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The Almighty Buck Businesses Programming IT Technology

Why Outsource When Workers are Willing to Telecommute? 874

Posted by Cliff from the is-cheaper-code-always-better? dept.
An anonymous reader asks: "Corporations and management resisted telecommuting for years, now jobs flow to distant nations. Did telecommuting become acceptable because of the greater distance? Because some form of on-site management persists? Because labor laws are favorable? Because a well paid middle class is a political threat? Is it really as simple as money? I'll work cheaper if I can choose where I live and work. Must I leave my country to do so?"
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Why Outsource When Workers are Willing to Telecommute? More

Why Outsource When Workers are Willing to Telecommute?

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  • Outsource because... (Score:3, Insightful)

    by Anonymous Coward on Friday July 25, 2003 @03:32PM (#6534596)
    Workers in India are cheaper.

    • Re:Outsource because... (Score:4, Informative)

      by zeno_2 ( 518291 ) on Friday July 25, 2003 @04:22PM (#6535093)
      My job was replaced by someone in India..

      Hint: A lot of Microsoft Support is done in India now..

    • Re:Outsource because... (Score:5, Insightful)

      by Daetrin ( 576516 ) on Friday July 25, 2003 @04:26PM (#6535129)
      Workers in India are cheaper.

      Which part of "I'll work cheaper if I can choose where I live and work." did you not understand?

      From the CNN article that got posted here a few days back, "The average computer programmer in India costs $20 per hour in wages and benefits, compared to $65 per hour for an American with a comparable degree and experience, according to consulting firm Cap Gemini Ernst & Young." First of all, as an average American programmer i'm apparently geting gyped by about 70k a year :) Second of all, there are probably quite a number of programmers in America who would be willing to work for $20 an hour if they could telecomute from the backwoods of Maine so as to minimize their living expenses.

      Obviously a lot of companies have decided that having an american physically in the office isn't worth a savings of $45 an hour, but once you've decided to hire telecomuters, isn't a $20 an hour American programmer with who management will probably have a lot less communication difficulties a better buy than a $20 an hour programmer from India?

      • Re:Outsource because... (Score:4, Insightful)

        by enomar ( 601942 ) on Friday July 25, 2003 @04:37PM (#6535254)
        I don't think programmers in India are getting paid $20 an hour. I think it's more likely that $20 an hour is the total cost of employment including wages, benifits, office space, utilities, communication costs and so on. If you want to telecommute for $20 an hour and pay for your own benifits, utilities, and bandwidth then I'm sure any company would hire you.

      • Re:Outsource because... (Score:4, Insightful)

        by derfel ( 611157 ) on Friday July 25, 2003 @04:47PM (#6535358)
        The $65 an hour for a programmer in the US and $20 for one elsewhere both include infrastructure, benefits, and management. I doubt that, even though you're working at home, our corporate culture would be willing to cut down on the management part. Unfortunately, this is a good example of the whacked out way our executives figure things. They figure in their salary into the cost of their domestic employees, but not into the cost of overseas employees. This biases things in favor of those overseas.
      • "Obviously a lot of companies have decided that having an american physically in the office isn't worth a savings of $45 an hour, but once you've decided to hire telecomuters, isn't a $20 an hour American programmer with who management will probably have a lot less communication difficulties a better buy than a $20 an hour programmer from India?"

        Don't compare outsourcing to telecommuting. There's more involved than the costs, and each option has different advantages and drawbacks.

        Telecommuting saves o

    • Power..... (Score:3, Insightful)

      by EmbeddedJanitor ( 597831 )
      Telecommuting = giving power to the employees and taking power away from managers. That means cutting your own throat if you're a manager.

      Outsourcing means giving away the whole problem (and it sounds good in management circles too).

  • It really is that simple. (Score:4, Insightful)

    by wayward_son ( 146338 ) on Friday July 25, 2003 @03:36PM (#6534628)
    Is it really as simple as money?

    short answer is yes.

    I'll work cheaper if I can choose where I live and work.

    Not as cheap as someone oversees. What is considered good money in India wouldn't be a living wage in Silicon Valley, or in most of the United States.

    • Re:It really is that simple. (Score:5, Informative)

      by BWJones ( 18351 ) on Friday July 25, 2003 @03:43PM (#6534704) Homepage Journal
      Is it really as simple as money?

      short answer is yes.

      And don't forget benefits such as healthcare and retirement.

      I'll work cheaper if I can choose where I live and work.

      Not as cheap as someone oversees. What is considered good money in India wouldn't be a living wage in Silicon Valley, or in most of the United States.

      Indeed. Especially considering that even $100k is not really even a living wage in Silicon Valley and that same $100k costs the employer approx $155k including benefits. That same job in many cases can be found in India for $5k or less. The issues to be overcome are language barriers, project management and innovation (or lack thereof with remotely managed projects).

      • Silicon Valley on the cheap. I did it, so can you. (Score:5, Interesting)

        by LibertineR ( 591918 ) on Friday July 25, 2003 @04:37PM (#6535251)
        I make close to $200K. I parked the Navigator and Viper and started taking Caltrain. I save $200 a month on gasoline, and I get work done on the train instead of sitting on hwys 17-85-101 on my way to work. Instead of the $10 I spent on two lattes per day, I now brew my own coffee in the morning and carry a thermos. Thats another $250 per month. Movies every weekend? Fuck that; NETFLIX rocks, and I can make a dozen hotdogs for what one costs at the Mountain view cinema. $50 per month.

        Going to Nola's or Baha Fresh everyday for lunch? Not anymore dude. thats $300+ a month reduced to $100 by bringing my lunch from home. Now that I ride the train, I dont stop at Fry's twice a week to "just look around" like I used to tell my wife. An easy $150 a month saved just by staying out of the book/CD/game aisles. If I need something now, Ebay has it. Drinks after work with my team? Once a week instead of 3-4 times. Thats another $100 saved.

        In one year, I have saved enough to help me make down payments on two rental houses, with positive cash flow coming in, that goes straight to the bank until I have enough to buy another one.

        If you can give up some of the ego stuff, you can live just fine in the Valley. Now, when I go out in my Viper on the weekends, I dont give a shit about how much the gas costs. I havent filled up in 3 weeks.

