The Coming Death Of Indian Outsourcing | Hacker News Reader

The Coming Death Of Indian Outsourcing

forbes.com

36 pointsedw51919 comments

...and the coming rise of Indian entrepreneurship.

People are often too quick to cry racism, but I really think that's the only explanation for all these "India isn't a problem" stories.

Most Indian engineers are Java drones, but guess what... most American programmers are Java drones. And yeah, there's a new generation that's prosperous on relatively less effort, but have you taken a look at Silicon Valley lately?

Unless you believe that the American innovation engine is also slowing, you don't have a lot of reasons to believe that we won't see more and more innovation coming out of India. In fact, if there's a crash in outsourcing, it might accelerate that process (or simply shift the outsourcing market to target Europe).

People are often too quick to cry racism

You mean like without offering any evidence for their claims?

I thought the article was superb, well reasoned on its key point of cost inflation in the industry, and thoroughly devoid of sordid prejudice.

Your reference to Indian entrepreneurship is a little ironic since the author (whose name is a Sanskrit word) has herself founded and sold two companies [1], and appears to have a particular interest in... Indian entrepreneurs [2].

[1] http://seekingalpha.com/author/sramana-mitra [2] http://www.forbes.com/technology/2008/02/22/mitra-zoho-india...

I'm busted. Okay, I missed that, and I have to retract what I said. I went off half-cocked.

I do have evidence for my view (although, obviously not applicable to Ms. Mitra). I'm half Indian and half Caucasian. Many of my relatives are in the outsourcing biz and I work for the American giants that are their customers. So I see both sides. I tend to think most Americans in this industry underestimate their Indian counterparts, and underestimate how fast things can change.

But, Ms. Mitra's pessimism is obviously borne from experience. Though her other articles show Indians doing more innovative things, perhaps she sees those as the exception.

No prob. I have deep admiration for India. Not so much for big outsourcing, which has a top-down bureaucratic approach to making software that has been producing poor results everywhere for decades and that thrives on the (software) ignorance of exeuctives and managers (the kind who fund and run those infamous multimillion-dollar, hundreds-of-programmer projects, and then hide them under the rug when they fail). But this has nothing to do with India; it has to do with software projects. Where I think the Indian outsourcing industry was brilliant was in its marketing to these executives, persuading them that what failed here would succeed in India, mainly because the labour force would be cheap (and abundant, and obedient). This was effective because it was based on a familiar model ("it's like moving a factory to Mexico"), and it had wishful thinking on its side ("this time will be different"). But bureaucracies don't do a good job of building software anywhere, including in India. So this whole story had a time limit on its effectiveness; say about 10 years to figure out that it really wasn't different this time. Meanwhile, smart programmers are the same everywhere, including in India. They know perfectly well that they're the ones holding up these boring projects for little pay and little status. It's just a matter of time, same as here, before many figure out that they can do a lot better. This is going to drive up the cost of retaining good programmers in India, as it should; and one would expect it eventually to lead to the emergence of an entrepreneurial hacker class, which would be a great thing.

one thing i hear a lot is the "brain drain" of smart people from India moving to the US (GB too? not sure.) if opportunities within India present themselves then maybe they will begin staying and start their own companies

The brain drain does seem to be slowing down considerably. Many of my friends from India, who did their grad studies in the US, are now returning to India to start their own companies. Or at least to join the R&D groups of MS or Intel etc in India.

Many very smart people built amazing products in Java (Google, Amazon, Ebay). Calling them drones makes you sound like an amateur.

You're right. I didn't mean to imply everyone who uses Java was a drone, but there is a class of Java users who are heavily dependent on frameworks and couldn't code anything from scratch.

I myself have written in Java for one of the companies on your list.

He's not saying everyone who uses Java is a drone. He's saying most Indians (and Americans) are Java drones.

This is a matter of culture, not race. Is culturism bad these days?

Good question. I don't know - people tend to throw the "racism" term around when really its culture. India is made up of a bazillian races anyway, so clearly it can't technically be racism unless someone intends to slightly a significant percentage of the global gene pool in one hit (which is more comical, then anything).

I am pretty sure that Indian outsourcing is going to be on the decline, but that's just because India is getting to be at parity with the US in certain respects. Salaries in Bangalore are almost at parity with salaries in Silicon Valley, say a couple of my Indian friends who are from Bangalore and are working in the Valley.

But, now that there is an upper-middle class in India, when the ball drops, and people lose their jobs I think they'll find it relatively easy to start a business and code a web app. Why? Because they can now afford a home computer and bandwidth. And, a $20 a month Slicehost account won't break their monthly budget.

I think what people who are born and raised in the States don't really understand, is how much of a luxury item having a computer is in most of the world. It's hard to buy a $400 computer when you're living on $200 a month.

Eh, matters arn't as simple as portrayed - a good bit of U.S. application support/development has went overseas to India... ...within a short 15 minute drive of my home in Arizona, I can tally thousands of programming jobs (mostly old school COBOL + CICS type work, but not limited to, as tons of Java and web developer slots too were affected) that went overseas. Departments comprised of 200+ employees (plus additional U.S. contracted programmers) now are skeleton crews that manage a blend of offshore and non-immigrant Visa workers that work at company facilities on-site or in special facilities here in U.S..

But in 5+ years time, the Indian programmers become the system subject matter experts as the few remaining U.S. workers mark the days until retirement. There are few young U.S. workers waiting in the wings, and any American who has opted for a career in programming has chosen something more "sexier", like working with Rails or as a web developer, even if the pay is a fraction of what a developer could make 15-20 years ago working with such "old school" mainframe technology...

But those systems are still running, every time you use a credit card, book a flight, use electricity, etc..., the "main nerve center" system that accommodates such transactions is still going to be a COBOL system with a DB2 (or even worse, an ancient hierarchical IBM IMS database)...

Well, is this any surprise?

Not really. Merely a consequence of the Hecksher-Ohlin international trade model. Under relatively free trade (free of tariffs, etc) of software, real wages paid to software engineers should equalize across countries.

I am not so sure. Maybe the wages will stop rising? Once companies start to lose business, they will fire employees, creating an oversupply of workers and thus driving wages down?

And Africa will become the last bastion of cheap outsourcing and manufacturing.

That would be difficult. As bad as Indian infrastructure may be, most African countries are far worse.

It has to happen eventually as long as African wages stay low.

"Eventually" the sun will go supernova, and the question will be moot. Given a sufficiently long perspective, all events are guaranteed to occur.

The point is, I'm not holding my breath.

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