The Changing Reality of Outsourcing

On Linked In "Answers" a member brought up the changing reality of outsourcing recently with the question: Is the Indian outsourcing engineering and IT market now efficiently or overpriced?

"A journalist friend of mine asked me recently about this: he had met a valley company the other day that had laid off its engineers and refocused its engineering back to the valley. Logic given: salaries have risen so high there, that the office and coordination is no longer with the price. My intuition has been that with the masses of companies seeking outsourcing to India that the pricing was going to reach market rates quickly. Not with facts, but with some reasoning and intuition, I have particularly thought that this would be true of small companies and small outfits very soon.

I'm curious for other people's data, analysis, thoughts, and examples of other companies."

It is quite worth reading the responses for the variety of and rapidly changing nature of what is going on in international labor markets. Or global outsourcing and offshoring as these are the current buzz words.

Some interesting points were:

• Salaries are growing at 10% to 25% annually in India for software engineers
• There is more demand than supply in India for software engineers
• It is cheaper to hire locally in the U.S. than to bring a person over on a visa
• Only large companies with very large projects are seeing the economic benefits
• Indian companies are outsourcing to other countries such as China to save money

Thirty years ago Thomas Temporaries pooled labor for companies that needed temporary workers. The work was shitty and the temps were paid poorly. These enormous firms like Tata and CapGemini are just larger versions of Thomas Temporaries, shuttling people from country to country, trying to keep salaries suppressed and and find people to do the crap work. The more things change, the more they stay the same.