        • Re:Silicon Valley on the cheap. I did it, so can y (Score:5, Insightful)

          by Tackhead ( 54550 ) on Friday July 25, 2003 @05:06PM (#6535535)
          > I make close to $200K. I parked the Navigator and Viper and started taking Caltrain. I save $200 a month on gasoline, and I get work done on the train instead of sitting on hwys 17-85-101 on my way to work. Instead of the $10 I spent on two lattes per day, I now brew my own coffee in the morning and carry a thermos. Thats another $250 per month. Movies every weekend? Fuck that; NETFLIX rocks, and I can make a dozen hotdogs for what one costs at the Mountain view cinema. $50 per month.
          >
          >Going to Nola's or Baha Fresh everyday for lunch? Not anymore dude. thats $300+ a month reduced to $100 by bringing my lunch from home. Now that I ride the train, I dont stop at Fry's twice a week to "just look around" like I used to tell my wife. An easy $150 a month saved just by staying out of the book/CD/game aisles. If I need something now, Ebay has it. Drinks after work with my team? Once a week instead of 3-4 times. Thats another $100 saved.

          After-tax, he's saving $200+250+50+200+150+100 = $950/month.

          Now dig this. With combined California + Federal taxes on $200K at around 43%, that after-tax savings is equivalent to a pre-tax salary raise of $20000 - about 10%.

          > If you can give up some of the ego stuff, you can live just fine in the Valley.

          Preach on, brother. You just got yourself a 10% raise, with zero change in your standard of living. (Well, apart from no longer "just looking around" at Fry's, but hey, we all gotta make sacrifices. I'd spend less time "just looking around" at Fry's too, if someone was giving me a $20000 raise for it :-)

          Suggested summer read: The Millionaire Next Door [washingtonpost.com]: Surprising Secrets of America's Wealthy.

        • haha (Score:5, Insightful)

          by geekoid ( 135745 ) <dadinportlandNO@SPAMyahoo.com> on Friday July 25, 2003 @05:32PM (#6535723) Homepage Journal
          I don't want to hear from somebody who makes 200K a year. Boo hoo, don't care.

          try cutting back on 60K a year, thats a whole new ball game.

          Its unbeleiveable that some who makes 200K a year doesn't understand that, and lies to his wife.

          Last month I bought 1 latte, and felt guilty for it.

          By ego stuff I assume you mean food, day card insurance and housing, cause buddy, thats all some of us have these days.

          • Re:haha (Score:3, Insightful)

            by ces ( 119879 )
            try cutting back on 60K a year, thats a whole new ball game.

            I hate to break it to you but at 60K/year you are still making more than 75% of all US taxpayers. In many parts of the country 60K is still a damn good salary.

            I suspect there are places you could probably cut down on expenses if you tried. Don't eat out, cook from scratch rather than eating frozen dinners, drop the cable or satellite subscription, don't spend money on consumer crap such as CDs or DVDs, etc. In other words buy only what you truel
      • I suggest we place a tax/fine on services that are outsourced to contractors ooutside the US. This is already done on goods that are imported. It helps maintain the lifestyle we enjoy here. It also encourages companies to keep the jobs within the country. Why can't we do the same w/ white collar jobs?

        We're shooting ourselves in the foot when we allow foreigners to come over to our schools and run our gas stations. We educate them and then send our jobs to their doorsteps? We support them with food and cash

        • Re:It really is that simple. (Score:5, Insightful)

          by XorNand ( 517466 ) on Friday July 25, 2003 @06:55PM (#6536489)

          A major problem is that this knee-jerk, xenophobic reaction makes sense to a lot of well-intended people. I would really recommend that you educated yourself in the field of macroeconomics before you hold such a strong sentiment

          Markets evolve. Slashdotter's are pretty quick to point out that changing times are eventually going to put the RIAA out of business, yet they scream bloody murder when those same forces are changing an industry that's a bit closer to their personal botttom line. Sorry folks... ya ain't stopping technological evolution. Maintain (and improve) your value by constantly adapting and learning new things; please don't ask the government to get involved.

          • Re:It really is that simple. (Score:5, Insightful)

            by arkanes ( 521690 ) <<arkanes> <at> <gmail.com>> on Friday July 25, 2003 @08:33PM (#6537150) Homepage
            Theoretically, the government is supposed to care about the citizens. The argument for pupping corporations at the expense of the average citizen is that the extra profit for the corp is better for the economy.

            Now, if the corp is outsourcing everything, and then all those arguments go out the window - there's no reason for that company to be an American company then. It can incorporate in India and pay it's import taxes like everyone else. Fostering this behavior is dereliction of duty by our elected officials - getting involved here is what governments are for.

            Now, there is a larger question here of whether its a good idea to prop up a local industry, blah blah blah, but fuck, econonicists(whatever :P) don't really do so hot and predicting things anyway.

      • Re:It really is that simple. (Score:4, Insightful)

        by GlassHeart ( 579618 ) on Friday July 25, 2003 @05:04PM (#6535520) Journal
        even $100k is not really even a living wage in Silicon Valley

        A reality check is in order. $100,000 is roughly $66,000 after taxes, or about $5,500 a month. Housing will take a big chunk of that, where two decent bedrooms might run you $1,500 to $2,500. A car payment for a subcompact might be $500. Eating out for two meals each day ($25 a meal) would cost you another $1,500. Finally, add cable TV ($50), phone ($30), broadband ISP ($50), and you should still be able to save a bit.

        How is this not a living wage? Sure, you can live far beyond what I described, but that's not what a "living wage" means.

    • still gotta pay benefits (if you're in the US) (Score:4, Insightful)

      by e40 ( 448424 ) on Friday July 25, 2003 @03:57PM (#6534859) Journal
      but if you outsource to India you don't have to pay benefits. Remember that big settlement that MS had to pay, which gave contractors benefits? It was because current law (IANAL) says that you can't just hire contractors to get out of paying benefits.

      This all means that even if your area has 1/2 the salaries of The Valley, you'll still be paid significantly more than someone in India.

    • Re:It really is that simple. (Score:4, Insightful)

      by Anonymous Coward on Friday July 25, 2003 @04:02PM (#6534909)
      Oh come on its not at all about money, but control. I've worked at comapanies where they still expect back-room developers to wear a tie even though there is absolutely NO chance that a client will ever see them. That dangly piece of material serves absolutely no functional purpose other than to demonstrate total mindless conformity.

      Unfortunately most companies won't ever consider telecommuting because managers don't trust their employees enough. They want to have their staff where they can see how and what they are doing on company time.

      The old-fashioned management style won't change until hell freezes over, no matter how much money a company actually loses because of it. Most managers don't actually care about saving the comapny money because its not their money. Also the old-school managers will just refuse to believe it works because they don't want it in the first place.

      • Re: it's about control (Score:4, Informative)

        by King_TJ ( 85913 ) on Friday July 25, 2003 @05:18PM (#6535619) Journal
        I just modded you up. While yeah, it's *always* about money to an extent - I think you're right on the mark pointing out the "control" factor (which most managers won't readily admit to, either).

