I actually read almost the whole thing, excellent revelations.
Here are some things none of you mentioned.
Right before this outsourcing of the latest "tech" jobs took place, tech/IT jobs were in a humongous bubble. Look in all seriousness, the wages and benefits being paid just because you knew a little bit of computers were absurd. Corporates, mom&pop, dotcom shops could not find enough IT "professionals" to fill their space because of the internet craze. Server maintenance, website maintenance, graphic design, NT professionals were always in demand, but it was not real demand. Companies were stocking up on workers in a crazy, while productivity was so innefficient. Everyone basically got carried away, thinking these great times will last forevers. Just like traders making sick money in 99, wasting it all thinking trading will always be that profitable.
Then the reality hits, and cost cutting to at least reasonable levels begin. Don't look at outsourcing as outsourcing, look at it as cost cutting to reasonable levels. Why try to offer the same jobs at a reasonable rates and deal with a labor force that still expects the absurd wages of the bubble? Easier to just outsource.
Another point
These outsourcing decisions are not made with rational concern for the actual firm. They are made by top executives looking to protect their jobs and keep their bonuses. I'll give an example. I worked at UBS Warburg doing presentations for IB. Our head of the department was this female who got her job god knows how. She was a perfect example why men did not want women to be in positions of power (no insult to the females of ET, there are quite a few female executives who do an excellent job, just not this bitch). One of the most idiotic techniques done by her was to fire a certain amount of staff by the end of the month and then rehire new ones at the beginning of the next month to manipulate the #s to show savings on labor costs. Too bad rehiring and training is very expensive in actual dollar cost and quality of work cost. Yet she has been able to do this for 2 years and still doing this, while getting a nice bonus for these "savings" she is bringing to the company. The fact that noone above her nor the accounting department can even bother to think about this idiotic scam of a technique just shows how concerned these executives are about the efficient operation of their company. We are talking about UBS Warburg, a major global bank, not some chop shop operation. Unbelievable.
I'm using the presentations department of Investment banks just because I'm very familiar with them and because for NYC, presentations used to employ about 5000 jobs at their peak. Since then, 70-80% have been outsourced to India. These jobs are actually quite reflective of the tech bubble jobs produced and quite related to many IT jobs being outsourced with craze.
Now for some banks, this outsourcing made sense because the presentations operators and bankers had pretty much zero contact with each other. But for most banks, the real interaction with an English speaking person that could relate to you at least at a minimal cultural level had irreplaceable value. So basically this is what the real outcomes are of this outsourcing for this particular department.
All inclusive costs for a computer operator in presentations in NYC comes down to about 60 bucks an hour. Thats considering office space, computers, minimal benefits, etc. Outsourcing to India makes it about 20 bucks an hour. Sounds great if you are some dickhead on top who has no real clue what really goes on in your bank since you have never even bothered to visit NYC where the particular top US producing Investment bank is located. But hey, you're the boss so who cares about rational informed decisions, it's all about your salary and bonus.
However, to the actual bankers, associates and even Managing Directors who actually use the presentations 24/7/365, dealing with some Indian shmuck that can barely speak English when you have an intensive job really starts to affect these costs. Instead of using up an hour at 60 bucks each, you end up using 4 hours at 20 bucks each. Now throw in the risks of communication abroad, systems going down, email going down (no other contact at the moment), corruption, electricity power failure (India has high electricity failure risk) and these costs of outsourcing actually go up. Then there is the overall quality effects since communication by email cannot even come close to replace real interaction when it comes to making 100-200 page books for clients.
Look it's basically this. You want to use Kmart/Walmart quality or you want Macy's/JcPenneys/Saks. You're building a house for someone and to impress them and get a nice bonus you use cheap ass materials for a crappy foundation, make the buyer feel like they saved, everyone seems happy and then the house falls apart in 2 years. But who cares when you are only looking at the very short term, like your job and your bonus at the end of the year.
Party this wave of outsourcing is due to overblown labor costs and party due to decisions by upper executives/CEOs based on keeping their salaries and bonuses. There is already a huge problem with the corporate governance in this country. Some shmuck is getting paid millions of dollars to write mission statements and do dinners while firing 1000s of workers that actually bust their ass and are the backbone of the company. Not efficient, self corrupting and actually somewhat reminiscent of the situations that brought down some of the biggest empires of human history (Roman empire is a great example).
Most of these outsourced jobs have brought a detrimental effect to the quality of the product/service. Who has had the pleasure of dealing with some heavy accent customer service rep from India? I have. If this is a reflection of the "efficiency" and "benefits" of outsourcing, man these companies going nuts with outsourcing are just asking for a lower quality reputation.
Yes some jobs make complete sense to outsource. Generic code writing, number crunching, repetitious BS work that used to overpaid are great candidates for outsourcing. But a lot of these jobs are not that. And this outsourcing craze will come back and bite these companies in the ass.
