US Programmers - India Salaries

[aephi alum]

Saw this article in BusinessWeek. Scary stuff.

U.S. Programmers at Overseas Salaries

Rather than send IT work to India, a Boston startup sought locals at the same money. The result: plenty of applicants -- and a lot of questions

It's the great unanswered business-economic question of our day: How do we replace the hundreds of thousands of information-technology, call-center, paralegal, and other jobs rapidly exiting the U.S. for India, Russia, and other low-wage countries? The main answer that the so-called experts put forth, without a lot of conviction, is that we'll create new "high-value" jobs to replace those leaving the U.S. What are those jobs? No one seems to know.

In the meantime, the matter of overseas subcontracting appears to have become open-and-shut. If you're an executive with half a brain, you can come to only one conclusion when tallying the differences in costs between hiring computer programmers in the U.S., vs. India or Russia. These days, the jobs are going to Indians and Russians.

OFFSHORE BARGAINS. But what if there was another way to skin this particular cat. That's what Jon Carson wondered a few months back, when confronted with the need to complete a major programming project in a hurry, and at the lowest possible cost. Jon is a serial entrepreneur whose latest venture, cMarket, helps nonprofit organizations increase their revenues by putting fund-raising auctions online. I have known Jon for years, and -- full disclosure -- have invested in several of his ventures. I only learned about his computer-programming dilemma after the fact, though.

cMarket had been pursued, as many business owners are these days, by an intermediary who promised he could cut cMarket's programming costs significantly by outsourcing his needs to India. So last spring, when cMarket signed an agreement with the national Parent Teachers Assn. (PTA) to handle online auctions for its 20,000-plus local chapters and, simultaneously, began taking on charity auctions from Boston to Miami, Jon knew he had to rapidly expand cMarket's capabilities. He had his IT director call the intermediary and tell him that cMarket needed four programmers, pronto. Jon knew the numbers for experienced American programmers doing the specialty work he required: $80,000 a year, with benefits adding an additional $5,000 to $10,000 per programmer. The intermediary came back with the number for the services from India: $40,000 per programmer.

It seemed like a cut-and-dried decision, the kind U.S. executives are making every day without hesitating, but for some reason Jon hesitated. Much as he likes the idea of having projects completed at the lowest possible cost, and as responsible as he feels to investors, he didn't like the feeling of becoming someone who callously pushes jobs to other countries. "I'm in the entrepreneurial economy," where competition around both costs and revenues is very intense, he says. "But I was personally very uncomfortable. This situation brought me face-to-face with how easy global disintermediation is being made for folks, to the point where it is almost inevitable."

TOUGH CALL. As he thought more about his decision, Jon realized he had a valid business reason to hesitate: As the head of a startup that had been going for less than a year, he wasn't at all certain he should take the risk of having essential work done at a far-off location by people he didn't know, and with whom he could communicate only via e-mail and phone. Still, there was that matter of nearly $200,000 in annual savings. Each time he hesitated about making his decision, various confidantes reminded him about the big money at stake.

And then Jon had a brainstorm. What if he offered Americans the jobs at the same rate he would be paying for Indian programmers? It seemed like a long shot. But it also seemed worth the gamble. So Jon placed some ads in The Boston Globe, offering full-time contract programming work for $45,000 annually. (He had decided that it was worth adding a $5,000 premium to what he'd pay the Indian workers in exchange for having the programmers on site.)

The result? "We got flooded" with resumes, about 90 in total, many from highly qualified programmers having trouble finding work in the down economy, Jon says. His decision: "For $5,000 it was no contest." Jon went American. And the outcome? "I think I got the best of both worlds. I got local people who came in for 10% more (than Indians). And I found really good ones."

HERE AND NOW. In the interim, Jon has promoted two of the programmers to full-time employees, at standard American programming salaries, rather than risk losing them to the marketplace. And he is convinced that having people working onsite gives him control over quality and timing that he wouldn't have enjoyed if he had subcontracted overseas.

While cMarket has solved its immediate challenge, the implications of Jon's approach are potentially mind-bending. What if other companies begin taking the same approach -- offering Indian-style wages to American workers? On the positive site, we could begin to solve our job-creation problems. But on the negative side, America's standard of living would inevitably decline. There's only one way to find out for sure how it all might shake out, and that is for other executives to replicate Jon's experiment. The results could be quite interesting.


David E. Gumpert is the author of Burn Your Business Plan: What Investors Really Want from Entrepreneurs and How to Really Start Your Own Business. Readers can e-mail him at david@davidgumpert.com


http://www.businessweek.com/smallbiz...03122_8887.htm

[DeltAlum]

I'm tired, and I appologize in advance that I didn't take the time to read the entire article above -- so this comment isn't about it, per se.

However, recently when having computer problems, I called Gateway and a couple of software companies -- and always got someone with a heavy Indian (not Native American) accent. I thought it was a coincidence until I read that a lot of high tech companies are using lower paid Indians in tech support. In fact, I was probably talking to someone in India since dedicated phone lines have become much cheaper.

I also heard that Gateway is taking a hard look at the practice because, frankly, some of the people are hard to understand.

