Why is India the focus for IT outsourcing?

NetworkingStudent

When concerning outsourcing, why is it that a majority of companies choose India for IT

based jobs? How come they don’t choose other countries such as: Africa, Ethiopia, or

Russia? I’m just curious because it seems like 90% or more of the off shoring/outsourcing

of IT jobs seems to be India based workers. I want to know for my own personal

knowledge. I know that by going to other countries that you can save a ton of money,

because you can pay the workers a lot less; however, I’m looking for specific reasons as to

why they chose India.

Why do they choose India for IT outsourcing?

Where do the India workers get their training and education?

Does the India and Untied States government play a big role in the number of India based IT workers?

eMeS

NetworkingStudent wrote: »

When concerning outsourcing, why is it that a majority of companies choose India for IT

based jobs? How come they don’t choose other countries such as: Africa, Ethiopia, or

Russia? I’m just curious because it seems like 90% or more of the off shoring/outsourcing

of IT jobs seems to be India based workers. I want to know for my own personal

knowledge. I know that by going to other countries that you can save a ton of money,

because you can pay the workers a lot less; however, I’m looking for specific reasons as to

why they chose India.

Why do they choose India for IT outsourcing?

Where do the India workers get their training and education?

Does the India and Untied States government play a big role in the number of India based IT workers?

Labor, regardless of the industry, always moves to where the lowest cost can be paid for the highest quality.

I wouldn't say that 90% goes to India; and there is significant outsourcing to Russia/CIS over the past 15 years.

I would argue that in the case of India, outsourcing has somewhat failed. In my experience there are some very good smart people over there, however, on the whole I have seen great dissatisfaction with outsourcing to India. Also keep in mind that many Indians would rather (and do) live in the US.

During my time in this field, the first outsourcing location was Ireland. A lot of development activity moved there in the early 90's. The next was significant outsourcing to Russia and then India.

The reason is I think the same. You have a surplus of highly educated people in all of those locations who are willing to work for much less than Americans that might be even have less education. You also have largely stable governments that give incentives to companies that move jobs to their countries. This lowers the overall transaction cost for the companies, and so they move jobs.

Why not Africa? (Or for that matter, why not South America?). Africa for the most part has non-functioning governmental structures. There are some exceptions, however the bulk of Africa doesn't work well from a perspective of government. In Africa, to get business done, there are always lots of random taxes and kickbacks that make things happen. When this is the case, it increases the cost for organizations, and they don't move jobs there. Also in Africa you have a population of people that are largely uneducated compared to other parts of the world. In South America you have much the same situation; a largely uneducated population and high transaction costs in the forms of kickbacks and graft because of non-functioning governments.

IMO, some outsourcing activities work and work well; Ireland being an excellent example. Others look good on paper, look good in the short-term, but overall result in increased costs; India being the best example I can think of there.

Also IMO, outsourcing, when it works well is not a bad thing. It turns simple routine jobs into commodities, and lets smart, well-educated and innovative Americans work towards making the next innovation.

MS

ColbyG

It's not just India. They're the biggest for now, but companies (like mine) are also sending jobs to the Philippines, Vietnam, and other places. They're getting supposedly quality labor for much cheaper than they could here in the states.

binarysoul

Because labor is cheap in India and it was a British colony, so they know the western culture.

mikej412

India has a large educated English speaking population that works for less money.

Russia has a great crop of programmers but language issues usually require a middleman, so the quality of Russian outsourced projects is directly related to the middleman -- and a bunch of them have found the American business way of making more money by milking a project than by knocking 'em out on time and under budget and moving on to the next project.

Hyper-Me

Thank god for langauge barriers or none of us would have a job.

Honestly, I've never dealt with anyone that was overseas that actually knew what the hell they were doing, but because they did it for pennies on the dollar it took a job away from someone here in the states.

We have a bum HP Printer once that was flat out DOA. We spent over 12 hours on the phone with support in India before they finally agreed to send a replacement. That only happened because I asked for supervisor after supervisor and was getting short with them after about hour 11.

chrisone

Although it is changing now but the idea is this...

Greedy corporations dont care about their employees.

Stingy corporations dont care about Americans/America.

Evil corporations dont care about your cost of living and would rather hire Indians in poorer countries and pay them half of what you earn because they would live like kings in their country because the dollar is much hire.

One more BACK Hand Obama needs to put down on some of these UN-American companies!

Super99

Hyper-Me wrote: »

Thank god for langauge barriers or none of us would have a job.

Honestly, I've never dealt with anyone that was overseas that actually knew what the hell they were doing, but because they did it for pennies on the dollar it took a job away from someone here in the states.

