Programming Jobs Going Overseas

Reason magazine has a great article on this move by IBM that I blogged about several days ago. Jeff Taylor, the author, hits the bullseye with his commentary.

No, it's about working the cost side of balance sheet in search of profits; revenues have been flat for two years and show little sign of improving. This is what good managers do, and there is no reason to be ashamed of it if you truly think you are going to make the company stronger.

But the catch is that out-sourcing is being embraced without much sign that it will actually make high-tech firms, particularly software companies, more effective. Highly collaborative, imaginative work might suffer in the hands of technically adept but inexperienced programmers.

Very true. I like this part too:

According to people who actually negotiate outsourcing contracts for a living, your costs are more like $22 an hour for each warm body once all the third-party finders' fees are paid. An experienced programmer's take in India would be around $11,000 out of total cost of over $40,000. That's still quite a gap from the $60,000 an American might demand but once the all-important question of productivity is factored in, it may not be much of a bargain.

Simply put, once you leave the U.S. you are leaving behind the world's best, most proven pool of programmers. That's is not to say that there aren't excellent programmers in Russia, China, India, and elsewhere. But large-scale, world-changing software development ain't easy. The Net bubble devalued just how hard it is to build neat technology. Shawn Fanning is the exception that proves the rule.

Or as one software engineer who has worked with out-sourced labor for years puts it, "If software development in India is so great, why don't they have a single software company worth a crap?"

This is a great analysis of the issue. Free trade is fine and all, but you can't outsource jobs just because it is the latest management fad, or because it saves money in the short run. In the long run it may cost much much more.

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