What is your opinion on Outsourcing?
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CirquedeSQLeil (5/28/2010)
bteraberry (5/28/2010)
I believe in free markets. I believe we'll all be better off the less government is involved in our lives with very specific exceptions where government oversight or control is absolutely necessary.Agreed
The big sad thing I see is that the U.S. is being transformed into a Euro style tax and spend nation which at some point will actually cause outsourcing to make financial sense when all things are considered.
Agreed. I don't like that direction either.
You can't fight effectively against the global nature of the economy. Trying to keep companies from utilizing the most cost effective labor will just weaken U.S. companies in the global marketplace. We would be better off spending our energy on our steadily declining education system so that American workers would have more to offer.
Well said!!
What needs to happen is our government, against their own intelligence, need to make the US more business friendly. Reduce taxes on businesses and individuals. It may sound counter-intuitive, but if you lower taxes on businesses they are more likely to move here than move out. If you lower taxes on individuals they will have more disposable income as well, and will probably be more likely to spend it.
If people are spending more and more businesses are coming here (either foreign or domestic) the more tax revenues are going to be generated. This is the one place where you really can make up in volume by lowering "prices".
It needs to be reiterated that government does not create jobs or wealth, people do.
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Being an economics guy, I take this a few ways. I tend to agree with what Lynn just posted about making things more US business friendly.
Outsourcing is fine. Not every company wants to be a software developer, janitor, cook, etc. Most of our companies outsources pieces of the business. I'm OK with that.
Offshoring is another story, and that's a tough one. It would be nice to say make it harder, but ultimately it's a global economy and do you prevent businesses from owning a company or office in another country? If you do, then you can make this hard, but if you don't, then how to you ever police this.
I believe in hiring citizens first, but not exclusively. That being said, we ought to make it attractive to do so, lower taxes for hiring citizens as opposed to expensing things overseas or using H1B people. That's easy. We can only let them expense $.70 per $1 spent and that will "tariff things", but I'm not sure that's the best answer. Maybe in limited cases. Tariffs have worked in the past, but we also want to trade with other nations, and that means they can tariff us back. So we get into an economic war, which ultimately doesn't necessarily benefit anyone.
(cont'd, saving here).
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I think that if you don't want companies to offshore, you need to do a good job here. Make it hard for them to see a value, despite paying more here. I'd love to see people that have had issues write about it, get more information out there.
My experience has been that we pay significantly less for work done in China/India/etc., but we lose some communication, and potentially quality for that reason. Not because they're worse coders, but because it's hard to work with a remote team unless you make the investment in making them a part of your company and getting to know them. Offshoring and outsourcing, to me, ultimately doesn't pay off well.
Unfortunately in an economy that looks at the next quarter, and not the next 5 years, many managers don't care.
I do think that we have issues with companies getting too large. They exercise too much power, and they ultimately put the profit motive, not for the company, but for a relatively few people, above moral action. Many of our Fortune 500 companies are just too large, and that has market effects. They are monopolies, or oligopolies, and they deserve more regulation for that reason.
My plan would be similar to what Mark Cuban has proposed a few times (Business Taxes[/url], Stock Taxes[/url], Tax Wall St[/url]). We ought to be promoting more smaller businesses. Reduce their taxes, and tax more for companies that are larger. Let's get more people working for a business, and not an investment. I think too many large companies, those that are over a $1B or so in capitalization, being run as investments, and not businesses. Tax VC startups more, not startups that invest their own money, but those owned by people that want a quick return.
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All peripheral and patronizing arguments aside, American jobs should go to our citizens first, not ship them overseas. It's just as simple as that. Particularly, with so many millions of Americans out of a job today. O'bama is commited to change this and I hope he does. I can assure you that the President of the United States does not see this as a waste of time, because it was one of the issues he campaigned on. He has the terrific burden of putting America back to work and he cannot do that effectively without first addressing this issue. It's just as simple as that. He knows it and down deep I think most Americans know it too. And what makes this issue even worse, as Steve points out, most managers/CEOs/CIOs don't care about American jobs going to Americans first, they are only concerned about company profits and their bottom line, period. That is why this will never change without legislation. As to the global ecomomy issue, this is not going to matter if neighboring countries continue to thrive ecomically while the U.S. falls into another depression because no one can find work in this country! First things first people. American workers cannot compete with people who will work 16 hours a day for $5000 a year in India who in turns puts none of that money back into our ecomomy. It is a whole different culture over there. America needs to put American workers back to work first. Write your Congressman/Congresswoman today and demand an end to the offshoring of American jobs now! Our entire economic future depends on it! Enough said. 😀
"Technology is a weird thing. It brings you great gifts with one hand, and it stabs you in the back with the other. ...:-D"
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All peripheral and patronizing arguments aside, American jobs should go to our citizens first, not ship them overseas. It's just as simple as that.
