Reactions of an Uncle Sam protege on outsourcing

Are the smiles on Indian faces but a reflection of the tears of US ?

I guess the situation is not that bad but thats what macroeconomic fundamentals are . In a world with no borders, labor and capital arbitrage isues will drive the future and our smiles/tears. An interesting read below from an uncle sam protege:

Analysis: Offshoring getting more costly in India.

Not many global IT majors have started recoiling yet, but the recent decision of Apple Computers to shut down its new Bangalore center and local news about Intel planning to lay off a number of people from its Indian operations have sparked fears that rising cost may have started threatening India"s attraction as an IT offshoring destination. (The very first sentence of the first paragraph starts out with a lie. This is typical of OFFSHORING material. A great many organizations have reversed themselves on the issue of OFFSHORING. The anger of the American public has reached deeply into the American citizen"s knowledge banks. The crime is argued in the Congress and it is well known on the news shows, especially CNN every night. Ask the 30,000 GM employees being fired in the 14 plants being padlocked here, and re-built in Mexico and Communist China whether the issue has subsided? The same treachery is happening at Ford. Chrysler is already a German company. OFFSHORING is so despised, -- those engaging in this crime hide behind constant renaming and rearranging. There is "off-shoring", "Out-Sourcing", "Off Shoring", "Asia Sourcing", "OFF-Shored", "Out-Sourced", "Near-Sourcing", "Offshore Outsourced", "Remote Sourcing", "OFFSHORERS", "Outsources", "OFFSHORES", "Out Sourced Offshore", "Near Shoring", "Offshore", "Overseas Sourcing", "OFFSHORER", "Outsourcers", "Offshoring", "Onshore Offshoring", "BPO" and the newer variation "KPO", "Global Sourcing", and the newest entry - "Homeshoring". OFFSHORING means India and Communist China. Red China is known worldwide for their respect for Trademark and Patents ownership, and their respect for Human Rights, and their respect for Intellectual Property Rights. Even the United States Navy crew of an EP-3 patrol plane is familiar with China"s respect for International laws, International air-spaces, and the International Borders near Hainan Island. OFFSHORING is a crime against Americans. Americans and others [UK] doing jobs in factories or in cubicles are the victims. Selling out one"s country to it"s [economic] enemies in war time for money is treason. Treason will never be a minor crime. Anger about it never decreases among patriotic Americans. That is as true for OFFSHORING as it is true for TREASON. Both are not NEW trends. Treason goes back to the days of Benedict Arnold, before my country was a country. Both deeds are still despicable deeds. I abhor both deeds. Journalists regularly defend one. The citizens of France rioted for two weeks in the streets, burning every corporation and vehicle which they could reach with a Flaming Molotov. Their issue was JOBS. Soon, every bank lobby in France and the USA will be filled with a mob, and every customer will be carrying a flaming torch. Every city which hosts a WTO convention expects and receives riots. Among the long term unemployed, I could even believe that some day soon lynchings of MULTI-National CEO"s will become socially acceptable. Saying that "not many" "have started recoiling yet" - - that is humorous.) And although the Indian IT sector has shrugged off these two developments as just "internal corporate decisions," many are worried that rising cost pressures -- which are showing signs of lasting for a while -- may end up in some lost opportunities and may even blunt the competitive edge of offshoring IT in India. "As the Apple story points out, India"s first-mover advantage is gone -- at least in established city centers like Bangalore," said Michael Corbett, executive director of The International Association of Outsourcing Professionals, the global organization for the outsourcing profession. "The marketplace dynamic of supply and demand is resulting in rapid salary inflation, high turnover, and other forms of cost escalation (such as technical incompetence, continuous repetition in all communications, nightmares of time zone issues, extremes of travel costs, and risks to executives for kidnapping for ransoms), which may end up in some lost opportunities for the Indian IT." He added that other competing countries like Philippines, (Communist ) China, Russia and Eastern Europe "will exploit India"s growing pains to improve their competitive posture," and could even give India a run for the money. (Recently, Bill Gates was in Vietnam collecting hugs and kisses. Same for Sam Palmisano CEO of IBM collecting his hugs and kisses in India recently.) In a startling announcement last week, Apple, which opened its software division in Bangalore with much fanfare in April, announced without citing reasons that it is closing down its Indian operations and "has decided to put its support center growth in other countries." Consequently it served layoff notices to about 600 newly appointed employees, who, according to reports, said "India isn"t as inexpensive as it used to be," and that was impacting the financial feasibility of the Indian operations. "Apple hired professionals at salary levels much higher than the industry standards and soon realized that the business generated from the additional expenditure did not justify the costs," said an industry insider requesting anonymity. (The problem was the thousands of American former customers of Apple who slammed their phones down with extreme enthusiasm, upon being connected to incompetent Hindi speaking Apple technicians.) But if the Apple decision perplexed the Indian IT offshoring industry, what came as a jolt were local reports that said that Intel, as a part of the company"s global cost-cutting and layoff exercise designed to cut $1 billion out of its forecasted expenses, is seeking to downsize its Indian operations as well. (Intel corporation is a fine display of OFFSHORING. Intel corporation, rushing into India and Communist China has now been FAILING on dozens of projects [cancelled Tejas, and Timna, recall on Grantsdale, recall on Pentium III with no re-release, cancellation on 4 gig Pentium IV, cancel on Alviso, on Prescott, on Dothan, and crashing in flames on LCoS Liquid Crystal on Silicon for digital flat screen TV"s]. --- All of that failure happening in a single corporation, and because of OFFSHORING. Intel is not alone with such blatant failures. Microsoft, rushing into India, has just missed two important deadlines. One ship date for a new Operating System [hacker-proof "Vista"], and the other for a new Microsoft "OFFICE 2007". In March 2006, Microsoft announce that they will miss the start of the school year fall season which was still 5 months forward. They will also miss the holiday retail shopping season which was still 9 months forward. Retailers [snakes who buy all their other merchandise from Communist China] are furious when India fails on new software. Microsoft did not fail when they were an American company. United Airlines is repeatedly teetering on the brink of bankruptcy, trying to scrape off its Pilot"s Pensions. Northwest Airlines is enduring a strike, hiring lowest bidder aircraft maintenance, and in bankruptcy. Delta Airlines is in Bankruptcy. U S Air with employee morale in the dumps from repetitive pay cuts, went through an embarrassing holiday season fiasco with mountains of luggage lost and thousands of customers abandoned across half of the USA. Every former customer vowed to never book U S Air and never lose their vacation again. Charles Schwab and Merrill Lynch and Quick and Reilly all RE-issueing 1099-DIV Tax Forms SIX TIMES in 6 weeks to their angry (fully IRS filed) customer stockholders during a recent TAX Season. That national fiasco was because outsource software personnel proved to be incompetent, and incapable of doing the 1099-DIV software tasks correctly the first 5 attempts.

