IT happens only in India!

Economic Times of India ^ | August 10, 2003 | R SUBRAMANYAM

[sarcasm]

Despite shrinking IT spend caused by the economic slowdown, Indian software and services export industry grew 26.3% last fiscal generating revenues of Rs 46,100 crore ($9.5 billion). Of this, the promising BPO segment earned Rs 11,300 crore ($2.3 billion), with the balance Rs 34,800 crore ($7.2 billion) coming from IT services, products and technology services.

Nasscom, the trade body representing software and service firms expects the momentum to continue and predicts the industry to earn $50 billion and create 1.1 million jobs by 2008. With outsourcing going mainstream and Indian cost and quality advantage gaining ground, the road ahead looks promising for the software export industry.

A Gartner report in August 2002 says that 79 percent of large US corporations are currently engaged in offshore outsourcing while the remaining 21 percent plan to do so soon. The report says surveyed US corporations ranked India as the primary country for supplying offshore IT services.

High quality delivery capabilities, significant cost benefits and abundant skilled resources are the pushing foreign clients to shift their software development and BPO needs to India.

While the outlook is bright, there are numerous challenges the software and BPO industry need to battle to retain this pre-eminent position. On the external front, prime issues are stringent visa regulations, preventing easy moment of Indian IT professionals to overseas clients premises and laws restricting outsourcing -such as the recent one in which five US states together are pushing for ban on government agencies moving back office and IT solutions work to companies outside the country.

Additionally, software and service exporters have to face the threat of increased competition from emerging outsourcing destinations like Philippines and China and big global IT consultants and service brands like IBM, Accenture and EDS, who are enhancing their India presence to push down rates.

The need to move up the value chain to provide end-to-end solutions for customers.

Tackling human resource related issues like employee attraction and retention and high wage cost are some of the internal challenges confronting the IT services export industry.

[Jimmy Valentine]

"I truly pray you are right. But, unfortunately, the concern of Fortune 500 companies for quality is rather suspect lately. They keep looking at the bottom line of costs and letting that drive all decision-making."

you are perfectly correct. Short run maximizers have done incalculable damage to American business in every field. Corporate Darwinism will weed out the short run competitors in favor of the more durable and adaptable players.

By the way, Bush's tax plan relieving dividend taxation will move this along faster, with investors demanding return on invested capital rather than just stock price increases.

Regards,

[dennisw]

When do we get to save big on government by outsourcing our worthless hack politicians and their staffs? I know an Indian can do my Congress critter's job better and at one fifth the price. I know Indians can do Congressional staff jobs better and at one fifth the price.

[thtr]

A Gartner report in August 2002 says that 79 percent of large US corporations are currently engaged in offshore outsourcing while the remaining 21 percent plan to do so soon.

100% of large US corporations to engage in outsourcing. And just what is America receiving in return? What markets has India opened to American products?

[tommix2]

Good for you for pointing this out. There are thousands of laws and regulations in this country that raise our cost of living and that Indian tech workers do not have to pay.
Occupational licensing laws raise our cost for many services.
Requirements for termite inspection, title insurance, transportation expense, taxi fares, I could go on and on. There is no comparison of the cost of living for an American tech worker tothe cost of living for the Indian. I have lived and worked in the far east and I know how cheaply one can live if one moves into the native community. I got along without a car, just a bicycle, had
low rent.
American workers are subject to thousands of costs imposed by law by special interest occupations and businesses here.

[BlazingArizona]

The Indian employers are cheaper than US employers in general re benefits and wages. US companies are being charged $28/hr for project leaders and $20 for programmers in IT for offshore work. The pressures will drive this up.

But the pointy-haired boss response to this will be to shift outsourcing away from India to China, Vietnam, and Indonesia. The IT wage will drop even further. Our best hope is a security meltdown in outsourced software.

[Pro-Bush]

I have a different prognostication. Give it 5 years, and unless tariffs are restored, we will literally have millions of people begging in the streets for any kind of job. The middle class will be imploding. And you will be out of a job, and no longer on-line.