Actually, it's better for everyone in the long run if companies make financially sound decisions. Capitalism isn't perfect, but it certainly has a superior record to any form of socialism.
Particularly, with so many millions of Americans out of a job today. O'bama is commited to change this and I hope he does. I can assure you that the President of the United States does not see this as a waste of time, because it was one of the issues he campaigned on. He has the terrific burden of putting America back to work and he cannot do that effectively without first addressing this issue. It's just as simple as that.
He also said Gitmo would be closed within a year. He also said a lot of other stuff that's not true. One of the problems with democracy is that it encourages and rewards candidates who tickle people's ears with false promises.
It's a modern and completely unrealistic viewpoint that looks to the government to create jobs. The best they can do is stay out of the way ... the government cannot create jobs. All the money they use to "pump into the economy" isn't theirs, it's yours and it's mine. It's that much less money that we have to spend, thus that much less money that companies have to grow and expand and that many fewer jobs they have to offer. People like Obama can come along and claim they are creating jobs, but all they are doing is using our money in an incredibly inefficient manner.
As to the global ecomomy issue, this is not going to matter if neighboring countries continue to thrive ecomically while the U.S. falls into another depression because no one can find work in this country!
What country has thrived over the past four years? And although unemployment is high for our country, I think you're going a little overboard.
First things first people. American workers cannot compete with people who will work 16 hours a day for $5000 a year in India who in turns puts none of that money back into our ecomomy. It is a whole different culture over there.
IT people in India work about 8 hours a day, less when you consider how many breaks they take. And they certainly don't work for $5k a year. There are tremendous disadvantages to offshore labor. Get good at what you do and you'll be a better option than outsourcing.
Write your Congressman/Congresswoman today and demand an end to the offshoring of American jobs now! Our entire economic future depends on it! Enough said. 😀
The most frightening phrase in the English language: "I'm from the government and I'm here to help." No thanks.
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I'll only disagree on one part. I think that government can create jobs. Not by spending our tax dollars, but with tax incentives, especially a reduction of taxes, they can make it a climate that allows more small businesses to flourish.
You could argue that infrastructure work, like roads, creates jobs. Not sure I would, but I also can't imagine private companies being responsible for, and deciding on roads.
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Steve Jones - Editor (6/1/2010)
I'll only disagree on one part. I think that government can create jobs. Not by spending our tax dollars, but with tax incentives, especially a reduction of taxes, they can make it a climate that allows more small businesses to flourish.This isn't really creating jobs though. What it really is: taking away fewer jobs than they could have otherwise with their burdensome tax rate. Somehow in the course of US history people have come to accept that the government has it's own money and it gives certain individuals or companies money in the form of tax breaks. It doesn't have its own money ... it's our money that it takes away from us. Every tax cut is merely a lessening of the penalty of success.
Steve Jones - Editor (6/1/2010)
You could argue that infrastructure work, like roads, creates jobs. Not sure I would, but I also can't imagine private companies being responsible for, and deciding on roads.Obviously there are certain things that the government has to do because nobody else can: national defense, key infrastructure (roads, water, etc), flood insurance, safety regulation, etc. But again, this isn't a matter of creating jobs. It's a matter of inefficiently but necessarily doing what needs to be done. Now, I do think that you could say if the government wasn't doing its role in this regard that they could cost jobs both directly (by not building stuff that needs to be built) and indirectly (by hampering business' ability to conduct business as efficiently.) So in a loose sense, the fed has a hand in things but not in the way that the current or previous administrations would have us believe.
Since FDR it is no longer popular or common to evaluate whether or not social programs and various government activities are even consistent with the core competencies and responsibilities of the government. In cases where their programs do not fit this criteria (I would argue a vast majority of legislation), rather than creating jobs they are creating waste and costing jobs relative to what the private sector would be able to do with the same funds.
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I think that we agree that some things are necessary, therefore some taxes are required. Always have been, always will be. Be altering the tax code to allow some things, perhaps like not taxing sole proprietorships for 2 years, they can potentially influence the creation of jobs.
I would argue that the private sector "would" not do many things, and potentially couldn't do them as well, though government has rarely shown it can be efficient. 'Course, lots of private businesses aren't efficient because they are run by the same flawed people that are in government. Surprisingly, Al Gore led some nice initiatives in the mid-90s to try and get governments to be more efficient. Was successful in some local places, didn't seem to dent the Fed.
