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  • Telemigration

    Posted by David Foster on May 26th, 2019 (All posts by )

    It has often been asserted that the US doesn’t need to worry overmuch about our position in Manufacturing, because Services are the future and that is where we will have the most competitive advantage.  And, indeed, the balance of trade in services is more favorable than that in the goods-producing industries: for 2018, exports of services totaled $821 billion, whereas imports of services were only $557 billion.

    However, while imports of services are today small compared with imports of goods, which for 2018 were almost $2.7 trillion, it would be a mistake to conclude that services businesses and services jobs are immune to offshoring.  Indeed, for many types of services, offshoring/exporting is easier than the offshoring/importing of goods:  there are no transportation issues, and, in the case of imports to the US, there are no tariffs at all.

    Telemigration…the term was introduced by Richard Baldwin in his book The Globotics Upheaval…is the ability to have remote workers doing things that previously would have required their physical presence.  Obviously, the ability to do this has been greatly enhanced by the availability of the Internet and other forms of high-bandwidth low-cost communications.  Today, medical images and legal documents are being reviewed in low-cost-of-labor countries.  Software is being developed for American companies in countries around the world.  Offshoring of clerical operations has been practiced by US firms for a couple of decades, and, of course, the offshoring of customer service is common.

    Baldwin also argues that telemigration will be greatly enhanced by the availability of machine translation technology, especially Google Translate.  I think he may be overstating the case here–from what I’ve seen, the quality of GT translations is highly variable.  Not sure how well this approach would work in facilitating the interaction that is often required among team members to create something or solve a problem, and I am sure I wouldn’t want to trust it exclusively for something like, say, translating the functional specifications for a life-critical avionics system to be programmed by non-English speakers.

    But there are a lot of English-speakers in the world, and a lot of activities in which fluency in a common language is not essential.

    One area in which a lot of telemigration seems to be occurring is in software development and maintenance.  Here for example, is a company which acquires application software companies and offshores much of the ongoing work (which presumably includes incremental product enhancements as well as problem-fixing) to contract programmers: company’s chief recruiter asserts that the current cloud wage for a C++ programmer is $15 an hour. As the Forbes article notes, that’s what Amazon pays its warehouse workers.  (Well, at least in the US–and $15/hour for a programmer in, say, India is surely worth a lot more than $15/hour in this country.)  What makes this story particularly interesting is that the founder/CEO of the company was noted, in his earlier incarnation in a different software business, for paying software people very well indeed and going to great lengths to recruit them.

     

    The use of telemigration by software product companies has not been limited to maintenance/enhancement activities:  remote workers are also frequently used for new-product development as well.  Russia and Eastern Europe are popular locations for this function: the labor costs are by no means the lowest available, but cheaper-than-US costs combine with the availability of people with excellent skill sets.

    Telemigration as discussed above mostly involves the work of symbolic analysts…I believe the term originated with Robert Reich…in any event, he defined in terms of jobs which involve the manipulation of symbols, whether those symbols be spreadsheets, computer code, or images intended for advertising or computer games.  While there has been much talk about symbolic analyst work representing the “jobs of the future”, it has been too infrequently noted that–despite all the improvements in transportation and the reduction of trade barriers–symbols can be transported globally much faster and at lower cost than can physical goods.  Robert Reich is cited here as saying that symbolic analysts are likely to dodge the offshoring bullet as long as they do not get trapped into job functions that are routinized.  But while managing hard-to-measure functions like creative software development may be more difficult when the people are not all in one place and fluent in a common language, current evidence and trends suggest that it is by no means impossible.

    There is also a kind of services offshoring which is not about symbolic analysts but is still economically important and likely to become more so:  the offshoring of maintenance of complicated physical systems.  In the airline industry, a significant amount of heavy maintenance is already offshored to lower-labor-cost countries:  evidently, the cost of flying the airplane to another country or continent for a periodic inspection or major equipment replacement/upgrade is outweighed by the labor cost savings.

    I don’t have any particular conclusions to draw from all this, except that phenomenon of services offshoring is an important one, and, IMO, not much-discussed or well-understood.  Also, more evidence that credentialism and chasing whatever is currently hot do not necessarily represent good career strategies.

