Columbia Computer Science

Saturday, April 09, 2005

Far Eastern Economic Review: "The Next Wave of Offshoring"

The Far Eastern Economic Review, an English monthly newsmagazine published by Dow Jones in Hong Kong for the past 60 years, writes about outsourcing primarily in information technology. Among the predictions is that 60% of all U.S. software jobs could be moved oversees. The reason: it increases world wealth (including that of the U.S.) and lowers prices. "Every dollar of spending that U.S. companies transfer to India creates $1.46 in new wealth, according to McKinsey & Co. research. India keeps 33 cents of that gain, while the U.S. keeps $1.13 for every dollar spent on offshoring." "Hardware and software prices will continue to drop as more computers are built in China and more software code written in India, according to the Institute for International Economics."

Some other quotes:

U.S. Bureau of Labor Statistics: "By the end of 2005, one of every 10 jobs at U.S. information technology vendors and service providers will have moved offshore."
Craig Barrett, CEO of Intel: "I don't think most people appreciate the magnitude of the change in the world's workforce. Over the next 10 years you are going to see major, major dislocation."
Stephen Roach, chief economist at Morgan Stanley: "We're now outsourcing investment banking to Mumbai. I don't know why we would ever hire another software programmer in New York again."


  • Its obvious to me that Stephen Roach has no idea about software development and the quality of software. His head is completely in the clouds of dumb-dollars-and-cents.

    The reason not to outsource is simple: you get what you pay for in terms of quality. Low quality == more support, maintenance and system failure support dollars.

    Low quality software offshore versus high quality software from individuals (and companies who have employees) from the best colleges in the world! MIT, Harvard, Yale, Columbia .... I could go on.

    India schools simply cannot compete, and, in turn, you are paying for software built by people who have just average education.

    No wonder Morgan Stanley is having problems of late-its this type of shallow thinking that causes it.

    By Blogger offshoreexpert, at 4:07 PM  

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