I do not believe in tariffs, that would limit the productivity of American companies. India has a competitive advantage against the USA in terms of providing an abundant labor pool that are educated in latest IT technologies (J2EE, Java, XML, etc.) and will take a job around $8,000 a year. If the USA issues tariffs against utilizing India's labor market, other countries like Germany, UK, & France will use the Indian labor force and hence will have the benefit of using a skilled labor force at a cheaper price. As a result, American IT companies would be more expensive due to the increase cost per unit/function point and would end up closing shop altogether. Then everyone looses.

[Pro-Bush]

Thanks! Bookmarked.

[Euro-American Scum]

Not much is reported about this aspect but the Indians in Bangalore and elsewhere are jobjumping like crazy to get raises and promotions.

That's one side of this I frankly admit I didn't consider. The wage slaves don't relish the prospect of remaining slaves.

Won't help anything in this country, though.

[creator]

Why is the west so hypocrite. India was enslaved by the west for centuries. Now India is independent, free and a democratic country, learnt capitalism from the west and hey... they are just doing what they learnt from the west. Why is that pissing you off... Believe me, the software engineers of India are no prison labor like china... they are just hard working individuals like you and me.

[creator]

look. American companies sell cars in India. GM, FORD. Amereican companies sell military equipment to India. GE, Raytheon, Lockheed Martin etc etc. No offence, American companies get brains from India that is not much available elsewhere. Before you blaim Indians you must know that Indias are one of the most affluent communities in america that consumes very little social services. Average income of an Indian in america is about $68000+.

Now what have Indians contributed to america. The answer is technology.

1. Fiber optics to pentium chip to CD ROM to many many such things that have touched the heart and soul of every american and every human being on earth, things that make you and me communicate was all developed by Indians. Ask Sun, MS, IBM, Intel, Cisco, MIT, Bell Labs, ATT what indians have contriuted to american corporations??? May be you will get the answer.

[Paul Ross]

The smart bombs are not 'pretty basic technology' except at the semiconductor level. What is elegant is the complete package of jam-resistance and inertial guidance backups that make it a truly devastating statement of American technical know-how...and a testament of the billions we spent on the research and development. India and China expect to be handed the production rights to this and other technologies...without ever spending a nickel of their own on R&D which I doubt they could do...even today.

[Paul Ross]

As a result, American IT companies would be more expensive due to the increase cost per unit/function point and would end up closing shop altogether. Then everyone looses.[Sp.}

You have failed to answer the prognostication. And further your point, is more applicable if you turned it around. The American IT companies...and all others are going to outsource everything. I.e., in your words "closing up shop altogether." They are in fact still doing that...just via outsourcing. They will then no longer BE 'American' companies. They will be the American-branch sales offices for the foreign enterprise they will in fact have become. American citizens will be the ultimate losers...and will be vastly poorer. AND EXTREMELY MAD. Get real. And you will be unemployed and no longer on Free Republic or any other internet site because you won't be able to afford it.

[mickie]

I hope everybody saw Lou Dobb's show last night.
He had a segment on outsourcing.
Citicorp is sending customer service (for several States) food stamps program. IMAGINE THAT......besides losing jobs. our tax dollars are going outside the Country.
One State senator....Judith Robson has sponsered a bill to outlaw such actions.

[mickie]

From Lou Dobb's Friday show:

"Several lawmakers in Wisconsin are outraged by this betrayal. And we want to on this broadcast compliment State Senator Judith Robson (ph). She's urging the state to require customer service jobs for food stamp recipients be located in the state of Wisconsin. And Governor Jim Doyle agrees. He says the only way he'll renew the state's contract with Citigroup is if those jobs are returned to the United States".

Pa. is also outsoucing customer service jobs via Citigroup. I am calling my reps on Monday to complain.

[sarcasm]

U.S. opposed to curbs on outsourcing

WASHINGTON JUNE 13. The Bush administration has assured India that it was totally opposed to anti-outsourcing bills and will try to resist legislations coming out of some States in this regard.

The assurance was given by the United States Trade Representative, Robert Zoellick, to the Union Minister of Commerce and Industry, Arun Jaitley.

The Union Minister, during a discussion with Mr. Zoellick, had said that restrictions by way of anti-outsourcing measures "are completely contrary to the spirit of market access.''

Meeting members of the media here on Thursday, Mr. Jaitley said that Mr. Zoellick was "very appreciative'' of our stance.

