Offshoring - has its time been and gone

[Former Member]

Hi guys -- this is the Coffee corner so please read this thread in the spirit in which it was originally intended.

The two areas where I've had to deal with "Off shored" facilites are in ABAP development and in Telephone Call centres.

My experience with BOTH has usually been at best a totally frustrating exercise, or at worst nothing less than an unmitigated disaster.

Customer experience in the UK at least with Off shored Telephone Call centres have been such a disaster that some Banks are now actually making TV commercials saying "UK Call centres Only".

Since a lot of Indians speak excellent English (often better than Native speakers) this can only be a resounding vote of NO to this type of actiivity.I

I found that one answer to avoid the hassle with these call centres was to call the DUTCH help number - most of these guys don't speak Dutch so the help desks are still actually located in Holland (or for any other language than English you could possibly use the same "bypass" to get a local help desk).

Looking at the typical queries raised on the various ABAP Forums as well - where people from this part of the world are posting the most elementary questions (or often worse - asking for complete solutions before they even realize that computer keyboards do actually have an F1 or HELP key on them) only confirms my view that this was a short term expedient for USA corporation chiefs to make their balance sheets look good in the very short term, inflate the share price hugely and move on pocketing HUGE bonuses on the way while leaving other people to pick up the pieces.

Where it DOES work is in such things as providing cheaper hardware infrastructure such as Networking or components -- but there is no way you can run business processes sensibly without functional consultants ON SITE especially now with B2B, C2B, B2C and all sorts of 24 hour online processes -- you can't wait 3 days while you explain the process to someone on the other side of the world whats happening, find a fix, write a Spec, wait for them to go through their change management procedures, test it and then find the progammer has either not understood the problem or there is a defect in the solution etc etc.

Maybe running Batch relatively constant stuff like payroll or some FI applications might work but in the scenario I've described above you will find that your customer has gone elsewhere.

Offshoring CAN work if the correct things are offshored but the mass wholesale offshoring nearly everything has as a lot of people predicted only ended in tears both to the source country who liost the jobs in the first place and the newer country where once these jobs have gone will never return owing to the complete customer dissatisfaction with the whole process.

I'm not talking sour grapes here -- I've been in SAP more years thabn I care to remember as a freelancer and now more than ever the phone is still ringing off the hook.

Cheers

Jimbo

[Bob_McGlynn]

James,

There are two real issues here: off-shoring and globalization.

You are correct about off-shoring, too many executives looked at short-term savings rather than long-term value. And, of course, in any strategy you have to look at factors beyond costs/financial. As you correctly pointed out, the customer backlash to these new service levels undermined many cost savings.

There are smart, talented people in every corner of the world. Technology has allowed us to better utilize those people. Globalization, though, hasn't turned us into one-world, most countries (and the people within them) still have a very strong sense of borders.

Some of the real issues with the pressures for companies to offshore come through these very people with strong sense of borders. These very people often cannot distinguish between cost and value, because they, like the companies, are only looking at short-term savings rather than long-term value.

It's no wonder that some of these people would also run companies where they make these very same short-sighted decisions.

It is a strategic decision to embrace globalization. But having that strategy means having clear goals, realistic expectations, ultimately expanding business within that country, not merely trying to low-ball cost structures in your own.

Bob

[Former Member]

Hi Guys (and gals).

Final take on the "BULLXXIT Airways saga at T5 at "Deathrow" (probably the worlds most Hated airport).

BA thought they could solve the delayed baggage problem by sending it via ROAD (and FERRY -- an airline co sending stuff by DHL trucks etc through the channel tunnel !!!) to an office in Milan Italy where the problem could be sorted out and baggage put on appropriate aircraft to re-unite it with the owner.

However this also didn't work at all for all sorts of reasons such as faulty software, customers were no longer in the destinations where they had booked their flights but had gone back home etc etc.

So the idea our great national airline came up with was to send the whole kybosh over to to BOSTON (not Boston Lincolnshire UK but Boston Mass. in the USA) to get the problem eventually fixed and re-unite the baggage with the owners.

Management surely must have just come back from Amsterdam after smoking some of those "funny smelling cigarettes". -- Some of the ideas management come up with is just totally beyond any normal belief whatsoever --and these guys get paid HUGE amounts of money as well.

I still can't understand that if the problem couldn't be solved in Milan or London why the USA would be any better --especiallly after 9/11 and paranoia over unaccompanied baggage.

This was a BAA software problem and nothing to do with the baggage handlers not being able to offload the baggage from the carousels quickly enough.

BAA actually admitted the problem and apologized to BA -- but if you are stuck in a foreign country without your baggage I don't suppose the problem of who'se to blame is of the slightest interest to you when you just want your "stuff" so you can go to your hotel and then go to work the following morning.

Cheers

jimbo

[NathanGenez]

Pursuant to my point (much) earlier, here's a recent article from Business Week on this topic.

Outsourcing is hear to stay. But it's location, type and timing of work will continue to fluctuate in and out of vogue.

http://www.businessweek.com/print/technology/content/apr2008/tc2008043_531737.htm?chan=technology_ce...guidetotech_ceoguidetotech--consumertechat+work

"India's "advantage as an offshore location is fast eroding—its attractiveness takes a hit with each passing day," analysts at Forrester Research (FORR) wrote in a January, 2008, report."

"Duke University professor Arie Lewin estimates that the benefit of doing business, from a labor-cost point of view, in such locales as Bangalore, India, will disappear for some companies in three to four years. That's due to a combination of dollar depreciation, wage inflation, and other costs."

"Recognizing that it may not be a good idea to locate all outsourcing in one country, or even a single region, many companies spread work among several sites."

-nathan

[Former Member]

Hi,

The current trend for French companies is to outsource in Marocco.

Much less time lag and they speak French...

[marilyn_pratt]

One of our top contributors shared this link [http://www.greencrosssociety.com/india.swf|http://www.greencrosssociety.com/india.swf] which I thought relevant to this conversation...

Thoughts?

[Former Member]

Hi Marilyn,

Sounds fantastic. Indians must be very proud.

One just hopes the fragile earth can cope with such enormous growth....................

Chester

[Sougata]

I see the author of [this|http://www.greencrosssociety.com/india.swf] is totally biased so he forgot to add the slide which should have said "India: The most corrupted country in the World (from grass-roots to the very top) - Ranked undisputed #1"

Sougata.

[marilyn_pratt]

The point in sharing this was not to further raise tempers but perhaps to raise awareness. To add to Bob's excellent summary, this isn't just a two topic forum thread about off shoring and globalization, its also about cultural exposure. Many of us have very limited images of what goes on in countries beyond our own borders. So rather than see the contents as being propaganda or working to discredit what is presented, we might consider some positive acknowledgment for a culture's successes. Goodness knows we are all adept on focusing on the failures.

My observation is that there are often generalizations and biases on the "other side" so that having some balance makes good sense. Let's not be too hasty to dismiss what works and can be admired while we rush to focus on faults.

[Former Member]

I totally disagree with you. My opinion is, and I feel most here share this, corruption is not localised but spread across the world, it is just the level at which it happens that differs.

How many countries/companies were not sucked into the Iraq oil-for-food scandal!

I strognly feel corruption is directly proportional to the population of a country/region.

[marilyn_pratt]

Interesting that both your comments, Chester, and Ravi's response, seem to point to an emerging new topic that is being hammered out and is getting more and more attention: Sustainability. I've been having real difficulty finding good contents to surface that connect the dots between the need for standards around corruption, bribery, illegal labor practices and abuses and the need for a software set of solutions to help govern these sets of risks which disrupt business.