We have a bum HP Printer once that was flat out DOA. We spent over 12 hours on the phone with support in India before they finally agreed to send a replacement. That only happened because I asked for supervisor after supervisor and was getting short with them after about hour 11.

It might have been cheaper for your company to just get a new printer.
Yes I don't like how we out source jobs to other countries while we're hurting here but thats how the CEO can make their $million bonuses and satisfy wallstreet while we bail them out with tax money. It's getting a rediculous.

dynamik

Hyper-Me wrote: »

Thank god for langauge barriers or none of us would have a job.

Honestly, I've never dealt with anyone that was overseas that actually knew what the hell they were doing, but because they did it for pennies on the dollar it took a job away from someone here in the states.

We have a bum HP Printer once that was flat out DOA. We spent over 12 hours on the phone with support in India before they finally agreed to send a replacement. That only happened because I asked for supervisor after supervisor and was getting short with them after about hour 11.

Have you used them for any serious problems or just miscellaneous bs like printer problems? I used one of my Technet support calls to Microsoft about five years ago, and the guy I got was a command-line ninja. I was very impressed.

Forsaken_GA

dynamik wrote: »

Have you used them for any serious problems or just miscellaneous bs like printer problems? I used one of my Technet support calls to Microsoft about five years ago, and the guy I got was a command-line ninja. I was very impressed.

This is Microsoft we're talking about.

Commandline pirate would be more appropriate.

MYSTYKRACER

chrisone wrote: »

Although it is changing now but the idea is this...

Greedy corporations dont care about their employees.

Stingy corporations dont care about Americans/America.

Evil corporations dont care about your cost of living and would rather hire Indians in poorer countries and pay them half of what you earn because they would live like kings in their country because the dollar is much hire.

One more BACK Hand Obama needs to put down on some of these UN-American companies!

OOOOHHH, NO YOU DIDN'!!!!! Don't you know it's unAmerican to agree w/ anything Obama says or does, and/or criticize anything a large corporation says or does?! You do know the Supreme Court just ruled that corporations are people too and they have feelings!


. . . but seriously, yeah been there, done that!

I had a great job w/ a major tele-com working in network main-frame operations ( MVS OS/390 - Z/OS for any who knows or cares and yes I actually really liked that environment, even the dreaded TN3270 terminal ) making mid-60s from 00-'07. In '06 the powers that be essentially decided that our entire division was costing too much money and they off-shored it to India.

There's was NEVER any consideration of the quality of service, strictly a bottom line decision. The plan was that we would spend six months training our replacements in India essentially over the internet and then after the training phase we'd have 60 days to find another job inside the company. Technically it is illegal supposedly to just fire a bunch of Americans in favor of cheap off-shore labor so what many companies do is "shift" the labor to another division and then claim that the old division doesn't have any work so they are not needed anymore. What was wild about our particular case though was that it was virtually impossible to train people in another country w/ a significant language and time barrier to do our processing on a complex platform that it usually took most people in our group a year+ to become proficient.

The whole thing was a predictable epic failure of planning and management. The QoS on that platform plummeted from nearly 99% to the mid-60s and after 1.5 years AT& - oops, I mean the major telecom - terminated a five year contract early and resourced the whole thing to IBM global services in Brazil. < - For those of you that wonder, supposedly the next major source of cheap IT labor/Tech labor will be coming from the so-called "BRIC" nations - Brazil, Russia, India, China.

The upshot of the whole story above is that even though I was fortunate enough to land on my feet in another operations gig ( although not nearly as rewarding as what I was doing ) I've taken about a 20% pay cut which translates directly into 20% less tax revenue for those budget/defecit hawks that are keeping score. As far as I'm concerned the recession started back in '06!

binarysoul

Oh, another reason why they outsource to India is government's incompetence. They give businesses billions of taxpayers money in tax breaks, bailouts and etc, but yet those moron businesses go out and create employment opportunities 500,000,000 miles away.

Globalization to certain extent is a curse and evil.

dynamik

Forsaken_GA wrote: »

Commandline pirate would be more appropriate.

I can't give you more rep until I "spread it around" a bit, so I'll just give you props here

Hyper-Me

dynamik wrote: »

Have you used them for any serious problems or just miscellaneous bs like printer problems? I used one of my Technet support calls to Microsoft about five years ago, and the guy I got was a command-line ninja. I was very impressed.

