Remember, of course, that the companies aren't static. If you tell Microsoft, for example, that it can't outsource to India, it could create a shell company in Canada which does outsource there.

Canada is the worse example of outsourcing. Remember its less then 30 mil people, wages are quite high, taxes very high, US is stealing Canada jobs as well, and you Americans could move and work in Canada quite easily. Actually finding alternative to India is not that obvious.

[Frank Silbermann]

The Indian rupee is undervalued relative to the dollar because until recently there were few Indian products Americans wanted to buy, but quite a few American products that Indians wanted to buy. As India develops a software industry, the value of the rupee will rise. It will hurt us badly, but there will be a limit.
stara szkapa: Canada is the worse example of outsourcing. Remember its less then 30 mil people, wages are quite high, taxes very high, US is stealing Canada jobs as well, and you Americans could move and work in Canada quite easily.
Well, Canadians are enthusiastic supporters of the United Nations, and one of the UN's stated goals is the equalization of wealth between the western countries and the poor of the world. The "western countries" are about one-fifth of the worlds population, and that proportion is shrinking, so equity will be reached when the average Canadian is as poor as the average Indian, Chinese or African. (Makes me wonder why Canadians are so enthusiastic about the UN.)

[Rufus BugleWeed]

I'm no expert on Indian culture or foreign trade law. But it appears to me that India is heavily subsidizing the formation of intellectual capital and selling it for less than it costs to produce it. This situation meets the definition of dumping.
Indian software should be hit a tarrif.

[Pakka Desi]

Originally posted by Rufus BugleWeed:
I'm no expert on Indian culture or foreign trade law. But it appears to me that India is heavily subsidizing the formation of intellectual capital and selling it for less than it costs to produce it. This situation meets the definition of dumping.
Indian software should be hit a tarrif.

Such indirect subsidy happens everywhere. As I understand, one of the main reason personal automobiles are so common in the US (as compared to the rail road network) is because the US govt. spent huge amount of money in developing the roads in the 50s on tax payers money. While the rail road companies had to install the railways on thier own. The ultimate beneficiary were the auto companies. Isn't that a subsidy?
US automakers Ford and GM are selling cars in India. They should be hit with tariffs as well then.
Most of the advanced technologies are developed in research labs which are funded by the govt. Isn't that a subsidy?
The fact is that nobody had a problem with what american/western companies have been doing in other parts of the world for decades. US was/is the biggest pusher of WTO. Why? Because they wanted to exploit the third world market. Now that they are at the receiving end, everybody is making a noise.
Developing nanations cannot compete with developend nations on technology alone. They can only compete on chaep labor (for now). And you want to take that advantage away? Why? Just because it doesn't suit you? Well, then developed nations should stop their companies from selling their products in the developing nations because it doesn't suit us. Live in an isolated world.
Some states are banning ouffshoring. That's the biggest hippocracy in the world. But than I've always maintained that might is right

[Tim Holloway]

Sorry if my calculations were off-base - though I did see Dell machines advertised for as low as $800-900 in the Times Of India the other day. I'm unclear whether the monitor comes with that, however. In any event, doubling the percentage of required income only amplifies my point.
I can't speak for various other greedy people out here, but my own personal concern is that it's a repeatedly-demonstrated fact that when the US economy crashes, it takes the whole rest of the world down with it, so everyone has a vested interest in health of the US economy until the day arrives when this situation no longer exists.
I don't want to see the Indian tech labor market destroyed. I think it's one of the greatest things that's happened for India since the Brits went home. However, because of of the extreme differences in cost of living, if you employ me at US wages, my federal tax bill alone comes to the salaries of two Indian Java techs. And while obviously Uncle Sam is't going to send that money over there, there's enough more that I can spare that it easily would make 3 people happy - me and 2 more in Banaglore.
However, if you cut me out of the loop, you are now dependent on some corporation to spend that money in Bangalore. They may, but if I'm unemployed, I'm not buying their goods/services, so they may simply cut back and keep the savings all to themselves or hire only one Indian programmer. Amplify me by millions, as most projections have, and there's a serious economic threat that extends all the way back to the far-flung corners of Asia.
In any event, we are repeatedly reminded that the American middle class drives the American economy. If you take my salary and give it to some exec as a cost-cutting bonus, relatively little of that money goes to the line-level producers of goods and services in either of our two countries - an awful lot of daily consumption is per-capita rather than based on net worth.

[Natalie Kopple]

Last year, when tension between India and Pakistan escalated, some CEOs of American MNCs threatened to pull out of India in case of a war. India weighed the presence of American MNCs much more than fighting against Pakistan; and consequently, India was willing to live in peace term with Pakistan.
The fact indicates the vitality of offshoring to the Indian economy. On the other hand, it is impossible for international terrorists overlook the concentration of American MNCs and American interests in certain parts of India. Those terrorists are not stupid cavemen.
[ August 06, 2003: Message edited by: Natalie Kopple ]

[Pakka Desi]

Originally posted by Tim Holloway:

I can't speak for various other greedy people out here, but my own personal concern is that it's a repeatedly-demonstrated fact that when the US economy crashes, it takes the whole rest of the world down with it, so everyone has a vested interest in health of the US economy until the day arrives when this situation no longer exists.
In any event, we are repeatedly reminded that the American middle class drives the American economy.

It is like saying, "Rich provide most of the jobs in the world, so let them be rich". Well, they can stay rich if they are competetive overall otherwise somebody will take them over.
Why should amrican middle class be helped in letting it drive the American (and thus, world) economy? What does an american middle class person have that other people don't have?
I disagree with the assertion that to prevent world economy to from sinking, american middle class has to be protected. Middle class is same everywhere. If an indian middle class person has more money to spend, he will spend it just like an american middle class person would. May be on different things. Ultimately it boils down to who is generating more value. The one who generates more value has more power. Total power (on the world scale) remains the same.
I simple example of this is because of the s/w boom in India, companies like MS are selling their s/w to Indian companies as well as to Indian govt. Intel is selling processors in India. Why? Because the Indian companies have money to spend. Why do they have money to spend? Because they are generating better value than some of the American companies. Earlier, nobody in India used to have imported cars. Now there is a huge market. Why? Because people have money to spend...just like American middle class.
So the point is, American middle class is no holy cow. If it is not able to spend that much then somebody else will. So there is no threat to world economy as you would suggest. Of course, there will be tremors while this balance of power shifts but that's all to it.

[Michael Bronshteyn]

[
[ August 06, 2003: Message edited by: Michael Bronshteyn ]