E-Commerce Times Talkback
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After nine months of exposure to the overseas outsourcing market, I'm ready to give an update on the realities of outsourcing for small businesses. This is an emotionally charged issue for a lot of people in the U.S., so let me start by saying up-front that the results are mixed. Like a lot of larger businesses, I've discovered a number of hidden risks and costs. While I don't think those issues will end the trend of sending jobs to cheaper labor markets, I do think the wholesale enthusiasm for outsourcing overseas is quickly waning.
Outsourcing has not at all diminished. I have a friend who has just returned from Bangalore, India and tells me about the growth that city and many other Indian tech cities have undergone. The economy there is absolutely booming. Jobs are in abundance. While, here in the US, we complain about a very weak economy...fact is, that economy has essentially moved to India and the rest of Asia. As such, the US economy has no chance to improve. Outsourcing is bad news for the US, people. I understand the business argument for it, profits and all that bottom-line stuff. However, understand this...without jobs to fuel the economy, there is no way the US economy can ever fully recover. Also, the moving of jobs overseas also undermine the US' dominance of the technology field. If we are to ever remain as a leader, we must cease outsourcing.
Unless India, Russia, Eastern Europe and the other destinations for outsourcing find a miraculous way to increase their standards of living to match those in US (hence growing their average income and prices), prices in the US and offshore will get near, then move away, in an oscillatory movement. Proof? Six month ago a programmer in India worked for $15. In the US, the price was $100. Now it's $25 vs. $35. Cause the American programmers have to eat, too. Next thing you know, Americans will have increased demand for their services. And that means their price will follow a slight upwards trend, while at the same time the Indians will have to hit low in order to stay alive. The distance between prices will grow once again, and when it becomes too big (like it did 6 months ago), the same phenomenon we are experiencing today will happen again.
This is why - I stress - the next step in offshore comes with the reliability and trust of an American company and the slash in prices which only an offshore team can offer in the long run. The resulting price of such an initiative would ideally be what American and Indian prices converge to in the get-near phase, and stay - almost - the same despite trends on and offshore; why would it stay the same? because it will generate the kind of constant business that reliability and fair (not breath-takingly cheap) prices usually bring; it's a sustainable, real deal.
Your theory is just that, a theory. Jobs gone away from the U.S. will never return. So, unless a programmer in the U.S. will want to work for $5/hr, he/she will likely say good-bye to his/her job to an Indian. Do you people even understand that there are now Indian consulting companies like Tata that bid at prices well below U.S. companies and then bring in Indian workers to the U.S. or take the jobs with them back to India?
You are delusional if you think there can be any wage balance between the 2 countries resulting in companies ceasing of their outsourcing activities. Do you understand that these U.S. based companies are opening HUGE facilities in India and shipping all the jobs there? They are highly unlikely to close their facilities and ship the jobs back to Mr. Joe Blow American Worker. WAKE UP!!
I think you are both wrong in your predictions. In my opinion what will happen is that when India gets too expensive, the work will move to cheaper places (e.g. China etc), leaving both USA and India without jobs. What do think of that?