        Even when you finally manage to prove to your boss that you can do excellent work outside the walls of the company, he/she often still clings to outdated ideas of time management and employee tracking.

        (EG. The guy I work for right now has me work on all sorts of projects for him, including producing and editing a computer training video he wants to use in-house. I do all of the work on this video at home, and keep track of my hours. When I get back in to work though, he forces me to religiously punch in and out on a time clock! So basically, I end up with a time card full of handwritten notes about hours I worked outside the office, plus all the time-stamps on it when I came in. Ridiculous - but another case of a boss who can't quite adjust to giving employees control.)

    • Re:It really is that simple. (Score:5, Informative)

      by SoTuA ( 683507 ) on Friday July 25, 2003 @04:06PM (#6534942)

      Not as cheap as someone oversees. What is considered good money in India wouldn't be a living wage in Silicon Valley, or in most of the United States.

      Too true... while workers in the US might work cheaper while telecommuting instead of going to the office, they will need a salary that allows them to live, wich means a salary that let's them live paying US cost-of-living. For example, here in Chile a computer engineer (computer engineering in this country (at least in the Universidad de Chile) is more or less like a MsC in Computer Science, six years of studying everything from advanced calculus to economics to algorithms to AI to BD to Software Engineering to OS to...) goes out, fresh out of school, to earn about US$12k or 14k a year. Sounds like peanuts in the USA, but here it allows you to rent a place, pay your bills, buy your food, and car payments. Low cost of living where you are hiring means your workers will be satisfied for less. In no way you are ripping them off. I know *I* would be too happy with a US$24k/year job :)

      You can split the pay of one US worker and use it to hire more people, wich are capable of doing the work of that one US worker and more. It's only a matter of sending someone here to do face-to-face interviews so they can pick the ones who REALLY speak english.

    • If you want an idea of how cheap... (Score:5, Informative)

      by dido ( 9125 ) <dido&imperium,ph> on Friday July 25, 2003 @04:41PM (#6535275)

      Imagine earning the equivalent of US$160 every month. Can you folks in America live with such a wage? That's how much money I'm making right now, and while it's not exactly a lot, it's enough for me to pay the rent and utilities, buy enough food to for me and my girlfriend to eat well every day, and allow us to have a little more fun besides romping around on the bed. :) (it's not enough for us to consider getting married and having children though) What do I do that earns me such a pittance? I deploy and design enterprise Linux systems, and write custom Linux software as well. The fact that I work for a new and impoverished startup company skews things a bit, but the facts remain. Even as much as US$500 a month is considered a very good wage where I come from. Would you folks in America even consider such pathetic wages?

      I can buy a pack of cigarettes here for the equivalent of less than 50 US cents. A home-cooked meal of chicken or other meat costs around 75 US cents per person. My daily commute to work is slightly less than one US dollar. Water and electric bills amount to roughly US$8-$10 per month. Rent, US$60 per month. That's what life's like in the Third World, folks. Come by and visit sometime.

      • The Philippines (Score:3, Informative)

        by Mozo ( 22007 )
        BTW, dido is in the Philippines (not mentioned in the post).

      • Of course the only difference is in cost of living. All you have said is that you can have a similar lifestyle to an engineer here in the US, but at a fraction of the cost.

        As much as I hate to see US companies abandoning their own country, I think this is exactly what needs to happen. Economics demand that companies find ways to produce with minimal costs, and thats what they are trying to do.

        However, the problem I have is that these same companies are not giving their US employess a chance to compete i

  • lose-lose situation (Score:3, Interesting)

    by TWX ( 665546 ) on Friday July 25, 2003 @03:36PM (#6534634)
    One advantage of having your workers in your office, despite labour costs, is that you can throttle them when they screw up, and the laws that cover labor are known to you directly. Any additional contractual law is also easier to enforce. Also, you can physically chew them out if they keep screwing up, so you have more direct management control.

    If they work from home, you don't have nearly the same control as if you walked over to their cubicle to yell, and they're as expensive as they would be in India, to boot. So, you gain nothing by doing this.

  • Costs (Score:5, Funny)

    by forii ( 49445 ) on Friday July 25, 2003 @03:37PM (#6534640)
    (Cost of paying someone overseas + overhead costs of remote management + costs related to misunderstandings/errors + inconvenience) is still less than (Cost of paying you to sit in your underwear and "work" for 2 hours a day in between slashdot postings).

    • Re:Costs (Score:3, Funny)

      by Anonymous Coward
      Yeah, but compared to that, what's the advantage in making me sit fully clothed and "work" for 2 hours a day in between slashdot postings?! This is the question!

  • Two factors (Score:4, Informative)

    by TopShelf ( 92521 ) * on Friday July 25, 2003 @03:37PM (#6534643) Homepage Journal
    There are two obvious factors that favor foreign outsourcing to domestic telecommuters:

    1) The outsourcer is still likely to be much cheaper.
    2) The outsourcer is (presumably) an organized unit with a high degree of standardized processes, etc. that are difficult to implement across a telecommuting workforce.

  • Liability (Score:5, Interesting)

    by w42w42 ( 538630 ) on Friday July 25, 2003 @03:37PM (#6534644)
    This may not pertain to *everywhere*, but it is a common problem. A lot of the reason it hasn't taken off is that the parent company assumes liability for what happens to you or your 'office' while you're working. In many jurisdictions, they also have to inspect your work area, etc. I imagine it is a support and legal nightmare.

  • We need H1-Bs (Score:2, Funny)

    by Anonymous Coward
    We need more H1-Bs so that we can train
    them here. If outsourcing is to become
    a more important part of our economy, then
    we need to have Americans train the people
    who will be taking their jobs. This is just
    the way it is folks, get used to it.

    Besides, it'd be nice to go to McDonald's
    and order fries in English and have some
    one who can not only operate the cash register,
    but probably wrote the software for it.

    • Re:We need H1-Bs (Score:3, Insightful)

      by Angstroem ( 692547 )
      > We need more H1-Bs so that we can train them here.

      Slight misconception, what a H1B is used for...

      Companies don't go through the hassle of sponsoring a H1B to get trainees. Any B-type visa / visa waiver would be good for that as long as they don't get payed more than a moderate daily expense and leave after 60 days.

      At the company I work for, they only apply for H1B if they spot a promising foreign PhD who might fit into and benefit to the company research profile.