America"s problem at [IBM, GE, Microsoft] is today there are no more High Technology technical people to turn to. Our country has stopped creating them. Why should any American in year 2006 take on $40,000.00 worth of education debts to earn degrees, when there are no High Tech ENTRY level jobs at the conclusion of that costly process. ALL entry level jobs today are given to H-1B"s who work cheap and are being trained by experienced American workers (under duress of loss of severance, and possible loss of vested pension). The visa holders then take the jobs to Asia. The paychecks get cashed in Asia. The High Tech Americans become unemployed. We might as well tear down Harvard University and MIT and NYU and pave them all flat for parking. Then, we can build Wal-Marts in the center of each. Wal-Marts will be filled with stuff made in Communist China. Everything will be cheap enough to be sold to the unemployed, unskilled, uneducated, cash starved Americans.)

Rising wages are not the only rising cost component. According to Ernst & Young, other elements of cost of operations like higher interest rates, (higher counts of [former] customers who have fled your logo,) and infrastructural hurdles are also adding to the cost inflation. For instance, Ernst & Young says that the working capital interest at 14 percent in India is at least 6 percent higher compared to other countries and that along with other costs makes the cost of running IT operations in Indian about 3 percent higher than in its Southeast Asian neighbors. This is why many fear that while no single nation poses a direct threat to India yet, quite a few countries have emerged as a viable alternative. "Out of the top 30 offshore outsourcing providers identified by IAOP, 23 are based in India," said an official. "While this signifies that India still dominates, it also identifies companies that are based in the Philippines, (Communist) China, Russia and Eastern Europe and are giving India a run for the money." (With all of these locations, the paychecks get cashed where the money can never be returned to the economy of the United States of America.).

P.S: The question is can this arbitrage issue be converted to a win-win situation for all. Narayan murthy with his global delivery model may provide a clue but a final solution still evades. Till then its cheers India.