Dec 2, 2005

Survive Outsourcing again?

Steve Larrison actually responded to some flames I threw his way in my blog. To me, at least, it indicates that he is serious about his site and what he writes there.

>This guy makes the same assumption that many others do; but all that '3 jobs in 6 months' means is that this person was at one company for 6 months.

If you read the article I linked to, it is clear that the writer is talking about the benefits of serial job hopping.

The writer is speculating on how much is enough. One oft-talked-about problem in the Indian IT industry is the rising wage bill, like you mention, but it is also due to salary hikes every year, not only because people job-hop. The reason behind this could very well be that after all the wage hikes, it is still economical to get the work done in India or Indian workers are good enough to warrant such wages. What you choose to believe is up to you. But that still does not address the point that the writer in question may not be a chronic job hopper.

> "Regardless of what rate someone like the above author works at, an experienced person in the western world who isn't a serial job hopper is going to be a better value for any employer."

>>I could say the same after replacing western with Indian. What he is trying to do is to paint all non-western persons as non-serial-job-hoppers, stable employees, who are not out to jump ship at every opportunity they get.

I am doing nothing of the sort. I am just recognizing reality. Though Japanese people are not westerners, their culture promotes loyalty to a company, and company loyalty to employees.

No? The reality is what I wrote in response to your statement. The word "western" is unwarranted in what you said. Any person (western or otherwise) who does not switch jobs is probably better value for a company. There was absolutely no need for you to bring "the west vs. the rest" in that comment.

Try as you might, you can't deny the facts. And the facts are that Indian IT companies experience 30%+ annual turnover. Call centers experience 100%+ annual turnover.
Some jobs are hurt more by high turnover than others.

Agreed. I'm not denying the facts. But consider, if you will, the fact that the Indian culture of employment was similar to what you wrote about the Japanese (without going to the extremes that the Japanese are rumoured to). The word "attrition" did not exist till the IT industry came in (that's right, the "western" companies). If a company is willing to ignore my job-hopping past and also give me a substantial hike in salary while providing me with similar work and environment, is there any reason for me to not switch jobs? Companies actively send out recruiters to head-hunt, and most places are desperate to get people with some work experience. We have executives from "western" MNCs flying down to conduct interviews and accepting people with the job-hopping record that you put so nicely in numbers. Given such a tremendous opportunity, would you blame people for falling for it? And yet, I know good people who have worked in the same company for 10 years and more, out of sheer loyalty or maybe inertia.

Call centers are a different kettle of fish. I don't work in one (should I add, thank God?), but I do know that they employ a lot of young people who are in it only for the money. The ads for call center vacancies blatantly indicate how much a new recruit will earn. Possibly a lot of them leave to pursue higher studies, or a job higher up the value chain.

Applications developers bring more than just knowledge of a programming language to the table. If you have ever worked at a company for several years, you would know that the knowledge of a system gained overtime is invaluable. Productivity goes up once you understand a system and no longer have to do research to determine where a problem lies, or how to make an enhancement.

Yes, and that is the reason why domain specialists are so much in demand. If all you know is a programming language you wouldn't last too long in the industry, would you? But you cannot argue that a person requires complete knowledge of the system that he is working on to be productive. I still maintain that a few weeks or a couple of months should be enough for anyone who is half-way good in his domain to start working productively. (And for the hecklers, his = his/her everywhere in this blog.)

>And trying to portray Indians as job hopping opportunists.

The turnover numbers speak for themself.

I wouldn't say so. Only the bad numbers make news. Let's look at some other numbers: Nasscom in a report said the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012. In such an environment, companies are going to do whatever they can to attract employees. And employees are going to be less tolerant of mistakes that their employers make. Here's more: Call centre professionals in India are well taken care of by the employers, compared to the United States, where the workers were treated like a 'commodity,' said an official of Communication Workers of America, the largest workers' union in the US. ... The delegation from the US, which visited call centres and IT firms in cities such as Chennai, Mumbai, Bangalore and Hyderabad, said the system in India was much better. "We are very impressed by the welfare measures for the workers here," she said. Interesting? And, apparently, the attrition rate in the US call centre industry is in the range of 18-25%, and may even be as high as 40% according to some estimates. Perhaps Steve has the correct numbers, I couldn't find them summarized on the web.

>"and the simple fact that even though Americans cost 4 times as much as Indians, we typically produce more work per person."

>>I take offense at that statement, Mr. Steve Larrison. There are lazy people and good people in all industries, in all cultures. Making such sweeping generalizations will only start a flame war - "Indians are typically more hard working, sincere and talented than Americans. And we are much less violent too."

There is no reason to be offended. Again, the numbers speak for themselves. Though the typical Indian software developer in India works for about 1/4 the rate of what someone in the United States charges, well run projects come in about 20% to 30% less than what you would pay to have the same project developed onshore.

But then a Gartner report says that outsourcing could even be more expensive than doing work in-house (from the "customer service industry" perspective). Oh well...

Tell me this, if all developers in a project being done in the "western" world were to take a salary cut of 50% would the project cost drop by exactly 50%? There are fixed costs, and even more importantly top management salaries to account for as well, I think. However, all this number crunching is totally beside the point, what counts most for a given company is whether the costs are reducing, and if they reduce by 20% to 30% there is no justification for not oursourcing. How much the Indian IT worker makes is a moot point, and perhaps it's up to the local industry to sort that issue out.

There are a variety of reasons for this. But the fact is that Americans produce more work per worker than people from any other nation. That's just part of the reason our GDP is the largest of any country in the world, and larger than the next 5 countries combined.

Indeed? More work in what terms? Dollars paid for doing that work? That just means Americans are, gasp, overpaid! Or did you mean to say that if I can write two thousand lines of quality code in a month, an average American in the same job would write ten thousand? Or that he could get the work done in 400 lines? Or in less than a week? With less coffee consumption? Or all of the above?

Larger than the next 5 countried combined? This sounded pretty intriguing to me...

Numbers are fun, right?
United States $ 11,750,000,000,000
India $ 3,319,000,000,000
China $ 7,262,000,000,000

Wow! Certainly larger than China and India combined. No mean feat, this, but larger than the next 5 countries combined?

Disclaimer: Numbers are from a simple google search, I have no proof of their accuracy and it seems they are from 2001. Hopefully things haven't changed so drastically since then :(

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