There is a lot of disconnected talk about how we are depleting resources and crippling ourselves with over extractions while at the same time abusing the human resources as well. And I agree with Ravi, that this is a global issue and necessitates coordinated global responses, so local finger pointing won't work well or help resolve anything. In fact it just distracts us from our core purpose of finding solutions.

In the next few days and ensuing weeks, I'll be able to share more and more content that addresses Corporate Environmental Footprint Components but I'll quote (and credit) one of the documents we would like to see in the CSR and Sustainability wiki and which soon will be uploaded to the library. In it, the author, Kris Gorrepati

of TechniData wrote the following:

"In environmentally fragile and distressed regions like China and India, the need to manage and minimize environmental footprint is paramount."  

Yet it would be wrong to ONLY focus on those fragile regions.

Lets stop finger-pointing and start coordinating efforts in finding some solutions. What could be a result is also helping set some standards around the topic that started this whole discussion: off-shoring.

[che_eky]

I don't understand where your coming from. First you 'credit' a statement which is finger pointing:

In environmentally fragile and distressed regions like China and India, the need to manage and minimize environmental footprint is paramount.

and in the next sentence you say lets stop finger pointing.

What is the USA doing to manage and minimize its current, future and accumulated environmental footprint? I see that India has signed and ratified the Kyoto Protocol.

Developed countries have feathered their nests nicely off the back of big environmental footprints and now its all to easy for them to point the finger at developing countries.

At the G-8 meeting in June 2005, Indian Prime Minister Manmohan Singh pointed out that the per-capita emission rates of the developing countries are a tiny fraction of those in the developed world. Following the principle of common but differentiated responsibility, India maintains that the major responsibility of curbing emission rests with the developed countries, which have accumulated emissions over a long period of time.

I guess finger pointing does not help but it does buy time.

[marilyn_pratt]

Thanks Che for giving the opportunity to state that I agree with you entirely and you are very correct in demanding to see the whole picture. That was the point: let's stop pretending the problems exist "over there" although it was very clumsily executed by my use of the citation with the result that the sentence provoked you to understand I was doing exactly what I was criticizing. I used the word credit to mean "cite" without plagiary. But without context it "discredited" the author as well as particular locales. Good you objected. My bad. Not my intent.

Many world leaders distract themselves with finger pointing. If an economy weakens, scapegoats are found. I'm old enough to recognize some very frightening examples of that behavior in our little world and its disastrous results, whether they be frenzied smear campaigns or even genocide .

To be fair to the author of the content, I pulled that sentence out of its proper context, and by highlighting it gave it the meaning that I was exactly trying to avoid: finger pointing. Without proper context it sounds like ONLY those countries are at fault or at risk. It seems a very populist, and blindered way of looking at the world: "the problems are over there", the other guys are to blame.

Thanks for making that exquisitely and painfully clear. You are to be applauded for making that distinction.

But now to my real purpose.

I do the author of the draft article a big discredit by pulling the sentence from its original context. But that is actually what is happening in this thread when we speak of offshoring and globalization, with resulting polarization and locale bashing that I find inappropriate. It does little to help each side understand the perspective of the other or think about root causes.

Sometimes I think it is actually a plan, to distract from what is material while corruption and greed are the real agendas. (not our agenda here of course but in government discussions of world economies)

Let's put the content quoted above into the wiki, for instance, and have the ability to refine, understand, and work with some foundational materials. The author was interested in having the contents in the wiki and I was hoping the topic would be of interest and thinking how to engage with our community.

If nothing else, you've helped me believe that the subjects of governance, risk, compliance and sustainability are worth exploring.

[Bob_McGlynn]

This is the challenge of globalization, how does the world work together when individual states are simultaneously competing with one another politically and economically.

Not so much different in any particular country where collective will of the people is also rife with political and economic intrigue.

When speaking of these differences, so much mistrust, fear, and anger is released. There is a Chinese proverb that says "The fire you kindle for your enemy burns yourself."

There are no easy answers to sustainability or collaboration because there are so many different cultural, political, and economic goals involved. We need to do what we can to inform each other and support each other so that we can make some better choices for our collective future.

Bob

[Former Member]

Hi all

Notice to the Mods.

It's probably time to close this question -- I think most of the arguments have been presented one way or the other.

I'll mark it as answered and perhaps a Moderator can close the topic.

Cheers

jimbo

[Former Member]

Ravi

As an Australian your comment on Oil for Food hits home and I agree with you. Corruption is one of those things, like stupidity and politics, which cross all national boundaries. And indeed, all countries have had ongoing periods of rampant corruption, and most have taken measures to combat this.

What we need to do is to open our minds (and use a little common sense) and realise that "one swallow does not a summer make", just as an instance of corruption does not taint an entire group of people.

AWB's conduct in Iraq was abominable - but that doesn't mean Australians are corrupt. A couple of police forces here have had corruption scandals - but that doesn't mean all police are corrupt. But you can see the tendancy in every workplace where nepotism is accepted, every junior sporting organisation where choices are based on the parent's contributions rather than the childs abilities, and the awarding of contracts to the consulting firm who throws the best lunch.

Lets all get back to the real issue.

You know it makes sense.

Gareth

[Former Member]

Gareth

Thanks for appreciating my point and I accept that one should not generalise.

Corruption to me, is a decision taken by overlooking the merits not just for financial gain.

Regards

Ravi

[Former Member]

The latest nail in the coffin to this sort of stuff is the total nonsense that's happenining at BA at the new Muti-Billion Dollar Heathrow Terminal 5 (4,5 Bn dollars) that's just opened.

On DAY 1 can you believe it -- the total "Off shored I.T baggage handling project" went AWOL --meanwhile 1000's of passengers were inconvenienced with no satisfactory explanations etc -- adding to the nightmare that travelling by plane is these days -- if you can't even get the baggage handling right what hope is there for the rest of the industry.

Whilst going through Heathrow is always a pain (" The worlds most HATED Airport") People should al least be able to GET ON TO a plane without problems.

http://news.bbc.co.uk/1/hi/uk/7317352.stm

cheers

-jimbo

[Former Member]

Hi James,

I agree to a large extent with most of your statements but the bottomline is that any business is market driven. So let market decide. I mean if offshoring model has to fail it has to fail. If it has to succeed it will do so.

Practially no amount of shouting on this topic can bring this debate to a logical conclusion as none of us here is really driving the market forces. Also apparently some of the comments are taking nationalistic,racial and every such abhorable colours so may be we should bring this thread to an end.

I am believer in pure capitalism but also at the same time do believe that quality will prevail over cost effectiveness. So if (we) Indians are good enough we will not only survive but also propser in the global market but if we are not good enough then it will not be long before most of us would perish (in business terms). This is not for every individual but for a general section.

In the end let market dynamics take their own course.Let us compete in a healthy manner and see who emerges the winner.

Regards.

Ruchit.

[Former Member]

Hi Ruchit --agree 100% with your post -- I'm not nationalistic etc..

What does get my goat however is when the "Offshoring process" sends over back to Europe Indian consultants (no comments here on the quality of their work BTW as most of them are usually very good) whilst paying them around 80 EUR a day and still charging the client company the going european consultant rate of around 600 - 1000 EUR a day.

If the offshoring process was to realize cost benefits from a cheaper labour market --so be it but to ship consultants half way round the planet, house them in almost unacceptable conditions and still charge what a local consutant would get reeks of exploitation of the worst possible kind.

Thank goodness most Indian consultants coming over to Europe soon realize what they can get on the open market and don't take long to go independent,.

Offshoring is viable in certain areas but "pure labour exploitation" isn't one of them.