We could argue about what social programs are necessary, but I would say that corporate breaks fall into the same category as social programs to me. I'd like to see a lot less of both, concentrating on places where it's needed to make this country strong, not where it benefits a few people's already bulging pockets.
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I'd like to see an analysis regarding the offshore projects (in relative number and relative volume) distributed over the various types of companies (e.g. family-owned enterprize, a stockholder company or a venture-capital based company).
I'm pretty sure the family-owned enterprizes will be the ones with the lowest number of projects and the lowest volume. Continuing guessing: I think this is because those people run their business knowing that if they fail it will be their own money going down the river.
The other two types are run by people hired to increase the short term profit (almost) regardless of the long term consequences. And if they fail they'll get a "Golden Handshake" and move on to the next company.
To my knowledge there are very few cases where CEO's / CFO's / CIO's actually had to legally deal with the consequences of their decisions...
Let's have a look at the following scenario:
You're a CIO of a stockholder company and you need to make a decision regarding a five year project. Your contract ends three years from now. You need to decide to go for concept "A" and spend 20MillUSD or "B" (= 30MillUSD). What would you do? Would you even ask about the risk? And guess which project will be done offshore...
And now put yourself into the CIO position being a member of the family that runs the business. Would you make the same decision? Or wouldn't you ask again and again and again where that difference is coming from and what risk you'd put your company at?
I'm not blaming "The Management" in general here. It's the race for short term profit.
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Steve Jones - Editor (6/1/2010)
I think that we agree that some things are necessary, therefore some taxes are required. Always have been, always will be.I don't disagree with much of what you say Steve, it's just interesting to me to study the history of taxation and see how the lines of perception have changed and how people are just ok with where things are going.
Consider a very successful and productive modern day American citizen. We're looking at a 35% federal rate and about another third of that on state taxes in most states. Then with what you have left you pay taxes nearing 10% on many things you buy in many parts of the country. Then there is Social Security, which is effectively a forced loan to the government that pays a whopping return of about 0.5% assuming it's not bankrupt by the time you retire, so it could be reasonably considered another tax. And don't forget property taxes, auto licensing, etc as well. The really scary thing ... we want to be like Euros who have high taxes compared to us.
It's very hard for me to believe that such a high level of taxation is sustainable.
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The question is what's the right level of taxation, for what benefits. Reagan's administration (correctly) surmised that lowering the top tax rates from above 50% to below 50% would result in increased revenue.
The questions is which tax rate is the middle.
I'm not sure that a 30% tax is horrible. I'd like it to be less, but at the same time, our government does a lot. Like many people, I'd like them to do more in some places, less in others. Mostly I'd like lower federal taxes, higher local ones, and more money being used in my local community.
I'm actually in favor of social security because I think the vast, vast majority of people can't save properly. I'm not sure who has saved well in the history of the world, in any country, and I do worry that is we don't provide some level of retirement benefits, we'll have a huge class/age-ist issue in this country. I used to believe that we ought to self-direct investments, but the truth is that most of us have no idea how to do it, and that a lack of regulation and thinly veiled con-men running investment opportunities are likely to worsen the class shift in the US.
I guess I'm a Libertarian, with a few disagreements with them. I do think we ought to have some health care option supported by the government, but more like a pool you can join, not the current mess that just passed. And I think we have to provide some pension/retirement.
I think we've gone off track here. Maybe this debate ought to move to a new thread. Anyone up for talking about taxes for IT folk?
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Personally I don't think outsourcing works.
At times technical requirements / skills set may require outsourcing, but when it's not - outsourcing is just as costly as inhouse development, if not more so.
We have experienced the following downsides to outsourcing:
1 - system changes take a lot longer to get done
2 - there isn't (as is often promoted) more than 1 or 2 individuals that know your systems well.
3 - quite often the face value cost of outsourcing is cheaper than inhouse development, but comes with high costs for system modifications and consultancy
_____________________________________________________________________________MCITP: Business Intelligence Developer (2005)
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Outsourcing being done poorly is a buzzword that management latches onto in the name of lower costs.
Outsourcing being done well is less common, but the result is usually lower costs.
Sometimes outsourcing is simply a response to the need to focus on core competencies and outsource non core competencies. But defining core competencies can result in a lot more grey than black and white. For example UPS is a shipping company, but for my money one of their core competencies is IT. They use it to make their company better, and their customers' companies better.
Specifically outsourcing IT depends more on the type of company you are in, and the type of IT work you do as to whether it can be effective. Generally it is easier to manage programming projects with a staff that really understands the company, its micro and macro needs, and its goals. Most of the time that means internal staff.
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Saw this, interesting. Outsourcers hurt by recession, might not come back as strong.
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