Offshore outsourcing grows

The Atlanta Business Chronicle ^ | April 18, 2003 print edition | Anya Martin

[TopQuark]

People are looking for *anything*. That's what they say.

It's very simple friend: if a guy in Ahmedabad (this is where all the IBMs and Microsofts set up shops) is getting, say, $15/hour and your were to offer $10 --- you would get that job.

Now, I do not know the exact numbers, and I Do not even think that they are available yet. I do know, however, how businesses operate. When the issue was studied, the shop in Ahmedabad was projected to produce more per dollar than your friends that "want anything." To shift the balance, your friends must make lower offers, which they are not ready to do.

[samuel_adams_us]

And if they took that job the amount of tax revenue generated by that person would be less than it is today and therefore the government would have less money as well as the companies selling goods here as this person has less to spend and the downward trend continues.

[jriemer]

Willie,

Have you ever thought that the Japanese and German auto companies that have built car assembly plants in the US are doing the same thing except we're the outsourcees?

Very little of the "big brain" thinking regarding engineering is done at the local plant level for the new plants - all that is kept back in the mothership. The Americans working in the foreign-owned auto plants are there solely for their relatively cheap labor compared to those in the owner's countries. A majority of the car componets are shipped in from the mothership and assembled here. These companies wouldn't have built these plants from scratch unless it was significantly more cost effective (for them) in the long run than continuing to ship fully assembled cars.

The auto plant jobs are just there to make us locals feel better about our international trade gap.

American corporations have finally jumped on the outsourcing bandwagon that started abroad long ago...

[TopQuark]

The market dictates salaries here. In the 1990s, programmers may have been overpaid, but it was the MARKET which was responsible for this. So, now the market has adjusted and salaries are lower, which is fine. However, instead of tapping this cheaper market, the firms are tapping an even cheaper market.

In a nutshell, this is exactly how the market works. YOu are complaining that the ocean does not end where you want it to end. The market is the market: sometimes it works in your favor, sometimes it does not. In the former case, one should thank G-d, save for a rainy day, and not to increase expenses (move to a bigger house, for instance, or buy a better car). In the latter case, one has to read the signals and ask how one can adjust better to the changing environment. One year of the most expensive MBA costs as little as the low-end BMW. Had some of your friends done that, they would not be in the position they are today.

[A. Pole]

It's very simple friend: if a guy in Ahmedabad (this is where all the IBMs and Microsofts set up shops) is getting, say, $15/hour and your were to offer $10 --- you would get that job.

But because of difference in the cost of living this $5 will be paid with larger expenses (or reduced incomes) by others in America . That is why we need tarrifs to level the playing field.

[samuel_adams_us]

By doing this the companies can work the tar out of their employees, wage slaves, and they maintain control over the working population, much like communism, all the while filling the pockets of those at the top.

[A. Pole]

Have you ever thought that the Japanese and German auto companies that have built car assembly plants in the US are doing the same thing except we're the outsourcees?

They did not want to do it! They were forced in 1980's by American government under the threat of closing the market access. At that time still the national interest counted more than the free market cult.

[samuel_adams_us]

MBA's will be replaced here soon also, why have a manager when you have no employees?

[Feldkurat_Katz]

It's very simple friend: if a guy in Ahmedabad (this is where all the IBMs and Microsofts set up shops) is getting, say, $15/hour and your were to offer $10 --- you would get that job.

And if the guy in Ahmedabad is getting, say, $2/hour? Should he offer $1.50/hour?

[Willie Green]

Have you ever thought that the Japanese and German auto companies that have built car assembly plants in the US are doing the same thing except we're the outsourcees?

No. Has it occurred to you that the outsourcing mentioned in this article INCLUDES the Japanese and German auto facilities that are located here?

[1stFreedom]

I have worked with CEO's and executives as part of my Human Resources experience. I have participated in compensation analysis, executive reviews, and so forth.

CEO's and executives are always complaining about their salary. They always fight for an increase. You'd think that someone making $3 million a year wouldn't fight for a $200,000 increase but they do, and they make a BIG stink about it. (I would fight for it myself). Do I think they are overpaid? No, since the market dictates the salary ranges.

