You seemed like you were pointing out that Russians get paid less because their costs are covered by the government while the Americans have all these great expenses and hence require such a high pay rate. 5k and 10k per year is not royal compensation for them. 12K a year is a good not great life in Moscow and I truthfully doubt that companies will be doing any hiring outside the major cities. I don't know how much they are paying but it is not pennies like you make it sound. It's still money and then there are the many hidden costs.
Not true. A regular programmer costs (!!) about $25 per man/hour of development in Moscow. It's not too little, especially considering that same work here can be done for some aprox $35. However, the issue of qualification comes into play - finding qualified people for reasonable (and even unreasonable) price gets harder and harder every day in the states. If I look over the floor at our quantitative development group, they have 1 american (i think he is american), but they have 3 russians, 1 greek, 2 chineese, 1 italtian, 1 frenchman and 1 serb. Oh, I forgot, 1 canadian. Similarily, the IT group working for IR derivatives desk is made up of immigrants, with one or two americans. I think it is pretty indicative of the quality of american IT labor.
sle, maybe add Columbian to that list. hehe. are u at a major ibank? seems like most quants/developers are foreigners.. ========================================= BusinessWeek Online A New Tide in Offshore Outsourcing Tuesday January 13, 11:47 am ET Any number of academics attempt to minimize the effects of the offshore outsourcing phenomenon by reassuring us that new jobs will take the place of the hundreds of thousands of programming, call-center, and other jobs shipped out to Asian countries. They frequently point to the U.S. at the start of the 1900s, when about half the population worked in farming. Today, only about 5% of the population farms, with all kinds of jobs having replaced farm labor. It's difficult to imagine what the replacement jobs for today's programmers and call-center operators might be, since none of the theoreticians offer specific examples. I recently received a possible peek into the future, though, in getting to know Ryan Kinzy, who, at first glance, seems to be just another high-tech entrepreneur who has thrown his life savings into an enterprise to sell special software designed to help sales people improve their productivity. A STARTUP'S PRIORITIES. The future Ryan is creating is a lot different than what the academicians suggest, but the effect could be the same in that the bottom line may well be more jobs as a result of outsourcing high-tech jobs. For now, it is a future in which labor is fungible and national borders nearly meaningless. It is a scenario that may offend lots of Americans who have lost jobs to India, Russia, and the Philippines, but may also provide a ray of hope from the outsourcing phenomenon. So hear me out. Ryan launched his company, K3 group, in Austin, Tex. 18 months ago using savings accrued from the good times in high-tech. One important lesson he had learned working in a large high-tech company immediately preceding his own startup was that the benefits of outsourcing of computer programming jobs, as currently practiced by large corporations, are often exaggerated. "There were too many headaches in dealing with India," he says, recalling his experience overseeing such work. "We often got spaghetti code that was functional, but couldn't grow. We had no idea if delivery dates would be hit because they would freely give promises, but not results. The time difference was very difficult. The explanation, 'They program while you sleep' doesn't hold water. Too often, a problem would arise and they would respond the next day with, 'Well, we weren't sure what you wanted to do' -- and a whole day was lost, time and again. Before long we were four months behind schedule. It was also very difficult to remotely manage a project unless you had a very strong infrastructure over there of U.S.-style managers. Finally, the rising costs over there make it tougher to justify." BANGALORE TORPEDOED. You might think that when Ryan launched his own company, he would have relied on U.S. labor. And that is what he did, at first. He and two other Americans developed the initial product themselves over the first year. He brought in a fourth employee, a sales person, last October. But while Ryan may have accrued skepticism about outsourcing overseas, there was never an ideological opposition to the proposition on his part. In fact, he kept thinking about how neat it could be -- and how much money it could save his cash-strapped startup -- if he could overcome the problems he had experienced in dealing with India. This past fall, when it was time to improve and expand K3's product offerings, an associate came up with an alternative to India: outsource to South America. The more Ryan investigated, the more he liked what he saw, and in December he took the plunge, sending work for up to five programmers to young developers in Colombia. Here is how the Colombian option compares to the Indian one: Cost. No contest here. The cost for a managed developer in India was $3,200 per month, vs. $1,000 a month in Colombia. (A managed developer is overseen by an onsite manager monitoring progress and quality, so the cost includes part of the manager's salary.) The difference in costs is so vast that it actually allows K3 group to make money in an area not known for profits, says Ryan. "Typically, with enterprise-application software, consulting for customer specific needs just breaks even. The benefit with having a low-cost development outsourcing partner is that we can make money with consulting." Quality. Ryan also expects that the days of spaghetti code are over. "You have to get the developers fairly young so they haven't learned bad habits," he says. This means grabbing them a couple years out of school. After a few years working for a company like K3, he says, these developers are typically grabbed by banks and other major companies, but K3 has obtained useful production from them. Real-time communications. Colombia is essentially in Austin's time zone, "which is very very good," says Ryan. In contrast to dealing with Indian programmers, "We now find out about issues before they become problems." Moreover, Ryan and his colleagues speak with the developers in Colombia using VOIP (voice over Internet protocol). This means their conversations and conferences are free. "This keeps the costs way down," says Ryan. Flexibility. Because K3 doesn't know for sure how its business will go this year, it can't be certain how much programming it will require from its Colombian team. But the Colombians are eager enough for work that K3 group can use anywhere from one to five programmers at any time, based on its needs at the moment. The reason K3's approach is so intriguing is that a startup has a different mission in life from that of many large corporations -- to grow rather than to cut costs. To the extent that K3 keeps its costs down, and attracts new customers, it expands, which inevitably creates new jobs. The exact nature of the new jobs isn't entirely clear, especially since, in small companies, many people handle multiple tasks. But one thing we do know from a number of past studies is that young, fast-growing companies create many more jobs than Fortune 500 outfits. Sure, some of the new jobs will be in Colombia, or wherever K3 group moves next in its search for low-cost programming labor. That's the beauty of virtual operations and borderless commerce. But some of the new jobs will inevitably be in the U.S. Moreover, the K3 model has stimulated Ryan's creativity. He is now thinking of establishing his own outsourcing business -- perhaps in a tropical country, near a beach.
