Will trend of tech outsourcing to India stop or reduce in next 2 to 3 years?

[echarcha]

I had interesting conversations on two seprate ocassions with some senior poeple from two very well known companies and both are in the Silcon Valley.

After general chit chat the subject was about downturn in economy, cost cutting and how outsourcing to India has helped etc.

Both had something interesting to say.

First one -"Traditional IT jobs like payroll, huma resources related IT, data mining , data warehousing - jobs which are well defined and have been done the same way over the last 2 or 3 decades will be outsourced to India and continue to be. Chances of screw ups are very less because the IT process is time tested. So it does not matter if the Oracle Report Writer or the Stored Procedure is written in US or in India - the business logic is the same."

Second -"Its true that IT will be outsourced to India but not critical or core development. From experiences it is seen that the quality of code is not upto the mark. If its IT related taks like SQL and related 4GL type tasks, then there is not much of an issue and work happens smoothly. Yet when it comes to other core development like product development without using 4GLs or complete core modules which can then be integrated into the core code of the product it still is best done here. The quality of code is one problem and maturity is another. Now everyone cannot afford InfoSys or Wipro who have 6 sigma certification. I think this trend will reverse in 2 to 3 years when managers here realise that a product is being delayed. Managers' bonuses are linked to timely release of products. We have had quite some bad experiences with modules developed in India."

I was more curious and so I asked what was it that was bad.

He continued -"Many good programmers are still in USA. They are not just coders but complete developers who understand that just writing if then else statements is not enough. Currently the experienced developers in India are mostly in the top 5 companies and not every US company can see benefits in hiring those companies for outsourcing. The costs of having a core developer in US is not much more compared to hiring an experienced overseas developer. Also communication in core projects is very important and even with video conferencing its not the same as having a developer in the same office."


Well they talked about Quality Assurance also. From my experience in my last product release one thing is for sure. Having development in US and QA in India causes huge delays. I cannot walk over to the testers test-bed and see the problem in real time. Tester files a bug, then I send an email to get more details, then he responds and then I respond. More times than not, I have to log into his PC overseas over a slow link and see the problem for myself. Then try to replicate it here. Its a mess. A lot of time is wasted.

Anyway, I was meaning to write about this for some time and now I had a quick chance while my 'make' process is chugging away to finish a test build.

Your comments please?

[Gr8_Hindustani]

Well, I am not from a technical background and do not understand the lingo quite well. But from what I have heard (I am privy to some very trusted inside info in a fortune 10 company) the outsourcing to India will continue to ramp up. Quality problems are eveyrwhere. Forget the inside info, just today Gartner came out with a report and as per them O/s to India will increase.

Just my 2 cents!

[YedaAnna]

watever said n done, if it finally comes to cost-cutting, which infact is the no.1 factor for corpns these days, then India would prove them to be very cheap. They can sustain the delay in communication, the problems with quality and a host of project-related issues when the sole aim is to cut costs (atleast for some more time).

Ok beat this, We have a client here in the US. We are designing a site for them and charging 50-100 bucks a page depending on wat goes behind the page. Any other US company would not even budge at that price, considering hiring a graphics designer, a content writer, a web designer, then a tester and wat not. Back home I charge anywhere between 500 to 1000 bucks a page. So itz a win-win situation. Client bhi happy company bhi happy. I earn atleast 5 times more and client saves atleast 80%.

[Zen]

A lot depends on –

Result of the next presidential elections in USA.

Stand of American government about the L1 visas.

American and Global Economy – If America stops outsourcing Europe or some other place may start.

Availability of local labor in the potential job markets – This used to be an important factor for the influx of Indians in USA, may be not any more.

International political scenario.

As far as problems associated with remote developement are concerned - they are getting resolved much faster now!

[echarcha]

for sure that outsourcing will continue because currently all that management here sees is - impressive reduction in cost of hiring overseas.

But, even in a reputed company like mine, I have seen problems that outsourcing causes. Mind you, I am very happy that India is getting more business and we are earning more foregn exchange and increasing our clout in computing worldwide.

Yet the problems are quite a lot when one can only afford a core team in USA and rest of the functions in India. For example, most of the code was developed here and some QA was done here. But owing to costs a couple of modules were developed in India and many QA areas were done in India. This created lots of problems. For one, a bug seen on a tester's test bed could not be seen here. It took quite some time to set up exact test bed and exact test scenario to replicate the bug here for purposes of gathering more information and debugging. Again, you might say, we should have exact same test beds here and in India, but again my friends - its about cost cutting. So we cannot replicate equipment to the last detail on both sites.

