Hi Bill,

And a welcome addition to our unmerry throng you are Bill (I've also made Phillip an honorary member).

I did a thesis on this very subject for my degree!

also lots of experience of outsourcing from my life in banking. And from experience it always costs more than was budgeted and the products produced are always less than expected.

Indian companies are finding it difficult to retain staff and much to the horror of the Indian people are outsourcing the work to China, Mexico and the Philippines.

Pakistan have also been attempting to get in on off shoring but so far with little success. probably lucky for Pakistan as any infringement on India's economy might sour already frayed ties between the two.

Whilst there have been some high profile cases of theft, cloning and identity theft for the most part I've found the Indian people to be very honest and trustworthy so the risk is no more in most cases than would be expected by outsourcing services within the UK.

I don't think that exploitation is an argument as those in OT and finance in India are very well paid.

The companies that work is outsourced to are not exactly back street organisations. They own luxury office blocks that put many in London to shame. So we're not really talking exploitation either.

Where my line is drawn is the whole area of economic protectionism as whilst India is free to buy UK companies and take work from the UK they are very protective of their own industries and markets.

From the accountancy and bookkeeping perspective I think that we can use the fact that we would not consider offshoring work as a selling point for your services as most small and many medium sized businesses are not happy with such arrangements regardless of any offered saving.

The minimum wage situation is an anomaly as cost of living varies greatly throughout the world. In parts of Thailand the equivalent of £2000 per year would be a very good executive wage. So, to set minimum wage at £5.80 for work outsourced to there would be the equivalent of making a minimum UK hourly wage of £75.40 (based on a calculation using £26,000 per annum as the UK equivalent of the £2000 in Thailand).

I appreciate that my argument comes across as for outsourcing but I'm actually in the dead against camp. Just thought that I would add my two penneth to the debate.

looking forwards to the debate that this one sparks.... You're such a little tike Bill!

talk in a bit,

Shaun.

Shaun

I don't disagree with most of your points about the honesty and working conditions (I've seen a few C4 progs that have covered the subject)

The point I was trying to make was the inequality of global economics and that for a UK bookkeeper to compete, they would have to work for less than minimum wage, to satisfy some accounting professionals

Lets face it, the only reason the work goes offshore is the perceived cost saving and the increased margin. It's not because the work is superior, or there is any added value from the service.

I agree the workers in these outsource centres, are very well paid for their economic region and have a good standard of living. If a worker only did 5hrs a day, 5 days a week for 48weeks, £2000 salary equates to £1.67 per hour (I am pretty sure they do more than that to earn their 2K)

I am not overly convinced on the security either, when it comes to transporting sensitive documents around the world, it will pass through many hands and inevitibly be more vunerable to loss, damage or theft. As you say, it gets further outsourced to places such as China and Mexico. What are their policies on data protection etc.
Even our good old HM Government loss important stuff moving it inland.

Enough diatribe, got that of my chest and feel remarkably less frustrated.

Bill

Never a truer word spoken in jest

Bill Associate Member of the Grumpy Old Men

shamus I find you v .v . interesting to read!

lol

In my dreams!!!!

Philip

You should be upgraded to full member now

Bill

Unanimously carried

Philip you're upgraded

Hi Marcella,

welcome to the forum.

I'd forgotten all about this thread.

I'm sorry but I have to disagree with you on this one. It's like comparing Wedgewood with cheap imitation Tupperware.

UK outsourcing was always based on quality where outsourcing now is based only upon price.

Taking IT outsourcing as a good example companies became used to the fact that where you brought in UK or US based professionals you gave them a problem and they found a solution.

Very simple example, we want a screen to record exchange rates and we want the information used throughout the payments system.
The contractors would dissect the way the payments system uses foreign exchange rates by reverse engineering the code then write a front end to input data and update a central database.

If the client was asking for anything stupid you told them that what was being asked for was impossible and gave them alternatives.
The people doing the work were called developers.

Then Indian software houses come along and say, why pay all of this money for developers when you could get two developers from us for the price that you are paying for one in the UK.

Now to a manager this sounds great.

Of course what they don't tell the manager is that the Indian idea of a developer is what we call a coder. Someone who takes a specification and types it in verbatim.
The UK analysts who were used to just telling developers what they wanted had to become developers to write specifications that could just be typed in by coders.

So, Analysts become developers and more has to be invested in testing resources as the code coming back was invariably did not do what was wanted. But of course, they were different budgets or different parts of the budget so it looked to senior managers that outsourcing reduced the development cost where the reality was that it just pushed the costs somewhere else.

It is my personal belief that if Analysts had been allowed to do what they were supposed to be doing rather than concentrating on trying to get work out of third party suppliers in a fit state then software systems would have been in place to stop some of the issues with the banking sector that have led to the position that we are in today.

The real issue at play here is that whilst managers bonuses are tied to cost reduction then this will continue.

I've seen it myself that development is outsourced. Then everything being done by the outsourcing company has to be rewritten in the UK. But the two budgets are not tied to each other so the manager who outsourced the work gets his bonus as it looks as though the cost of development has been greatly reduced.

Anyway, the problem is deeper than the above in that in outsourcing work to India the banks are actually creating a new market for financial products which will figure in a big way in banks profits in the future.

House prices in places such as Mumbai have rocketed on the back of IT salaries creating an excellent mortgage market in a low risk area as Indian people are generally renowned for their honesty.

I have nothing against any of the people that work is outsourced to but I do have a real problem with the fact that we are not comparing like with like and the markets are not open to Western firms in the same way that the West is open to the East meaning that this really is not a level playing field at all (try buying an Indian company the way that Tata bought Corus).

Needless to say my flag is firmly in the camp of legislating to make outsourcing a less attractive option for companies at least to the point where the government does not lose any tax revenue because of it.

Likelihood is that it will reach that stage anyway as wage inflation is making outsourcing less and less attractive. There has been outcry in India about some Indian software houses now outsourcing outsourced work to cheaper ecconomies such as Mexico, Brazil and the Phillipines. Only a matter of time methinks before Mexico is then outsourcing the outsourced, outsourced work back to IT developers in the UK! Now where's the irony there. lol

Sure that some of the above has left you grinding your teeth. Look forwards to the reply :)

All the best,

Shaun.

Shamus wrote:

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There has been outcry in India about some Indian software houses now outsourcing outsourced work to cheaper ecconomies such as Mexico, Brazil and the Phillipines. Only a matter of time methinks before Mexico is then outsourcing the outsourced, outsourced work back to IT developers in the UK! Now where's the irony there.

---

  This made me laugh, and reminds me of a documentary I watched on a particular clothing company that shut its factories in the UK to move to India, but is now closing them to move to Sri Lanka! Just moving around and only the few at the top benefit

 

Hi Shaun,

Yes bring the quiz back!!!!!!!