     

     

     

    36 Responses to “Telemigration”

    1. Mike K Says:

      I sometimes ask people doing those back office jobs, like bank services, where they are, Some India and some Philippines.

      Lots of call center robocalls from India. One the other day, the guy could barely speak English. But they know my first name. How?

    2. Brian Says:

      In my experience there are a small number of programmers who are superstars who can outperform any number of your average programmers–I would say 10x, but I honestly think it’s more like 100x. So one business model would be to find those superstars and build a company around them, producing top quality product for top quality dollars, for a small number of discerning customers.
      But just as in the food industry, where there are a small number of premium restaurants that hire the very best and charge the very most, and a large number that are just trying to produce a product that is “good enough” and so need lots of people with low skills, there is plenty of software produced that doesn’t require elite programmers. And being a programmer with the skill set to work at one of these companies means you will not be employable if you are in the US and demand a US-level salary.
      I think everyone should learn the basics of computer programming for two reasons–1, programming requires you to lay out what you want in a coherent, logical way, and that’s very important to teach; and 2, it needs to be hammered home to everyone that computers are tools intended for the service of humans, not vice versa. But it should not be taught in the expectation that it will lead to employment, because that is very unlikely, and programming jobs would make most people miserable. As will/do most office jobs, actually.

    3. Bill Brandt Says:

      When I finished at a programming school in San Diego in 1981, I thought I had a profession for life. Mainframes were still King, with some inroads by the mini computer (a class started by Digital Equipment that is now gone – along with Digital). In the era of mainframes the programmers were like the high priests.

      I think it is a 2 track system here – the kind of programming that mgt derisively refers to as “coders” – the bulk of end user and consumer programming – can be done off shore but the high end systems programming – still here.

      Then again too the kind of programming I expedience regularly – where it is obvious the programmers never actually had to use their creation in real life – explains a lot.

      I have a friend who I could call the top 1-3% of programmers – lives in Idaho and programs for a company in Houston. Systems programming.

    4. Gavin Longmuir Says:

      There is an element of the “Tragedy of the Commons” in offshoring. It is advantageous in the short-term for the business-woman who sends work overseas; but by doing so, she deprives the people who live on the other side of the railway track of jobs.

      One scenario is that the unemployed people from the other side of the tracks eventually come and beat the business-woman up, steal everything she has, and burn her house down. Physical crime will not be outsourced! Although the Usual Suspects seem quite willing to import shady characters to do the crime that Americans just won’t do.

      Another scenario is that rates of pay steadily get equalized across the world, at a much lower rate than currently seen in the Western world. That in turn means the cost of living in the West will have to drop to a much lower rate. Consequently, the prices her company can charge will drop, along with the profits and ultimately her own pay. Her investments in rental property will turn out to be duds, and her stock portfolio will decline drastically. The business-woman’s standard of living eventually drops along with that of the people on the other side of the tracks.

      Yet if that business-woman sees the long-term issues with outsourcing and refuses to do it, she will go out of business as other less-scrupulous business-women outsource and undercut her.

      Open borders make the “Tragedy of the Commons” inevitable. Yet closed borders are impracticable. And the best solution of bringing everyone in the world up to current First World standards would require so much more energy that it is impossible without the wide-spread adoption of nuclear power — which the Usual Suspects will fight tooth & nail.

    5. David Foster Says:

      One other thought: As cloud computing becomes the predominant way of delivering specific applications, as well as generalized computer power, the location of the major capital equipment AND the energy that supports it can be different from the location(s) of the main part of the workforce. Server hardware can be acquired by a company with low cost of capital and located in the Pacific Northwest, where electricity costs are low, with the development staff located in, say, the Ukraine.

    6. David Foster Says:

      Bill….”I think it is a 2 track system here – the kind of programming that mgt derisively refers to as “coders” – the bulk of end user and consumer programming – can be done off shore but the high end systems programming – still here.”

