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Software Outsourcing

February 25th, 2004 · No Comments

Another day, another story on software outsourcing from the US to India. Business Week takes a look at it from the eyes of a US and Indian software engineer.

U.S. software programmers’ career prospects, once dazzling, are now in doubt. Just look at global giants, from IBM and Electronic Data Systems to Lehman Brothers and Merrill Lynch. They’re rushing to hire tech workers offshore while liquidating thousands of jobs in America. In the past three years, offshore programming jobs have nearly tripled, from 27,000 to an estimated 80,000, according to Forrester Research Inc. And Gartner Inc. figures that by yearend, 1 of every 10 jobs in U.S. tech companies will move to emerging markets. In other words, recruiters who look at Stephen will also consider someone like Deepa — who’s willing to do the same job for one-fifth the pay. U.S. software developers “are competing with everyone else in the world who has a PC,” says Robert R. Bishop, chief executive of computer maker Silicon Graphics Inc.

For many of America’s 3 million software programmers, it’s paradise lost. Just a few years back, they held the keys to the Information Age. Their profession not only lavished many with stock options and six-figure salaries but also gave them the means to start companies that could change the world — the next Microsoft, Netscape, or Google. Now, these veterans of Silicon Valley and Boston’s Route 128 exchange heart-rending job-loss stories on Web sites such as yourjobisgoingtoindia.com. Suddenly, the programmers share the fate of millions of industrial workers, in textiles, autos, and steel, whose jobs have marched to Mexico and China.

This exodus throws the future of America’s tech economy into question. For decades, the U.S. has been the world’s technology leader — thanks in large part to its dominance of software, now a $200 billion-a-year U.S. industry. Sure, foreigners have made their share of the machines. But the U.S. has held on to control of much of the innovative brainwork and reaped rich dividends, from Microsoft to the entrepreneurial hotbed of Silicon Valley. The question now is whether the U.S. can continue to lead the industry as programming spreads around the globe from India to Bulgaria. Politicians are jumping on the issue in the election season. And it will probably rage on for years, affecting everything from global trade to elementary-school math and science curriculums.

Countering the doomsayers, optimists from San Jose, Calif., to Bangalore see the offshore wave as a godsend, the latest productivity miracle of the Internet. Companies that manage it well — no easy task — can build virtual workforces spread around the world, not only soaking up low-cost talent but also tapping the biggest brains on earth to collaborate on complex projects. Marc Andreessen, Netscape Communications Corp.’s co-founder and now chairman of Opsware Inc., a Sunnyvale (Calif.) startup, sees this reshuffling of brainpower leading to bold new applications and sparking growth in other industries, from bioengineering to energy. This could mean a wealth of good new jobs, even more than U.S. companies could fill. “It requires a leap of faith,” Andreessen admits. But “in 500 years of Western history, there has always been something new. Always always always always always.”

I would agree with what people like Marc Andressen say. Change in industries is natural. It is only that the US software industry had been largely isolated from the impact of globalisation and digitisation. I also think we in India are partly to blame for all this noise that’s happening. We should just go about doing the work quietly rather than shouting that India is IT. Just get the work done with less talk.

Tags: Emerging Markets

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