[33girl]

DeltAlum -

There was just a story about that on 60 Minutes last week. They were saying how they use names like Jenny or Mike on the phone instead of their real (Indian) names. The reason so many companies are doing this is that many Indians are fluent in English and can tone down their accents.

[kappaloo]

Originally posted by 33girl
DeltAlum -

There was just a story about that on 60 Minutes last week. They were saying how they use names like Jenny or Mike on the phone instead of their real (Indian) names. The reason so many companies are doing this is that many Indians are fluent in English and can tone down their accents.

I've heard of cases where they are told to do different accents during the day - which would co-ordinate with which part of the world would be calling... English/N.American/Australian!!!

[Peaches-n-Cream]

I missed that 60 Minutes story, but I was told that the telephone answerers are trained to duplicate US regional dialects such as New Yorker, Midwestern, Southern, etc. Also the Indian employees are paid far less than US employees, but still significantly more than the average Indian.

BTW about a decade ago, many of the 1-800 numbers were answered in Ireland because they had a lower salary requirement, a mastery of the English language, and accents that were pleasant to the American and Canadian ear. A few years ago, many of these calls were answered by prisoners in jail. It goes to show, you never know who will answer your call.

[aephi alum]

I've also read about call centers being outsourced to India. Apparently CSRs in India often are set up with American-sounding (or British-sounding, Australian-sounding, etc) names, backgrounds, etc. that they can call upon to further the illusion that the caller is talking to someone in New York or Chicago or Sydney or wherever - rather than, say, Bombay.

This article, though, comments specifically on the effects of the outsourcing of software engineering jobs to India and elsewhere. If you were a manager facing the choice of spending $80K/year for a senior engineer in the US vs. spending $40K/year for an engineer in India, which would you choose? But this particular manager tried to see if he could find senior software engineering talent for $40K/year (ok, $45K/year) within the US, and he was flooded with resumes. That means the going salary for this profession has effectively been cut in half in the space of a very few years. That's pretty scary.

[Peaches-n-Cream]

aephialum, that has happened in a lot of fields at least in New York City. I know people who were earning $125,000 to $200,000 salaries in 1999 and 2000. Now they are lucky to earn $60,000. Actually, they are lucky to be employed. Some of these people worked for internet start ups that never quite got off the ground. Others are/were in advertising, marketing, and other divisions of business. What is really alarming is that many educated people still can't find jobs. I know two people who are very close to me who have been out of work since 2002. An entire year has passed, and they cannot find jobs. It is awful. At this point, they would be willing to take jobs for the salaries you described.

BTW, I just heard that IBM is looking for 4,500 new employees in the US.

[DeltAlum]

An outplacement company AT&T uses told me that the average time needed to find a comparable job with comparable pay is one month for every ten thousand dollars in salary.

I found that to be true, although I was out of work for over twelve months, and the salary in my job at the end of that time was just under half of what I made before.

Kinda tough in middle age and with kids in college, etc.

By the way, that's about the only useful thing I found in my experience with that company.

But, that was just my personal experience.

[Rudey]

It's called the natural order of things. Either eat or be eaten. If you're overpaid and don't compete to the level that nobody considers competition, then what can you say really? It sucks?

-Rudey

[WCUgirl]

Hubby worked at Microsoft last year here in the Charlotte office. About mid-April is when they started letting people go because they were closing the office due to moving the jobs to India. The entire office shut down. Hubby found a new job with another company. About a month ago he got a call from his old boss at Microsoft saying that they decided to scrap the India plan, they're re-opening the office and are calling all the old employees to see if they'll come back. Supposedly they scrapped the idea because so many customers were complaining that they couldn't understand the workers through their accents.

[AGDee]

Dell has scrapped their India help center for the corporate tech support group due to complaints also. I believe they're still using it for home tech support customers though.

Dee

[AchtungBaby80]

Originally posted by DeltAlum
However, recently when having computer problems, I called Gateway and a couple of software companies -- and always got someone with a heavy Indian (not Native American) accent. I thought it was a coincidence until I read that a lot of high tech companies are using lower paid Indians in tech support. In fact, I was probably talking to someone in India since dedicated phone lines have become much cheaper.

I also heard that Gateway is taking a hard look at the practice because, frankly, some of the people are hard to understand.

I didn't know this, but I have noticed that each time I've called Earthlink customer service (don't ever use Earthlink unless you can help it, by the way) I've gotten a tech support person with an Indian accent and it's been very difficult for me. Last time, I had to ask the poor man to repeat everything he said...he probably thought I was incredibly stupid, but I just couldn't understand him. I'm glad he had the patience to deal with me!

[aephi alum]

I actually agree with Rudey here (she says, while checking the temperature in hell ). You have to stay competitive, keep up to date with the latest technologies, constantly improve yourself to stay ahead - otherwise someone else will eat your lunch.

It still bothers me to see the going salary for a profession slashed in half in the space of a couple of years.

[AXO_MOM_3]

I recently had an aol problem, and talked to several different people in India. It was hard to understand them - they had to repeat everything, and I was totally annoyed by the time we got the problem fixed.