Secondly, even if you are on fiber optic here, the link to India is slow. Period. It takes a lot of time to even access a file from India and using a PCAnywhere or VNC kind of software is like watching paint dry as you wait for a window refresh. I can understand the need to outsource and can also appreciate it for projects but not for products. With a project you know that such and such is the deadline. If it gets delayed a bit you can tolerate. With a product there is no deadline - infact everyday is a perfect day for releasing the product because you are running a race with other competitors. The sooner you get it out of the door the better it is. So even a delay of a week in a product release can be a major concern.

Well, I feel that a core team should be all in one geogrpahical location. You cannot always video conference and share your code and discuss like you can when you are physically present with your team. Despite virtual meeting technology advances, some things just need you take a quick walk to the lab and see the problems and sometimes a quick tea break to chat about some code problems is far more effective than writing lenghty emails or even using the phone.

[echarcha]

Originally posted by Zen
A lot depends on –

Result of the next presidential elections in USA.

Stand of American government about the L1 visas.

American and Global Economy – If America stops outsourcing Europe or some other place may start.

Availability of local labor in the potential job markets – This used to be an important factor for the influx of Indians in USA, may be not any more.

International political scenario.

As far as problems associated with remote developement are concerned - they are getting resolved much faster now!


You are right to cover these points too, but I was focussing more about the problems mentioned by the people I chatted with. It about what happens when a company is hired in India. Its abotu software development lifecycle.

[YedaAnna]

Originally posted by Zen
A lot depends on –


If America stops outsourcing Europe or some other place may start.



May nahi Zen Pai shuru ho gaya hai...
Infy has already started stalling american projects and turning towards europe as euro is still going strong compared to the amrikan dollar...

When Indian companies are themselves showing their middlefingers to these so called MNC's:D, they dont have no other go than to go to Small-time companies (like mine:D) and these would be the ones who are going to reap it good this time around!!!

[YedaAnna]

Originally posted by echarcha
You are right to cover these points too, but I was focussing more about the problems mentioned by the people I chatted with. It about what happens when a company is hired in India. Its abotu software development lifecycle.

I guess the title of the thread is a lil different from this then:D

[Zen]

Originally posted by echarcha
for sure that outsourcing will continue because currently all that management here sees is - impressive reduction in cost of hiring overseas.

But, even in a reputed company like mine, I have seen problems that outsourcing causes. Mind you, I am very happy that India is getting more business and we are earning more foregn exchange and increasing our clout in computing worldwide.

Yet the problems are quite a lot when one can only afford a core team in USA and rest of the functions in India. For example, most of the code was developed here and some QA was done here. But owing to costs a couple of modules were developed in India and many QA areas were done in India. This created lots of problems. For one, a bug seen on a tester's test bed could not be seen here. It took quite some time to set up exact test bed and exact test scenario to replicate the bug here for purposes of gathering more information and debugging. Again, you might say, we should have exact same test beds here and in India, but again my friends - its about cost cutting. So we cannot replicate equipment to the last detail on both sites.

Secondly, even if you are on fiber optic here, the link to India is slow. Period. It takes a lot of time to even access a file from India and using a PCAnywhere or VNC kind of software is like watching paint dry as you wait for a window refresh. I can understand the need to outsource and can also appreciate it for projects but not for products. With a project you know that such and such is the deadline. If it gets delayed a bit you can tolerate. With a product there is no deadline - infact everyday is a perfect day for releasing the product because you are running a race with other competitors. The sooner you get it out of the door the better it is. So even a delay of a week in a product release can be a major concern.

Well, I feel that a core team should be all in one geogrpahical location. You cannot always video conference and share your code and discuss like you can when you are physically present with your team. Despite virtual meeting technology advances, some things just need you take a quick walk to the lab and see the problems and sometimes a quick tea break to chat about some code problems is far more effective than writing lenghty emails or even using the phone.


Sunit,

As much we used to be focused on the economic aspect and the technical aspect of out sourcing, Now we have two more influences in the decision - Politican and the National Security, both of them makes countries biased towards local labor if not the corporates!

This is getting cut throad - citizens loosing jobs to H1 , H1 to L1 and L1 to the Indian working for 25,000 a month.

Next phase of the cycle - Americans start exerting pressure to end this chain! Look at the MSNBC, CNBC, CNN, CNNfn - they are crying in the same raaga about out sourcing - speacially about call centers.