Cheers

-Jimbo

[Former Member]

Hi James,

Poor housing condtions are not something companies provide but something which individuals choose themselves on most occassions. I want to take my personal example I am living off pretty well in a decent apartment and that too alone. Also I know a lot of guys who share apartments and most of them live in pretty spacious apartments. For some folks (with same saIaries) I might agree with your point but that is an individual choice. Also you have to realize why most Indians (not all) would like to come to Europe or US for that matter inspite of such large cultural differences. You see most Indian companies are bound to pay the basic minimum wages prevalent in the respective countries and when converted into Indian rupees the salaries are pretty substantial. So it is it like the metaphorical slaying of the goose that lays golden eggs. Get yourself as much cash rich as possible. For some it is better quality of world or may be greater exposure.Things would change as India grows ecnomically and people with greater incomes will concentrate less of saving too much for future and instead focus on improving their present day lifestyle.You see this is all psychological and social and I guess it would not have been much different when Europe would have been not so cash rich may be in the Dark Ages. It will change;believe me but it will take time.

Anyways I didnot mean to call you nationalistic or an jingoistic. That comment was not pointed in your direction. As far as I have understood your comments they are purely of economic nature.But I sensed that some of other comments are of such nature even though thinly veiled so that is why I asked you to bring this thread to an end. Better to avoid any bad blood in such a small world of SAP consultants.

Regards.

Ruchit.

[Former Member]

Hi James (don't know if I can call you Jimbo still ),

I agree with your exploitation part. I mean yes Indian companies charge 600-700 euros a day but hardly pay 100 euros a day to consultants but then that this what profit and loss meachanism on which these companies run is all about.And this is not for just Indian IT firms but for almost all firms from almost all sectors. You can rake in the moolah if you are a free lancer but not when you are working as a full time employee. A reason is that there is some thing called job security that comes with these companies. A lot of Indian companies don't pay their companies a sizeable percentage of what they earn from their employees but they do provide them enough security, You see comapnies like Infosys have a hire policy but no fire policy. They rarely issue pink slips.

Regards.

Ruchit.

[Former Member]

Hi Ruchit

Jimbo is fine.

The main point of this post was actually to say that the original idea of "Off Shoring" 100% of the work was a big mistake. You can of course off shore some work but in other areas you still need to have consultants on site.

The fact that there are a huge number of consultants being sent over from India to client sites just demonstrates this fact -- and because the companies charge approximately the same for these guys as they do for local consultants proves the point that the initial Off shoring model has passed it's "sell by date".

In spite of the horrendous problems of the banking sector with "sub prime slime" threatening to devastate the Western economy the SAP market place here is more buoyant than I've seen it for ages. ( Don't know about the US but most EU countries have a severe SAP skills shortage currently).

There is no way normally a company would pay say Infosys money to send guys half way round the planet and have to get visas, work permits etc etc . for them if they could get local talent.

I think the days of mega expansion for these large companies operating in India is now over and if you have shares in these it probably would be a good time to sell as the market will surely contract.

These companies will have to concentrate now on growing the local (Indian / asian) market for their future expansion.

It will be very interesting to see what happens over there in the next few years as I'm sure it will be a very different market.

Cheers

(and looking forward to the Professional Cricket league in India --interesting if it gets off the ground).

Jimbo

[Former Member]

Hi James,

On a light note IPL( Profession Cricket League) is just another money making excercise but it will succeed in a big way coz the guys running it are expert businessmen but I am sad for Test cricket.

And yes Infosys needs to concentrate on Indian market which it has ignored so far. But most other Indian IT companies are well entrenched into it.So competion gets tough for Infosys.

regards.

Ruchit.

[ThomasZloch]

My parents are stuck right now at LHR while returning from a holiday trip...I hope I can pick them up today at our local airport. At least I can tell them who's to blame...

Cheerio

Thomas

[Former Member]

The latest nail in the coffin to this sort of stuff is the total nonsense that's happenining at BA at the new Muti-Billion Dollar Heathrow Terminal 5 (4,5 Bn dollars) that's just opened.
On DAY 1 can you believe it -- the total "Off shored I.T baggage handling project" went AWOL --meanwhile 1000's of passengers were inconvenienced with no satisfactory explanations etc -- adding to the nightmare that travelling by plane is these days -- if you can't even get the baggage handling right what hope is there for the rest of the industry.
Whilst going through Heathrow is always a pain (" The worlds most HATED Airport") People should al least be able to GET ON TO a plane without problems.
http://news.bbc.co.uk/1/hi/uk/7317352.stm

As it is, it was the British execution (not my quote, read the BBC URL you provided) which resulted in this pile-up. Seeing your perennial harping here it is easy to imagine such chaos ( another quote from the same URL - "Not my fault, Guv, Someone else's fault") there, since the Britishers (at least some of them) seem to be looking to just pass the buck rather than doing their job.

There is no mention of outsourcing (or the 'outsourced-system' not working, much less any connection with offshoring which you so hoped to be there). Are you now in the Hillary-speak (youtube Hillary Clinton, Bosnia) mode these days?

What next? Tsunami happened because of offshoring. US reaped 9/11 because they offshored? I think your fixation with outsourcing has gone way past the expiry date. Perhaps princess Diana was killed because of outsourced Veering-Control-System in the Mercedes S7 not working.

Keep the gems a-coming, don't ever let facts cloud your judgement.

And for folks piling on to it without reading the quoted material - it reflects on credibility of your online persona, not that you don't know it already.

Edited by: Ajay Das on Mar 28, 2008 10:09 AM

[Former Member]

Actually the baggage problem in T5 was caused --amongst other things by 400 " Off shored" computer systems totally dedicated to the baggage handling process not working properly.

On Day one also the security systems were so screwed up that even the regular staff couldn't login --and can you imagine the frustration of people who would normally be able to solve this type of problem relatively quickly not even being able to logon to their OWN systems --and then having to call overseas call centres with endless menus going round in infinite loops so nobody could actually call staff who might have been able to fix the problem.

Breaking lugguge carousels weren't the main cause of the T5 fiasco -- although these problems didn't obviously contribute any help to solving the ongoing problem.

The people on the ground at Heathrow couldn't even login on day one so they couldn't even BEGIN to analyse what went wrong.

The whole T5 exercise was a total disaster --

BA or BAA might have been to blame but the real fault was not enough rehearsels and also not having enough consultants on day one actually on site who had any clue as to what was going on.

Some problems quoted such as staff car parking etc only added to the misery but the major culprit was the total failure of the Baggage handling system -- for which those in the UK who commissioned the system must bear a responsibilty for the chaos as well as those on the asian sub continent who for one reason or another obviously didn't also supply a robust working system.

(Whilst not specifically a SAP problem the same principles can be applied to ANY project).

Cheers

-J

[Former Member]

>

> BA or BAA might have been to blame but the real fault was not enough rehearsels and  also not having enough consultants on day one actually on site who had any clue as to what was going on.
>

It is elementary to have some consultants on site when going "live" - now even my 15 year old studying IT at his school has learnt it,. Point it is, in Sherlock speak - "It is elementary, my dear Watson".

>

> Some problems quoted such as staff car parking etc only added to the misery but the major culprit was the total failure of the Baggage handling system -- for which those in the UK who commissioned the system must bear a responsibilty for the chaos as well as those on the asian sub continent who for one reason or another obviously didn't also supply a robust working system
>

Wonder who made the "go - No go" decision, obviously did not realise the faulty system. It is easier to blame the consultancy but being a consultant yourself, would you take the blame in a similar situation? I doubt it because you build what the client asks for and expect the client to perform sufficient testing to feel confident enought to go live. You can't keep up with a client, who is managing by changing the goal post, is susceptible to chaos, etc.