I have never seen people fired so a CEO could make more money. I know it has happend, but it is not the norm.

Typically, such outsourcing is done for the good of the company, not the executive(s). A side effect of outsourcing is that executive options might be worth more. But that is not the primary purpose. (Any gains in stock prices which result from outsourcing are short lived.)

You have to understand that these executives/CEOs are only going to get limited compensation. Most big firms use market data and WILL NOT overcompensate an executive or a CEO. I've seen executives hit these compensation barriers and they DO NOT get any increase in compensation of ANY type (options, bonus,etc). This may not be true of smaller firms, but you can bet your bottom dollar the big firms do this.

So, it's not about filling the CEO's and senators pockets with money. It's about the bottom line of the company. The problem is that if the bottom line is all that is important, then everthing else is optional.

[TopQuark]

I am not a commie, I know that.

Next time you call someone a commie I did not: I said they you are repeating commie propaganda.

hose family has lived in Virginia since 1607.

OK, I'll call you Sire if it you'd like, but what does the pedigree have to do with one's views? Friedrich Engels was German whose family lived in Germany probably since the Gothic invasion, and yet he is one of the fathers of communism. How many descendants of those who shed blood in the Revolutionary War are now screaming anti-war (anti-American) protests? One thing that differentiates us from the Continent and England is that our pedigrees do not determine who we are (except for the country club dues in "restricted" places).

I can see that you can and should be proud of your ancestry, but that point is irrelevant.

[samuel_adams_us]

Why do american CEO's get paid 100x more than their European counterparts and why have the European companies been in business much longer and for the most part are more successful?

[1stFreedom]

That's because the market drives the wages here. It doesn't matter what the European counterparts get paid.

ECONOMICS IS LOCAL, even with global companies.

[samuel_adams_us]

I guess you forget who owns and runs this country. It's not the working poor, it's the rich. It always has been and always will be. Did you know that Geo Washington was appointed his first term as the president? Guess by whom.

[TopQuark]

Capitalism is a good, but not perfect, economic system. No economic system is perfect. Capitalism, IMO, is the best of the bunch, but like all systems, it has it's own problems.

At some point in your life, you should move beyond these generalities which anyone can repeat ad infinitum.

What are the limitations of capitalism? What are the "imperfections?" You do not say and I was hinting --- again, it's not my intention to offend you --- your posts indicate that you have no clue about the subject.

Which is fine: we all have a limited knowledge. However, intellectual honesty dictates that, when one steps into a subject he knows not, he refrains from judgment. That was the only point I was trying to make. I've said, you are welcome to ignore it.

[samuel_adams_us]

Then why are the Germans buying up our car companies, firing our management because they are worthless and stupid, and then are returning to profitability?

[A. Pole]

Why do american CEO's get paid 100x more than their European counterparts and why have the European companies been in business much longer and for the most part are more successful?

It is because being CEO is a vocation like being a minister. If the congregations paid many times more their pastors, the wrong type of people would take over. The people with true calling would be pushed out and the affected denominations would decline after some period of phony flashy success produced by money minded, selfish crooks.

Not only the law of diminishing returns applies here, but the return can be even NEGATIVE.

[Poohbah]

...it is difficult to deal with the techs from India.

The general consensus in the software industry is that their work is shoddy and unreliable.

In other words, just like much American code.

The general consensus among management is that at a fraction of the cost, that's more than acceptable.

Management perspective: "I can pay $1,000,000 for unworkable crap made in America, or I can pay $650,000 for equally unworkable crap from India."

[1stFreedom]

CEOs and executives are not overpaid.

This is a common complaint of those who WISH they could make the money these people do.

However, we should be congradulating these folks that they have hit it big in terms of compensation.

One time I found out that a collegue made 5x as much as I did for the same work (he was a lazy bum also). My first reaction was jealousy. It was unjust that I got paid less. Then I realized, well I was getting paid well and not starving. Then I realized, hey, one day I'd like to make that kind of money, so why should I be jealous? Rather, I should be happy for him that he makes that kind of money.

Be happy for someone, don't be jealous.