
Outsourced Jobs Are No Longer Cheap, So They're Being Automated - nreece
http://motherboard.vice.com/read/outsourcing-is-no-longer-cheap-so-its-being-automated
======
gboudrias
> The automators will continue to get very, very rich, while the automated
> will have to find something else to do.

Part of me thinks this will lead to make much more apparent the paradox of
capitalism: Those with the most money can... make the most money. Over time
this means it all gets funneled into just a few families' pockets, until they
own everything (which is silly and most likely would not be put up with after
a certain extent).

Another part of me thinks that automation has been part of our society for a
long time, and that taking it further only changes the kind of jobs everyone
has, maybe even promoting equality by eliminating the more menial tasks (and
therefore making every worker's skill and experience important, instead of
them being just a replaceable cog).

Either way it seems absolutely inevitable in the long term, and I don't see a
point in pretending it's not going to happen.

~~~
msandford
A huge part of the problem here is the low, low interest rate environment
we're in. Low interest rates make expensive machines cheaper than humans. High
interest rates make humans cheaper than machines. (For a range of values of
cheaper)

Being able to afford a $300k house on $50k/year is great until you don't make
the $50k/year anymore because you've been automated out of a job.

In the past people with a lot of money could invest their money and see a
fairly stable, secure return of 5-15% a year depending on the exact risk
profile of their investments; savings accounts -> stocks.

Now if you have a lot of money you can buy businesses and replace people with
capital equipment. Better returns than investing in the stock market (or bank
accounts!) and it's basically off-limits to people who don't have 7+ figure
amounts of cash. Which statistically is basically everyone.

Higher interest rates would let the rich enjoy more work-free income but it
also keeps normal people in jobs. And it provides some kind of incentive to
save; interest in a bank account is basically scale-free.

I think maybe that's another one of the problems we're seeing, opportunities
to grow your wealth aren't scale invariant. A little money has very, very few
opportunities to earn interest. A lot of money has a many opportunities to be
grown.

~~~
eru
> Being able to afford a $300k house on $50k/year is great until you don't
> make the $50k/year anymore because you've been automated out of a job.

It doesn't even work like that. Rent is basically fixed by the average income
level. The price of the house is then annual rent / interest rates.

~~~
msandford
I agree completely. But "owning" a $300k house makes people feel a lot richer
than "owning" a $120k house, even if they're the exact same house! You're
right that payments are the same, because housing prices are driven by monthly
payments not the dollar amount that you're signing for.

Which is part of the problem, too. When mortgage interest rates fluctuate
between 6-10% say, a person doesn't get terribly underwater that fast. But
when they fluctuate between 3% and 7% a person can go from equity->underwater
in a hurry, because the price fluctuations are so much larger.

It's basically a y=1/x kind of problem and the closer you get to x=0 the
closer you get to y=infinity in a very nonlinear way. Which is great if you
bought a house a x=more and sold a house at x=less because you made huge
gains. But if you bought at x=less and are trying to sell at x=more you can be
very, very underwater.

------
bruceb
Cites recent layoffs but has no real stats on the decline of outsourcing, near
shoring, etc. Weak.

Part of the problem with India is lack of standards. There are people who are
good at programming in both the US and India and people who are bad at it.

The problem is in the US most of the bad ones don't end up getting a CS degree
where in India they do. This means there are a lot of people in India who have
a little bit of skill and can get a job but not do it that great. Their US
counterpart might have switched to business or something else as they are less
expected to get a tech (viewed a good a job) related job by their family.
Obviously there are more complexities but bottom line its not just the cost it
is the quality of work.

~~~
tluyben2
To add to this; a lot of companies in India just gather as many people as they
can with a CS degree in a building (often 1000s) and hire them out in 'teams'
to western companies. This is a valid (currently) business plan which makes
them a lot of money. It also gives outsourcing a really bad name, but that
does not seem to deter companies from hiring these kind of, let's call them
what they are, sweatshops. The idea is definitely appealing; you hire educated
women and men, usually they are monitored (often by camera's!) to make sure
they site and work 8 hours / day, 5-6 days / week and they have the skills you
need. Not happy? You get another person right away! You can expand or shrink
your team(s) at any time.

That they are treated like robots sitting in long rows of far too little space
and that they are not allowed to get up besides for lunch and tea at set times
is not interesting to most; that this kind of environment (not even looking at
if they are good at their jobs or not; some are, some are not like you say) is
destroying any chance of getting quality anyway is lost on most people who
hire. This market is growing as it does sound incredibly attractive on paper.
The prices are also still a lot (for programmers you pay around 20-40% of what
you would pay in the west, it used to be 5-10%) lower than the same role (on
paper) in 'the west'.