  • Not the same (Score:2, Insightful)

    by Wilebi ( 253774 )
    First, I'm pretty sure it *is* all about the money. Having said that, I don't think the workers receiving the outsourced work are telecommuting. My understanding (and correct me if I'm wrong) is that they are employed by a company and report to work at a physical location. They have supervisors looking over their shoulders making sure they're not surfing the web, reading slashdot (*cough, cough*). I don't think they're hanging out at home in their underwear watching Spongebob, which is/was the fear mana

    • But I_I_ telecommute (Score:5, Funny)

      by Hayzeus ( 596826 ) on Friday July 25, 2003 @03:42PM (#6534695) Homepage
      ... and I can assure you that this kind of goofing of is rarely a prob... oh -- wait a minute -- God I love the sound Squidward makes when he walks. Cracks me up every time. Hold on -- let me freshen up this martini and I'll be right back...

      • I telecommute too.... (Score:4)

        by Pharmboy ( 216950 ) on Friday July 25, 2003 @04:46PM (#6535348) Journal
        I have telecommuted for about two years now (4 days a week on average), but not as a programmer. (ok, some perl crap, but thats 3% of my job) I do the photography, website management, IT and general marketing for a smallish manufacturer/retailer. I find the trick is to make sure you sandbag your best ideas, and talk to the boss from home so he thinks you do your best work in your undies. Actually, I TELL him I do my best work in my undies, which is partially true since my best work happens at 7 am, before the office opens.

        There IS a bad side to telecommuting: The boss has a bad habit of calling me around 5pm on Fridays with "ideas" to work on over the weekend. He seems to think that since i work at home, I don't mind working weekends. Which brings up another point: When you work at home, its hard to get away from the office. Also makes it hard to drop off for a beer on the way home. Now I go camping when I can on the weekends to get out of the house, and get away from the temptation of "hey, I got an idea, lemme go write it down" and spending half the weekend working.

        Most people FAIL at telecommuting because the temptation to sit around all day watching cartoons is too great, and it's hard to get motivated without the normal rituals of getting up, shit/shower/shave/coffee/drive to get their brain in gear. I've been self employed alot (still own a pawnshop someone else runs) so self motivation isn't a problem, but I can see over half the 20-30 year old guys not getting anything done.

        On the other hand, it may teach you to code fast, to try to produce 40 hours worth of work in 8 hours on Monday so you CAN watch SpongeBob all week :p

  • Not working from "Home" (Score:3, Interesting)

    by rlsnyder ( 231869 ) on Friday July 25, 2003 @03:39PM (#6534666)
    Most of the outsourcing or moving of jobs overseas that I've seen (and what happened where I used to work) is not to a bunch of people sitting at home. It's opening up a whole office there, that functions just like an office anywhere, with managament in place, etc.

    I think the typical "telecommuting" sense is that people are working in isolation, typically from their home. I see that as only marginally more acceptable now than it was before. Some companies embrace it, some don't, some do a little.

    Jobs flowing overseas is something different. It's not just telecommuting on a grand scale.

  • Ironic, isn't it? (Score:4, Interesting)

    by stefanlasiewski ( 63134 ) * <slashdotNO@SPAMstefanco.com> on Friday July 25, 2003 @03:39PM (#6534668) Homepage Journal
    It's ironic. For years, many businesses didn't like employees to telecommute because of communication problems, and the boss couldn't keep an eye on you to make sure you were working. In my mind, telecommuniting 1-2 times a week is great, as long as you get the work done.

    And yet many of these same places have no problem outsourcing the same work half-way around the globe. Judging by the poor quality of some of the code I've seen from these outsourceing places (not all), there are a fair amount of communication issues, and then places aren't getting the work done properly.

    Double standard?

  • Just tell them you're outsourcing to India... (Score:5, Funny)

    by irritating environme ( 529534 ) on Friday July 25, 2003 @03:39PM (#6534669)
    Since the outsourcing companies are charging basically the same amount as if they had real employees, we should form companies that say they're outsourcing to India, but we're actually outsourcing to telecommuters in america.
    • The "mythical man month" comes to mind here...

      I've had two experiences with Indian outsourcing...

      In the first, I've recently been bidding (as an indie consultant) against a company in India that works for "$12 US per hour".

      Yet, when I assess the actual deliverables, I'm delivering every feature for about the same price as their bid, at $65 per hour! I'm pretty confident that I'll get the project.

      In the second, an Indian company was hired to perform a core deliverable for a venture company. I got in arou

  • You're willing to work cheaper, huh? (Score:5, Informative)

    by Schlemphfer ( 556732 ) on Friday July 25, 2003 @03:39PM (#6534670) Homepage
    From the article summary:

    I'll work cheaper if I can choose where I live and work. Must I leave my country to do so?

    Yep. And you must also accept a salary of around $5,900 a year, [dailymirror.lk] assuming you're relocating to India. You said you would be willing to work cheaper, but I doubt you'll want a job at that salary.

  • Outsourcing generally results in inferior product (Score:4, Insightful)

    by curtlewis ( 662976 ) on Friday July 25, 2003 @03:40PM (#6534674)
    I don't know what your experience is, but I've worked at several companies that relied on off-shore resources for some engineering. Sometimes it was collaborating on a project and in some cases entire mini projects were assigned to the off-shore engineers.

    In every case, massive re-engineering needed to be done.

    It sounds stupid to say this, but these guys just aren't as good as the seasoned tech people we have in the US. They can't see the big picture. They lack the comprehensive technical immersion that we in the US have. This immersion gives us a greater understanding of technology, how it works, how to architect it, etc. Most off-shore engineers were in non-technical jobs before they managed to go to college and learn how to program. They just don't have the background that we do. In 20, 50, 100 years I'm sure this technology gap will fade and perhaps even vanish, but certainly not in the short term.
    • It sounds stupid to say this, but these guys just aren't as good as the seasoned tech people we have in the US. They can't see the big picture

      In many cases, they can't see the big picture because they are only given small amounts of code to create or port rather than being given a larger perspective. One simply has to look and the many hundreds of programmers for IE to see this.

      They lack the comprehensive technical immersion that we in the US have.

      This may be changing faster than you might expect.

    • Quality doesnt matter as much as you think. (Score:4, Insightful)

      by YllabianBitPipe ( 647462 ) on Friday July 25, 2003 @04:10PM (#6534974)

      For example, you go to old navy and buy a ten dollar t-shirt that was sewn up in China. I can vouch for the fact that the quality is crappy and this shirt will get a hole, tear, break within a year or two. But who cares? It was ten bucks, and these things still sell like hotcakes. Heck they are so cheap when the shirt tears, you throw it in the trash and buy another one, and you're still spending less money than if you bought some cashmere T-shirt from Versace.

      You may think this comparison is apples and oranges, and I kinda do to, but I bet the CEOs and execs outsoursing the tech jobs don't.

