

The Coming Death Of Indian Outsourcing  - edw519
http://www.forbes.com/home/enterprisetech/2008/02/29/mitra-india-outsourcing-tech-enter-cx_sm_0229outsource.html

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neilk
...and the coming rise of Indian entrepreneurship.

People are often too quick to cry racism, but I really think that's the only
explanation for all these "India isn't a problem" stories.

Most Indian engineers _are_ Java drones, but guess what... most _American_
programmers are Java drones. And yeah, there's a new generation that's
prosperous on relatively less effort, but have you taken a look at Silicon
Valley lately?

Unless you believe that the American innovation engine is also slowing, you
don't have a lot of reasons to believe that we won't see more and more
innovation coming out of India. In fact, if there's a crash in outsourcing, it
might accelerate that process (or simply shift the outsourcing market to
target Europe).

~~~
gruseom
_People are often too quick to cry racism_

You mean like without offering any evidence for their claims?

I thought the article was superb, well reasoned on its key point of cost
inflation in the industry, and thoroughly devoid of sordid prejudice.

Your reference to Indian entrepreneurship is a little ironic since the author
(whose name is a Sanskrit word) has herself founded and sold two companies
[1], and appears to have a particular interest in... Indian entrepreneurs [2].

[1] <http://seekingalpha.com/author/sramana-mitra> [2]
[http://www.forbes.com/technology/2008/02/22/mitra-zoho-
india...](http://www.forbes.com/technology/2008/02/22/mitra-zoho-india-tech-
inter-cx_sm_0222mitra.html)

~~~
neilk
I'm busted. Okay, I missed that, and I have to retract what I said. I went off
half-cocked.

I do have evidence for my view (although, obviously not applicable to Ms.
Mitra). I'm half Indian and half Caucasian. Many of my relatives are in the
outsourcing biz and I work for the American giants that are their customers.
So I see both sides. I tend to think most Americans in this industry
underestimate their Indian counterparts, and underestimate how fast things can
change.

But, Ms. Mitra's pessimism is obviously borne from experience. Though her
other articles show Indians doing more innovative things, perhaps she sees
those as the exception.

~~~
tokipin
one thing i hear a lot is the "brain drain" of smart people from India moving
to the US (GB too? not sure.) if opportunities within India present themselves
then maybe they will begin staying and start their own companies

~~~
randomhack
The brain drain does seem to be slowing down considerably. Many of my friends
from India, who did their grad studies in the US, are now returning to India
to start their own companies. Or at least to join the R&D groups of MS or
Intel etc in India.

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iamelgringo
I am pretty sure that Indian outsourcing is going to be on the decline, but
that's just because India is getting to be at parity with the US in certain
respects. Salaries in Bangalore are almost at parity with salaries in Silicon
Valley, say a couple of my Indian friends who are from Bangalore and are
working in the Valley.

But, now that there is an upper-middle class in India, when the ball drops,
and people lose their jobs I think they'll find it relatively easy to start a
business and code a web app. Why? Because they can now afford a home computer
and bandwidth. And, a $20 a month Slicehost account won't break their monthly
budget.

I think what people who are born and raised in the States don't really
understand, is how much of a luxury item having a computer is in most of the
world. It's hard to buy a $400 computer when you're living on $200 a month.

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pauljonas
Eh, matters arn't as simple as portrayed - a good bit of U.S. application
support/development has went overseas to India... ...within a short 15 minute
drive of my home in Arizona, I can tally thousands of programming jobs (mostly
old school COBOL + CICS type work, but not limited to, as tons of Java and web
developer slots too were affected) that went overseas. Departments comprised
of 200+ employees (plus additional U.S. contracted programmers) now are
skeleton crews that manage a blend of offshore and non-immigrant Visa workers
that work at company facilities on-site or in special facilities here in U.S..

But in 5+ years time, the Indian programmers become the system subject matter
experts as the few remaining U.S. workers mark the days until retirement.
There are few young U.S. workers waiting in the wings, and any American who
has opted for a career in programming has chosen something more "sexier", like
working with Rails or as a web developer, even if the pay is a fraction of
what a developer could make 15-20 years ago working with such "old school"
mainframe technology...

But those systems are still running, every time you use a credit card, book a
flight, use electricity, etc..., the "main nerve center" system that
accommodates such transactions is still going to be a COBOL system with a DB2
(or even worse, an ancient hierarchical IBM IMS database)...

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aneesh
Well, is this any surprise?

Not really. Merely a consequence of the Hecksher-Ohlin international trade
model. Under relatively free trade (free of tariffs, etc) of software, real
wages paid to software engineers should equalize across countries.

------
randomhack
I am not so sure. Maybe the wages will stop rising? Once companies start to
lose business, they will fire employees, creating an oversupply of workers and
thus driving wages down?

------
rms
And Africa will become the last bastion of cheap outsourcing and
manufacturing.

~~~
timr
That would be difficult. As bad as Indian infrastructure may be, most African
countries are far worse.

~~~
rms
It has to happen eventually as long as African wages stay low.

~~~
timr
"Eventually" the sun will go supernova, and the question will be moot. Given a
sufficiently long perspective, all events are guaranteed to occur.

The point is, I'm not holding my breath.