I hear some companies actually get work done this way and are very happy with
it, growing continuously without worrying about who does the tech; they have
100s of companies to pick from and 100-1000s of employees in these companies.
How they manage that, I have no clue, but I do hear a lot of my Indian friends
who try to make something 'west' quality in India complain about these popping
up a lot and a lot young guys dream of making these, in essence no-risk at the
moment, 'brain work' farms.

~~~
pavanred
>> I hear some companies actually get work done this way..

This statement and lack of any citations with statistics makes me suspect this
as an opinion, not necessarily factual. I am a engineer from Bangalore, India.
I worked for a few years with companies that outsource teams to many countries
across the world. I lived in Bangalore for over 20 years and I know a lot of
people who are in similar line of work. Most software companies provide
competitive salaries (according to wages in India based on Indian cost of
living, which is lower compared to the US) along with annual leaves,
sick/casual leave, maternity leaves, statutory programs like provident fund
(retirement benefits in India), gratuity fund etc. Many companies (all
companies I have worked with and I know people working in) provide a lot more
benefits than the ones I mentioned. I worked with companies that provided
facilities like on-campus full time doctors, financial support programs, gyms,
swimming pools, libraries, higher education support, employee rewards
programs, sports programs, transport facilities etc. I have never heard of CS
engineers hired and monitored by cameras to ensure work. I would like some
citation on this, and even if it occurred at some place I doubt it's a problem
at such a scale that it should be termed that it usually happens.

And, about quality of work, a large portion of the outsourcing projects
involve support and maintenance of an existing software/website. Many of such
customers do not have software as their primary business e.g. a internal web
based software for a huge construction company. Such L2/L3 support work
generally tends to be repetitive and does not require highly skilled software
programmers. There are lot of companies that work on the same outsourcing
model which cost the customers a lot higher and produce high quality work,
such companies generally attract the better skilled engineers and customers
that require high quality products.

My point, outsourcing software companies in India are definitely not
sweatshops. There are sweatshops in parts of India mainly in the textile
industry and they most certainly do not hire CS engineers. And, there are good
and bad engineers everywhere, it's not determined by where they are from or
who employs them.

~~~
tluyben2
I didn't say that; I said I see a rise (also in Bangalore) of actual
sweatshops (my definition of sweatshops is tainted by the west and especially
the EU; I find workplaces where my chair touches my neighbours rather
unworkable; I know actual manual labor sweatshops are much much worse than
that) with coders; I never said 'Indian outsourcing companies are sweatshops'
as I know that's not true at all. I just see a lot of them and it's growing, I
believe. And of course it is an opinion; I don't know if anyone does research
in this area. I just say what I hear (from friends who own/founded outsourcing
companies who live in India, including Bangalore) and see.

~~~
thewarrior
I don't think they're literal sweatshops as they usually have air
conditioning. :P

~~~
moron4hire
Sounds like only so the computers don't break down.

------
beedogs
"What does it mean for the economies of these up-and-coming world powers?
Well, probably the same thing that it means for everyone else: The automators
will continue to get very, very rich, while the automated will have to find
something else to do."

Or, you know, basic income. Why is the answer to "there are no jobs anymore"
always "well, I guess you can starve, then"?

~~~
anigbrowl
Very possibly, but proponents of a basic income consistently fail to
articulate three things: how these monies will be collected, what rationale
there is for distributing it (other than the implicit acknowledgement that the
alternative is civil unrest) and why it won't be inflationary.

~~~
AnthonyMouse
> how these monies will be collected

Taxation.

> what rationale there is for distributing it (other than the implicit
> acknowledgement that the alternative is civil unrest)

A basic income removes the need for a long list of bureaucratic social
programs like social security, food stamps, housing assistance, pell grants,
etc. etc. It's the free market solution for social welfare programs. You allow
individuals to decide what they need rather than having the government decide
from the office of central planning.

It also eliminates means testing much to the benefit of the middle class (and
simplicity and economic efficiency).

