U.S. Programmers at Overseas Salaries

Businessweek ^ | 12/03/03 | David E. Gumpert

[stuartcr]

Would we use new, state-of-the-art sweat shops, or old ones?

[Pikachu_Dad]

Hmmm. Lets start offering CHINESE style wages to U.S. workers.

[Smogger]

And he is convinced that having people working onsite gives him control over quality and timing that he wouldn't have enjoyed if he had subcontracted overseas.

Duh. Gee this guy is practically a rocket scientist. Anyone with a small to midsize business could tell you that. Only huge corporations can afford to absorb the potential losses associated with outsourcing to offshore companies. If you had only one or two major projects would you trust them to nameless, faceless programmers in a country a dozen time zones away for whom english is a second language? Only if your the moronic executive of a blue chip company.

[Shermy]

How do we replace the hundreds of thousands of information-technology, call-center, paralegal, and other jobs rapidly exiting the U.S. for India, Russia, and other low-wage countries?

Who is "we?" The outsourcers aren't part of "we" and don't care.

[ARCADIA]

The bread line forms on the right.... here is your little red book....

[Orangedog]

Great way to entice kids to study math and science in high school then spend 4 years at college in a challenging field. "Come, spend a small fortune in tuition and years of your life so you can earn what they pay people in countries like India!" Anyone still wonder why law schools are cranking out so many lawyers?!

[ARCADIA]

Would we use new, state-of-the-art sweat shops, or old ones?

Next they are going to reintroduce debtor's prison and flogging.

[Capitalist Eric]

An excellent demonstration of macroeconomics in action. Since India or Russia (or whatever) are essentially "local," in terms of the exchange of labor for cash, and delivering a (relatively) instant result without real transportation costs, the deciding factor becomes the labor rate. Since the barriers to competition are essentially nonexistant, Indian labor rates have forced down the prevailing world-wide labor rate for the same talent...

The ultimate winner, just as the theory says, is the consumer (NPO, in this case).

Very cool.

[RogueIsland]

And then Jon had a brainstorm. What if he offered Americans the jobs at the same rate he would be paying for Indian programmers? It seemed like a long shot. But it also seemed worth the gamble. So Jon placed some ads in The Boston Globe, offering full-time contract programming work for $45,000 annually

That's probably pretty bad in Boston, but it would be pretty liveable where I work, if one could get reasonably priced health insurance.

[Khurkris]

This is simply finding the value of a position. Its also called - REALITY.

[Moleman]

Interesting although scary article. Although the programmer will only get 45K per year I rather keep jobs in the US and potentially negatively impact the US standard of living
than to ship the job over seas and improve the standard of living for Communist China.

[stuartcr]

I hope we get sent to Australia.

[RogueIsland]

Since the barriers to competition are essentially nonexistant, Indian labor rates have forced down the prevailing world-wide labor rate for the same talent...

Just curious. What's the prevailing salary for whatever it is that you do in the Ukraine?

[Snuffington]

In the meantime, the matter of overseas subcontracting appears to have become open-and-shut. If you're an executive with half a brain, you can come to only one conclusion when tallying the differences in costs between hiring computer programmers in the U.S., vs. India or Russia.

And if you're an executive with a rare case of having an whole brain, you'll notice that hourly billing rates aren't the best measure of productivity or value in IT work. You might even examine a few studies finding that most companies sending work overseas are exeperiencing little to no overall savings, while experiencing slowdowns and quality problems with their product development.

Hats off to Jon Carson for his innovative solution. But I suspect in the long run those salaries he pays will rise again. Why? Because they'll prove it's hard to replace truly productive onshore workers with less efficient offshore ones and save any money. He's running a business, not a quarterly spread sheet. Labor cost means nothing unless it is tied to what is being produced with it.

[Snuffington]

If you had only one or two major projects would you trust them to nameless, faceless programmers in a country a dozen time zones away for whom english is a second language? Only if your the moronic executive of a blue chip company.

Tut tut. I must disagree. This good just as easily be decided by a moronic procurement officer for a blue chip company.

[PoisedWoman]

I have trouble believing that a programmer in India actually gets that $40K. There, it would be a fortune. I suspect many middlemen are involved.

Maybe a new business venture for a savvy out-of-work programmer would be to start an employment agency for Indian programmers, pay them $10K and keep the $30K.

[Alouette]

$45,000 for an overseas programmer is very high end.
The average Indian programmer makes $8,000 a year. Are Americans ready for that?

[ThinkDifferent]

What if other companies begin taking the same approach -- offering Indian-style wages to American workers? On the positive site, we could begin to solve our job-creation problems. But on the negative side, America's standard of living would inevitably decline.

The negative is incorrect. Yes, lower salaries hurt developers (of which I am one), but they benefit everyone else.

[ThinkDifferent]

The average Indian programmer makes $8,000 a year.

Yeah, I thought $40k sounded high for India, but presumably that's including the substantial overhead costs of running an outsourcing program.