I've never gotten a foreigner for a high-end support need. I have called MS for activation and generally get India but on occasion its rolled over to UK (or perhaps just british people working in India) and its been much more enjoyable with the brits.

snadam

dynamik wrote: »

I can't give you more rep until I "spread it around" a bit, so I'll just give you props here

just did for you

twodogs62

Cost and people wanting the work

HeroPsycho

Hyper-Me wrote: »

Thank god for langauge barriers or none of us would have a job.

Honestly, I've never dealt with anyone that was overseas that actually knew what the hell they were doing, but because they did it for pennies on the dollar it took a job away from someone here in the states.

You have to understand it's not that they're overseas that explains why they suck. It's because the company chose to save costs over providing quality support for their products. At that point, it could have been in the US or India or any place else. The support was gonna suck once they decided it was okay to suck as long as they saved money.

I've worked with overseas personnel who could kick my butt, and I've worked with people here in the US who were the most useless sacks of crap I've ever worked with. The company's priorities shine through regardless of the nationalities of the employees.

chrisone

MYSTYKRACER wrote: »

OOOOHHH, NO YOU DIDN'!!!!! Don't you know it's unAmerican to agree w/ anything Obama says or does, and/or criticize anything a large corporation says or does?! You do know the Supreme Court just ruled that corporations are people too and they have feelings!


. . . but seriously, yeah been there, done that!

YES WE DID! hahaha Im all for corporations and i believe big business provides jobs. Heck im a conservative / republican too. However I voted for Obama and i understood he was the better man to help rebuild this country. I just believe in order for our country to be great like it once was, we cannot be one side blinded anymore. In reality we need to be conservative in some situations/topics and liberal in some situations/topics. Corporate greed and illegal practices are so disgusting and its destroying our country.

Forsaken_GA

chrisone wrote: »

YES WE DID! hahaha Im all for corporations and i believe big business provides jobs. Heck im a conservative / republican too. However I voted for Obama and i understood he was the better man to help rebuild this country. I just believe in order for our country to be great like it once was, we cannot be one side blinded anymore. In reality we need to be conservative in some situations/topics and liberal in some situations/topics. Corporate greed and illegal practices are so disgusting and its destroying our country.

You call this last year rebuilding the country? Sure, the current state of the economy is a very large gorilla that Obama inherited, but rather than correct the mistakes of the previous administration, he's helped propagate them. Instead, we've gotten a government that's grown even more intrusive into the working of society. The party labels are meaningless, both of them will do the exact same thing, it's just a matter of where they get their money.

I think this November's congressional elections will reveal a widespread indictment of the Obama administration. Ted Kennedy's seat changing over to a Republican in the midst of the health care debacle that Ted Kennedy helped foster is a pretty good singal that at least the folks of Massachusetts are willing to express their displeasure.

The problem with the country isn't that politicians lie or are stupid, or incompetent - it's that the mindshare has developed a sense of entitlement. I shouldn't have to do anything, the government should take care of it! Being responsible for your own life is hard, folks would rather sit back and blame someone else rather than have to suck it and up say 'yeah, my bad, I'll do better.' Until people are willing to stand up and fight for what they believe in, things won't change. A gentleman by the name of Jefferson said something about a populace predisposed to suffer, and the man was dead on.

coffeeking

eMeS wrote: »

Labor, regardless of the industry, always moves to where the lowest cost can be paid for the highest quality.

I wouldn't say that 90% goes to India; and there is significant outsourcing to Russia/CIS over the past 15 years.

I would argue that in the case of India, outsourcing has somewhat failed. In my experience there are some very good smart people over there, however, on the whole I have seen great dissatisfaction with outsourcing to India. Also keep in mind that many Indians would rather (and do) live in the US.

During my time in this field, the first outsourcing location was Ireland. A lot of development activity moved there in the early 90's. The next was significant outsourcing to Russia and then India.

The reason is I think the same. You have a surplus of highly educated people in all of those locations who are willing to work for much less than Americans that might be even have less education. You also have largely stable governments that give incentives to companies that move jobs to their countries. This lowers the overall transaction cost for the companies, and so they move jobs.

Why not Africa? (Or for that matter, why not South America?). Africa for the most part has non-functioning governmental structures. There are some exceptions, however the bulk of Africa doesn't work well from a perspective of government. In Africa, to get business done, there are always lots of random taxes and kickbacks that make things happen. When this is the case, it increases the cost for organizations, and they don't move jobs there. Also in Africa you have a population of people that are largely uneducated compared to other parts of the world. In South America you have much the same situation; a largely uneducated population and high transaction costs in the forms of kickbacks and graft because of non-functioning governments.

IMO, some outsourcing activities work and work well; Ireland being an excellent example. Others look good on paper, look good in the short-term, but overall result in increased costs; India being the best example I can think of there.