    • I agree with your opinion on outsourcing results, but not your conclusions. You get back crap from overseas, but if the Indians outsourced a project to the US, they would get crap back.

      The problem is that you can't build a good system without access to the customer. I've been in software development going on 30 years, and I've never seen a spec that didn't have holes. And I've never seen a design that didn't have holes. If the coders are 12 time zones away from the designers/analysts/customers, then t
    • Most off-shore engineers were in non-technical jobs before they managed to go to college and learn how to program.
      Yeah, God save us from engineers with experience in non-technical jobs.
    • Sorry gang, I'd have to agree with this one as superficially elitist as it sounds.

      I've dealt with offshore outsourced developers and sysadmins on a few occasions -- and it's always been bad. My experience has been that the code or systems are always poorly done. It's also been my experience that many of these outsourcing companys claim to have knowledge and experience, but don't.

      Perhaps they are so eager to get the job that they overstate their experience even more than we do on our resumes (I'm in Canada

  • Whatever happend (Score:4, Insightful)

    by Ogrez ( 546269 ) on Friday July 25, 2003 @03:41PM (#6534683)
    To buying products made in the USA?? I can remember just a few short years ago when that made in the usa tag meant you got a better value for your dollar. The product might have still been made in a sweatshop, but it was a sweatshop in the USA!!.

    I think that the way to convince middle and upper management to stop going overseas for tech workers is to convince them that although it might cost more to employ workers in the US, you get more value for your dollar if you stay at home, you get better code, better communication, and better management of the project.

    Its time to stop whining about the jobs leaving, and find reasons to keep them here... and show IT managers why they should do things the RIGHT way, teach them about value, not just about bottom dollar.

    But thats just my 2 cents...

    • Re:Whatever happend (Score:3, Insightful)

      by geekoid ( 135745 )
      cause they don't care about the long term. If it loks good on paper now, they get there bonus, when all hell breaks loose, its do to 'communication' problem and time difference. In fact its almost always the same reason for screw ups, lack of clear specification from mamangement.

  • Management (Score:4, Interesting)

    by Reckless Visionary ( 323969 ) * on Friday July 25, 2003 @03:42PM (#6534691)
    While I'm sure most here will play up the labor issue, the clients of my company's outsourcing solutions are paying mainly for on-site management of staff, project evaluation and management, and centralized billing cost-structure. If you use telecommuters instead of an outsourcing solution, you're still responsible for lots of administrative work, like payroll and project management. The main advantage of outsourcing is not only cost management in a labor sense, but in an administrative sense.

  • Apples and Oranges (Score:5, Insightful)

    by Waffle Iron ( 339739 ) on Friday July 25, 2003 @03:42PM (#6534696)
    Bosses don't think of outsourcing as telecommuting because the outsourced employees aren't working from home. They are usually in an office being supervised by someone. Bosses can relate to that; they can't stand the thought of somebody sitting at home working in their underware.

    To the boss, the fact that the fully clothed workers' hourly wage is 1/4 that of the unshaven half-naked ones is another big factor.

  • Overseas labor is mucho cheaper than anything here (Score:5, Informative)

    by x_man ( 63452 ) on Friday July 25, 2003 @03:44PM (#6534711)
    The average Indian programmer costs $20/hr in wages and benefits while the average American programmer costs $65/hr.* Therefore you would need to take a 69% paycut in order to be competitive. You would be better off moving to your favorite part of the country and waiting tables.

    *Source: Arizona Republic, July 14 2003

  • Must I leave my country.... (Score:5, Interesting)

    by frovingslosh ( 582462 ) on Friday July 25, 2003 @03:44PM (#6534722)
    Must I leave my country to do so?

    I have a friend who used to live and work in Texas. He was spending 3 hours a day just commuting to and from work. Was not permitted to Telecommute.

    He got the bug to get out of there. Decided to move to Alaska. Once the company knew he was leaving, he was able to strike a deal and telecommute from Alaska!

    Makes absolutely no sense business wise, since now he is much too far from the office to come in even if he had too, but if American business always made the choices that made sense then Scott Adams would be out of work.

  • I think people misunderstand. (Score:4, Insightful)

    by mindstrm ( 20013 ) on Friday July 25, 2003 @03:45PM (#6534725)
    I get the feeling that most slashdotters, when they hear "outsourcing to India" picture some run down building with old computers and starving Indians in cheap work clothes who are happy to program for $2 an hour or less, working in sweatshop conditions.

    This isn't necessarily the case. India does have almost 1 billion people; not all of them are poor, or uneducated, and not all of them work for nothing.

    The fact is, a software house in india may produce work just as good as one in the US, at a fraction of the price, simply because the overall cost of living is so much less.
    Educated, intelligent programmers who appreciate their jobs, which are good by their local standards, and these sofwtare firms are competing on a global scale with every other firm out there. And winning.

    This isn't the garment industry.

    • Re:I think people misunderstand. (Score:5, Insightful)

      by thesolo ( 131008 ) <slap@fighttheriaa.org> on Friday July 25, 2003 @04:42PM (#6535288) Homepage
      The fact is, a software house in india may produce work just as good as one in the US, at a fraction of the price, simply because the overall cost of living is so much less.

      And then, as their economy picks up, and the standard of living increases, companies looking to spend the least on salaries will shut down their companies in India, and move them to a place where they can find cheaper work. Then Indian employees will feel the same pinch that many Americans are feeling right now. It's a cyclical pattern; by and large, companies will do whatever they can to get the work done for less. If that means moving jobs to a place with a lower livable wage, so be it.

      I bet for some rather unscrupulous companies, they would go to slave labor if they could.

  • It's been tried before (Score:5, Interesting)

    by vishakh ( 188958 ) <vishakh@yahGAUSSoo.com minus math_god> on Friday July 25, 2003 @03:51PM (#6534793) Homepage
    Companies did embrace telecommuting before. It did go through a phase when it was hot, but things eventually cooled down. I remember reading about this on my "Social Analysis of Computerization" class. The reasons given were that:

    - Teleworkers are harder to monitor.

    - Apparently, telecommuting hit productivity hard.

    - Workers aren't in office enough to get promotions.

    - In the office, there aren't enough people to keep ideas going.

    - Working at home can be distracting.

    - Telecommuting breeds resentment among co-workers since they are anonymous to each other and also because non-telecommuters might dislike others getting such a "rosy" deal.

    Ultimately, however, it came down to managers being distrustful of new ideas. They dislike having to put such a high level of trust on employees that they rarely see. They like things the way they are right now and wouldn't really like to see them change. Maybe after some time passes, when many current prospective telecommuters rise to managerial positions, we might see telecommuting establish a strong presence.