I am really surprised, they did not even have any local support immediately available, which makes me wonder how far these claims are true. Would BAA or the other company be so foolhardy to not have any consultants on-site?

[ThomasZloch]

Update: my parents arrived safely on Friday afternoon, their luggage (including my 1 litre malt whiskey gift bottle!) is still in nirvana as of today.

They told me they had to wait close to five hours in line with hundreds of other stranded passengers, since BA had only two of ten available desks open. Two clerks had "downed tools" at precisely 5 pm. Riots were just around the corner...

Incredible, BA were not even able to handle the crisis, once it had happened.

[Former Member]

Hi Jimbo,

The following text comes from the following link -

http://www.computerworlduk.com/management/it-business/it-organisation/case-study/index.cfm?articleid...

"The terminal has involved 180 IT suppliers, runs 163 IT systems, manages 546 interfaces, more than 9,000 connected devices and 2,100 PCs. The building has 96 self check-in kiosks, 54 traditional check-in desks and 90 self-drop baggage depots."

>>for which those in the UK who commissioned the system must bear a responsibilty for the chaos as >>well as those on the asian sub continent who for one reason or another obviously didn't also supply a >>robust working system

and

>>amongst other things by 400 " Off shored" computer systems totally dedicated to the baggage handling >>process not working properly.

I really would like to know where exactly you read about the 400 off-shored computer systems. Anyways it seems incredible to me that you point the finger straight away at the "asian sub-continent" for the things that didn't work out..I am pretty sure that ALL 180 IT suppliers could not have come from the sub-continent. Which of course brings us to the point that before having had recognised what EXACTLY the breakdown was, no one really can point the finger at any region/country or company. For all I know, the IT suppliers could have all been located in England or anywhere else in the world - except for a few which came from India.

Bye!

T00th

[Former Member]

Perhaps your Malt is heading over to Milan now Thomas...

http://news.bbc.co.uk/1/hi/uk/7325723.stm

It'll be nicely aged by the time you get it.

[Former Member]

I'm yet to hear anything that suggests it was a systems issue. The main analysis so far focuses on the failure of staff to clear the conveyor system quick enough. I saw a TV program which included footage of the volume testing on the conveyors, the system was fine then.

http://news.bbc.co.uk/2/hi/uk_news/7322453.stm

He added: "Essentially, people didn't feel familiar with the terminal, were under-trained and didn't understand the geography."

[Former Member]

Why depend on dubious organization like BBC, when our own in(ve)stigator-in-chief James has the case closed already.

400 IT offshored systems, plus non-english-speaking call-center dudes in sweatshops in offshore location in Asia - this is what caused T5 fiasco. As it has caused everything else that is bad with UK and the world.

Don't miss the forest for the trees folks. Get under the offshoring umbrella, it is big enough to blame away all the ills of our age.

[Former Member]

Here's what the BCC says [here|http://news.bbc.co.uk/1/hi/uk/7322453.stm]

Here are some extracts....

1. Despite months of preparations at T5, its problems began almost immediately as staff arrived for their morning shifts.

2. Many British Airways airport workers complained they were delayed getting to the building because of a shortage of specially-designated car parking spaces.

3. Some also reported that staff overflow car parks were not open and they had been forced to drive around in circles to find somewhere to put their cars.

4.Then, once inside the terminal building, workers also faced problems getting to the restricted "airside" via security checkpoints.

5. Jamie Bowden, an aviation analyst and former BA customer services manager, was at T5 during the early hours on launch day and said he began to have concerns when he saw queues of staff.

European and short-haul flights operated on a tight schedule, he said, and staff needed to "hit the ground running" to ensure everything ran on time.

"I thought 'Woah! There are a lot of people not getting to their areas in time'. If I had seen this in Terminal 1 it would have immediately signalled danger to me.

"If you start the day like that you are playing catch-up all day long."

6. As well as being delayed getting through security, many staff were also unfamiliar with the building and systems they were using.

Ed Blissett, from the GMB union, reported how workers had not been familiarised with the new terminal and that many "didn't know where to go, what bags to get".

One baggage handler told the BBC it was "a shambles the moment the doors opened" and blamed BA for the "lack of training and the essential support that was promised".

And no one mentions IT so far!

[Former Member]

>>And no one mentions IT so far!

Oh no... James already did.

Regards,

Jaishankar

[Sougata]

Another whinging Pom have we? We have so many of them down here its not funny!

Mate, your phone's been ringing off the hook and you are making more money than ever (before anyone could spell "off-shore") plus you are on the verge of retirement - so what do you care and what are you on about?

@Ravi

Mate, I'm totally confused about which side you are on! lol

Sougata.

p.s. James, although you are whinger but I sort of agree with you....I wish the "cowboys" would piss-off

[Former Member]

CEO's only are concerned with a SHORT TERM look at the bottom line usually going no further into the future than the next reporting period (usually expressed in Quarters of a year such as Q1, Q2 etc).

They don't care if the company is STILL TRADING in 5 years or not so long as they've trousered their nice fat bonus.

This leads to breakdown in the end although our US readers might find the following scenario described below where cheap cost is NOT the deciding factor in what the consumer is after a little baffling and probably runs counter to their percieved business culture.

A number of companies in the UK have now tried experimenting with a "paid for" premium service as well as the traditional " Free overseas call centre" one.

Now most UK companies have abandoned the FREE 0800 numbers -- but you still get a relatively cheap 0845 number.

What some have done now is to re-instate the FREE 0800 number for customers who don't want to pay anything and are prepared to navigate through endless horrendous Telephone Menu options - none of which ever seem to have the choice the customer really wants or a premium (paid for service) which puts you IMMEDIATELY in touch with a "Real Human UK operator".

Guess which service is making the money and proving HUGELY POPULAR.

The "Cheapness at all costs" model doesn't always work.

It does for a while but in the end customers will always pay over the odds for QUALITY SERVICE.

Off-shoring WAS viable in the 80's - early 2000's but IMO these type of operations need to be handled EXTREMELY CAREFULLY these days or it will most certainly all end in disaster --with worse results for the emerging countries (India, China etc).

As for quality of manufacture -- this depends on the local factory laws and QA systems in place. - As a slight digression the FAIR TRADE concept is doing really well here - consumers will pay a fair price for a product - particularly if the farmer and his workers are paid appropriately rather than the US transportation company and the profit is not beng made at the explotation of 8 year old kids forced to slave all day long in factories that would have seemed horrendous even by 1890's standards.

Some recent examples of manufacturing in China where a lot of lead was still used in the paint (MATTEL OUTSOURCING for example) caused horrendous problems in the USA where the "Bottom Line " is pursued far more as a religion than in W.Europe.

Once you have similar controls both on the quality of the product and the health and safety regs of the factories as one does in the West costs will inevitably rise and coupled with the HUGE growth in transportation costs (Oil over 105 USD a barrel and not likely to get much cheaper) these types of operations will eventually find their way back to where the consumers are .

I'd love to re-visit this whole issue in say 5 years time but I will have retired long before then -- still I might just keep an eye on the trends.

Cheers

jimbo

[Former Member]

>

> What some have done now is to re-instate the FREE 0800 number for customers who don't want to pay anything and are prepared to navigate through endless horrendous Telephone Menu options - none of which ever seem to have the choice the customer really wants  or a premium (paid for service) which puts you IMMEDIATELY in touch with a "Real Human UK operator".
> 
> Guess which service is making the money and proving HUGELY POPULAR.
> 
> The "Cheapness at all costs" model doesn't always work. 
> 
> It does for a while but in the end customers will always pay over the odds for QUALITY SERVICE.

Doesn't this reflect poorly on the company itself! Firstly, it had a free service that had apparently no complaints, this they replace with a "cheaper" service, without proper knowledge transfer and because of too many complaints, bring back the old service and charge money for it! I think the UK customers are being taken for a ride here...