Here are some things none of you mentioned.
Right before this outsourcing of the latest "tech" jobs took place, tech/IT jobs were in a humongous bubble. Look in all seriousness, the wages and benefits being paid just because you knew a little bit of computers were absurd. Corporates, mom&pop, dotcom shops could not find enough IT "professionals" to fill their space because of the internet craze. Server maintenance, website maintenance, graphic design, NT professionals were always in demand, but it was not real demand. Companies were stocking up on workers in a crazy, while productivity was so innefficient. Everyone basically got carried away, thinking these great times will last forevers. Just like traders making sick money in 99, wasting it all thinking trading will always be that profitable.
Then the reality hits, and cost cutting to at least reasonable levels begin. Don't look at outsourcing as outsourcing, look at it as cost cutting to reasonable levels. Why try to offer the same jobs at a reasonable rates and deal with a labor force that still expects the absurd wages of the bubble? Easier to just outsource.
Another point
These outsourcing decisions are not made with rational concern for the actual firm. They are made by top executives looking to protect their jobs and keep their bonuses. I'll give an example. I worked at UBS Warburg doing presentations for IB. Our head of the department was this female who got her job god knows how. She was a perfect example why men did not want women to be in positions of power (no insult to the females of ET, there are quite a few female executives who do an excellent job, just not this bitch). One of the most idiotic techniques done by her was to fire a certain amount of staff by the end of the month and then rehire new ones at the beginning of the next month to manipulate the #s to show savings on labor costs. Too bad rehiring and training is very expensive in actual dollar cost and quality of work cost. Yet she has been able to do this for 2 years and still doing this, while getting a nice bonus for these "savings" she is bringing to the company. The fact that noone above her nor the accounting department can even bother to think about this idiotic scam of a technique just shows how concerned these executives are about the efficient operation of their company. We are talking about UBS Warburg, a major global bank, not some chop shop operation. Unbelievable.
I'm using the presentations department of Investment banks just because I'm very familiar with them and because for NYC, presentations used to employ about 5000 jobs at their peak. Since then, 70-80% have been outsourced to India. These jobs are actually quite reflective of the tech bubble jobs produced and quite related to many IT jobs being outsourced with craze.
Now for some banks, this outsourcing made sense because the presentations operators and bankers had pretty much zero contact with each other. But for most banks, the real interaction with an English speaking person that could relate to you at least at a minimal cultural level had irreplaceable value. So basically this is what the real outcomes are of this outsourcing for this particular department.
All inclusive costs for a computer operator in presentations in NYC comes down to about 60 bucks an hour. Thats considering office space, computers, minimal benefits, etc. Outsourcing to India makes it about 20 bucks an hour. Sounds great if you are some dickhead on top who has no real clue what really goes on in your bank since you have never even bothered to visit NYC where the particular top US producing Investment bank is located. But hey, you're the boss so who cares about rational informed decisions, it's all about your salary and bonus.
However, to the actual bankers, associates and even Managing Directors who actually use the presentations 24/7/365, dealing with some Indian shmuck that can barely speak English when you have an intensive job really starts to affect these costs. Instead of using up an hour at 60 bucks each, you end up using 4 hours at 20 bucks each. Now throw in the risks of communication abroad, systems going down, email going down (no other contact at the moment), corruption, electricity power failure (India has high electricity failure risk) and these costs of outsourcing actually go up. Then there is the overall quality effects since communication by email cannot even come close to replace real interaction when it comes to making 100-200 page books for clients.
Look it's basically this. You want to use Kmart/Walmart quality or you want Macy's/JcPenneys/Saks. You're building a house for someone and to impress them and get a nice bonus you use cheap ass materials for a crappy foundation, make the buyer feel like they saved, everyone seems happy and then the house falls apart in 2 years. But who cares when you are only looking at the very short term, like your job and your bonus at the end of the year.
Party this wave of outsourcing is due to overblown labor costs and party due to decisions by upper executives/CEOs based on keeping their salaries and bonuses. There is already a huge problem with the corporate governance in this country. Some shmuck is getting paid millions of dollars to write mission statements and do dinners while firing 1000s of workers that actually bust their ass and are the backbone of the company. Not efficient, self corrupting and actually somewhat reminiscent of the situations that brought down some of the biggest empires of human history (Roman empire is a great example).
Most of these outsourced jobs have brought a detrimental effect to the quality of the product/service. Who has had the pleasure of dealing with some heavy accent customer service rep from India? I have. If this is a reflection of the "efficiency" and "benefits" of outsourcing, man these companies going nuts with outsourcing are just asking for a lower quality reputation.
Yes some jobs make complete sense to outsource. Generic code writing, number crunching, repetitious BS work that used to overpaid are great candidates for outsourcing. But a lot of these jobs are not that. And this outsourcing craze will come back and bite these companies in the ass.