      But there are plenty of individuals with high-end programming abilities who live in places other than the US. The issue, I think, is not so much whether the people are Americans or non-Americans, but rather whether proper collaboration & communication can take place if they are not all in the same place and/or in the same place with the marketing/product-planning people who specify what the product is to do and the sales/customer-service people who provide feedback on what is good and what isn’t.

    7. Trent Telenko Says:

      David,

      To borrow a phrase from scifi author John Ringo, the collapse of extended “fiddly bit” supply chain of intermediate goods that quality 3D printing brings means that “In-sourcing” and “local” is the wave of the future, not “telemigration.”

      For an example of that “in-sourcing” trend, see:

      https://www.fabbaloo.com/blog/2019/5/16/why-is-stanley-black-amp-decker-so-deep-into-3d-printing

      Stanley Ventures expects parts manufacturing to be re-integrated into their company’s (Black and Decker tools) not so distant future production and assembly processes.

      The internet, radio frequency beacons and the ISO container are the warehouse for the extended supply chain of “fiddly bits” for “Just in Time” production.

      Additive Mfg/3D Printing just removed all the multi-organization transaction costs, transportation costs and quality issues of all the intermediate suppliers of “Just-in-Time” and it is replaced by a vat of print media and “just enough/close enough” 3D/AM capital equipment. Capital equipment that is orders of magnitude more scale-able & mobile than a mass production set ups of old.

      Lower transaction costs favors “local’ over “telemigration” skilled human talent.

      We are looking at full-on disruptive technological change on the order of electrification.

      Short form:

      There are going to be lower barriers to entry for manufacturing anything, anywhere, with shorter times to market. More profit with 3D/AM will be made in areas of higher social order, lower corruption and lower regulatory kudzu.

      All the existing power structures built up on the basis of the old industrial tech supply chains are going to get re-ordered locally, nationally and internationally.

    8. David Foster Says:

      Trent—Perhaps counterintuitively for many people, the case for localizing manufacturing work is in some ways stronger than case case for localizing “symbolic analyst” work. In the case of physical goods, transportation costs matter. Transportation *delays* matter even more, and have major implications for inventory management and product flexibility.

      Energy costs matter a lot for many kinds of manufacturing…not all…and they also matter for the location of server farms. BUT, as noted above, the server farm location doesn’t have to be the same location(s) as the majority of the people.

    9. Trent Telenko Says:

      David,

      Another thing for you to consider here.

      I remember 2003, when Arianespace had driven the Delta, Atlas and Titan American space launchers out of the commercial launch market and their lobbyists were knocking on the DoD’s door for launch contracts.

      Space X is the first aerospace company to make 3D Printing/Additive manufacturing the heart of its production processes. Not because they wanted to, but because it was the only way to get around the established aerospace players — like rocket engine maker Aerojet — who were busy losing to Arianespace.

      The ability of Space X to move faster since then to meet market needs is largely due to that intuitive leap into “Produce it ourselves” via 3D printing to avoid the entrenched “fiddly bits” makers in the aerospace world.

      Space-X does not do a $10 billion dollar program with sub-contractors in the states and districts of all 26 important House and Senate chairmen.

      They do almost everything except launch and recovery in one place with 3D/AM industrial processes.

      This is the industrial future.

    10. David Foster Says:

      Relevant case in point: a startup with 600 employees in 54 countries (really?) and no headquarters.

      https://www.wsj.com/articles/the-office-of-the-future-is-no-office-at-all-says-startup-11557912601

      I think they are probably carrying this a bit too far.

    11. Trent Telenko Says:

      David,

      This is a 3d/additive Manufacturing article for you to read and consider:

      Paul Benning Chief Technologist 3D Printing at HP Predicts 3D Printing Developments in 2019
      https://3dprint.com/232470/paul-benning-chief-technologist-3d-printing-at-hp-predicts-3d-printing-developments-in-2019/

      Simulation tools for iterative design of a part before a print is a really good idea.

      Machine AI monitoring of the print as it is being executed is much better. That is where machines are better Quality Control than people.

      Having the engineers interactively working with the AI from simulation through the print is really interesting as a concept.

      I don’t think the same AI could do both simulation and print control (lots of reasons).