  • Money is more than salary (Score:5, Insightful)

    by Lumpish Scholar ( 17107 ) on Friday July 25, 2003 @03:53PM (#6534808) Homepage Journal
    Your salary is only about half of the expense you represent to your employer. You might be willing to work for half salary; would you be willing to work for half salary and pay for all your health care benefits? If you're not a telecommuter, your employer pays for the space you work in; are you willing to work in half a cubical? You need to have some administrative staff support; do you think the people who do those jobs are willing to cut their salaries in half? And work without benefits? (Yes, I know their jobs are at risk, too.)

    I'm not saying outsourcing is a good idea. I'm saying, if you want to understand it well enough to deal with it, you should understand it well.

    P.S.: Even if your employer cuts back, and makes you pay a bigger share, health care costs to employers in the U.S. are outrageously high. If you hear a story about a pharmaceutical company reporting record profits, and then a story about a company outsourcing its software development because programmers in the U.S. are too expensive ... well, it might not be a coincidence.

  • Does outsourcing work in the long run? (Score:4, Interesting)

    by Monoman ( 8745 ) on Friday July 25, 2003 @03:55PM (#6534831) Homepage
    I have not dealt directly with outsourcing but I have yet to hear of one long term success story.

    Most of the stories go something like:

    "Outsourcing saved us a bunch in the beginning but then they started charging us for every little change we wanted to make."

    IMHO outsourcing often is used to hide the fact that costs are out of control. Costs in areas that are not needed at all or are very ineffecient. Management never blames themselves so they decide that it must be the over paid techies.

    My roomate has a great idea. Outsource management! I hear tons of complaints about ineffective managers. Why pay managers so much when you can get a monkey to contribute nothing (ok maybe a little) to getting things done?

  • A telecommuting worker still needs to be managed (Score:5, Informative)

    by jjohnson ( 62583 ) on Friday July 25, 2003 @04:00PM (#6534882) Homepage
    The problem with workers telecommuting is that they need to be managed individually; the lure of Indian outsourcing is that someone else is managing them. In short, if the relationship with the Indian shop is set up correctly (specs go one way, code goes the other), the management overhead goes down as well as the cost. The interface is (theoretically) cleaner. I've never heard of an Indian outsourcing arrangement where the coders were in India and their immediate supervisor was in the U.S.

    The comparison with telecommuting is shallow, and not very good.

    • Re:A telecommuting worker still needs to be manage (Score:5, Interesting)

      by josepha48 ( 13953 ) on Friday July 25, 2003 @04:24PM (#6535106) Journal
      I'd have to agree with you. Problem that I have seen most, and from some of the other posts here, is that the outsourcing to India and other countries does not give you a better product, only a cheaper work force. In many cases it actually gives you a worse product, cause of the communication gap.

      IT is going the way of the auto industry. Now that many big companies see that they can get a software product from other countries cheaper they do.

      Telecommuting is vastly different. I don't like telecommuters. One or two days a week is okay, but any more becomes more of a hastle. Many peoplw will take advantage of this and work none standard hours or work to many hours to get stuff done, or work to few. I am working on a project now and 3 of the members work at home. One guy in the office created an object. At the same time one guy who was telecommuting created a similar object. Both do essentially the same thing. Had they both been in the office they probably would have talked about this and only one would have implemented it. Had management been more interactive they probably would have found out through a conference call. Problem is that managers in the US don't want to manage either, they want to make money and they don't care how it gets done. Most big companies don't give a rats a** about you working at home in your underware, or nude or even in your cube at the office, they want to make money, PERIOD. If they can get decent work out of someone overseas as compared to you for less which do you think they are going to pick?

      If all you want is a hamburger are you going to go and buy the $6 hamburger every day or are you going to get 2 x $1 hamburgers that will work just as well? If both will fill your tummy, and both taste like burgers, most people will go for the 2 x $1 burgers, thinking 'they are getting a deal'. Well think of yourself as the $6 buger and outsourcing as the 2x$1 burger. Most people go for the 2x$1 dollar burgers and save themself $4 in the process. Sorry but thats the way it is!

      The auto and manufacturing industries have gone the same way. Its okay to buy clothes that were made in Mexico by some child, cause it cost you less in the US. It doesn't really matter which car you bought, cause many of the parts are made OUTSIDE the US. Just go to auto makers web site and see how many companies are actually 1 company. A Ford pickup and Mazda pickup are the same truck, just with different labels on them, and there are MANY cars like that.

  • Wrong Answer (Score:5, Insightful)

    by Dr. Bent ( 533421 ) <ben&int,com> on Friday July 25, 2003 @04:10PM (#6534975) Homepage
    Telecommuting will not save your job.
    Working longer hours will not save your job.
    Working for less money will not save your job.

    If you think it will, then you're looking at this problem in the wrong way. You will never be able to beat the cost of offshore labor. Even if you could, you wouldn't want to. There's a reason it's so cheap...everything here costs 10 times more (rent, food, clothing, etc...) than it does in India and China.

    It's like trying to beat Tiger Woods at golf. Maybe...maybe...if you train really hard, sacrifice your family and friends, and everything you ever knew or loved, you might be able to beat him in a round of golf if you were having a good day and he was having his worst one ever.

    But a much simpler way to be him would just be to school his ass at Tiger Woods PGA Tour 2003' for the PS2. The game is a lot easier if you change the rules a bit ;-).

    The weakest point of outsourcing is the lack of communication. Developers in India can't communicate with customers here because:

    1) English is not their native language
    2) There's no face to face communication
    3) They're 12 hours ahead

    And if you can't talk to the customers, you can't solve new problems. Old problems are easy to solve. Those are the kinds of things that can be effectively outsourced. Building yet another e-business website with a shopping cart and inventory control; Creating one more payroll processing system based on an SQL database; It's the well understood problems, where the customers know exactly what they want, that can be outsourced. Everything else seems to fail.

    And that is the IT Industry's saving grace. Using new technology to solve new problems that are not well understood will always have to be done here, because solving those problems requires constant and effective communication with the "customer" (the users of the sofware).

    Software is slowly and painfully learning the lesson that manufacturing learned a long time ago: "Build where you sell". If engineers can't talk to the people who will be using thier products, they won't know what to build. Most problems in software are not well understood enough to be completely spec'd out by an intermediary party and passed onto the engineers for implementation. That is why lots of outsourcing ventures fail, and that is why the innovators here in the States will always have a job.

