I just finished reading and reviewing a fascinating book “The Elephant and the Dragon” by Robyn Meredith that describes the growth of the Chinese and Indian economies. The Chinese are characterized as becoming the world’s factory while India is becoming the knowledge center. The Chinese are building what Wal-Mart sells and the Indians are providing the call centers and computer development work. The problem with the book is that it was copyrighted in 2007, and a relative who is very savvy about computer work tells me things are changing. He said it is true that Indian companies theoretically could develop programs much less expensively than American companies because they pay their people a fraction of what is required in the U.S. However, he has direct experience about the often poor results. He said that deliverables often did not meet requirements despite numerous and lengthy conference calls to describe what was wanted. The work would eventually be revised by Americans who were able to communicate sufficiently to understand the requirements and develop the desired products.
I searched and found a source called the “Ashbourne College’s Business Studies Blog.” It refers to one company bringing all of its call center work back to Britain from India because of complaints about a center in Mumbai, India. “The reason for placing back the call centres to UK is that India has low quality of staffs (which) would lead to worse services…”
Another site that offers some insight into the problems with outsourcing to a foreign country is a blog by “Programmer for Hire.” The warning flags go up with the source, who I would guess would prefer to be hired to do programming. However, the content seems appropriate. Friends had hired an Indian company to do programming based on the lure of $12-14/hour rates compared to typical rates of $125/hr for a U.S. company. The author admits he wasn’t the correct choice for a project that had high hopes and a small budget. However, the project did not have a usable product after they had “…paid for something between 600-700 hours of development with a firm in India, and they should have launched 6 weeks ago.” The client asked whether they were available, since to fix the problems they decided it would take the correct person 10 hours, instead of 50 or more with these guys.”
The book “The Elephant and the Dragon” mentions that more companies began to outsource as the result of John Kerry berating CEOs of companies that had already gone that route during his presidential campaign. Politicians sometimes actually are able to inspire. The book observes that the best way for the U.S. to come out ahead is to do a better job of educating its citizens to compete in the world economy and to get our deficits under control.