Also IMO, outsourcing, when it works well is not a bad thing. It turns simple routine jobs into commodities, and lets smart, well-educated and innovative Americans work towards making the next innovation.

MS

Well put eMes, totally agree!

MYSTYKRACER

HeroPsycho wrote: »

You have to understand it's not that they're overseas that explains why they suck. It's because the company chose to save costs over providing quality support for their products. At that point, it could have been in the US or India or any place else. The support was gonna suck once they decided it was okay to suck as long as they saved money.

I've worked with overseas personnel who could kick my butt, and I've worked with people here in the US who were the most useless sacks of crap I've ever worked with. The company's priorities shine through regardless of the nationalities of the employees.

+1!

I remember having a conversation w/ my immediate supervisor toward the end of my time at the telco and being almost in tears asking why no one seemed to care about the QoS anymore? There was a lot of pride in my group in having gotten to our near 99% rating and when they let it go to crap, let's just say there was a lot of visible frustration.

My bosses answer to me to at the time was that the decision had been made that QoS could suffer "a little bit" in favor of some other objectives. By the end of the first year of this little exercise most of our internal clients had bailed on that platform though but instead of acknowledging the real problem they instead blamed those of us that were doing the training and accelerated the process.

I don't care how many clever adds they have on tv or how many coupons they send me in the mail, I will never use a product or service from that company.

HeroPsycho

Forsaken_GA wrote: »

You call this last year rebuilding the country? Sure, the current state of the economy is a very large gorilla that Obama inherited, but rather than correct the mistakes of the previous administration, he's helped propagate them. Instead, we've gotten a government that's grown even more intrusive into the working of society. The party labels are meaningless, both of them will do the exact same thing, it's just a matter of where they get their money.

I think this November's congressional elections will reveal a widespread indictment of the Obama administration. Ted Kennedy's seat changing over to a Republican in the midst of the health care debacle that Ted Kennedy helped foster is a pretty good singal that at least the folks of Massachusetts are willing to express their displeasure.

Sorry, hate to get a political flame war started, but I have to comment.

First off, I'm a political moderate. I do not believe leftist or rightest philosophies, or any pure political philosophy works in their purest forms. Every philosophy has a weakness.

Now, in respect to Obama making the economy worse, I'm gonna assume this is speaking to running up a larger deficit than what the previous administration was doing. Please, PLEASE, study a bit about Keynesian economics before blasting any administration for deficit spending. The difference between the Obama and Bush administrations is Obama is running the deficit up during a recession, and not just any recession, but the biggest recession since the Great Depression. He MUST deficit spend to get the economy going again. He has no choice. The vast majority of economists who are not politically involved agree about this. Bush on the other hand ran at the time record deficits during one of the fastest economic growth periods in American history fueled by a bubble that many economists saw coming, although underestimated greatly how badly the bubble was inflated. You can't do that, period. Most economists agree there, too. Believing a deficit is always bad is a nice simple way to view economics, but it's simply not true. You must run deficits to get out of most recessions, and surpluses during periods of growth, especially when the growth is fueled by bubbles to prevent the bubbles from inflating and to pay for the deficits you must run during recessions.

Secondly, about the late Kennedy's seat being lost to a Republican, could it be that the reason Brown won was because the Democrat ran an absolutely craptastic campaign?

Thirdly, please explain how under the Obama administration that government is more involved in society than before in any appreciable manner. So far from what I've seen, not much has been done by the Obama administration other than the economic stimulus and some credit card reform.

There's plenty to critique about the Obama administration, or both parties in general for that matter, but Obama isn't worsening the economy, and he's not making the government more obtrusive in our lives.

eMeS

HeroPsycho wrote: »

Sorry, hate to get a political flame war started, but I have to comment.

First off, I'm a political moderate. I do not believe leftist or rightest philosophies, or any pure political philosophy works in their purest forms. Every philosophy has a weakness.

Now, in respect to Obama making the economy worse, I'm gonna assume this is speaking to running up a larger deficit than what the previous administration was doing. Please, PLEASE, study a bit about Keynesian economics before blasting any administration for deficit spending. The difference between the Obama and Bush administrations is Obama is running the deficit up during a recession, and not just any recession, but the biggest recession since the Great Depression. He MUST deficit spend to get the economy going again. He has no choice. The vast majority of economists who are not politically involved agree about this. Bush on the other hand ran at the time record deficits during one of the fastest economic growth periods in American history fueled by a bubble that many economists saw coming, although underestimated greatly how badly the bubble was inflated. You can't do that, period. Most economists agree there, too. Believing a deficit is always bad is a nice simple way to view economics, but it's simply not true. You must run deficits to get out of most recessions, and surpluses during periods of growth, especially when the growth is fueled by bubbles to prevent the bubbles from inflating and to pay for the deficits you must run during recessions.