      Printing a working stress gage into the part as it’s printed has a whole lot of implications in high performance applications if there is also AI monitoring involved. Getting that concept to work will be a real trick with huge pay off in -reliable- top end performance.

      However, I think this comment to the article/interview link above was far better than the interview in it’s implications for the future.

      See:

      James K McMahon
      At the beginning of the 3D printing era ( the rapidprototyping phase), a sale could be lost because the finished model wouldn’t meet tolerances or the surface quality was poor. This problem still exists in 3D printing today. Machines are smarter and processes are more automated to achieve engineering objectives. Perfection is the ultimate goal. This seems to be today aim. Then the issue of speed and cost will pop back to the top of the list. I am still looking for the next technology that will allow small production runs of perfectly made parts in a reasonable time at a fair cost. There will be compromises but quality is not one of them. It also will not be 100% additive technology.

      All of the above, for me, argues local human presence in 3D/AM mfg process, as opposed to the “telemigration” model.

      YMMV.

    12. Trent Telenko Says:

      >>a startup with 600 employees in 54 countries (really?) and no headquarters.

      Doing performance appraisals and other human resource tasks in this company will be a b*tch.

      More than 54 different tax and regulatory regimes, every pay period?

    13. David Foster Says:

      Trent…I suspect that “employees” in this context really means “contractors.”

    14. David Foster Says:

      Trent, just to clarify: “telemigration” as I am using the term does not apply to the direct production activities of manufacturing…at least until you can send the manufactured part or complete product down a wire…though it certainly can apply to the design of the item and possibly of the manufacturing process for making the item.

      We may well see companies in which the manufacturing engineers designing the mechanical aspects of the product are in Russia (seem to be a lot of ME’s there) and in Taiwan for the electronics and software aspects, with the CAD models reflecting the parts and the assembly are electronically transmitted to a production facility somewhere in the US. Which is exactly the opposite of the common image of offshoring.

    15. yara Says:

      re: “US doesn’t need to worry overmuch about our position in Manufacturing, because Services are the future”. I first saw this argument in an editorial in Time (magazine) sometime around 1972-73 except replace “Services” with what amounted to “product creation and design”. I’ll leave it to others to determine the success or failure of that prediction. Apple certainly seems to have been able to do that pretty well.

      I was involved in three waves of IT outsourcing in the mid-2000 to the mid-2010’s. I worked with folks in Bangalore. Had my firm not retained me, I would have had the option to travel to India to train my replacement(s). When I was assigned my job and the attendant crew of Indian programmers, I told my boss I had two requirements, 1) they had to speak English well and 2) they had to be able to talk in something other than a whisper.

      The language issue/barrier is one of the sub-items David Foster refers to, i.e., “proper collaboration & communication”. There’s a cost associated with management of off-site resources that we, the boots on the ground sometimes replaced, talked about but that was never mentioned at all in the justification of that outsourcing.

      What I found was that the level of Indian programmers probably wasn’t a lot different than that of programmers in the US. It might have been a lower, but it’s been a long time since I worked with current college graduates from the US. I had some outstanding Indian programmers and some who were really nice people, but couldn’t convert a written specification into code to save their life. How much that was determined by my firm’s hiring practices and how much due to the immaturity of the Indian IT education, I can’t tell.

    16. Gavin Longmuir Says:

      David F: “We may well see companies in which the manufacturing engineers designing the mechanical aspects of the product are in Russia (seem to be a lot of ME’s there) and in Taiwan for the electronics and software aspects, with the CAD models reflecting the parts and the assembly are electronically transmitted to a production facility somewhere in the US.”

      OK — now, who is that company going to sell their product to in the US? Because who in the US is going to have a job and an income?

      One of the really Bad Ideas that came out of a misunderstanding of Keynes’ theories was that Demand/Consumption is all-important. A moment’s thought shows that in fact Production/Supply is the foundation of any economy. Cave men would have been quite happy to consume anything that was thrown at them — but they could not produce much beyond their next meal, and that is why they were cave men.

