Following ‘comment’ was posted in response to Why I Will Never Feel Threatened by Cheap Overseas Programming as comment # 194. Here’s a copy + paste of that, with some corrections.
Some of my Indian friends (born in India, migrated to US on H1B) who manage IT spend in US also bemoan the fact that they can’t even employ a single programmer due to blanket ban of using onshore programmers. Well, that’s taking it (offshoring) to the extremes.
One thing the author of this post should bear in mind, however, is what my Indian friends call the 70:30 or 80:20 gambit.
Most companies that have any decent budget to spend on IT initially hire the services of one or the other Big 5 firms to do ‘business process consulting’, ‘change management’, ‘feasibility study’, ‘strategy document’ and quite a few other fluffy bits. Fresh or seasoned MBAs with no direct knowledge of the industry, regurgitate report after report, recycled from years of hard work put in by their predecessors (from Victorian or WWII times ? ha ha ha). They have long term stay in Marriotts, Best Westerns, Radissons – charge hefty sums in time and expenses and leave precious little as ‘tangible’ output. Suddenly, after 1-3 botched up years, the IT Director of the firm realises his seat has turned hot under a$$ with just 1 more year to show something tangible – e.g. an ERP that works, a portal that customer can use to place orders etc. By this time, he has already spent 70-80% money on PPTs, PDFs and VISIOs! With what’s left, all he can lay hands on is a ludicrously under-cut offer from one or the other tier-2/3 type ‘system integrator’ Indian firms. Obviously, such firms, hired as an after-thought, with frugal margins, are infamous for long work hours, high employee attrition, low morale and consequently low creativity. These become bad ambassadors for Indian talent, bringing down with them, the overall image of what Indians are actually capable of.
The already rich, upwardly mobile and well-oiled workforce in the West fleece exorbitant rates and move on from one firm to the other. Middle class in the West have no clue why carpet is pulled under their feet. If all white elephants are made non existent and profligacy is nipped in the bud, there can be budgets for healthy IT spend, hiring best of talent at optimal price, be it onsite or offshore.
Is there truth in the fact that one can hire similar (like for like) talent for less cost in India – A big YES. No running away from this reality. A country rich in people as a resource, even if intelligence is a matter of statistics, should have lot more talented people. Indian middle class population today is the size of US population or more.
A firm that charges 1/10th of US hourly rate – can they still provide similar talent though – Of course NOT
Is outsourcing (to anywhere overseas for that matter, not just cheap destinations; try outsourcing from US to Ireland) always the best way to bring down costs – Again, how could this be true ? Common sense should prevail on what’s best retained locally what should be outsourced.
There really is no need to seek refuge in any perceived ‘holier than thou’ pedigree. It’s only as misplaced as a conceited programmer in India who may think his English is already impeccable !