Outsourcing - good or bad..for the US and India
By vanny
@vandana7 (100526)
India
December 7, 2011 1:50am CST
Still unable to decide that..
I mean we got good monies into our country. But correspondingly costs have also gone up! You would think that all that money was deployed in right places. Wrong. Do we really need those costly motor races, and motor cycles with break neck speeds that have killed one too many? Government seems to be more concerned about the needs of the rich than those of poor and middle class. Its a different matter that rich and few so it is easy to fulfil their needs. All I can say is we are now grappling with inflation which we truly lost touch with.
Out there in the US - statistics show 865,000 job losses between 1999 and 2009. Dont merely read those as numbers. Each job implies some annual remuneration. Multiply that by number of years and you know what the US has lost. Therefore, if each one of those 865,000 had earned at the rate of $1000 per month you are talking loss of about $10380000000 per annum. But the crux of the matter is - the US didnt lose that much. That is because it must have paid around $250 per month to those people. Effectively, the loss to the US is only $2595000000. It is by no measure a small sum. And these are rough estimates before you point that guns at me. So my question is..
Is the cost of living in the US low enough for people to survive in $250 pm to refer to this being loss of jobs?
Presuming there was no outsourcing, would the companies that outsource and still employ some US work force have survived? Would the unemployment numbers not been still higher in the US had there been no outsourcing?
Of course, I could be very wrong. I am just seeking opinions on this. Because so far I have been under impression that while recruiting immigrants is not favorable for a country, outsourcing is good for the country and its business enterprises.
7 people like this
10 responses
@SpikeTheLobster (6403)
•
7 Dec 11
I've worked in a huge company that followed the outsourcing trend when it started - they saw budget savings by employing in India instead of the US/Europe and went for it big-time.
The funny thing is that the quality of service they got fell so dramatically that they ended up having to re-source everything in the US/Europe after changing providers three times in India.
Now, I'm not saying that the Indian staff were bad or low-quality. Not at all. The major problem was communication (accents and time difference), the inability of the Indian management to handle the US way of working (110%, 24 hours a day, strict deadlines and massive motivation) and the lack of equipment (what use are 6 developers when they only have 1 PC capable of communicating with the version management system?).
In the end, outsourcing cost them more than if they'd stuck with the awesome French dev team (I sat next to them and knew how good they were). So much for economy. 
In a more up-to-date version, I've been trying to show one of my clients why he shouldn't ignore the possibility of employing a UK writer instead of someone on the other side of the world. Knowledge-wise - since he's producing stuff about the UK property market - he's more likely to find someone who knows what they're talking about. Price-wise, it comes out about the same since he has to pay me to edit everything a non-native writer produces (so adds my time to theirs, more money). Time-zone-wise, it's easier to manage. He doesn't see it.
I'm not really "for" or "against" outsourcing as such. I just think people need to look closely at their situation and choose the best solution. If that's outsourcing, great. If not, great!
In a more up-to-date version, I've been trying to show one of my clients why he shouldn't ignore the possibility of employing a UK writer instead of someone on the other side of the world. Knowledge-wise - since he's producing stuff about the UK property market - he's more likely to find someone who knows what they're talking about. Price-wise, it comes out about the same since he has to pay me to edit everything a non-native writer produces (so adds my time to theirs, more money). Time-zone-wise, it's easier to manage. He doesn't see it.
I'm not really "for" or "against" outsourcing as such. I just think people need to look closely at their situation and choose the best solution. If that's outsourcing, great. If not, great!2 people like this
@SpikeTheLobster (6403)
•
7 Dec 11
In this particular case, they were reasonable developers: the managers just didn't realise what they'd got themselves into. The quality requirements and deadlines were extremely high/strict (which we considered normal, since the company is #1 in its field) and they weren't prepared for such demanding clients. Stupid management/sales, basically, taking on more than they could handle.
@thesids (22180)
• Bhubaneswar, India
7 Dec 11
The funny thing is that the quality of service they got fell so dramatically that they ended up having to re-source everything in the US/Europe after changing providers three times in India.
