re: Force10 Relocates Jobs to IndiaGardner is making some very valid points here.
(1) Outsourcing is not inevitable as the economic elite seem to be repeating ad nausem. A government needs to balance the benefits of outsourcing against the social and economic upheaval its citizens are forced to endure. As much as I hate to agree with Buchanan, what is happening is that an entire layer of entry level workforce is being move offshore and along with it, a stepping stone to higher level architectural positions. How many entry level s/w and h/w engineers can directly make the jump to architectural, design positions? The on-the-job training opportunities are completely lost. Guess what? Since there is no ladder, in time the high-level design/architecture positions are also going to move offshore. (2) Some of the blame rests squarely on the shoulders of American citizenry. I have not seen a set of people like Americans who will do anything to get 5c off their shopping. Where is the pride in making sure the local booksellers and groceries survive against the onslaught and buying power of the Wal-marts of the world? It is certainly hypocritical that folks here want to buy cheap ipods, HDTV sets etc. but at the same time, concerned about the movement of labor offshore.
re: Force10 Relocates Jobs to IndiaNeocons and libertarians forgot:
The reason for government to exist is to protect the governed from attack. Except for it seems, attack from its own corporations and banks.
The neocon plan is clearly to bankrupt the US government, and eliminate all forms of social spending: social security, medicare, etc, and instead fund 5 year "emergency" no-compete contracts to Halliburton.
The greed and outright corruption in this Whitehouse makes Whitewater look like a drip next to Niagara.
Only the Dems are too girlyman to call it like it is.
re: Force10 Relocates Jobs to IndiaLet's get back on topic. Outsourcing reflects the soul of a company's operations. When a company adopts it, the CEO should be out in front.
This company allowed a marketing person who, apparently, has no experience with the press to convey the public description of its outsourcing decision. What were they thinking?
You don't announce outsourcing like you announce another router blade. You think hard about if you want to do, how you plan to do it and then what you say about it.
If I were an investor, customer or partner of F10 I'd start thinking very hard about the quality of management there.
re: Force10 Relocates Jobs to India Irrespective of the economics, there is enough blame to go around:
1. Our elected officials who get elected by special interests and feel obligated to support them irrespective of the outcome. 2. The so-called technical leaders who only see the short term gains and don't see the long term pit-fall of loosing the tech edge. 3. The executives and the board or VCs who want to follow the band-wagon of the Ciscos of the world and don't see their jobs are also on the way out. 4. The consumers (regular joe) who still want to buy from the Walmarts of the world and don't show through example they support the local labor force. May be I will move to India and live on my savings until the next cheap haven is found by the tech companies.
Turnabout is only fair play. Our eager friend from IIT better bone up on his Mandarin. The following clip from todays NY Times: ______________________________
"India Taps China's Reserve of Technological Talent
By SARITHA RAI
Published: November 2, 2004
ANGALORE, India, Nov. 1 - When Infosys Technologies began scouting for an alternative to India as a source of unlimited, low-cost human resources, the fast-growing company came up with one answer: its home country's archrival, China.
Now, a year after the Infosys Technologies (Shanghai) Company was set up, the venture center has 200 employees and 4 multinational customers.
Infosys, the Bangalore-based software services company, and other top Indian outsourcing rivals, including Tata Consultancy Services and Wipro Technologies, are doing application development and maintenance work in China as they grow rapidly to keep up with booming demand from the West for their services.
And they are quickly concluding that only China has a worker base equal to India's in terms of cost, quality and scale. Expansion there also offers the ability to cater to - and possibly garner more of - the local and regional markets, including Japan.
Vigorous global demand - revenue from India's information technology exports was $12.5 billion in the year ended in March, up 30 percent from the previous year - has resulted in a 10 percent to 15 percent annual rise in wages in India's software and back-office services industry.
According to a KPMG study for the National Association of Software and Services Companies, or Nasscom, an industry trade group in India, the country will face an acute shortage of technical employees by 2009, falling short by about 250,000 workers.