      Comparative Advantage get overplayed by free trade extremists, but the concept does have some basic value. If Russia can do a better job of designing mechanical products, all power to them. But the US had better produce something of equal value to trade to Russia for those mechanical designs. We are currently in a Never-Never Land where the US imports real goods & services and exports IOUs. It can’t last!

    17. David Foster Says:

      Gavin…but the value isn’t all in the design work; it is also in the production. Even with automation, it seems likely that there will be more people employed in the manufacturing of an item (including its components) than in the original design, depending on what the item is, of course. (and automation has been and is being applied to design activities as well as production activities)

    18. Gavin Longmuir Says:

      David — yes, there will always be a handful of people who are actually producing tradeable goods & services. Now, what happens to everyone else?

      If we look around the world, it is fairly clear that the great employment growth industry of the last several decades in the West has been — government, and government-related contracting. Productive jobs that have been lost to outsourcing & automation have been replaced by (generally non-productive) government jobs. Since we are probably at “Peak Government”, the question is — Where do we go from here to provide our countrymen with the dignity of work? And how do we pay for imports, if we can’t produce goods & services of equal value?

      Most of us probably subscribe to the idea that a society is at its best when everyone is free to pursue his own best interest (under the significant constraint of doing so without interfering with anyone else’s opportunity to pursue his own best interests). Offshoring brings me back to the model of the “Tragedy of the Commons”. There is a substantial risk that businesses which pursue their own short-term best interests by offshoring & importing will ultimately impoverish everyone in the West — including their potential customers and thus eventually themselves. Consumers first have to be productive and earn an income before they can consume.

    19. David Foster Says:

      Gavin…for tradable, physical goods, you can limit the effect of the ‘tragedy of the commons’ (if tragedy is indeed is, a lot of economists, of course, would demur), via tariffs….but it’s not clear how workable this would be for symbolic analysis work. The US doesn’t now have any tariffs on service imports, and I don’t think we ever did….non-tariff barriers are used by some countries, of course, and France had some sort of limit on non-French movies…not sure if they still do. I believe some countries do have services-import tariffs, but they seem harder to implement than physical-goods tariffs.

    20. Mike K Says:

      But it should not be taught in the expectation that it will lead to employment, because that is very unlikely, and programming jobs would make most people miserable. As will/do most office jobs, actually.

      I was at the College of Surgeons convention a few years ago (when it was still in SF every three years) and saw a young surgeon who had written an excellent EHR for office use in Visual Basic. That must have been before Obamacare but I was very interested in EHRs at the time and was very impressed. It was far easier to use than the low bid products that came out of Obamacare.

      Even with automation, it seems likely that there will be more people employed in the manufacturing of an item (including its components) than in the original design,

      I agree even with 3D printing. There was an interesting story I saw yesterday about a young man who was homeschooled and during his teen years had also done some technical apprenticeships. He was applying for a technical job in some sort of high voltage equipment maintenance. He was turned down for the job as over qualified and advised to apply to engineering school. His tests scores were too high.

    21. CapitalistRoader Says:

      Automated manufacturing facilities don’t have huge OSHA/EEO overhead and are locating in the South where industrial electricity rates are lowest:

      Average Price of Electricity to Ultimate Customers by End-Use Sector

      China’s and India’s industrial electricity prices are quite a bit higher than the South Central US.

    22. Anonymous Says:

      Fundamentally real market wages and income are determined by productivity. Productivity is driven by relative scarcity of human and physical capital, technology and availability of resources. If the population of the US wants to be paid a premium for their labor effort they must have the human capital and deliver the effort that causes their productivity to be of higher value than others.

      Despite such labor productivity, if we place barriers on such things as resources (say petroleum, rare earth, timber, metals, water, etc.)and place differentially high costs of government (including disincentives to be producive workers), litigation and regulation on our national economy, we reduce our productivity in real terms and price our output higher than our comparative advantage would indicate.

      Comparative advantage is not a factor in specialization and trade, it is THE concept that explains it. We can voluntarily screw it up, but that’s on us or others who strangle the golden goose. When two or more goods or services have different opportunity costs in production for two or more parties, all parties are better off to specialize and trade. That does not mean they will be equally benefited by the exchange. One would think that there would likely be a leveling of benefit among the parties to the extent human capital and other inputs are able to change and or migrate based on competitive forces.