Sadly, I know many Indians who know nothing about the work but the Money and how to make it by doing exactly this kind of things
1 person likes this
@vandana7 (100526)
• India
8 Dec 11
SpikeTheLobster - reasonable developers does not imply they would be good with the business, isn't it? Perhaps they were just starting and they had a key personnel who deserted them half way. Selecting the right party to give the contract to matters. Even if it is slightly expensive it comes with some guarantees, right?
From our end - to be honest, I see many youngsters looking at software engineering as their ultimate goal. They are not facing the fact that this is a short term phenomena. They are not accepting the fact that there is some impermanence in this type of contract even when they see unemployed seniors. Odd optimism. So many institutes have cropped up all around the city, with every unemployed software engineer starting one. What will be the fate of all these when the shop closes down? As it is, everybody has acquired airs. They want to be like the Americans in lifestyle. Ground realities are very different. So will it be good for us? Not sure about that.
1 person likes this
@jennyze (7028)
• Indonesia
7 Dec 11
A friend of mine just came from USA and she mentioned that now the government encourages people to use American's products. Another question is what are the American's products when most of the products there are made in China, India and Mexico? Isn't that slogan to use American's products a bit off and racist? Well, that is another matter.
As for outsourcing, I think it is beneficial to the companies operating in USA not to the people there nor to the government as now government would have to face more and more jobless citizen. The citizen union demands are so high there that the companies could not afford to employ them hence the outsourcing. I think it is beneficial to Indian government to provide jobs to their people, but then I do not know about the politics there....
2 people like this
@vandana7 (100526)
• India
8 Dec 11
I think Americans need to lower their cost of living a few notches. Bring down their quality standards and let the people pay more for higher quality less for lower quality. Let the ball be in the courts of people rather than taking it on the government. Lot of litigation there and hefty awards too. That makes everything manufactured there very expensive. After all, manufacturer has to factor in liabilities for product as well as personnel disputes. Out here, we dont have them, do we? If the quality is rejected by the buyer, it gets sold locally in sales!
I for one dont thing any American can survive in $250 pm. But out here, that is good money in call centers. We have a joint family system. Children live with parents. So rental costs are virtually not there. This cultural change cant be adopted all of sudden by the Americans.
I agree with that union demands..they need to be tempered..and people need to be explained why their jobs are leaving.
@jennyze (7028)
• Indonesia
9 Dec 11
Yeah, you are right. everything there is about suing another for the comfort of oneself. Just like the union demands that don't make sense making them loosing their jobs and their comfort at the end.
If someone slips in front of a shop, he/she will sue the shop. If a product makes them getting a diarrhea, they sue the producer. If an old woman driving a car with a cup of scald hot Starbucks coffee between her thighs, you know what will happen, it will spill onto her thighs. Still she sues Starbucks for it. People does not make sense anymore...
@vandana7 (100526)
• India
9 Dec 11
They've taken suing to extremes I think. That adds considerably to their costs. In fact, that is a major contributor to their costs. Obviously, lawyer's fee is not going to be small considering the cost of living out there. And judge needs to be remunerated you know, and so too each member of jury, that court reporter, and other personnel. So in all, if only Americans reviewed their litigation options, they could bring down their cost of living. I call that as a non-productive contribution. It does not add to national GDP. I dont say people should not be sued. But there has to be valid reason - certainly not the instances that you quoted.
If the manufacturer were to be less concerned about being sued by the emploees then chances are that he would feel more comfortable about starting a few more units. As of now, he prefers to stash it away so that he can bring it out should such needs arise.
@medstudents4 (826)
• India
8 Dec 11
I think eventually everyone will be working for everyone. Since the time this globalization and "world is a global village" started, outsourcing has become even more prevalent. Previously, it was limited to "within" a particular country and now since the whole world is like a country, it appears like a trouble to us in the long run. However, I think it is no less than random selection and how nature takes its place. Population is increasing everyday, eventually everyone will need their "neighbors" help. No offence, but I find it very economical either way, buyer gets things done, seller gets the price. There is much talent in this world, outsourcing is like exploring that without compromising the cost. I like this idea very much!