"We need a deep reservoir of talent as well as an alternative low-cost center like India as we continue to grow," said Nandan Nilekani, chief executive of Infosys, who has talked of his company's scaling up to become the Wal-Mart of outsourcing. "And only China can match up."
In the quarter ended in September, Infosys alone added more than 5,000 employees, for a total of nearly 33,000. And Wipro added 5,500 employees, reaching more than 36,000.
As Indian companies have looked for skilled workers outside the country for software development and customer support centers, some have ventured into Mexico and Eastern Europe. But many say that China holds the most promise, in part because of its potential as a rival.
Though its software export revenues were just $700 million in 2003, "China will soon be competing with India as an outsourcing destination," said the Singapore-based Girija Pande, director for Asia Pacific of Tata Consultancy, India's top software services exporter. It set up operations in China in 2002.
And a presence now, these companies say, positions them to grab such future business. Entry into the country is made easier by the ability to piggyback onto the existing base of customers with interests in China. "With China's economy swelling so quickly, multinationals are looking for global software firms who already understand their standards and systems," Mr. Pande said.
Tata Consultancy, for instance, is working in China with its longtime customer, General Electric.
China has some 200,000 information technology workers - compared with India's 850,000 - in 6,000 local companies, according to some estimates. More than 50,000 Chinese software programmers are being added to this pool annually.
Some important ingredients that have made India a formidable global software services exporter are in place in China as well, like the high value put on education and a focus on engineering in higher education.
The Chinese government is sweetening the deal for the Indian concerns, as well as for global competitors like Accenture and I.B.M. Global Services, by offering high-quality infrastructure at low costs and offering alliances with local universities to recruit Chinese talent.
China also offers Indian outsourcing concerns a low employee turnover rate. For instance, Tata Consultancy's staff turnover in China is less than 6 percent a year, compared with 15 percent in its Indian operations. The company says it may double the number of employees in China in the next 18 months from its current 180.
For now, however, even with wages rising in India, China's information technology workers are more expensive "because a combination of English-language and technical skills is at a premium," Mr. Nilekani of Infosys said.
According to Mr. Pande of Tata, the wage differential is about 12 to 15 percent. So while an entry-level programmer in India might earn $125 a month, a Chinese equivalent might earn $142 to $147. The managerial talent differential is even bigger.
And scalability - the ability to grow quickly when circumstances warrant - is posing a challenge because of the scarcity of good English speakers and experienced managers in China. While even second-tier Indian software companies have 12,000 to 15,000 employees, only a handful of Chinese software companies have more than 3,000.
When NIIT, India's top technology training company, set up by the founder of the software exporter HCL Technologies, made exploratory moves in China in 1997, it was a toss-up between setting up a software services unit or a training one.
"Available skills were so low that we went into training," said Prakash Menon, president of NIIT China, who opened NIIT's first training center in Shanghai in 1998. The company now has 121 centers in 25 provinces and trains 25,000 Chinese annually.
Wipro set up its China unit in August to develop software and maintain it for the company's global clients in the United States, Europe and Japan. Though Wipro aims to expand the unit to 200 employees next year from 10 now, projects that require a high level of management skills are unlikely to be done there soon, said Masaki Nagao, Wipro's chief executive for Japan and China operations.
Mr. Nilekani of Infosys says he expects that this will change. "In three to four years, cost and scale will be two top reasons to be there," he said.
At least for now, however, some Indian companies are choosing not to take the plunge. "Though it is fashionable to be in China, we are skeptical" about the need to move there, said Saurav Adhikari, vice president for corporate strategy at HCL Technologies. There is enough potential to expand in markets where the company already has operations, he said, including India, the United States and Japan.
For those that do move into China, said Mr. Menon of NIIT the eventual model would be to hire Chinese programmers and Indian managers, and set up operations in low-cost centers just outside high-cost business hubs like Shanghai.