      As we have becoming less competitive, others have become more competitive. With decreasing transportation costs and rising importance of services and information flow, this is starting to level out standards of living. The increased productivity based on information flow and technology is raising the world standard of living more universally than what we have seen.

      This is not a zero sum game. We are not fighting over the production of some current and future output pie. We can reduce our comparative share by being stupid, but output will increase to the extent market incentives are allowed to function efficiently. The real threat to us is not what others are achieving. It is what we have been doing to ourselves.

      Death6

    23. Gavin Longmuir Says:

      Death 6: ” The real threat to us is not what others are achieving. It is what we have been doing to ourselves.”

      Agree absolutely. The US (and more generally the West) have put idiots in charge who strapped 50 lb weights on our backs before the marathon and are now trying to ignore the obvious fact that we are not keeping up with some of the other runners.

      Free traders who get excited about Comparative Advantage tend to forget about all the factors involved — and focus only on the short term benefit to some people of cheaper import prices today. If the child worker in Vietnam has access to the same capital equipment as the worker in the West, then it will be only a matter of time until everyone’s living standards decline to the level of the child worker in Vietnam. There are 7 Billion people in the world, and there is always someone who will do the job for less. Race to the bottom.

      Protectionism has problems. Free trade in goods & services has problems. Free movement of capital has problems. Free movement of people has BIG problems. International commerce is a difficult area, but one that is very important to all societies, even a hermit kingdom like North Korea. It deserves more careful consideration than it has had in the decades since WWII.

    24. MCS Says:

      I remember when “made in China” meant Taiwan because importing anything form the mainland was illegal. With “made in Japan” relegated to cheap toys off the racks in the dime store. Around ’66-’67 things were changing, A friend of my father’s that built short run electronics said that he had investigated having assembly done in Japan and found it would be too expensive.

      For pretty much the same period, we’ve been running a “disastrous” trade deficit with someone. While it may have come back to bite Japan, I can’t recall, with the exception of the 70’s oil shock, any problems here. Most of the damage from the Arab embargo were self inflicted between Ford and Carter. Never blame malignity when incompetence is ample.

      As long as our trading partners are willing to accept dollars, they can either trade them with other foreigners or buy something here. They are also free at any time to require payment in another medium of their choosing. They don’t because that would be the equivalent of massively raising our cost. Up till now, China has chosen to use their dollars to either buy commodities or Treasuries with occasional diversions into U.S. real estate. The Japanese tried the real estate thing and got burned badly.

      It’s true that these dollars will eventually return as inflation but considering the present course of the government and Fed, won’t amount to more than peeing in the ocean. The real question is when all the people making snide remarks about socialism, free stuff and Venezuela are going to realize that we are Venezuela about 2005.

    25. OBloodyHell Says:

      However, while imports of services are today small compared with imports of goods, which for 2018 were almost $2.7 trillion, it would be a mistake to conclude that services businesses and services jobs are immune to offshoring. Indeed, for many types of services, offshoring/exporting is easier than the offshoring/importing of goods: there are no transportation issues, and, in the case of imports to the US, there are no tariffs at all.

      This is less easy than it would seem.

      First off is language barriers. It is not cheap to hire and retain quality non-English native speakers at a price lower than native-English speakers. Yes, there are certainly Indians who speak English quite well… But fewer than you’d think. There is nothing more aggravating than having a service issue, and having difficulties wither either understanding or explaining your problem and the preferred solution. A lot of those service call handling groups that were getting shipped to India in the early 00s have been brought back.

      The second is the time zone difference. It would seem that, once more, America is protected by its moats… with a five hour difference in one direction and a 10-11h difference in the other, it is not trivial to oursource service activities that occur in real time, which is a large chunk of them.

    26. David Foster Says:

      OBH…yet open-source development has been successful on a pretty large scale, and I believe the participants in these projects have often been distributed in a lot of countries.

      The time zone moat works for some functions, such as the real-time customer service, but for some other activities, it is actually a benefit….one team can work on a project or problem in Pacific Standard Time and another in Greenwich Mean Time. Handoff problems are of course not trivial.