    • Re:Wrong Answer (Score:3, Interesting)

      by Ian Bicking ( 980 )

      You will never be able to beat the cost of offshore labor. Even if you could, you wouldn't want to. There's a reason it's so cheap...everything here costs 10 times more (rent, food, clothing, etc...) than it does in India and China.

      Not true! Rent is cheaper... but in part because people live in small buildings and apartments, with less services. Most material goods cost about the same, except food (though prepackaged food like Americans tend to eat isn't that much cheaper -- and raw foods in the US aren

  • Having telecommuted for a while... (Score:4, Informative)

    by YllabianBitPipe ( 647462 ) on Friday July 25, 2003 @04:26PM (#6535121)

    Let me just say that, as far as my experience was concerned, telecommuting wasn't that great. I was offered to telecommute one day out of the week, and after a couple weeks of that, I actually found myself going into the office on my telecommute days... to sum up:

    1. Technical issues. The VPN was butt slow. Even over DSL the whole process of logging in and getting simple stuff to happen was a pain in the ass. They gave me a laptop that was nowhere near as fast as my work computer, plus, because of the VPN and paranoia, I had to do all work on the laptop, not my home box. Then, some days I couldn't log in for hours. I would actually prefer working on the work box since everything would get done twice as fast.

    Totally distracting. Had the TV going, music playing, couldn't resist the urge to do household chores, etc. I'm honest when I say my productivity was likely reduced by 25% just from stupid distractions and the basic "hey, the boss ain't here, I'll post on slashdot again..." etc.

    Lonely. I was surprised, but it sucked not being around other co-workers, even just for one day. If you want a quick answer on something you can't just walk to their cube. Have to call them up, inevitably leave a voice mail, or email, etc. The back and forth probably wasted an hour every day I telecommuted.

    Team gets fragmented. Our telecomute schedule was like a rotation, so every day of the week one or two people would be out of the office. It made it harder to schedule meetings, also, I seriously think workflow would be slowed, because someone would be "working from home" and people would figure, well, I'll just ask this question tomorrow when I can speak to them face to face (procrastination).

    So, on the surface telecommuting sounds like a sweet deal, but I found it problematic. And if I were to take a pay cut for telecommuting? No way. I'd go to the office anyday. Your mileage may vary but I urge anyone to actually TRY telecommuting for a while before assuming "working from home" is such a holy grail.

  • Three reasons: Money, Money, and Money (Score:5, Insightful)

    by RalphSlate ( 128202 ) on Friday July 25, 2003 @04:31PM (#6535189) Homepage
    Here's a quote from the an article [newsforge.com] previously referenced on SlashDot:

    IDC warns that Bangalore, India's primary IT hub, may no longer offer the world's best IT outsourcing value; that the infrastructure there is saturated; and wages for skilled workers are being bid up, with many new grads demanding annual salaries of $4,000 (USD) or more -- not only in Bangalore but all over India.

    Oh my God. The nerve of those Indian developers demanding more than $4k/year. No wonder companies are turning to Romania and China. They're obviously less greedy in those countries.

    Can you cut your salary demands from $75k to $4k, probably with no health, pension/401k benefits? If you can't, then the argument for telecommuting is moot because someone else will do your job for a hell of a lot less than you will.

    I know a lot of Slashdot readers are in favor of globalism, but I don't think they're prepared for the effects of it. Unless you're a plumber or electrician, you better get used to a wildly lower salary and standard of living, because if your job can be sent overseas, it will be, due to this type of astromonical savings.

    Not just IT -- engineers, benefits administrators, architects, analysts, animators, call centers, they're even shipping radiologist work overseas because someone in India can read X-rays just as well as someone in NYC.

    We won't see the alleged benefits of globalism for decades, so there is probably a long stretch of very rough waters in our future, where entire industries will be eliminated almost overnight by offshoring, and the economic balance of many regions of the US will be ripped to shreds.

    The problem is that the change is just too fast to react to. IT is still a relatively new field; when I attended RPI 10-12 years ago there were really no IT courses being taught, it was all CompSci -- data structures, etc. The IT industry as a career has ramped up and burned out in a span of about 10-15 years. That's about 1/5 the length of a person's working years.

    How can someone completely retrain themselves every 10 years, when retraining means starting from the ground floor both salarywise and knowledgewise? I'm not talking about evolving, like moving from mainframes to PC's. I'm talking about moving from being a programmer to being a lawyer or an accountant.

    How can anyone prepare for a career when there's a significant chance that the career could be totally obliterated in as short a period as 5 years.

    Ralph
  • One troublesome fact unvoiced in these discussions over why some companies might outsource jobs is the fact that the government of California has made it prohibatively expensive to employ people there, with the result that businesses are leaving in droves.

    Take a look at this article in Fortune [fortune.com]. With it's high taxes it's long been more extensive to do business in California than elsewhere, but Governor Gray Davis and the Democratic-controlled legislature have enacted so many costly new taxes and regulations that businesses have finally had enough.

    A few tidbits from the article:

    • "The state has lost 289,000 manufacturing jobs since 2001."

    • Davis and the legislature have approved new legislation that will increase some businesses' costs per worker "by $4,000 to $5,000 a year."

    • "The legislature made workers' compensation more expensive by mandating a large increase in benefits. California businesses now contribute the highest premiums by far per $100 of employee wages: $5.85, vs. a national average of about $2.50. Yet instead of cutting costs, as other states have done, the legislature recently raised maximum benefits by 71%, from $490 per week in 2002 to $840 in 2005. Countrywide and Verizon both pay four to five times more in workers' comp per employee in California than in Texas."


    I have a programmer friend in California that was bemoaning this very negative business atmosphere last week in reference to this article. [signonsandiego.com] "In 2001, Abrahamson said, South Coast Building Services paid $500,000 to insure its workers for on-the-job injuries. A year later, the company's bill more than tripled to $1.7 million. This year, the tab nearly tripled again to $4.8 million, enough to erode the firm's profits on its $33 million in revenue."

    Quoth my friend "I knew it was bad, but I had NO idea it was THAT bad. 1000 employees, and $4.8 million in workmans comp. Holy fuckin' cow! No *wonder* it's so damned hard to find a job!"

    During the Internet boom, the Davis administration spent money like drunken sailors rather than laying the groundwork for sustainable growth. Now it looks like they may finally have suceeded in killing the golden goose.

  • Cheap Labor Conservatives (Score:3, Insightful)

    by spun ( 1352 ) <loverevolutionary&yahoo,com> on Friday July 25, 2003 @04:43PM (#6535294) Journal
    I saw this phrase on a website [countryjoe.com] the other day. It really explains a lot. Right-wing ideology is based on getting people to work for less. Cut social programs so they have no safety net. Lower minimum wage. Get rid of worker safety laws, trash environmental laws, anything to get cheaper labor. Right wingers are anti-prosperity: prosperity for all would remove their source of power.