>

> Off-shoring WAS viable in the 80's - early 2000's but IMO these type of operations need to be handled EXTREMELY CAREFULLY these days or it will most certainly all end in disaster --with worse results for the emerging countries (India, China etc).

It is still viable, India is producing more qualified and Quality professionals than the West hence the shift in balance. Haven't you heard about GE's fruitful partnership with Infosys? Last I heard, their partnership is going stronger.

>

> As for quality of manufacture --  this depends on the local factory laws and QA systems in place. - As a slight digression the FAIR TRADE concept is doing really well here - consumers will pay a fair price for a product - particularly if the farmer and his workers are paid appropriately rather than the US transportation company  and the profit is not beng made at the explotation of  8 year old kids forced to slave all day long in factories that would have seemed horrendous  even by 1890's standards.

This exploitation lies everywhere, wasn't it Nike that was in the news for exactly the same reasons - "explotation of 8 year old kids forced to slave all day long "? this implies, Nike did not bother to do regular checks of the factory setups.

>

> Once you have similar controls both on the quality of the product and the health and safety regs of the factories as one does in the West costs will inevitably rise and coupled with the HUGE growth in transportation costs (Oil over 105 USD a barrel and not likely to get much cheaper)  these types of operations will eventually find their way back to  where the consumers are . 

Till that happens and till there is some cost benefit to companies, at no comprise to the quality, offshoring will go on...EDS offshores part of its US work to New Zealand as well, to gain some cost benefit. I have seen people from US migrating and working there at a reduced salary. Today, it may be India, tomorrow it could be another region, so long as they can produce qualitifed pros, like the Indian textile industry that was thriving in the 1700s, which the British during there rule, effectively killed by "offshoring" the garment/textiles production to Britain, and sending the finished product back to India, at a very high cost. That is an example of "offshoring" going full circle, as the textile industry is again thriving in Asia.

I do agree with your point that the CEOs went for offshoring as a cost benefit exercise but they stayed back for quality as well. The SDN posters asking elementary questions, constitute a miniscule number, from most likely, fly-by-night operators and not from reputed companies like Infosys, Wipro, etc. Not only Indian companies but even giants like EDS, IBM, Fujitsu, etc have started in India and are shifting work there not just to save money. Whether you like it or not, all maintenance and support work will shift to low cost regions, just look at Nestle, they have a development centre in India that supports all regions of the world - and there has been no "drastic" imapact of this.

Cheers

P.S. A "Cheap" product does not necessary be of inferior quality.

[Former Member]

Hi there

I don't normally want to "Name and Shame" individual companies -- [inappropriate references removed by moderator]

I can point to many instances here in Europe where a number of consultants sent over by that particular organisation have to live in not very pleasant conditions - often 3 or 4 people sharing rooms, and having to work often as much as 10 - 14 hours a day --usually at weekends as well for wages that most of us would regard as derisory.

Any complaints etc and the guys are immediately sent home.

I'm actually not a "Whinger" but I do like to see reasonable "Fair Play" and if this means a slight reduction in "the bottom line " so be it.

The best these Indian (and others) can do is really to work independently - the education is good enough in India for consultants to compete with anyone on the open market and put and end to these types of organisation who might charge 2,000 EUR a day for hiring out a consultant whilst only paying the guy around 80 - 90 EUR.

As I said before - the initial model has passed its sell by date.

Like all these things it won't "die suddenly" but will certinly wither away or develop into something much better suited to the advantage of ALL PARTIES concerned.

A Wealthier planet makes a much healthier and stable one.

Cheap or rock bottom wages never did anybody any favours in the long run.

Cheers

jimbo.

Edited by: Marilyn Pratt on Mar 20, 2008 2:07 PM

[Former Member]

Hi James,

Thanks for sharing this after you crossed 60..

I believe if all asians go back to their homes, i would like to check the western economy then...

If the westerns have MANY skilled professionals , why do they recruit from outside and allocate visas??

Why would the australian/england players come to India and play in IPL--Indian premeir league rather than just playing for their country???? they play only for money

similarly in IT , ppl go around to earn money

every above line doesnt look related , but i meant it )))))))))))

Edited by: Chandrasekhar Jagarlamudi on Mar 13, 2008 1:18 AM

[markus_doehr2]

EDS is still messing around with old fashioned stuff like EDI (haven't these guys ever heard of E-mail, E-commerce and the Internet)...

Oh well - what I can say, we generate ~ 45 % of our sales volume using (old fashioned?) EDI. Not all non-Fortune 500 companies want to deal with B2B/SOA/ESA/<insert-buzzword-here>. We do not only because it´s reliable technology but mainly because the "other side" of the pipe is not (yet) ready for that <insert-buzzword-here>. You shouldn´t generalize your opinion of the consultant companies, each industrial sector has it´s own requirements and necessities. It may not have worked for those customers you speak of, it may work though for others just better as any deficient not-yet-ready-for-prime-time technology that is just hyped.

Cheap or rock bottom wages never did anybody any favours in the long run.

Full ack.

Markus

[markus_doehr2]

> I believe if all asians go back to their homes, i would like to check the western economy then...

True...

> If the westerns have MANY skilled professionals , why do they recruit from outside and allocate visas??

Because they are "cheaper" and there are "enough of them to hire and fire"?

Markus

[Former Member]

 Because they are "cheaper" and there are "enough of them to hire and fire"? 

How can one be cheaper when both employees(asian and western) in same company(working at western) with same designation are paid equally unless offshored

[Former Member]

>

> I don't normally want to "Name and Shame" individual companies -- but since in your post you mentioned  two  I have to TOTALLY 100% disagree with you on both EDS  and Infosys.
> 
> Both these are diabolical organisations in W. Europe who really don't have a very good reputation amongst the TRUE professionals even if CEO's still seem to like them
> 

I thought you would see the point I was trying to make that offshoring is not just from the West to Asia but from high cost regions to low cost ones and not just for cost benefit..

Cheers

Ravi

[NathanGenez]

There is a lot to read here.

As a US Consultant in the SAP area, I can say that 100% of the real reason why American companies pursued off-shoring was because of the short term cost savings. Of course they also talked about other benefits like tapping into service providers that had skills outside their own core competencies, 24x7 support, etc... but the real reason was purely financial. The savings were tremendous initially but they have changed significantly in just the past 2 years so that at least some of the companies are re-considering the degree to which they off-shore some of their work. It was quite funny to see it happen... all of these customers fighting to get into this model quicker than their competition without really assessing the quality and associated risk from making this transition. Even funnier was to watch some of the providers (SAP included) try to service this demand yet without the infrastructure, talent, and management to deliver. This is not to flame against those doing the work because the whole situation requires a well established framework to communicate the requirements back and forth... and I haven't seen a good medium yet to handle that. So even if two highly capable people are remotely working on a solution, it is difficult because some of the work naturally requires some intimacy in terms of discussing needs, negotiating solutions, and generally collaborating on the issue at hand. I think this is one of the points that James is trying to make. Yet in my experience, they've asked us to 'communicate' via MS Word and Excel. <give me a break>

To the original question... I think outsourcing will continue in some capacity and sense that there is some agreement on that in this post. But it has to happen at the right time and in the right areas. From what I've seen in the US over the past few years, outsourcing during the original implementation is absolutely foolish. I am searching for a single US customer to provide even a shred of success when it comes off-shoring SAP development or configuration work during their initial project. I think a successful outsourcing engagement requires as little risk as possible because of the inherent difficulties of just operating and managing the day to day process. This requires a stable system (i.e., not a new one or an upgrade project). Yet it is during those exact times when the budget requirements are highest that most customers start looking for ways to engage lower cost solutions.

