

Ask HN: Why have we not been outsourced (yet)? - ptype

Hi,<p>IT jobs are easier to outsource than many other jobs who require physical presence. Yet, we are still earning a fairly decent salary and the outsourcing seems to have stopped at the lower end of the IT value chain. Why have we not been outsourced yet and will this change in the future?
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nostrademons
Communication. People think that software is a coding problem, but for
anything non-trivial, communication is a far bigger bottleneck. The amount of
code on a project is O(n) with number of developers, but the amount of
communication required is O(n^2). Anything that makes coding cheaper at the
expense of making communication less efficient becomes a net loss at scale.

This is why engineers who can communicate effectively make several times more
money than engineers who can't.

~~~
pathy
Exactly!

I was doing research at a large European bank that has a lot of development
outsourced. The project management primarily located at their HQ in Europe
while the development is mostly in India.

They have had to resort to moving over a fair few people from India to their
HQ as the communication just doesn't work as well otherwise. There is simply
no replacing face-to-face communication.

The Communication has the be incredibly specific when outsourcing, not to
mention the time difference which carries another set of issues. Both
contribute to communication issues, at which point it may simply be better to
do it locally, or at least move contractors over from outsourcing location to
your HQ.

Remote work is popular right now but the value of just being able to walk over
to a colleague to discuss a problem should not be underestimated.

~~~
auganov
I don't agree on the face-to-face part. Remote work does not predetermine bad
communication. It IS correlated because most of people that do attempt it do
it in this outsourcing style. If you have a company-wide remote-first culture
your communication can be as good if not better than traditional arrangements.

~~~
pathy
You certainly have a point. Remote work doesn't have to have bad communication
but there are barriers to communicating and if the organization is not set up
to properly handle the barriers it can cause issues.

Outsourcing to a different country in a different time zone with entirely
different management styles is asking for communication trouble.

A company built on remote work from the start seems to be more likely to
succeed with remote work than one who has adopted it kind of ad hoc.

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mcv
Outsourcing has its fair share if disadvantages. It happens a lot, mind you;
not remotely every company has its own IT department, builds its own website,
etc. But if it's part of your core business, you probably want some direct
control over it and not be at the mercy of other companies. And that means
hiring the right expertise.

Whether to outsource or not is an important strategic decision that depends on
how important the task is to your core business, what kind of expertise you've
got in house, and how well you can guarantee the quality of that expertise.
But in the right circumstances, having this in your own company gives you more
control at a lower cost than if you outsource it.

Then there's offshoring, of course, which is outsourcing to a cheaper country.
This was popular 10 years ago because from a management perspective, because
of the lower cost per hour, it seemed to be cheaper. But if it takes more
time, you lose that advantage. Most companies have finally come to understand
that offshoring means you import a big communication overhead, and you hand
over quite a lot of control over the quality of the project to a party that is
not always capable of delivering the quality you need. Fixing the mistakes
takes a lot of time and money.

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raquo
Here's just a few factors:

– Security: possible to do background checks on citizens of your own country,
easier to hold them responsible, less chance of rogue employee, etc.

– Communication problems: both in terms of poor communication skills being
more apparent in limited telecommuting communication channels, and cultural
differences (different norms of subordination, etc.). Language barriers and
time zone differences also go here.

– "Outsourcing" is a misnomer for what you describe, and has a poor reputation
for a reason. Turns out hiring cheap incompetent sweatshop workers using an
intermediary/broker is apparently not a good idea if you want a decent result.
And quality workers are not as cheap as you'd expect in their home countries
because they are a rare breed globally.

– Telecommuting on the other hand, by which I mean hiring individual
contractors to work remotely, can work out pretty well if you do quality
control in-house. It will surely become more popular.

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vpatil_amt
Perhaps lack of cost pressure.

I see that Europeans are now increasingly outsourcing more: likely driven by
cost pressures.