Many samll scale American recruiting firms have accepted their defeat by Indian firms but now a political mahaul is being built up and this can be made a really big issue if you look at the ways of B!thcy American Media!

[wmac]

Interesting article.

From my point of view continued outsourcing to India depends on some parameters:

1- Changes in costs: Salaries may rise in india and it may become less profitable to do outsorcing in India. Big companies may ask for higher prices but pay less to their employees.

2- New inexpensive IT development bases will apear in next 10 years. I am not sure where but I can guess in central asia (former republics of USSR), in some Asian countries (malaysia etc), even in Dubai and other countries.

3- Management and communication issues: You know I really like you people and I have been interested in India since I was in high school. I mean I do not want to critisize on a personal case. But I think we have very serious communication problems in india.

In my own case you saw that after 6 months I was not able to get 2 provisional admission papers after spending near $800.

I have not worked with Indian programmers/companies yet but if things are this way in other sectors then this is a serious problem that you should look at very carefully.

Lack of good communication is something that frusturates customers. Big customers may reach the result that it does not worth it to struglle with these problems.

We need a more accurate communication and management structure.

4- Quality: I am not sure about the type of projects being done in India now and the quality of work. But if the quality is good then they will be encouraged to give core development jobs to India.

Price matters for me personally but I prefer to pay a little more and have better quality.

5- Maturity and capability: Capability and maturity needed to do big projects. Currently seems a few big companies are able to manage big projects. I think new companies should be started by government or NRIs. It needs time for a company to become mature. And from my point of view the most important thing with a company is its maturity level.

Regards,
Mac

[YedaAnna]

Originally posted by wmac


3- Management and communication issues: You know I really like you people and I have been interested in India since I was in high school. I mean I do not want to critisize on a personal case. But I think we have very serious communication problems in india.

In my own case you saw that after 6 months I was not able to get 2 provisional admission papers after spending near $800.

I have not worked with Indian programmers/companies yet but if things are this way in other sectors then this is a serious problem that you should look at very carefully.

Lack of good communication is something that frusturates customers. Big customers may reach the result that it does not worth it to struglle with these problems.

We need a more accurate communication and management structure.





No Mac,
This is not particularly true with the Indian IT sector (private to be specific)... Indian Software companies are at par with any American Software company management-wise, communication-wise and quality-wise... They whip employees' asses when it comes to quality:D

we dont have a fukking sound marketing sector..o/w we wud have had our own microsoft;)

[Zen]

Originally posted by wmac
Interesting article.

From my point of view continued outsourcing to India depends on some parameters:

1- Changes in costs: Salaries may rise in india and it may become less profitable to do outsorcing in India. Big companies may ask for higher prices but pay less to their employees.

2- New inexpensive IT development bases will apear in next 10 years. I am not sure where but I can guess in central asia (former republics of USSR), in some Asian countries (malaysia etc), even in Dubai and other countries.

3- Management and communication issues: You know I really like you people and I have been interested in India since I was in high school. I mean I do not want to critisize on a personal case. But I think we have very serious communication problems in india.

In my own case you saw that after 6 months I was not able to get 2 provisional admission papers after spending near $800.

I have not worked with Indian programmers/companies yet but if things are this way in other sectors then this is a serious problem that you should look at very carefully.

Lack of good communication is something that frusturates customers. Big customers may reach the result that it does not worth it to struglle with these problems.

We need a more accurate communication and management structure.

4- Quality: I am not sure about the type of projects being done in India now and the quality of work. But if the quality is good then they will be encouraged to give core development jobs to India.

Price matters for me personally but I prefer to pay a little more and have better quality.

5- Maturity and capability: Capability and maturity needed to do big projects. Currently seems a few big companies are able to manage big projects. I think new companies should be started by government or NRIs. It needs time for a company to become mature. And from my point of view the most important thing with a company is its maturity level.

Regards,
Mac

Mac,

Indians software firms have the most aggressive workforce on their disposal to make literally world class products and consulting services.

These temple going vegitarian nerdy eat their compitition raw like cannibals! Take my word on it man - don't judge them based on your college application issues :) ... (really don't mean to derail this nice thread - consider it a side note!)

[vakil sahib]

as long as we provide a good technical service coupled with cheap labour large companies will continue to outsource in india.
i can see this trend continuing for a long time to come.