I heard Paul O'Neill on the radio today. He's very impressive. What he had to say about Bush fits very well with the impression one gets...disengaged is a polite way of saying, "too stupid to know what is really going on." www.amazon.com/exec/obidos/tg/ detail/-/0743255453?v=glance m
Factory Jobs Seen Rising 250,000 in 2004 Thursday January 15, 10:21 AM EST WASHINGTON (Reuters) - A rebounding U.S. factory sector should generate about 250,000 jobs in 2004, barely denting the huge losses it has suffered since its peak, the National Association of Manufacturers said on Thursday in its annual economic forecast. "Manufacturing has lost 2.8 million jobs, and it is doubtful if more than half of those jobs will return any time soon," NAM President Jerry Jasinowski said in a statement. "Our scenario sees an increase of 250,000 manufacturing jobs over the next 12 months with the biggest gains in fabricated metals, electronics and industrial equipment," he added. NAM predicted that manufacturing output would rise by more than 6 percent in 2004 vs. 1.4 percent last year. "Thanks largely to the realignment of the dollar to its 30-year average, along with improving economic growth abroad, we expect export growth to triple from 3 percent in 2003 to 9 percent in 2004," Jasinowski added. Before the dollar's recent slide, NAM was a vocal critic of the U.S. Treasury Department's so-called strong dollar policy which the group said hurt the ability of U.S. exporters to compete with goods from countries with weaker currencies. Manufacturers have enjoyed a reprieve on the currency front recently with the dollar last year tumbling some 17 percent against the euro, hit by low U.S. interest rates and the wide current account deficit.
yep, major i-bank. i would not worry about Columbia much, since the math and science education is not up to the level of India, China and Russia. Outsourcing to Nigeria or Eqador would be even cheaper, but the number of competent developers waiting to be found there is rather low. PS. I still maintain that the salaries for IT professionals in popular outsource countries will be reaching American and European levels rather soon, thus making IT a level playing field again.
sle, Since the currency exchange rates are so bad in some of the outsource countries, it is highly unlikely that the salaries of IT professionals will ever reach American or European levels. The two factors that determine outsource salaries would be the strenght of the dollar, and the supply of IT workers. If the dollar were to decline significantly, then that would play the biggest role in leveling the playing field. As far as the supply of IT workers, this would increase in outsource locations as the demand for them increases, thereby keeping salaries competitive. Once some of the outsource locations' economies and currencies improve, then other outsource locations with more favorable exchange rates will become more popular.
sle, I was merely making a 'smart' comment. I know Latin America got a long way to catch up to India, China, and Russia. But the way things are going with fast internet access and education, all countries can compete with eveyrone else. Isn't that the promise of globalization? I wouldn't hold my breathe for those countries yet. Sure, salaries will go up in India, China, and Russia as the developers gain more experiences and demand higher salaries. But the entry level IT work will always be low because SUPPLY of people willing to do that is VERY VERY LARGE...
Well it is true that in the technical fields that native born American citizens are under-represented. However, the reasons for this statistic have little to do with ability: The reason Americans steer clear of these jobs is that there are better jobs which allow them a higher quality of life than toiling long hours in sweatshop-like conditions. Immigrants are willing to work 80-100 hr workweeks for normal pay - which when translated into an hourly wage is peanuts. Its a fallacy to equate lack of interest in a particualr job/field with lack of ability. Its really a lack of interest due to lack of job quality and the situtation will not change as long as employers seek the lowest cost solution: Americans have many better paying and higher quality job situtations than those your describe .....
I would not represent a job at a major IB as something "Americans steer clear of " nor I would call it "sweatshop conditions". In fact, the median salary in the quant group is somewhere around 300K and the median salary in the development group is about 250K. Even given the 50-60 hour weeks, are you suggesting that american programmers are able to find a job with higher hourly pay? If the working hours were an issue, Americans would also stay clear of the stock/bond analyst jobs or M&A, which are staffed predominantly by WASP's(*). They in general work longer hours for lower pay. I'd say the reason americans steer clear of the quantitative and quant devopment jobs is the lousy math education in american schools. * even these days, if you see no indian, asian or jewish faces, you probably pressed the wrong button in the elevator and exited on the M&A floor.