> why it won't be inflationary

Inflation comes from increasing the money supply faster than the size of the
economy increases. Inflation would only occur if the money paid out was newly
printed. When it comes from taxation the amount of money in circulation is
unchanged, only the parties holding it change.

~~~
yummyfajitas
_Inflation comes from increasing the money supply faster than the size of the
economy increases._

This is a strange Austrian definition and is not widely accepted.

The normal definition of inflation is increases in the value of a basket of
consumption. CPI is a good proxy for this over the short term (in the long
term CPI becomes useless for this purpose since the basket changes).

If BI increases demand for consumption (as most of it's proponents claim it
will), then the price of consumption will increase - hence, inflation.

~~~
AnthonyMouse
> If BI increases demand for consumption (as most of it's proponents claim it
> will), then the price of consumption will increase - hence, inflation.

This is a very bizarre argument against BI. You can clearly see how silly it
is by applying it to reducing the unemployment rate (or for that matter
anything that provides income to the poor) -- if more people have income then
consumption will increase and cause inflation.

The reason the argument is silly is that it's way more complicated than that.
Even the assumption that BI will cause increased consumption is based on other
assumptions about what people want at different income levels. It could be
that members of the lower middle class are hungry for an opportunity to start
a business and will use the money to invest rather than consume. It depends
entirely on the contours of the economy at a specific time and place and is
constantly in flux. Investment vs. consumption is also a false dichotomy,
because investments just turn into the consumption of the entity selling the
investment, and businesses obtain capital by selling products as well as by
soliciting investors. So it's really the difference between consumption of
consumer goods and services like food and entertainment vs. of business goods
and services like commercial equipment and marketing services, and even that
distinction is as clear as mud.

On top of that, whether an increase in demand causes an increase in price
depends on the supply of the goods in question. There are many products for
which this relationship is _negative_. Where there is no practical limit on
the number of units suppliers can produce, having more demand will give
sellers more units over which to amortize fixed costs and can thereby reduce
the unit price.

This makes the statement "basic income will cause inflation" completely
meaningless. What it will do is cause the price of some goods and services to
increase and others to decrease, much as any economic change will do. Whether
this change will on net cause prices to increase more than decrease (and to
what degree) depends entirely on the contours of the economy and on which
specific goods and services you're measuring.

But perhaps most importantly, even assuming it would cause inflation in a
particular economy, the amount of inflation is necessarily less than the
amount of the basic income because of the existence (and likely preponderance)
of products with less than perfectly inelastic supply.

~~~
yummyfajitas
_You can clearly see how silly it is by applying it to reducing the
unemployment rate..._

Reducing unemployment will increase demand but will also increase supply. So
no.

 _It could be that members of the lower middle class are hungry for an
opportunity to start a business and will us the money to invest rather than
consume...There are many products for which this relationship is negative.
Where there is no practical limit on the number of units suppliers can
produce..._

So if I'm understanding you right, BI will work because the rich have a higher
marginal propensity for consumption, Giffen goods are common and scarcity
isn't real? Ok.

 _It depends entirely on the contours of the economy at a specific time and
place and is constantly in flux._

If that is the case then the usefulness of a BI will also constantly be in
flux. I guess your opinions on the topic are also constantly in flux? If not,
why not?

~~~
AnthonyMouse
> Reducing unemployment will increase demand but will also increase supply. So
> no.

That's just the same fallacy. Why can you assume the thing the employee is
producing won't have less price elasticity than the thing the employee buys
with the income, but I can't?

> the rich have a higher marginal propensity for consumption

Your argument is that the rich have a _much lower_ marginal propensity for
consumption, enough to really matter. And that may even be true if you're
talking about a matter of $2, which a poor person would almost certainly use
to buy lunch or the like but would have no effect on a rich person's level of
consumption. But if you give a poor person $20,000, now you have to ask
whether they aren't going use it to attend college or start a business. It's
an entirely different dynamic.

Also, if the money is raised using a consumption tax then it can inherently
never come from someone making an investment regardless of their income level,
which kind of destroys your entire argument, since it is based on where the
money comes from as much as who gets it.

> Giffen goods are common

Nobody is even talking about Giffen goods, that's the demand side. And goods
whose total cost is dominated by fixed costs _are_ extremely common.

> scarcity isn't real

Scarcity is often not relevant. The market price of a computer or
pharmaceuticals or recorded music is completely divorced from the cost of the
scarce materials necessary to manufacture it. There is no realistic volume of
DVDs that could be produced that would materially affect the market price of
plastic.

> If that is the case then the usefulness of a BI will also constantly be in
> flux.

Whether and to what degree it causes inflation or deflation would constantly
be in flux. That it might possibly cause a small amount of inflation is hardly
a condemnation, and it is unlikely to cause a large amount of inflation for
the reasons I've already mentioned -- its tendency to increase prices in some
products is offset by its tendency to reduce prices in other products.