Secondly, about the late Kennedy's seat being lost to a Republican, could it be that the reason Brown won was because the Democrat ran an absolutely craptastic campaign?

Thirdly, please explain how under the Obama administration that government is more involved in society than before in any appreciable manner. So far from what I've seen, not much has been done by the Obama administration other than the economic stimulus and some credit card reform.

There's plenty to critique about the Obama administration, or both parties in general for that matter, but Obama isn't worsening the economy, and he's not making the government more obtrusive in our lives.

Well said, I couldn't agree more with everything in this post.

The years 2001-2009 were like a continual bailout for the defense industry and a few others. The economy doesn't simply turn on a dime, nor has that been a promise that I've seen made....

MS

eMeS

I think I can help translate this:

HeroPsycho wrote: »

I've worked with overseas personnel who could kick my butt...

Not Dynamik

HeroPsycho wrote: »

...and I've worked with people here in the US who were the most useless sacks of crap I've ever worked with.

Dynamik

HeroPsycho wrote: »

It's because the company chose to save costs over providing quality support for their products.

Agree, except to add that they haven't really chosen to save cost. They've actually chosen higher cost. There is a saying from the quality management world that "the highest quality solution is always the least expensive." Typically when these companies, and individuals within the companies make these types of decisions, they are only looking at the short-term. In the long-run not only will they have sacrificed quality, but treasure as well.

The thing is, for most executives that make these types of decisions it's almost always someone elses' problem in 5 to 7 years....

MS

Forsaken_GA

eMeS wrote: »

The thing is, for most executives that make these types of decisions it's almost always someone elses' problem in 5 to 7 years....

MS

Heh, yeah, you'd think that instead of golden parachuting executives so that they're in a constant revolving door scenario, that some company would figure the best way to deal with an executive who screws up is to make him stay and fix his mess.

eMeS

Forsaken_GA wrote: »

Heh, yeah, you'd think that instead of golden parachuting executives so that they're in a constant revolving door scenario, that some company would figure the best way to deal with an executive who screws up is to make him stay and fix his mess.

What goes by the name leadership is many organizations is really nothing more than cowardice.

I have a theory, it's a long one, and I won't spell it out here. Basically, at least in the US, I blame the baby boomer generation.

MS

MYSTYKRACER

Forsaken_GA wrote: »

Heh, yeah, you'd think that instead of golden parachuting executives so that they're in a constant revolving door scenario, that some company would figure the best way to deal with an executive who screws up is to make him stay and fix his mess.

"The significant problems we have cannot be solved at the same level of thinking with which we created them." - Albert Einstein

I understand what you're saying but at some it's obvious that these folks don't know what they're doing and shouldn't be allowed to screw up further. In my opinion some of these clowns should be fired in a very public and very humiliating press conference where the company board and/or employees can demand repayment of their executive salary!

Case in point:
Documents: Toyota boasted saving $100M on recall

The savings are listed under the title, "Wins for Toyota -- Safety Group." The document cites millions of dollars in other savings by delaying safety regulations, avoiding defect investigations and slowing down other industry requirements.

snokerpoker

I don't understand why so many companies go to India. I once thought the same thing as most people- that India had well educated, high end employees that could do the job for less money. But at my last job my entire department was outsourced to India and I found from first hand experience that this was NOT the case at all. The Indian employees could not even reset a password or do simple tasks such as finding which process is pegging the CPU. We had to train them for about 3 or 4 weeks and instead of actually showing them how the flow of work went, we spent all our time educating them on how to use a PC. Granted not all experiences are like this and I'm not trying to say that there aren't any smart Indian people out there, but the experience I had with them has made me seriously wonder why so many companies would outsource to India.

HeroPsycho

Follow up to the whole thing about the need to deficit spend...

CBO: Stimulus bill created up to 2.1 million jobs

"...added between 1.5 to 3.5 percentage points to the growth of the economy in 2009..."

"CBO projects that the stimulus measure to have a greater impact this year, boosting gross domestic product by 1.4 to 4 percentage points and lowering the unemployment rate by 0.7 to 1.8 percentage points."

CBO: Stimulus bill created up to 2.1 million jobs - Yahoo! News

More people with jobs = more people with money = more spending = economic recovery. The real issue is whether or not the country will support an administration who will hike taxes and cut spending when the economy is rolling again to run a surplus to pay for all this.