    Here is a reprint of the main part of the post I read:

    Right-Wing Ideology in a Nutshell

    When you cut right through it, right-wing ideology is just "dime-store economics" - intended to dress their ideology up and make it look respectable. You don't really need to know much about economics to understand it. They certainly don't. It all gets down to two simple words.

    "Cheap labor". That's their whole philosophy in a nutshell - which gives you a short and pithy "catch phrase" that describes them perfectly. You've heard of "big-government liberals". Well they're "cheap-labor conservatives".

    "Cheap-labor conservative" is a moniker they will never shake, and never live down. Because it's exactly what they are. You see, cheap-labor conservatives are defenders of corporate America - whose fortunes depend on labor. The larger the labor supply, the cheaper it is. The more desperately you need a job, the cheaper you'll work, and the more power those "corporate lords" have over you. If you are a wealthy elite - or a "wannabe" like most dittoheads - your wealth, power and privilege is enhanced by a labor pool, forced to work cheap.

    Don't believe me? Well, let's apply this principle, and see how many right-wing positions become instantly understandable.

    Cheap-labor conservatives don't like social spending or our "safety net". Why? Because when you're unemployed and desperate, corporations can pay you whatever they feel like - which is inevitably next to nothing. You see, they want you "over a barrel" and in a position to "work cheap or starve".

    Cheap-labor conservatives don't like the minimum wage, or other improvements in wages and working conditions. Why? These reforms undo all of their efforts to keep you "over a barrel".

    Cheap-labor conservatives like "free trade", NAFTA, GATT, etc. Why? Because there is a huge supply of desperately poor people in the third world, who are "over a barrel", and will work cheap.

    Cheap-labor conservatives oppose a woman's right to choose. Why? Unwanted children are an economic burden that put poor women "over a barrel", forcing them to work cheap.

    Cheap-labor conservatives don't like unions. Why? Because when labor "sticks together", wages go up. That's why workers unionize. Seems workers don't like being "over a barrel".

    Cheap-labor conservatives constantly bray about "morality", "virtue", "respect for authority", "hard work" and other "values". Why? So they can blame your being "over a barrel" on your own "immorality", lack of "values" and "poor choices".

    Cheap-labor conservatives encourage racism, misogyny, homophobia and other forms of bigotry. Why? Bigotry among wage earners distracts them, and keeps them from recognizing their common interests as wage earners.

    • I wouldn't pigeon-hole all "right-wingers" in that manner. In "Fast Food Nation", sure, the majority of companies seem to follow in that mold, but what surprised me was a company called "In 'N Out". When I was in Cali, this was by far my favorite hamburger chain, and now I have even more reasons to like them.

      Basically, instead of relying upon poor schmucks with little to no education and paying them "peanuts", they decided to give their workers an actual "competitive" wage and pay their managers *real* s

  • You do not need to go to india for cheapness (Score:3, Interesting)

    by aepervius ( 535155 ) on Friday July 25, 2003 @05:44PM (#6535811)
    I mean I live in germany, I am a computer engineer, and earn about 36K brut (about 19K net) (*). I am nearly as competitive as India !!! Or , from my side of the pond, 75K is overpaid. Your call.


    (*) coding on a mainframe for a big company

  • You missed something important.... (Score:3, Interesting)

    by ComputerSlicer23 ( 516509 ) on Friday July 25, 2003 @06:18PM (#6536038)
    The poster missed something incredibly obvious.... All the cheap labor in India is in the same room. When 2 outsourced employees need to talk, one walks to the other. They work in the same timezone, and more then likely work in the same building.

    This makes tons of stuff easier. Like oh, say, when the network is down between you and the world, you can't telecommute. The guys who all work in the same building, can probably press on, continue to have meetings, and make progress on work. Where you are stuck.

    Oh, confidential paperwork doesn't leave the building. They don't need nearly as many VPN connections. There is no one making a connection from a Dynamic range of IP's that are outside of the network operations control.

    Telecommuting, you aren't in the same building with 500 co-workers. Now if the started hiring lone guys, on their own island in India, yeah, you've got a point. However, your wrong, wrong, wrong.

    What I really don't understand, is why they don't start transplanting business from major cities. Look, there is no god damn reason in the world you have to be in downtown SF to write software. You don't need to be in LA, SF, NY, or any other major city. You can get an amazing number of resouces in much cheaper places then a lot of companies feel they need to be in. It's just plain silly.

    Kirby

  • Telecommuting can save big bucks if done right (Score:4, Insightful)

    by rollingcalf ( 605357 ) on Friday July 25, 2003 @06:56PM (#6536494)
    The savings from telecommuting could rival savings from offshore outsourcing, if the telecommuting is done en masse.

    If they made the almost the entire IT department telecommute, they could reduce their real estate and other physical overhead costs drastically. They would just need a room for the servers, a few floating terminals lined up side by side like an Internet cafe (ie no space-hogging cubicles) for when people do come in to the office, and a set of meeting rooms so teams can meet once or twice a week.

    It would also need a different approach to management and more strict rules regarding being at your home desk during office hours -- there is no good reason for not answering your phone for an hour, because you're not going to be away at somebody else's cubicle discussing anything.

    Combine the reduced real estate costs with the reduced salaries that they can pay because people would accept less money in order to telecommute, and US employees wouldn't cost much more than Indian programmers when taking total costs into consideration. (Remember that although Indian salaries are only 10-20% of US salaries, their physical overheads are often the same or more than in the US - for example look at the office real estate costs in Bombay compared to Boston http://www.forbes.com/global/2002/0527/066sidebar1 _2.html. [forbes.com] The result is that Indian programmers are 1/3 - 1/2 as expensive as an in-house US employee when counting total direct costs, not as low as 1/10 - 1/5.)

    Then after you add in the undocumented and indirect costs associated with outsourcing that result from differences in language, time zone, and culture, and other factors like the relative lack of company-specific business knowledge, you're probably saving MORE by telecommuting than by outsourcing.

    But outsourcing is popular now not because they are really interested in saving money; it is happening because it is the latest fad. If they were really interested in saving money, this big outsourcing wave should have been happening 5 years ago when American programmers were hard to find and expensive to keep, and Indian programmers were much less expensive than they are now. But no, the fad back then was to throw megabucks at anything that touched the Internet, and pay six figures for any semi-talented web programmer. They jumped on the dotcom bandwagon in pursuit of dubious profits ... and we know what happened with that. Now they are jumping on the offshore bandwagon in pursuit of dubious savings.

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