------
jmadsen
Interesting to read all these comments about the "real" problem. What the
article actually SAID was:

"Labor in India and China is still cheaper than it is in the United States,
but it's not the obvious economic move that it was just a few years ago: Wages
in India have increased about 10 percent annually over the last five years"

In other words, it might seem - I say might, because the article is obviously
not a real heavy-hitter with data - that the old idea of wages balancing over
regions is coming true. I find this interesting because I used to reject this
notion, because I feel labor is actually very static (you can't just freely
move to China if the jobs move there), but my economics days pre-date the
internet and much of what we can do today via technological advances.

So, I'm not really sure about anything based only on this article, but find
this to be very interesting.

As far as the Automation part goes, I think in the short- to medium-run it
will simply become a case of "Automating things" is the new hot job for a
while.

Purely theoretical, long-run thoughts? We are moving closer to that Utopia of
machines doing all the labor, while Joe Man-on-the-street gets a guaranteed
yearly salary so he doesn't rebel and kill everyone with money. Unless Running
Man is your thing.

~~~
luch
There is another interesting side-effect : companies from developed countries
are unwillingly training low-wage workers from 3rd the world.

As an anecdotal evidence, the company I'm working for has partially outsourced
their customer services (technical maintenance, etc.) to Northern Africa in
order to lessen the wage bill. Their problem is the following one : as soon as
they find a competent employee and training him, he expatriate himself into
Europe and sell his skills for a much better payroll. Now my firm is stuck
with incompetent salary men and old-timers which aren't willing to relocate
themselves.

------
netcan
Putting commentary on things like this is always tricky. Reality is
complicated and perspectives tend to be more impoverished.

I think part of this is actually a narrowing of gaps between middle classes in
large cheap labour markets like China and the working poor in Europe and the
US, mostly due to the rising middle class wealth in the former.

A second major cause is progressing technology and culture.

"Automotion" is not always this literal version of machines directly replacing
humans. A website where you can renew your insurance, buy plane tickets, make
a complaint or order a pizza is automation of a sort. It's not necessarily a
self driving scooter deliver that pizza.

This is harder to fetishize as an ideology. We are not replacing hand looms
with steam powered looms. It's more like we decided to just be naked instead.

------
ilaksh
I know this is a tough sell but I am going to say it anyway. Automation
effects every single person and every single job.

For example, if your job is writing custom software, it becomes progressively
harder to find problems that don't already have open source solutions.

Or look at how component marketplaces and open source components or modules
increases software reuse. There is not an infinite capacity for software
complexity to increase. So that reduces the amount of work to be done simply
because solutions are being shared rather reinvented.

~~~
brandonmenc
> For example, if your job is writing custom software, it becomes
> progressively harder to find problems that don't already have open source
> solutions.

There's a lot of work to be done writing glue code.

~~~
CmonDev
There is a whole business of 'integrating' the software products that are kind
of ready (much more so than OSS) - ERP (Dynamics, SAP etc.).

------
joshwa
The actual product (actual content 2 links from the article):

[http://www.blueprism.com/about/bpm.php](http://www.blueprism.com/about/bpm.php)

Basically sounds like Selenium for mainframes/win32 powered by some decision
tables?

That's certainly one way to solve the enterprise integration problem...

------
julie1
People are not tired of this kind of FUD?

Whatever you do good devs are a limited resource, and all that is made to try
to walk around the problem worsen it:

\- outsourcing ? => You have to compensate in supervision and you lose in
quality. (Indians are not bad coders, but there is something called the Babel
tower effect that creates a lot of signal perturbation/costs)

\- agile? => Trying to cut on correctness and detailed specifications to ship
value faster result in insecure useless softwares. Ofc a startup owner does
not care of the sustainability of his product because he will cash out a lot
of $$ before the problem will happen. But what about the customers and the
economy relying on it?

\- Web as an UI because web dev is less expensive than GUI devs/shipping? GUI
devs then where making atrocious bugs because they were clueless on
asynchronuous coding (reentrant code) and money related data still needs to be
transactional (transactional is a property that is exclusive of distributed).
Devs that understand this class of problems are still few, and Web dev is
causing even more problems.

\- The Cloud? It has non linear costing! If you x2 your customers you cannot
predict your pricing unless you make fat margins, and swap KPEX and slowly
linear OPEX for strongly growing non linear OPEX is kind of totally
mathematically irrational (except for the one doing fat margins).

\- Containers? In 1999 the problem of the GUI was already the dependency Hell.
Well, now instead of solving the satisfiability of dependencies (NP complete
problem) in one closed system you do it on a set of M containers that still
requires internal KSAT solving (yes instead of solving one KSAT, you solve N
KSAT coupled to M KSAT). (so we created the DevOps and more security holes!)

When automation can replace people, it means the industry does not requires
skilled people. That is not the case.

Can't you see there is a trivial contradiction in the thesis of this article?

Seriously this insanity never ends? IT industry is just bullshiting the rest
of the economy to sustain its totally insane model and paying our daily wages.

I would be happy of this waste of money (I am a still a coder) if only people
were not starving in the streets and our economies were not suffering and thus
creating instabilities all around the world. I long for the internet 2.0
bubble to explode soon so that we can get back to an economy that profits to
everyone not only the IT crowd.