Outsourcing will also make people become competent. Just like survival of the fittest. If poor don't want to work and learn new things, they will be poor forever. If rich don't know how to spend their money wisely, they will no longer be rich. People just need to extract the positives from outsourcing, which will be inevitable always!
-May God and Peace be with all of us!
@sid556 (30959)
• United States
8 Dec 11
Are you serious right now? So many call center jobs are outsourced. It doesn't take a lot of competency to work in a call center. It is so so irritating to call for help for just about anything and get a foreign person that yes..speaks English but with such a strong accent that we can't understand a word he says. It's painful to him and painful to us. I've nothing against outsourcing. I've spoken to foreign people that speak very fluent english and I'm glad we help other countries. The problem is that they aren't hired for their ability..they are hired because they will and can work so cheaply. They are getting screwed over as badly as we are.
Aww...
@vandana7 (100526)
• India
8 Dec 11
Blondie is right on one account - we are getting screwed over as badly as the people from the US. All that money that is coming in is going towards luxuries rather than necessities. New infrastructure is being developed for facilities that are export oriented. If there is a major slump, all that money we spend on such infrastructure and teaching institutes goes waste.
@bhanusb (5709)
• India
8 Dec 11
Hi vandana,
if cities reflect India then India is developing. Economy is going high. But in rural India most of the villages still have no electricity,gas or health felicities. People are starving there and girl children are neglected. There remain social discrimination. Higher cast people are dominating over lower cast poor people. India's economy is unbalanced. The leaders are dreaming to make the country a super power. Neglecting the marginal class of the society a country can not go high.
@vandana7 (100526)
• India
9 Dec 11
Exactly. In our village - they have just four hours of power. They have to rush to run their bore wells in that time. A lot of fighting goes on when that happens. So folks there get up at 4.30 am, finish everything by 8, and have the rest of the day to do nothing! They sleep by 7 pm. I also agree with that caste thing you've mentioned.
This unbalanced economy is likely to create resentment amongst lower class. There can be a time when they will take up arms and do something like the French Revolution. Time we tried to balance things.
I really dont think we need more Airports. Instead, we could opt for better railways after all, majority will be served with that. I also dont think we need car race tracks to host a car race within the country. Come on! When half the people in the country do not get more than 30000 rupees per annum to survive! Did you see that Kaun banega karodpati show in which there was a farmer who said he lives on that much! We are pampering the rich at the expense of poor. Today, after more than half a century of independence, we are still not self-sufficient in food. Pakistan, and Bangladesh fare better than us. And it is we who benefitted the most from the outsourcing thing - even if the benefit is temporary.
@thesids (22180)
• Bhubaneswar, India
7 Dec 11
I am little informed on this one for sure, but here is what my little awareness tells me -
Outsourcing cannot be good for any country specially where there is a large working population. It will always lead to unemployment inside the country. Maybe good for figures at the economic magazines and what not, but the base facts say a completely different story. Remember that todays majority of workable population doesnt believe in Agro-Based Income, this is another reason that adds.
I believe, it is more about the population ratio at that time - Workable Population Vs, the non-workable population.
2 people like this
@vandana7 (100526)
• India
8 Dec 11
There is a logic that it is good for the country that outsources. It is just that the timing of such outsourcing has gone wrong. It has coincided with Afghan and Iraq wars. Wars are expensive. The cost of outsourcing is certainly not as high as such wars, or even scams such as Enron, and Lehman bros. Politicians can take a stand and make their statements. But we need to think.
Positives I take from outsourcing..it has prevented replay of the Great Recession which lasted for almost 10 years! How? For the simple reason that businesses that would have pulled down their shutters have found another way to remain profitable during recessionary times as well. Not only are they able to save on their costs, they are able to create markets for future after all, Indian who has more money in his or her hand is more likely to smoke 555 or Dunhill because it is classy. Right?