[echarcha]

I am happy because after a long time I have reached page two of a thread and have seen serious responses and not just derailment. Keep it up :up:

[smartganduinuk]

Originally posted by echarcha
I am happy because after a long time I have reached page two of a thread and have seen serious responses and not just derailment. Keep it up :up:

charcha pai,

recd ur pm and hint in another thread - but i didnt want to reply - because if i had replied - i know that 100 pro-americans are gonna take the bait and derail the thread :D:D

[Zorro]

I am in a different field than most of you IT guys, so cannot comment a whole lot. But I have been looking for sources in India and China that we can outsource our 'discrete event simulation analysis' projects. Already, most of our FEA work goes to India/China. Based on my dealings with overseas suppliers, I find that it is important to have a representative of the overseas company based in the US. If any of you know of anybody in India that does discrete event simulation modeling using Witness or Automod in India, I would like their contact info.

Further, my company's IT department has recently been sold to IBM. Recently, I had some problems with an HP plotter which forced me to call our internal helpdesk. The call was first answered by a person in Toronto ( I am based in Detroit), was later transferred to an HP call center in Romania! So there definitely is some competition to India in the BPO market.

[echarcha]

Originally posted by smartganduinuk
charcha pai,

recd ur pm and hint in another thread - but i didnt want to reply - because if i had replied - i know that 100 pro-americans are gonna take the bait and derail the thread :D:D

smarty, you got the right hint about that war thread. Thanks for that. For now, can you please comment on this thread itself. I look forward to what you have to say. As I said, in the beginning, I had some conversations - rather I was listening and asking questions - to some experienced and senior management people of well known companies. I have reported what I have heard.

Awaiting your response. And those who will derail the thread.. well I will surely delete their posts.

[Big-G]

It's a win-win situation for both the parties. For US companies, what they pay to Desi corps is peanuts. While for the Indians, after conversion to Rupees, the figure is pretty impressive. In a hard-core capitalist economy like US, the bottom line is profit. As long as the profit equations remain valid, outsourcing will continue.

[Zen]

I would try once more to bring my point in attantion!
Cost cutting is one of the most frequently used way of increasing profit margins - agreed! ... People have started to see this outsourcing as anti-national and bad for the domestic economy!

What if these voices get their attantion? get ahead, move on to the next "What if " guys!!

[YedaAnna]

Originally posted by Zen
I would try once more to bring my point in attantion!
Cost cutting is one of the most frequently used way of increasing profit margins - agreed! ... People have started to see this outsourcing as anti-national and bad for the domestic economy!

What if these voices get their attantion? get ahead, move on to the next "What if " guys!!

aisa nahi hoinga paaji... private companies have a strong foothold in this capitalist arena here... they wud show their finger to all this anti-national propoganda and surge ahead o/w threaten to close their shops which the present administration wud definitely not afford to bow down to:)..

[Big-G]

Originally posted by Zen
I would try once more to bring my point in attantion!
Cost cutting is one of the most frequently used way of increasing profit margins - agreed! ... People have started to see this outsourcing as anti-national and bad for the domestic economy!

What if these voices get their attantion? get ahead, move on to the next "What if " guys!!

Your point was duly noted and responded to. Once again, when the economy is captalistic, the main driving factor is MONEY (aka profits). This factor over-rules everything including people's voice. Especially in the totalitarean state of affairs that this country is moving towards, people's opinion wouldn't make more of an impact than a drop of a pin in a hydro-turbine chamber.

[Zen]

In my opinion this is quite an underestimation as Gandhi said -

"first they ignore you then they laugh at you and then you win" ... I am still not in my exact comfort zone - which used to be Dow between 13000 and 14000 by the way! Have been watching some TV friends, and I am really not comfortable with the way they attribute this to the unemployement of 7 million folks - majority of them white white collared middle managers and IT people!

Oh yes, American white men become drama queen b!tches in a snapp when the heat touches their asses baby and they are not going to give up their lunches at applebees and dinners at Red Lobsters! watch out!!

[echarcha]

The corporations rule the roost. No political party in USA is going to screw up the economy or fight with corporations. Corporations hold a big clout over both parties. This market is Capitalist (and I have started liking this ) and MONEY rules and I say nothing wrong in it. The prosperity and material comforts that we all see around us have been possible with a open and competitive market system.

I am happy that India will get more foreign exchange and our brethren will get more jobs and overall we will prevail all over as the Back Office of the World.

[compukid]

hi,
well..as far as i have seen...true..that Outsourcing is becomin a BIG thing now...for the US companies...but i guess a lot of it was always outsourced...but now because everyone wants to set up call centers in India and a few states are raising issues about it....this thing has become Big News these days.
Personally i think, call centers and such stuff can be kept overseas...but core technology development shud stay in the originating country ...US here......thats just what i feel...
bye.