~~~
CmonDev
"...if only people were not starving in the streets..."

You have a bigger problem with IT then investment banking and international
politics?

I am personally very happy that once in a while engineers are getting a _kind
of_ fair deal. Of course let's not forget that salaries in Silicon Valley were
artificially suppressed for a while in an illegal agreement between the likes
of Google and Apple. So being underpaid is what we should be really
complaining about.

~~~
julie1
We are getting paid peanuts compared to the unfair captation of our values
through Intellectual Property.

Let me be clear: we are undervalued by our companies, and overvalued when sold
to the customers. Have you looked at apples/googles net (official) margin?
20+% Stuff like Danone are 5%. And They have incentive to underestimate their
profit for paying less taxes.

A coder is like 40% ROI once you set your monopole.

The only merit of a boss? Being bornt wealthy, and then all he is doing is
walking into the open like Riquet with the tuft.
[http://en.wikipedia.org/wiki/Riquet_with_the_Tuft](http://en.wikipedia.org/wiki/Riquet_with_the_Tuft)

He can act as a jerk, be an asshole, but everybody gives him the credit of the
employees real value, and of course the real benefits.

------
tbrownaw
The title doesn't seem to match the content. Sure there's _speculation_ about
automation, but what they cite as actually happening is the outsourced jobs
being brought back to have humans here on the proper side of the timezone and
language barriers do them.

~~~
geophile
The business geniuses who foisted this idiocy on us (software professionals)
are now saying what we said 10+ years ago: it's an obviously dumb idea that
doesn't actually save money.

------
t-rex1
I keep wondering, say the rise of automation continues at the rate its going
right now, eventually eliminating a lot of opportunities, then what happens to
the people? how would a good number of the population be able to further earn
a living? I think this growth of automation needs to be taken a bit more
serious than it is right now. I can envision it causing quite a problem in the
society.

~~~
Robadob
Basic income is a proposed economic solution that would change welfare such
that everyone receives enough money to survive from the government and is
therefore encouraged to work to earn money for greater comforts. It's been
suggested that this model of welfare allows people to work less hours with
other possible benefits.

[http://en.wikipedia.org/wiki/Basic_income](http://en.wikipedia.org/wiki/Basic_income)

I've not studied economics but I would expect there might be other proposals
which could also be suitable for a society with far greater population than
jobs.

------
hokkos
The author of this weak article seems to surf the waves of "robots are taking
our jebs" because he brings no proof that the layoff of Yahoo, IBM, Cisco in
India are the results of automation or business shrinking or strategic
decision about outsourcing. Also this site hacks the scrolling wheel in a bad
way, small scrolls seems discarded.

~~~
gnufied
It is very interesting that - he uses Yahoo layoffs as an example. Because
from what I know, by and large Yahoo hires better engineers than Outsourcing
firms. And since I have friends who have worked for Yahoo India, the kind of
jobs they did - are not going to be automated away until we invent software
capable of writing complex programs. In other words - can a robot
write/maintain Yahoo maps? Something tells me - we are not there yet.

Overall the article is load of bull. and I don't think author has expertise
required to judge what kinda of IT jobs are going to be automated away and
what kind don't.

------
germanogmn1
I dont't understand why people think that's bad. That means that workers are
getting paid more and are not willing to sell their labor for a low price.
Machines make the work that nobody want to do for what it's worth.

------
known
I believe
[https://en.m.wikipedia.org/wiki/Basic_income](https://en.m.wikipedia.org/wiki/Basic_income)
is the solution to globalization/automation

------
known
Hope Govt imposes tax on Corporate Income, not Profit.

------
dscrd
They were at some point?