    27. Gavin Longmuir Says:

      Just a thought about services, which some would claim are the future:

      If we think about a service like medical treatment, the high quality service today depends on very advanced manufacturing using exotic materials machined to incredibly fine tolerances, and ethical pharmaceuticals manufactured with astonishingly high quality control. Or, to put it another way, the service depends on a manufacturing infrastructure. There is a somewhat similar argument with financial services, which increasingly depend on ultra-fast communication through fiber optic cables made from amazingly pure glass and computer chips manufactured on a nanometer scale. Without the manufactured infrastructure, there would not be much of a service to sell.

      Longer term, the implication is that a country which can manufacture the equipment is going to have an advantage in providing services based on that advanced manufacturing capability — especially if that country is mercantilist in orientation. Accordingly, it would be unwise to depend on services to make up for lost manufacturing capabilities.

    28. Nicholas Bretagna II Says:

      This is my field. I work for an Indian company. We have three levels of service — on-site, in-US, and in-India.

      How much do you want to pay? How much inconvenience are you willing to deal with?

      Because there IS inconvenience the further away you get.

      1) Language barriers. There are always issues with this. Some Indians become highly fluent, others barely so. Among other things, Indians tend to use the front of their mouths when speaking, while Americans use the whole of it. This makes for an “accent” that can be pretty thick, and takes practice to hear through. An additional thing that makes Indians hard to follow is their tendency to use passive voice, even when otherwise fairly fluent — “You will do this.” vs. “You will be doing this”. If iterated, it can make sentences that are much longer to hear than most Americans are used to. That sounds odd, but it does apply.

      2) Time Zones. Workers coming and going on the same schedule, vs. an hour or so off, vs. 12 hours off. This can make a bigger difference than you realize, especially when you’re dealing with the front-end vs. the back-end. Back-end stuff is less “hands on”. But the front-end stuff, you tend to want people on-site or at least nearby. It’s very very “touchy-feely”.

      3) UX/UI is a lot more cultural than you’d think.

    29. Nicholas Bretagna II Says:

      P.S., my own impressions of the current state of US programmers vs. Indians — Indians seem a lot less aggressive and ready to figure something out ahead of time. Americans are more spoiled as to working hard. So picking and choosing your people for the team and its situation is important. If you need more on-the-fly learning, and more people willing to TELL you “no, that can’t be done in the time allotted”, you want Americans. If you want people that have a clear target within their skill set to work their asses off to do what you need, then Indians are better. There are certainly some Indians who Really Really Know Their Shit. But I think there are more Americans who fit that bill.

      I cut my teeth as a programmer in the late 70s and early 80s, and, bored with pure programming, moved to software testing… and now do automation testing. So I assert that I have a pretty decent feel for all this stuff.

      Frankly, one problem with all of it is that there’s too much kludge and too little actual understanding. It’s annoying how often a problem gets solved by poking it, rather than understanding what the problem was. I joke (ha-ha only serious) about the magical aspects of coding these days: “It didn’t work because you were making your passes like this… (move hands up and down), instead of like this (move hands side to side)…”

      At some point, it seems to me, the whole thing is going to break down because of that… not sure when, but eventually.

      There’s too many people who don’t/can’t think outside the box these days — our school system has been making good little drones for too long.

    30. OBloodyHell Says:

      Longer term, the implication is that a country which can manufacture the equipment is going to have an advantage in providing services based on that advanced manufacturing capability — especially if that country is mercantilist in orientation. Accordingly, it would be unwise to depend on services to make up for lost manufacturing capabilities.

      Nope nope nope.

      Because how did they develop the understanding of how to make that thing?

      The KNOWLEDGE is more valuable than the thing.

      The iPhone4 (2010) retailed for US$600. No matter how you got it, somehow or another, APPLE got 600 bucks.

      It was “Made In China”. How much did CHINA get for “making” this clearly complex device?

      Quick answer: Six Bucks. One percent.

      http://mjperry.blogspot.com/2010/07/iphone-designed-by-apple-in-us.html

      I don’t think any of that has changed much in the 9 years since.