To be fair, American companies are very predictable and I don't mean that in a good way. They are ruled by investors and Wall Street analysts. Employees, customers, and even their senior leadership take a backseat to everything financially based. Even the CEOs are handcuffed in making some of their decisions outside of what an analyst at Goldman Sachs expects. The minute someone finds a cheaper alternative, the line queues up and companies scramble to shutter old high-cost operations and re-allocate resources as necessary. It's great for the continued growth of the US economy... but sometimes it's not that pleasant to work in regardless of which side you're on.

-nathan

[Former Member]

I think some people here have misunderstood the main question here.

Let's get some mis-conceptions out of the way.

1) The Sour Grapes Issue ==>I'm still getting more phone calls than I can handle and have been a free lancer in SAP for many many years at rates that newer people in the industry probably couldn't even DREAM about . Currently there's no lack of demand for SAP consultants ANYWHERE as far as I know (possibly the US might be an exception - I haven't been there for a while so I can't say).

Here in Europe the market is booming again.

2) Globalisation / World Trade. This on the whole with some minor caveats is HUGELY BENEFICIAL even if adjustments have to be made in working practices.

3) Some type of Offshoring is fine -- companies that can provide a stable server type infrastructure and keep it working 24 hours a day 7 days a week at an economic price is an example.

Stable applications like say Payroll, most financial stuff and some type of HR processes can be run anywhere on the planet (or even Off planet if we could establish a data ceentre on Mars etc.)

4) Some types of applications are NOT suited to a "classical offshore "process -- these are as I've described a lot of the newer 24 hour e-commerce stuff, CRM. B2B,C2C.B2C, and C2B type stuff. These applications require ON SITE functional consultants who understand the business processes properly and programmers who can hit the ground running having to fix problems often by word ofr mouth and certainly without having to rely on any technical or functional specifications.

The classic Functional Spec, Technical spec, code review, develop, test, test result review, transport request, move to PROD type of approach won't work.

Some large corporations even have scenarious where stuff is only transported to a PROD system ONCE A WEEK.

By the time this happens you've probably lost another 1000 customers because the e-commerce facility isn't working properly.

5) The initial consultants employed in the OFFSHORED facilities have largely moved on to better and more lucrative positions, meanwhile the whole of the SAP scenarios have become infinitely more complex. The newer intake of people not only need to actually have a much higher skill level than the previous people employed in this business, they also have to do more work in less time.

As I've posted previously I am 100% convinced that the "Classical 100% Off shore everything " model has run its course.

Some services will always be managed in cheaper locations - but I'm really certain that the major I.T companies in India (or the off shoots of US / European companies based there) will be looking at other forms of enterprises in order to "grow their business"from now on.

(Finally just as an addendum -- Non working Communication Infrastructure in a place that prides itself on being 100% ready to handle business from anywhere iin the world is not actually a good indicator of how the other necessary parts of the equation might fit together. Of course any type of equipment can break down -- have you ever tried using the London Underground -- Now that's a job I'd outsource at an instant if anybody was made enough to accept the commission) but it does seem to be a fairly frequent occurrence - at least on the trips I've made - compared to that other Asian giant china.

Cheers

jimbo

[Former Member]

Hi James,

>>Some types of applications are NOT suited to a "classical offshore "process -- these are as I've described a lot of the newer 24 hour e-commerce stuff, CRM. B2B,C2C.B2C, and C2B type stuff. These applications require ON SITE functional consultants who understand the business processes properly and programmers who can hit the ground running having to fix problems often by word ofr mouth and certainly without having to rely on any technical or functional specifications.

I dint want to comment about others. I am working for around 2 years in an Offshored Project. We were part of implementing SRM and related applications for the client. The implementation was a succes and the customers were happy. Now we are providing Production support for all the applications (Read including B2B). Through onsite-offshore model, we give them a 24*7 support. Incase of issues, we work even on weekends. Overall the customer is happy and I see many such cases here at offshored locations(read India).

Finally, if your opinion is projects are offshored only coz they get services at cheaper rate. I disagree with your opinion.

Regards,

Jaishankar

[Former Member]

>

> Finally, if your opinion is projects are offshored only coz they get services at cheaper rate. I disagree with your opinion. 

What was the initial motivation for Western companies to go down this route, if not the cost benefits?

[Former Member]

>>What was the initial motivation for Western companies to go down this route, if not the cost benefits?

Again I dont want to generalize things.

If I own a business in Western side at initial stage/time I would not have outsourced my business operation to a different part of the world to gain some dollars at the expense of quality of my product/service. This is just my view and you can have a view that is completely opposite to mine.

Regards,

Jaishankar

[Former Member]

Hi there

of course if you own your OWN business it's a different ballgame.

A lot of the CEO's who started the whole off-shoring trend were only concerned with " Next weeks share price " and the " current profitability". They weren't interested in " customer service" or whatever and certainly not in the long term viability of the company but only with their own bonuses.

Great to see this stuff finally " coming home to roost".

For some guys working in Bangalore etc it must have felt in the last few years a bit like the old "Dot.com" boom days ====>but a sobering reminder here

dot.com very rapidly turned into dot.bomb.

You can't build a successful business model on supressing wages to a low level indefinitely (and I'm no Socialist either).

Once Bangalore costs rise (as they will) then they will have to compete by offering a competitive service. The marketplace is a very testing environment to those who've no experience of it. There will soon be many tears shed in some of these "high tech" off shored business parks unless they can offer a competitive service - and that is by no means an easy objective to achieve.

cheers

jimbo

[Former Member]

>

> 
> If I own a business in Western side at initial stage/time I would not have outsourced my business operation to a different part of the world to gain some dollars at the expense of quality of my product/service. 

I have lived in the West for 10 years now and find, even here, the quality hat is not worn my many organisations otherwise we wouldn't see manufacturing shift to China, which was mainly to show some added gains to the companies' results.

Compared to the quality of products originating from China, Indian services are way ahead - there is no doubt about that. Software outsourcing itself started way bak in the 70s and 80s when the quality of manpower in India was on par with othr nations, not like today when people without any concepts jump on to the IT bandwagon. Back then the West started utilising Indian pros for not only cost savings but their quality and qualifications, all in all they were a "nice package". Those were guys from IITs and other reputed institutions not from fly-by-night ones that are prevalent today. Though there are still many excellent resources, they have been diluted by the likes of whom we see everyday on SDN, so lazy that they can't even press F1 forget understanding the concepts.

In summary, IMHO, cost savings were the main reason for the West to look East, while accepting the high-level skills and quality as added bonuses (in IT only) that are at risk of disappearing....

[Former Member]

CEO's should be concerned with " Next weeks share price ", as share holders own the company and the CEO's responsibility is to the share holders; also the share price represents the value of discounted future earnings . The stock market is a honest judge of the company's long-term profitability.

Companies that innovate can sell their products at a premium, but things can over a period of time become 'commoditized'. For commoditized products, the companies that can make the cheapest products are successful. If you can offshore your manufacturing, and produce products (of the same quality) at a lower cost, you must do so in a globally competitive economy. If two similar products of the same quality are available at different prices, wouldn't you buy the cheaper one?

Low cost is a competitive advantage, and many companies succeed with this strategy.

CEO's of public companies answer to the stock market. In these times it is also expected that CEO's look after all their stakeholders - employees, suppliers, customers etc. But let's be clear on one thing - business is about making money, and CEO's focus should be on making as much profit as possible. If CEO's do not look after profitability, the business will fail, and all the stakeholders will suffer.

The goal of CEO's of public companies should be to maximize stock price.