Mr. Zoellick had maintained that these proposals coming from States were "bad policies'' and that the "Federal Government opposes it and is trying to resist it.''

"We have taken up the issue and I am sure that the industries that are entitled to cost-effective and quality services would watch for its own interests,'' he said.

Over the last two days, the Union Minister had talks with a number of senior officials and functionaries of the Bush administration, including Mr. Zoellick and the Commerce Secretary, Don Evans. Mr. Jaitley raised a number of bilateral and multilateral issues and concerns of India, especially as it pertained to agriculture, industrial goods and market access.

"Wherever concerns we have we raised it with the United States,'' he said. Bilaterally issues such as generalised scheme of preferences, shrimp and mango exports and the totalisation agreement are some of the things that were dealt with.

The Minister was the keynote speaker at the Relaunch of the United States-India Commercial Dialogue and also made a presentation at the Carnegie Endowment.

From a bilateral perspective one of the issues that came up was the refund of social security contributions made by Indian professionals who came to the U.S. for temporary work.

Under the existing domestic law, 15 per cent of the wages goes to the social security fund and benefits could be availed of only after 10 years or 40 quarters.

Most of the Indian professionals had come on a three-year visa eligible for extension for another three years.

Their contribution to the social security fund is in the neighbourhood of $ 500 millions annually.

Mr. Zoellick has apparently made the point that the subject of any refund could be made only to a comparable social security system in India; and New Delhi has responded saying that while there may be no centralised social security system in India similar to the one in the U.S., there was a "multi-layered'' system of social security in India.

Among other things, India is asking the U.S. to look into this issue in the way Washington has dealt with a group of other countries.

[mickie]

What say you?

[Willie Green]

The hare and the tortoise

[Pro-Bush]

You have failed to answer the prognostication. And further your point, is more applicable if you turned it around. The American IT companies...and all others are going to outsource everything. I.e., in your words "closing up shop altogether." They are in fact still doing that...just via outsourcing. They will then no longer BE 'American' companies. They will be the American-branch sales offices for the foreign enterprise they will in fact have become. American citizens will be the ultimate losers...and will be vastly poorer. AND EXTREMELY MAD. Get real. And you will be unemployed and no longer on Free Republic or any other internet site because you won't be able to afford it.

I see the situation a bit differently.

In general, I am saying that if US companies did not have the legal right to outsource, and other IT companies in other countries could, then US companies would be at a competitive disadvantage because our products would be more expensive and wouldn't have access to a vital IT labor pool to tap into when needed.

Am I happy about losing jobs overseas? No I am not.

Cost cutting won't end, and neither will outsourcing.

Don't worry, Oracle, HP, Seibel, Convergys, DST Systems, Microsoft, Intel, etc. will not be headquartered offshore. If you have an example of a major IT company that has, I'd love to hear about it.

[Paul Ross]

if US companies did not have the legal right to outsource, and other IT companies in other countries could, then US companies would be at a competitive disadvantage because our products would be more expensive and wouldn't have access to a vital IT labor pool to tap into when needed....Don't worry, Oracle, HP, Seibel, Convergys, DST Systems, Microsoft, Intel, etc. will not be headquartered offshore. If you have an example of a major IT company that has, I'd love to hear about it.

This is not just wrong-headed...it's a sophomoric sophistry. And from this reply with your lipservice about not liking losing U.S. jobs aside (a mere political inconvenience, eh?) I can tell you that you are not concerned about America...only Corporate Headquarters.

First, you should be aware that coporate HQ's don't produce anything. They don't generate any revenues. They just consume. And with China siphoning off most of the Returns on Investment, via 'partnership' requirements... location of the HQ will not yield revenue flows commensurate with that status as formerly.

Second, HQ's are in fact transportable. Many of these Fortune 500 companies are set up as being...'incorporated' non-U.S. entities (HQ's in Barbados, or some other caribbean tax-havens)...even certain critical defense companies.

Third, and most crucially, bearing on the NEP-Scam we are witnessing play out for the second time in a century (some HQ-honchos NEVER learn): When the foreign entities that will in fact control the companies foreign assets NATIONALIZE their assets...the HQ's will go down the drain too...taking their shareholders with them. And you can't say it's a low probability. You have still failed to address the prognostication.

[Hat-Trick]

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