    31. OBloodyHell Says:

      OBH…yet open-source development has been successful on a pretty large scale, and I believe the participants in these projects have often been distributed in a lot of countries.

      The time zone moat works for some functions, such as the real-time customer service, but for some other activities, it is actually a benefit….one team can work on a project or problem in Pacific Standard Time and another in Greenwich Mean Time. Handoff problems are of course not trivial.

      More than you’d think. Open-source stuff doesn’t happen on a timetable. Companies want more control over the end-product, too. And they want a feeling that they are in control of stuff, which is harder when you’re communicating by e-mail and not chat or conferencing.

    32. Gavin Longmuir Says:

      “It [I-Phone] was “Made In China”. How much did CHINA get for “making” this clearly complex device? Quick answer: Six Bucks. One percent.”

      First, Apple is selling a branded product (the phone), not a service.

      Second, we all know to be careful about what we read on the internet. Especially for something as complex as accounting for a physical product – marginal cost? fully-loaded cost including amortization of equipment? including share of development costs?

      Third, always apply the smell test. If a Chinese manufacturer can make a smart phone for $6, why is the global market not flooded with other Chinese smart phones retailing for less than $25? Even the phones made by Chinese manufacturers retail for hundreds of dollars. And Apple’s uncommonly fat markup on i-Phones is still only about 40%, not 99%.

      Main issue is that the provision of top-class services ultimately relies on access to advanced manufacturing. Losing the manufacturing edge will lead to losing the services edge. Try a Chinese-authored communication service like “WeChat” on your smart phone — China is already fully competitive in at least parts of the services arena.

    33. David Foster Says:

      The $6.54 cited in the article was for final assembly. There is also “Materials” ($187.50) and “Miscellaneous” ($45.95). I’m pretty sure “Materials” does not just mean raw materials but rather includes components and subassemblies. The article identifies Korea, Italy, Taiwan, German, France, and the US as sources of those “materials”; it’s hard to believe that some aspects of that supply chain are not also resident in China.

    34. Bill Brandt Says:

      I have a friend that I would consider in the top 2 to 3% of programmers in the US Has written a lot of systems stuff UNIX guru

      He sent me this email today which is long as I don’t give you his name I think is OK.

      _____________________________

      Here’s what happened to our profession

      http://barelyablog.com/about-those-brilliant-imported-workers-americans-are-significantly-better-proven/

      In the above link, first read the article it links at the top, “Visas for ‘The Brilliant’ Is Kushner Code For Replacing You“. Then read the short followup in the above link.

      When I worked for HP, I frequently found screwed up code coming from the lab — as they called their development group — fixed the code, and got the customer’s problem solved. I solved two-to-three times the problems while I was there than did the #2 ranked help engineer.

      The majority of the lab employees were contractors in India.

      And you wonder why we can’t find jobs as experienced programmers

    35. BobtheRegisterredFool Says:

      Nicholas,
      I’m coming at it from the other end. Very little programming experience, very shallow training.

      I’ve decided I need to try to understand Computer Science a lot better. Why?

      That same conclusion that programmers as currently trained are not quite what we need them to be, hence poor design choices in currently built systems, with excessive maintenance and failure costs coming along down the line.

      My takeaway from noticing that was that if I had a system I wanted working, I really needed to understand the computer science part of the design space.

    36. David Foster Says:

      From the study….

      “The examination assesses how well CS seniors master CS-related concepts, principles, and knowledge. It consists of 66 multiple-choice questions, some of which are grouped in sets and are based on materials such as diagrams, graphs, and program fragments. The test does not assume knowledge of any particular type of software or programming language. In fact, it uses pseudocode that is meant to be easily understood by CS students regardless of program or country. Examination content areas include discrete structures, programming, algorithms and complexity, systems, software engineering, information management, and “other”…

      I’m not sure that this test would really provide a good indication of how well an individual would do at practical programming tasks: ‘write a program to solve the following problem.’ I’ve encountered CS people who were good at talking theory, but who that nobody would have wanted to trust at an important task.