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Thoughts on Outsourcing

Wired 12.02 Cover. Copyright © 2004 Wired Magazine. Wired's cover says it all. American IT jobs are being outsourced to India. I, for one person have been mostly pissed about the whole situation. My American friends who know about this probably think, "why is this guy, who's not even American, thinking so much in favor of protecting American jobs?" But they never say it to me. It might be my rivalry towards India, or my fear of not finding the future of my choice here in the U.S., but mostly, it's my love of seeing this country as a model for the whole world. Which can't be disrupted, in this seemingly brutal and abrupt wave of outsourcing.

Let's start of of with the bad side. More than half of the Fortune 500 companies are already outsourcing to India. By the end of this year, one in 10 IT jobs will be overseas. That number would jump to 3 million jobs or $136 billion in wages (how much is that in lost income taxes for the government?). People are getting tired of calling up Dell and hearing the Appu accent. I, myself have had experiences with third class outsourced "U.S." services. Thousands and thousands have already lost their jobs and a NJ State Senate wasn't even able to get a bill through the state assembly to ban state contract work from being outsourced because of efforts of Hill & Knowlton, the Indian IT industry lobyist from Washington D.C. Some IT personnel are being forced to train their Indian counterparts to do their job, and then being laid off. Such a friggin' shame.

The Wired article that stirred these thoughts once again in my mind is perhaps the first broad look at the current and futures trends of IT outsourcing, and it's serious implications. The major point made over and over in the article, by both Indian IT workers and the author, is the inevitability of change. But come to think of it, mostly all of the historical shifts in U.S. work trends have just moved people from one career to another. But now jobs are going out, and IT in just the beginning. Any job that doesn't require close proximity to the local workplace or the client is a potential oppurtunity for an outsourcing consultant.

Now let me find some promising, a bitter better bright future, points about outsourcing jobs to India. No matter how big pool of technically sound workers India can offer, there will always be an invisible cap limit to how many job can be exported. India's top IT firms still make fractions of what U.S. companies make, and even with a $57 billion outsourcing industry in India, that would still amount to less than half a percentage of the U.S. economy. 86% of the country's population lives below the poverty line according to the U.N. Human Development Report of 2002. Now if a few million people are infact making $8,000 in IT jobs outsourced from America, it really provides growth assured market for American products, like the veggie BigMac's they are already hooked on. Right now they believe America is going their way for the "quality"... unfortunately, they haven't understood the psychy of the American CEO: more profits come first. So once the Chinese and South East Asians get a better grasp of the language and a broader look at the market potential, it'd be a totally different ball game.

About a hundred years ago half of the US population was in agriculture. Today with only 3% of the workforce in that field, we have the world's third largest agricultural output. And even though Nike's and McDonald's Teenie Beanies come from China, we still are the largest - $1.9 trillion strong - manufacturing economy in the world. Similarly, a few years from now, when somewhere in India in a gleemy Silicon Valley style office complex next to teaming slums a coder would be coding the next generation app., he would be working on a concept that was born in the mind of an American software desginer. We will invent and they will code. That's how it'll all work out. True globalization.

Posted in Tech Stuff on February 3, 2004 12:21 AM
Comments

haydur, is there a way you could keep this discussion live till I reach back at Karachi. I did go through the Indian Silicon age and it's way too interesting and addictive not to leave and would surely like to pour in my thoughts as well as bring few other indian fellows to talk on the same subject matter.

Posted by: Ejaz Asi at February 4, 2004 3:24 AM

I don't close comments on old entries. So you can always use the permalink to access and make any comments.

As far as hearing the Indian side of the story is concerned, I doubt that you will hear anything more than the notions that were repeatedly recited to the Wired editors.

Posted by: Haydur at February 4, 2004 6:54 PM

For indians, I too agree on that. It was funny to read the comments stated to Wired, "its about quality and we (indian developers) are better..." You wouldn't sick of anything else in SouthAsia than the profanity of "I wanted to do something new and different this time" or "we want quality not quantity...". However, for their "Americans are not the only nation to inherit IT jobs" sounds valid. And it seems less viable to curse indians for such a shift, for they are the natural and most obvious source of this major shift. However, I have another Paki blogger to write on this at http://www.zackvision.com/weblog/archives/entry/000639.html by Zakaria Ajmal. Let's see where it lands.

Posted by: Ejaz Asi at February 5, 2004 3:00 AM

The only reason why I'm interested in this whole debate is the fact that jobs are being exported because you can get an Indian programmer to do the same work for a 7th of what an American programmer would cost. And those are same guys that have brought us countless software innovations since the 80s... and it's a shame that now they are out of a job because people in third world countries have caught up after years behind PCs loaded with thousands of dollars of pirated software and tons of pirated tech. books.

The whole "qaulity" thing is laughable, since I am yet to meet a consumer here who was anything but satisfied with any experiences in dealing with India-based support and other services. Still, it's an amazing phenomenon indeed.

Posted by: Haydur at February 5, 2004 5:20 PM

Thanks for linking to my post. Perhaps I'll update it after work. ;)

Posted by: Ryan at February 10, 2004 4:33 PM
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