Al Lal

www.olap.wetpaint.com

[JozsefSzikszai]

>

 The stock market is a honest judge of the company's long-term profitability. 

hi Abhinav,

you learnt the lesson well... However it is only true, if everyone has all the information at the same time. I wonder if it was not included in your textbook...

ec

[Former Member]

Abhinav, your view on how a CEO should conduct business is what is wrong with businesses these days.

Short-term profits should not be had if it sacrifices long-term sustainability and value creation. Business are about making money, but not at any cost. For an organization to succeed, it needs leadership and vision that don't just revolve around next weeks profitability.

I also disagree that the stock market is an honest judge of long-term profitability. Stock prices often clearly do not coincide with reality, because information that people have is often incorrect (eg. Enron).

[Former Member]

Hi Daniel -- the stock market is actually a notoriously UNRELIABLE indicator of how well / poorly a company is doing.

Stocks and shares are traded like any other commodity with city traders and investment bankers out to make as big a killing as possible in as short a time as they can get away with.

Look at what typical "Day Traders" do --- long term considerations don't even enter their minds -- a few ticks on the stock price in minutes and it's traded one way or another.

Just have a look at that "Dog Poo" mess of "Sub Prime Slime" US Bank loans which almost had the entire world's financial system on the brink of total disaster -- I hope you (or anyone else) when buying something at least know what you are buying rather than just buy a "packaged piece of goods" without the slightest idea of what the package actually contains.

And people say these type of traders are fit to run businesses. Most of them would be hard pushed to organise a prayer meeting in the Vatican or a "booze up" in a brewery -- and they are earning telephone number amounts of money -- even a small fraction of which most of us who work hard in our businesses / professions would gladly receive and probably put to better use.

Off shoring DID have its momernts and there could still be a little life in the old dog yet -- but "classic" large scale offshoring is definitely NOT the way of the future now.

Cheers

jimbo

[Former Member]

James,

On outsourcing, you may wish to check the facts rather than selectively quoting anecdotes that support your bias.

Outsourced = poor quality : is what you imply. And that is the gist of this and other such arguments.

Of all that you have said, you have quoted only one specific example supporting your case - of Mattel recalls. I would like you to check the facts there - It was Mattel US which was eventually blamed (for flawed designs resulting in excess lead and other issues), and the apology for this was rendered by Mattel US CEO - to China (you read that right, to China) for the fiasco.

It is this 'we see what we want to see' urge that negates an objective argument. I am sure there are many examples of outsourcing resulting in net negatives, just as there would be quite a few resulting in positives.

Like you, I would be interested to see the outcome of this business trend in years to come. And rather than taking an absolute position I would be willing to adjust and adapt my viewpoint.

cheers,

[Former Member]

Nice article published in [Forbes|http://www.forbes.com/home/enterprisetech/2008/02/29/mitra-india-outsourcing-tech-enter-cx_sm_0229outsource.html] about Outsourcing.

Indian powerhouses ( Indian MNCs ) must diversify their portfolios away from pure body-shopping and process competencies to technology-driven advantages. They, too, could buildor acquireSaaS businesses

I totally agree w/ the author.

Thanks

Prince Jose

Edited by: Prince Jose on Mar 4, 2008 6:27 PM

Edited by: Prince Jose on Mar 4, 2008 6:28 PM

[Former Member]

I believe that long term profitability is important. While the stock market is imperfect, it is the best judge of long term profitability that the public has.

CEO's should look after all stakeholder's (employees, customers, suppliers, owners etc.). But what is most important is profitability, and for a public company the stock price.

The strategy for creating maximum profitability can vary. It could be creating highly innovative and differentiated products sold at a high price. It could be 'commoditized' products sold at a low price.

CEO's are business leaders and the should not only understand finance, but also have understanding of the products or services the company sells.

Al Lal

www.olap.wetpaint.com

[Former Member]

>

> It could be 'commoditized' products  sold at a low price. 
> 

In all my 10 years in the West, I must have bought at least 10 umbrellas, at different prices but all were Chinese made, while my ex-colleague has just a single one made in Germany, he bought over 8 years ago!

[Former Member]

Actually you can already see the beginning of the end of the "classical offshore model"

I've been recently in a small European country where one of its largest employers is ACTUALLY FLYING IN loads of Indian I.T contractors to work in Europe for a short while and then fly them back home again.

Now IMO this spells the beginning of the end since

a) It emphasizes the the point that for certain critical operations you actually DO NEED CONSULTANTS ON SITE as I pointed out earlier in this thread - 24 hour B2B/B2C/C2B etc type of operations often need immediate attention which is usually poorly served by remote off shored facilities

and

b) once these indian contractors realize the wage differential between what they earn and the other guys then "all hell will break loose". When they also go back home this will have severe implications as well as they will realize the true value of the services they are offering.

If the Indian I.T market is as smart as it is supposed to be then they will develop their own PROPER consultancies and consultants and the market place will be the real test of how this works.

As I said before --for all sorts of reasons the Offshoring model was viable for a while and still is in specialized niche areas such as Basis, Backup, Network Infrastructure etc. but the "Off shore everything" model has shown to be what many people always suspected it was -- a short term idea to temporaily maximize the company's bottom line so managers could look good without any thought given to the long term implications.

And Santanu -- I am not taking offence -- remember I STARTED this whole thread.

Of course there are many many competant I.T workers, Engineers, Doctors etc etc who come from India -- that's not the point at issue - especially since most of these guys can get well paying jobs in almost any country on the planet anyway.

Entrepreneurs like TATA etc which can compete globally with anybody exist as well so no one is saying all Indian workers are a load of Tosh --far from it --my point was with a) the whole idea of "Off shored" working, and b) the quality of the people usually employed in these activities.

Whether it's India, Antarctica , the USA, UK or even Planet Mars if you pay people low wages don't expect stellar results even if you can get away with it for a short time.

Cheers

jimbo

[ChrisSolomon]

I have read a LOT of interesting articles in CIO magazine about this over the last 2 years or so. Most articles seem to point out that when using off-shoring with truly external organizations, any cost savings is diminshed (or in some cases, comes at a greater expense!) after about 5 years due to various reasons. In the last 6 months to a year, there seems to be a shift happening where off-shoreing companies are now being expected to provide greater services and value (ie. more-bang-for-less-buck) as well as the fact that many previously strong areas of offshoring are now having to compete with other emerging, cheaper areas (much like the India versus China competition that appears to be wavering but on the brink...many more cultural, language and political barriers to work out with China, but once that happens, I think it will be like removing a dam). It's almost as if these companies are now expected to become akin to consulting firms in some ways. And now, you throw into this mix the national/politcal issues (like you mentioned in the UK and what is happening here in the US with a lot of talk of bringing jobs back to the US via "punishing" companies that send work overseas, not to mention our economic problems at the moment and an election year to boot!). Very interesting times.

[Former Member]

Hi there

Politics could also be another factor but I think in the scenarios I described above it was actually Market Forces driving this type of stuff back home.

Politics is a totally different issue however which I don't want to get too much into.

Incidentally talking of politics with the Green and Environmental issues taking more and more prominence it could well be an added "reverse twist" to the whole offshoring sorry saga.

China itself is no problem -- apart from anything else they have a HUGE HUGE internal market themselves to satisfy and unlike India are also creating the manufacturing infrastructure such as roads, ports, railways etc etc to service this and they will need MASSIVE MASSIVE expertise from the West for years and years to come.

India is in not nearly such an enviable position. - Apart from a few centres of "Ëxcellence" such as a relatively cocooned I.T sector in Bangalore, New Delhi etc the whole infrastructure is in total disarray and they could be in serious trouble if the I.T sector folds - jobs can be moved these days easily at the stroke of a pen.