[GpeL]

Out sourceing might stop from government agencies but no one can tell private corporations to not outsource.. doh!!.

[echarcha]

Originally posted by GpeL
Out sourceing might stop from government agencies but no one can tell private corporations to not outsource.. doh!!.

Thats true.

I have seen two examples within my company where on group had major success by handing off some core development overseas. And in one group we had real problems with two core features. Anyway.. I brought this up because I heard what I have written and wanted to discuss with you..

[Zen]

We should consider writing for news papers now - LLKC at its best baby! The following artical about outsourcing is in hindi but the author saved himself from writing a conclusion or his opinion - overall a good read.

http://www.webdunia.com/news/samayik/0306/21/1030621004_1.htm

[DesiBaba]

herez mah 10 cents..mah 2 cents r free...

outsourcing of code development to India will continue..all QA work will remain in US..

[desichacha]

hi

My thoughts -- trust me this outsoucing topic is what we discuss everyday.

COST:

A typical big five software company of india charge anywhere been 20-40 dollar per hour which is close to $5-6 K per month.This is almost same as that of what software engg in usa is ready to work for.

and tust me working at 5-10 dolllars you are not going to be a quality people.

Quality:

Only way to ensure in IT outsourcing is really quality where we are really lacking. Quality is surely going to be a question which all know once a ms guy from usa is ready to work for 60K. This cmm level 5 and all doesnot ensure anything if people who work have no regard for quality.



Rationalization Process

forget those 100+ salary for writing in any other language than c or assembly. Plus you will have to have phd or a top 5 mba up your ass.

that is dream which americans have to forget.
This is very much true in almost all other tradtional engg fields. going to be same in IT also.


Quality of Life


Another point is quality fo life. USA will still attract best people to come and work there for quality of life.


Nationality

Trust me friend this is captalist society but americans still know that they are happy because economy is stong and returns come back to them. They are not going to let it go.


recently they have imposed 40% surcharege on chips from south korea as they feel those people ahve advangte to create chips.


i am just writing all this because most of hte people here really feel indian has some great talent in IT.

people learning java or doing some engg degree from some stupid college ( only IIT's are decent college with few good REC's)

after sometime code which we produce so called customized solutions are goign to go away man. products are going to rule and there customnization is usa people also start doing for same price as us we are doomed.


aage bhai pata nahi
God has yet not entitled me with the job of predicting future.

[Zen]

People have a very short memory – Specially Indians! Have you forgotten or do you really even know about the ruckus created by American Domestic Iron Industry, which was not able to survive the free trade – their slogan was - "No Free Trade Without Fair Trade". Yes they are so good at selling their point!

Does anybody remember how the federal government yielded to the pressure of this anti-imports lobby and Bush imposed 30% tariffs on these imports! This all was done to help out the domestic Iron Industry – who’s ass was on fire for the cheaper imports! What happened to the Free trade policy then?

Their movement against these imports grew some time in late nineties against the export of Iron in USA – the lobby used the word “dumping of surplus Iron” for this export in their manifesto – as if it was not a needed metal but some foreign waste! They wanted 40% tariffs on the imports!! In mid 2002 they almost won what they wanted!!

USA has backed off from its own policies and principles as and when needed so at least puhlease spare me (and yourself) of this so called free trade point! Carporates fund the elections but it people who vote! and and the end of the four years ita people who have power!

The same kind of tariffs or some new creative ways can be very easily found out to stop the outsourcing too!

So, Free trade – MY ASS! First it is about the comforts of the American masses then it is about the corporate fortunes!!

A quick reference here -
http://levin.senate.gov/releases/200102col1.htm
http://www.lcaships.com/ar2steel.htm
http://www.usatoday.com/money/covers/2002-03-06-steel.htm

Another point about Indian worker not being good - Indians are very good workers and are very low maintenance as compared to their American counterparts I think they are still far being their Japanese counter parts. If a person just could not get in IIT for he was two marks short of the cut off – it really does not mean that he is intellectually any less! I have see many non-IIT programmers coding better than those from IITs! Bill Gates is a drop out by the way!

PS: speculating future is sure fun if not predicting it! ... why are si-fi movies always the best sellers! ;)

[desichacha]

Shant yaar


Tum to senti ho gaye ho.

We all know USA doesn't believe in fair and squae play ok.

And that is exactly my point. After sometime they are going to make conditions such that almost all services work will make more sense only from usa.