Some companies are already adopting variations of that model. Wipro, for instance, plans to recruit Indian or Japanese managers along with Chinese programmers to expand in China in the coming year. Zensar Technologies, based in Pune, has a new joint venture with Broadengate Systems of China; the venture, Zensar Technologies (Shenzhen), expects to grow from 14 employees to 50 by the end of the year with Indian project managers and Chinese programmers.
Cognizant Technology Solutions, based in Teaneck, N.J., but with most of its development operations in India, is taking a different approach. It plans to enter China in 2005 to serve its financial services clients there, and says it will bring Chinese managers to its global development base in Chennai, India, for training.
All this activity could translate into a 40 percent slice of the growing China software export pie by 2006 for Indian companies, according to Gartner, the technology research firm based in Stamford, Conn.
And while few industry experts say they think that China will rival India as a viable offshore software development center anytime soon, most say they think it will happen eventually.
"The raw materials - talent and infrastructure - are there,'' said V. Sriram, the Tokyo-based vice president, Asia Pacific, at Infosys Technologies, "so it is only a matter of time before the ecosystem evolves." _____________________________________
....and I add in closing that after China has its two or three year run, the Phillipines will be next, what with the Peso at 50:1 to the dollar...then Africa or SEA???
Until we rationalize the way exchange rates are determined, or the world economy implodes in endless cycles of arbitrage.
re: Force10 Relocates Jobs to IndiaA little digging shows that Force 10's investors have pumped in over $290M to date. The latest from Morgenthaler. For a 10% market (top line)share against 70% Cisco.
They clearly think their exit is to get Chambers to buy off the irritation. But in moving to India, they devalue the company tremendously. I know this will come as a shock to the MBAs at Morgenthaler. They assumed that it was a strong play to cut expenses and maybe get cash positive....a bigger threat = more exit value. A start-up with any hope of an up-exit has got to have a better story than that. 'Cause its just too easy for Chambers to underbid you and take the sales away...but he hasn't gone there...yet.
The other more obvious reason is a numbner of Force 10's customers are US government. That will rapidly fade away with overseas engineering and support, especially with ITAR and all. I'll wager nobody bothered to ask.
re: Force10 Relocates Jobs to Indiawhyiswhy: "Our eager friend from IIT better bone up on his Mandarin."
You assumed IIT and NIIT to be the same. IITs in India provide education equivalent to MIT and NIIT is a training institute like the CISCO training center in your nearby community college in the US.
re: Force10 Relocates Jobs to Indiathe NYT article just proves indian IT cos are positioning themselves to (a) get into the training market in China (b) becoming more global as in opening ODCs in tens of other countries with local employees and management. in due course some of these talents will also end up in top management.
the costs in china are stated to be about the same as india. so indians have nothing to be afraid of these, instead there's plenty of money to make becoming large "chinese" cos operating in the far east markets.
I wonder what IBM , accenture and the more "harvard-trained" cos are doing in china ? probably the same thing, developing local offices.
(1) Outsourcing is not inevitable as the economic elite seem to be repeating ad nausem. A government needs to balance the benefits of outsourcing against the social and economic upheaval its citizens are forced to endure. As much as I hate to agree with Buchanan, what is happening is that an entire layer of entry level workforce is being move offshore and along with it, a stepping stone to higher level architectural positions. How many entry level s/w and h/w engineers can directly make the jump to architectural, design positions? The on-the-job training opportunities are completely lost. Guess what? Since there is no ladder, in time the high-level design/architecture positions are also going to move offshore.
(2) Some of the blame rests squarely on the shoulders of American citizenry. I have not seen a set of people like Americans who will do anything to get 5c off their shopping. Where is the pride in making sure the local booksellers and groceries survive against the onslaught and buying power of the Wal-marts of the world? It is certainly hypocritical that folks here want to buy cheap ipods, HDTV sets etc. but at the same time, concerned about the movement of labor offshore.