However, discretion is a must. Not every type of job should be outsourced. Moreover, it is necessary to select the right party for outsourcing.
From Indian perspective - it is bad. People get accustomed to high standard of living and think that this phase will last forever. It will not. Sooner or later those jobs will dry up here. What then?
@kingparker (9673)
• United States
8 Dec 11
A company seeking outsourcing is nothing with them, because they simply want to make profits to maximize their earnings. Every enterprise would do the same. In domestic, U.S. for example, many people are reluctant that our companies, U.S. companies exporting the jobs to somewhere else, and it became most people angers. So, whether outsourcing is right or wrong, we just hope that everyone can keep up their living, and be able to pay bills from month to month.
@sid556 (30959)
• United States
19 Jan 12
What you are not grasping, Brownie, is that many of these businesse's that are outsourcing are not anywhere near the point of falling. The recession is hitting us working people...including many of the workers at these big business's that get laid off. The higher ups in these places are doing just fine and even better now that they can hire you guys to do the job for so so much less! MY meager pay would be amazing to YOU...What they have would be like winning the lottery to both you and I. Sure those other things are contributing but they are not hurting these big business's in the least. They wouldn't know poor if it hit them in the head.
@vandana7 (100526)
• India
8 Dec 11
I understand how you feel. But I feel that by outsourcing, the businesses are actually ensuring their survival during the recessionary times. If they are able to survive, they are able to keep more people employed. If they cant squeeze the monies in some activities, then chances are that they have to downsize. Effectively, high unemployment in current scenario is inevitable. Outsourcing actually helps to bring it down may be. And may be it helps to make profits in future because a new market is created for the products.
@Hatley (163776)
• Garden Grove, California
8 Dec 11
vandana outsourcing is wrong here as we have still many many unemployed and no 250 dollars a mo nth would not come close to
supporting one person for a month my G the rents here on 2 bedrooms apts run from1200 to 1500 a month.the cost of living in the US is high no question about that and we still have a lot of people out of work so I say stop outsourcing and put Americans to work. they only do that to get super cheap labor shame o n them. we need jobs and a lot of them. my son now is working full time but he suffered through the part time for several years. I am still stuck here in this tiresome retirement center. darn.
@wongchoiyee (7413)
• Malaysia
8 Dec 11
I think is good for outsourcing because there are employment opportunities even to the lowest level of people around in India and US. Like some internet there are jobs for outsourcing like microworkers and etc.
@li123456li (101)
• China
8 Dec 11
Hi,vandana,I would like to say,outsourcing has some relationship with the unemployeement rate.it's done in developed who using a low-cost labor in developing countries to improve enterprise efficiency practices.so it's not good for whole country.not conducive to long- term development,but the immediate benefit
@vandana7 (100526)
• India
8 Dec 11
But I thought that the country that outsourced stands to benefit immediately as well in future.
How? Well, you already know about immediate benefits. But in future, it has equipped citizens of other country to buy its products, it has effectively marketed its products! Moreover, it does not have spend precious resources on teaching institutes. Savings all the way..
Unemployment rates may not exclusively be related to outsourcing. It is coincidence that some problems have surfaced around the same period. Lets examine the outsourcing period from 1999 onwards. Right? We've also had other problems like Enron, Lehman Bros, World Trade center, and Afghanistan wars. The cost of these has been much higher than the cost of what has been outsourced.
Now, I am not saying outsourcing is right. Quality does take a beating. So it is necessary to be cautious on that front.
The country that receives such contracts..honestly..its sad. While it is nice to see all that money step in, people get so accustomed to high standard of living that should things go awry, they would fall down with a thud. For those who are not directly connected with outsourcing, cost of living has galloped considerably. Inflation is scary.
@gabrielpatrick (5)
• New York, New York
5 Dec 13
Time comes by quickly and change happens very fast. Technological advancement has redefined the lives of people as the world is driven by information.
