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To toss in a second-hand anecdote: I once asked someone who worked at/with companies screening Africans for diamonds in the rough, smart guys who could do programming but were being paid peanuts, like $10k/year, and paying them a multiple of that for outsourcing, why it wasn't such a great idea, when Africa seems to have so many under-utilized people. He said that despite expectations, they were not much cheaper to hire than alternatives like American programmers on net. While you would think that it would be impossible to not make a profit paying these smart guys $20k or $30k a year when alternatives are like $200k/year, the economics barely worked because they just wouldn't do the work reliably. They would just not show up some days, leave early, do no work, blow off jobs, half-ass the actual work, and so on. By the time you hired enough non-African managers to oversee them and handhold them, you'd blown through your cost advantage, because good managers aren't cheap either. Most customers found it a lot easier to deal with a reliable non-African contractor who would get the job done when they said they would get it done mostly right the first time and would answer emails.

It reminded me of Gregory Clark's 1987 paper "Why Isn't the Whole World Developed? Lessons from the Cotton Mills" https://pdfs.semanticscholar.org/6152/0798b9dd2c691872d58db3... where he points out that despite Indian labor being incredibly cheap, Indian cotton mills were still uncompetitive with British (and later, Japanese) cotton mills for basically the same reasons. As the saying goes, "you get what you pay for"... The more something is an o-ring process https://en.wikipedia.org/wiki/O-ring_theory_of_economic_deve... , the more skimping on labor is penny-wise pound-foolish.




Absolutely. This has been true throughout my entire career literally everywhere I worked, on-site and remote alike.

What makes my experience a little more representative (or so my ego says) is the fact that I am from Eastern Europe. Ever since several years now (3-4) we are no longer that attractive IT outsourcing location because a lot of people around here learned their price and value and charge normal (if still below USA's) rates. And thus many businesses started trying to outsource cheaper to Africa and parts of Asia.

The results have been catastrophic and hilarious at the same time. I've been called to "fix the mess" 6-12 months later by five businesses now, and I outright told one of the business owners that he'll have to pay me $20k a month to fix something as non-salvageable as the dumpster fire I was given. He refused which was a win for me because I still value my time and sanity.

So many businesses look at this outsourcing to cheaper staff thing very superficially, as you said. Sure you save money the first 2-3 months. Absolutely, you do. But then all the unfinished and badly done work starts peeking from the edge of the window.

And finally, you are also very correct when saying that hiring the managers that govern these people efficiently effectively destroys the cost savings.

In conclusion: I have definitely observed the same as you.

(Several edits: apparently I had a stroke and wrote some really broken English here and there.)


> Eastern Europe

Eastern Europe is not a great example of productivity either.

I can totally understand why employees from poorer countries disappear all the time - why wouldn't they? They know they're getting paid peanuts in your country (so you don't expect much) and you're paying them an incredibly competitive salary in their own country (which means their lifestyle is closer to upper middle class).

Which means they can piggy-back off your seemingly efficient decisions and get away with doing less.


The basic strategy is this: if I can work lazily at 20% the output and get a middle-class lifestyle at 80% my salary. Why would I bother to be better if the only companies from the west are here to cheap out on talent? I can always go work for a new “revolutionary” company that is trying to outsource their talent and barely do any work all over again.


There definitely do exist such people, can't deny reality here. But again, this happens everywhere and is hardly exclusive to Eastern Europe -- at least I've met slackers and seat-warmers of 7+ different nationalities over the course of my career.


Well, that's a kind of a rude generalisation. :) Or maybe I read you wrong.

You should know there's a lot of world-class talent around here. Sure there's tons of slackers but I posit that's true everywhere (maybe they can't squeeze through the cracks in the USA? but they still exist).


There’s in Africa too. But you would be paying them the same amount (or well, maybe 70% that?) if you wanted the same output.


Sure, I don't see anything wrong with that. To me nationality bears almost zero correlation to productivity and this has been anecdotally proven throughout 18.5y of career.


The world has changed a lot since 1987, so this post-colonial mindset might need revisiting. I don't know about cotton mills, but now the biggest steel manufacturer in the world is ArcelorMittal, an Indian company. On the other hand, British Steel was initially acquired by Tata, an Indian conglomerate, and recently "rescued" from insolvency by a Chinese investor. Any productivity advantages in manufacturing that might have existed decades ago are clearly gone by now.

I really hope that in the near future at least some African countries could be in a position to move up the value chain and take control of their own destiny as well.


According to its wikipedia article, ArcelorMittal doesn't actually have any plants in India: https://en.wikipedia.org/wiki/ArcelorMittal#Facilities


At the end it says:

> Garett Jones (2013) builds upon Kremer's O-ring theory [...] He then goes on to show that small international variations in average worker skill per country result in both large international and small intra-national income inequality.

This sums up the situation to me. The value of the skilled worker depends on the value (and desired quality) of what is being produced with co-workers. So in theory if you could build up a distributed team of these skilled lower-salaried workers, have them work well remotely with each other, have a high sense of quality and share other relevant cultural norms, then high-quality/value products could be produced for such a market demand.


Those lower-salaried workers will soon realise that they have lost the citizenship lottery so why would they bother?

No matter how much you try the only way to fix that is to equalize their opportunities, but you would never do that because you're inherently interested in keeping them poor.


Japanese cars were considered cheap and poor quality too, until they weren't. Chinese-made used to be a synonym for shoddy workmanship. Like recently, when I was an adult, and I'm not that old.

Things do change.


"Chinese made" is still a meme. But now there is nothing made anywhere except of China, so it's kinda moot point.


> leave early, do no work, blow off jobs, half-ass the actual

sounds like specifically a work ethic problem, which is indeed an issue outside the US , Western europe, japan etc, assuming those programmers were indeed capable enough and getting paid above-decently. I don't know how you go about building work ethic in countries that don't have it


Assuming all of this is true (which I believe), it exasperates me that this is yet another indicator that raising the baseline education for all should be the most important priority for any country that is seeking economic growth.


Education has nothing to do with work ethics and general attitude to your job and it's position in your life. You can be educated all the way, but without sufficient motivation your abilities and skills will be left unused - by you


why do you think it is that those that are in dire need of oppertunities blow them with the lack of work ethics while those in first world countries are willing to work long hours to get even richer? Is it really greed and/or keeping up with the joneses? At the expense of free time?


This is where education becomes a poverty issue- if you're poor, you're often not well-incentivized to make sure you kid goes to school. He can do work, or she can be married off, or a dozen other opportunities. School is seen as an investment with heavily, heavily diminishing returns. Imagine trying to explain to a person that can't read, and who has gotten by fine, why his child needs to read. "So he can be rich?" "But ah, I have my farm and he will work on that farm etc etc etc"


I bet this anecdote can describe any 2 countries and price of something




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