China won't be interested in "call Centres" etc -- due to all sorts of cultural and other factors.

On the Infrastructure front just go into ANY decent hotel in Beijing / Shanghai that caters to westerners. Everything works first time, is spotlessly clean and service is exemplary.

In New Delhi sometimes it's hard most days even to get a working Internet connection in the hotel room -- the manager while polite will always have the same excuse -- it's just being looked at --I'll call my uncle / other relative etc who knows someone in telco who'll get it fixed --meanwhile 2 days later it's STILL not working.

Cheers

jimbo

[Former Member]

Are you sure it is not a sour grape issue?

You rebuke someone heavily for asking a stupid question(I agree its stupid) [here|https://www.sdn.sap.com/irj/sdn/profile?userid=3584538]

Then you answer a question from non asian background with not so stupid but similar request promising to reward points [here|https://www.sdn.sap.com/irj/sdn/profile?userid=3584538].

Further you post questions with huge pre conditions to be able to answer [here|https://www.sdn.sap.com/irj/sdn/profile?userid=3584538]

Anyway comming back to the point, the offshoring activity is more economic than a short term profit churning initiative.

There a few disasters, but the list of success stories is long too. And it didnot start now but from the mainframes time. Over years consultants from countries where internet service does not work in hotels have provided consistent support to their clients. The brand building activity had started then and not when ERP 2.0 was launched. You do not hand over control your critical systems to anyone just because it is cheaper, it would be the dumbest business decisions by any standards.

Irrespective of the public outcry or politice. I think the Offshore Onsite model is here to stay.

Regards

Santanu

[Former Member]

your links are funny. you managed to make me click and see the (false) target 3 times in a row.

Congrats on that )

[Former Member]

Sorry for the goofup:

[here|/message/4948003#4948003 [original link is broken]]

[here|].

[here|]

And James its just a discussion..nothing personal

Regards

Santanu

Edited by: Santanu Dawn on Feb 28, 2008 5:21 PM

[Former Member]

Hello,

>I think the Offshore Onsite model is here to stay.

So you mean that countries like India will never develop to the point where they will get a big and mature enough internal IT market to give real work (projects) to indian IT workers ?

I hope for India and all developping countries that you are wrong. I think that outsourcing will only happen during a transition time.

When a software engineer from India will get the same wages as a US engineer, why would a US company outsource to India ?

Regards,

Olivier

[Former Member]

India's economy is growing at 9% p.a., and even at that rate it will take a long time to catch up to the West. By the 22nd century, most of the worlds population will be in Asia, and living standards in Asia will be similar to the West.

Indian companies are already moving up the value chain, and doing innovative and creative work. For knowledge workers the salary is about 20% of US salaries, but the salaries are growing at over 10% p.a.

I think that in the 21st century the world is a better place because of globalization. With international trade, economies have become interlinked. Countries that depend on each other for products and services are less likely to go to war with each other.

Al Lal

www.olap.wetpaint.com

[Former Member]

Outsourcing (in IT) is just one step in business evolution (if I may term it so). It happened with forces of globalization and will continue to evolve in some form or other.

It can be objectively argued in which cases it is effective and in which ones it is not. However, one would dismiss it summarily at one's own peril.

Globalization has brought many disruptive forces in its wake, and all countries/societies face it in some or other form. Thinking outsourcing as the only 'big' issue, and one that can be addressed by just rolling it back, and/or demagoging it is futile, and may have unwanted consequences.

If we believe in market forces determining what is a sound business practice, let it play itself out - outsourcing may not survive if it is not beneficial to the business.

If we are complaining of the adverse effects on individuals (eg job losses etc) - and take that as an absolute violation not to be tolerated one bit, we need to look in the mirror (and history books) and stop playing victim.

It is funny to see people looking at newbie posts on SDN and extrapolating it to a mandate on outsourcing. Really?

Much as one would like to vent with personal anecdotes of non-working infrastructure in a hotel in India (or other such places), it begs explanation how that is relevant to a discussion on outsourcing.

Bad as rampant newbie posts are, it is equally grating to see posts venting personal frustrations in the garb of a rational discussion on a business practice.

[Former Member]

Hi,

> For knowledge workers the salary is about 20% of US salaries, but the salaries are growing >at over 10% p.a.

With a 10% increase each year and if wages stay the same in US, it will take 17 years for India knowledge workers to be as paid as in US.

>Countries that depend on each other for products and services are less likely to go to war >with each other.

I completely agree on this. This was completely the reason of the European community (and later Union).

After 3 wars, it is now completely unconcevable to imagine a new war between Germany and France (at least for the next century !).

Regards,

Olivier

[ThomasZloch]

> After 3 wars, it is now completely unconcevable to imagine a new war between Germany and France (at least for the next century

For competition I recommend football (but not rugby).

[Former Member]

 With a 10% increase each year and if wages stay the same in US, it will take 17 years for India knowledge workers to be as paid as in US.

IMhO, the salary should be propotional to the expenditure and some savings (so that we can die an a warm place). So, instead of comparing the salaries of US and salaries in India, one should think of what i'll spend if i'm in US and what i'll spend if i'm in India. The reason why people want to work for a few years onsite (client place) is because of the exchange rate disparity.

Also, i do agree that is a good market within India. But then if i as an MNC, do an implementation for an Indian Customer, i can't do it for cut throat price because i get my revenue in INR and my operation costs are also in INR. So, not as much ROI as i see for customers in US/Europe.

There might be major hit on the offshoring only if the currency exchange rates become equal. Then it will not become profitable to outsource (if cost savings is the objective). But then if specialized knowledge is required, offshore will still happen despite higher costs (because of Visa issues).

Regards,

Ak.

[Former Member]

>

> By the 22nd century, most of the worlds population will be in Asia,  
> Al Lal

Errrr...doesn't Asia already have "most of the worlds population"?

[Former Member]

After reading this, I feel we should have a "Ranting corner"....

[Former Member]

Actually it's not RANT. The fact that some of these companies are actually flying consultants back to the "original business areas" such as Europe etc only emphasizes the point that the offshoring idea was done for ONE REASON AND ONE REASON ONLY ONLY -- SHORT TERM BOTTOM LINE.

Anybody who thinks this was done for "altruistic purposes" such as improving the lot of people in some of these countries was 100% totally living in cloud cuckoo land.

Now if consultants are actually being flown from India in large numbers (never mind about the "Carbon / Green issues here of making un-necessary plane journeys etc) it proves above all else

1) You do actually need ON SITE expertise (wherever the consultants come from)

and 2) These people wouldn't be sent half way round the planet if there weren't significant (but these days de-creasing) cost benefits in doing this.

I'm not saying that India etc has poor consultants --far from it -- but I think most people will realize that the days are long since gone where you could outsource your whole operation somewhere else and expect to make a huge profit on it.

Most guys I know in India are smart --why should they work for 90 EUR a day when thet can get anything up to 1000 EUR a day in Europe -- of course they'll come here for a few years, go home and live like royalty --wouldn't you if you were in the same situation.

The "cheap wages" idea won't wash in the long term as it's impossible these days to prevent wages from risng to the "norm" even if you can get away with it for a short time.

For a while Polish Plumbers and builders were hugely in evidence in Western Europe -- as their standards (and wages) have risen a lot have gone back home ( and started their own businesses) whilst their places have been taken by Albanians and Bulgarians.

Outsourcing IS viable in the short term for selected areas but it is not a long term solution - even in a global market place. If you don't develop your own markets then you are lost.

Cheers

jimbo

[Former Member]

@ Jimbo

Sorry for the confusion, I replied to Ajay' post.