Reply to: If you are a CEO of a multinational - it's your duty to outsource

[TinTrump]

How does one apply for a working visa to India? 10 rupees say it's much harder emigrating from here to there than the other way round!

I've just been installing a factory system there (Chennai). That city's not my cup of tea. Sweet FA to do at night.

[sasguru]

So we should say bogoff to the UK and the nasty weather, horrible people, bad food and move to India? Awesome!

How does one apply for a working visa to India? 10 rupees say it's much harder emigrating from here to there than the other way round!

You're probably right.
You could always try to undercut Bob though

[the_duderama]

Absolute salary is irrelevant unless Bob wants to travel - if he earns 1000 dollars a month and can live like a king for 500, he's better off than most IT types here.

So we should say bogoff to the UK and the nasty weather, horrible people, bad food and move to India? Awesome!

How does one apply for a working visa to India? 10 rupees say it's much harder emigrating from here to there than the other way round!

[sasguru]

Maybe, but I don't think Earth could sustain its entire current population living at first world levels of affluence for very long. If wealth is to be shared more equally, something or somewhere has to give eventually. Either less people or less well off people. Even the current situation isn't sustainable.

I agree. That's a whole different kettle of fish though - what that tells us is that capitalism in its current form (based on consumption) is unsustainable.

[TimberWolf]

Africa looks like it will be the only really poor region in 20 years.

Maybe, but I don't think Earth could sustain its entire current population living at first world levels of affluence for very long. If wealth is to be shared more equally, something or somewhere has to give eventually. Either less people or less well off people. Even the current situation isn't sustainable.

[sasguru]

Plus as I'm sure most of us realise, real wages for IT types are falling here.

[sasguru]

The middle classes may well increase - that wasn't my point. What is the salary of an IT developer in India compared to here? Is he part of this growing middle class? Probably yes. By western standards his salary is still low. He will not be buying the high price goods being outsourced to India and China for a very long time.

Wrong he's buying it right now - look at house prices in Mumbai, witness the rash of new car models being released specifically for the Indian market.That's your 2 big-ticket items right there.
And yes he's also buying your plasma TVs etc - they're ridiculously cheap after all, because his less educated cousin makes them down the road.
Absolute salary is irrelevant unless Bob wants to travel - if he earns 1000 dollars a month and can live like a king for 500, he's better off than most IT types here

When India and China become too expensive there are plenty of other poor nations to outsource to.

Actually no. Africa looks like it will be the only really poor region in 20 years.

The reason companies outsource to India and China is to reduce costs and boost proficts. Cost to the business is the only driving factor. If they can get some sales from the Indian sub continent then all well and good, but only a fool would say that companies outsource for some moral reducing poverty type crusade!

I would be the last one to claim any multi-nationals are on a moral crusade.
But you're completely wrong. Its cold hard cash thats driving them to create markets as well as exploit them. Killing 2 birds with one stone as it were.

I am constantly surprised by the naivete of some CUK posters.

[The Lone Gunman]

only a fool would say that companies outsource for some moral reducing poverty type crusade!

I saw what you did there.

[Moscow Mule]

I'd like to see a big multi-national do an experiment: One project, two teams (one onshore, one offshore).

What is the total cost (inc paid for re-works / bugs etc) for each model? I'd be willing to bet the onshore team wins on total cost & time.

Has anybody actually done this?

[BoredBloke]

The middle classes may well increase - that wasn't my point. What is the salary of an IT developer in India compared to here? Is he part of this growing middle class? Probably yes. By western standards his salary is still low. He will not be buying the high price goods being outsourced to India and China for a very long time. When India and China become too expensive there are plenty of other poor nations to outsource to.

The reason companies outsource to India and China is to reduce costs and boost proficts. Cost to the business is the only driving factor. If they can get some sales from the Indian sub continent then all well and good, but only a fool would say that companies outsource for some moral reducing poverty type crusade!

[sasguru]

When outsourcing becomes common then yes the income in the outsouced countries will increase, but not by as much as you would think. We are talking about 2 of the most populous countries on the planet. The tiny percentage involved in the outsourcing can easily be replaced so the wages stay low when compared to those earned in the west.

Completely and utterly wrong.
http://www.mckinseyquarterly.com/Tra...dle_class_2032

[BoredBloke]

It's obvious. You want the largest and growing markets for your products, by outsourcing you:

1) Create a new population of affluent consumers
2) Who can then buy your product.

Why bother with stagnant, aging markets like the UK when you have young, growing markets like India and China?

Wrong - outsourcing to a cheaper economy is about reducing your baseline costs and that's all. If two companies produce similar products with similar production costs and a selling price then both will make similar profits. If one can significantly reduce it's operating and production costs then it will make more money. This competative advantage would mean that the outsourced company could benefit from 3rd world costs while selling at a 1st world price. This extra profit could be used to make their similar product the market leader (price drop or extra marketing) and eventually swallow up their competitor.

When outsourcing becomes common then yes the income in the outsouced countries will increase, but not by as much as you would think. We are talking about 2 of the most populous countries on the planet. The tiny percentage involved in the outsourcing can easily be replaced so the wages stay low when compared to those earned in the west.

[TimberWolf]

It's obvious. You want the largest and growing markets for your products, by outsourcing you:

1) Create a new population of affluent consumers
2) Who can then buy your product.

Why bother with stagnant, aging markets like the UK when you have young, growing markets like India and China?

3) Avoid first world taxes and social costs but sell to first world economies at first world prices.

Why stop at outsourcing technical skills? If there is a cheap market to be tapped for technical skills, there's an even bigger one ready for soft skills. Don't stop until the CEO has himself been outsourced.

[sasguru]

Only if the rate you pay allows the locals to buy your products.

Indeed. That's what Henry Ford realised - he had to pay his workers a reasonable wage so they could buy his cars.

The modern Ford has created a cheap Indian car (built in India for peanuts)which they can sell to their outsourced IT workers (and similar) in India. Margin is probably higher than a similar model in the UK.

Simples.

http://news.bbc.co.uk/1/hi/business/8270541.stm

[DimPrawn]

It's obvious. You want the largest and growing markets for your products, by outsourcing you:

1) Create a new population of affluent consumers
2) Who can then buy your product.

Why bother with stagnant, aging markets like the UK when you have young, growing markets like India and China?

Are you talking about yourself again?