There is a difference between offshoring and cheap-shoring (i.e what I call offshoring at very low costs). Most of the bad experiences you get from India are a result of cheap-shoring. You get what you pay for. Cheapshoring undervalues good engineers and overvalues a lot of bad engineers.
I have seen this for almost 15 years (from the Indian side), and I don't like it. While some people see Indian IT as growing with the likes of Infosys, TCS, Wipro, etc - I personally saw that as crippling good CS talent in India. However, all that is coming to an end - probably sooner than later. These biggies will either have to trim down significantly or collapse under their own weight
If you want equivalently good engineers from India (as of now), be ready to pay half(45-50%) of the pay in US. So if you are paying 120K in the US, the same should cost you 54-60K USD when the engineer is in India. This will also reduce friction. One may get lucky in the early days hiring at cheaper costs, but sooner or later the good engineers will see their worth and will most likely leave instead of asking for a raise. You have to do your due-diligence selecting a worthy engineer - that is like finding a needle in a haystack.
If somebody chooses cheapshoring, they are planning for a higher cost that is at least more than the 50% mark mentioned and in most cases if you analyze retrospectively - it would have cost lower if you did not cheap-offshore in the first place. The release may seem less costly, but the maintenance and operating costs will ultimately outgrow.
I agree with what you say, and just validates what I think and heard over and over again for many years - off shoring isn't worth it for most of the use cases. In long run, it's at least as expensive if not more, the issue with time zones, communication and just doing everything is too much to counter the low savings which are not usually even there.
the only case I can think of is if you need an army of developers and for some regulatory reason cannot find them / bring them locally.
I'll take anytime mediocre dev that sits next to me to some remote superior dev, since all we do is a team effort that actual coding of lines of code is quite small part of.
> While some people see Indian IT as growing with the likes of Infosys, TCS, Wipro, etc - I personally saw that as crippling good CS talent in India
There's two sides to that coin though - these companies and other cheap-shorers, as crappy as they may be, provide better employment opportunities than most other available ones to people in smaller cities and villages. I've known many such people, and most of them see these BPO/KPO type jobs similar to how Americans see "crappy" McDonalds burger flipping jobs - a way to sustain themselves and keep employed, while looking for better more suitable opportunities. (And just like with the McDonalds burger flippers and Walmart cashiers, some get out, some choose to remain, and some get stuck in the same place "for just a few more months" forever.)
I suspect this is also the reason for the high churn rate that the author mentions.
> So if you are paying 120K in the US, the same should cost you 54-60K USD when the engineer is in India
When you are comparing to the US, are you talking about Silicon Valley or the Midwest? In Silicon Valley, $120K is probably a junior engineer that would cost $54-60K in the Midwest.
For what I can tell, London has starting salaries in the £30-40k range which compared to the $60-100k in the valley seems absurd, specially as cost of living in London is not that much different.
Absolutely - if they work as regular employees. In Munich a senior dev can be offered around 100k. If he's single and without kids, the government will immediately take more than half of that. Then the apartment will set him back around 1000 euro a month. This leaves him with around 3000€/month.
I can make that in less than a week as a contractor doing the same thing in literally the same place.
This is what I don't understand about offshoring. People keep going to India and China to find devs when they can get very high quality English speaking devs from the UK, Australia, and Canada for about the same price (factoring in all costs).
Is it really that low in Berlin? That's like 3k net a month isn't it? Probably half that when you rent an apartment. At this point I'd just not bother, get some easy minijob gardening or something and apply for social housing and Hartz IV.
Harz 4 I think adds up to about 800 or 900 euros per month with all benefits combined, which is a lot less than 3000.
Our rent is 490 euros net per month (in Berlin) for a 1BR apartment but we're looking for a 2BR at the moment so our kid can have his own bedroom. This will probably end up costing about 800 eur/m net (not a central or hip location, but close to transit).
Also, while Germany has high income taxes it has lots of tax relief for being married and having kids. I think we ended up paying maybe 15% income tax last year (1 kid, wife earning minimally). Plus lots of subsidies for childcare & education (in Berlin even more than in other places in Germany).
You can definitely easily support a family of 3 or 4 with a single wage in that range.
Honestly with a lot of very good engineers paid in Europe less than 60kUSD I would say that I strongly disagree with your point of view.
If you want to be paid like that move to Europe or to US.
If you want to live in a country with an abysmal cost of life then be prepared to have less in absolute value.
Heck, I know that with 60k in India you can have several servants and you can live like a king.
I think that there is a limit to what the pointy head bosses are willing to pay once they realise that in proportion they are poorer than you.
>However, all that is coming to an end - probably sooner than later. These biggies will either have to trim down significantly or collapse under their own weight
Thank you for your insight. Curious, what makes you say this? Is the current system trending down that path?
but i think that's opposite of what op is saying. I got the impression that 'cheap sourcing' has failed and businesses built around it are failing. You seem to be implying cheap sourcing is moving elsewhere due to price.
There is a difference between offshoring and cheap-shoring (i.e what I call offshoring at very low costs). Most of the bad experiences you get from India are a result of cheap-shoring. You get what you pay for. Cheapshoring undervalues good engineers and overvalues a lot of bad engineers.
I have seen this for almost 15 years (from the Indian side), and I don't like it. While some people see Indian IT as growing with the likes of Infosys, TCS, Wipro, etc - I personally saw that as crippling good CS talent in India. However, all that is coming to an end - probably sooner than later. These biggies will either have to trim down significantly or collapse under their own weight
If you want equivalently good engineers from India (as of now), be ready to pay half(45-50%) of the pay in US. So if you are paying 120K in the US, the same should cost you 54-60K USD when the engineer is in India. This will also reduce friction. One may get lucky in the early days hiring at cheaper costs, but sooner or later the good engineers will see their worth and will most likely leave instead of asking for a raise. You have to do your due-diligence selecting a worthy engineer - that is like finding a needle in a haystack.
If somebody chooses cheapshoring, they are planning for a higher cost that is at least more than the 50% mark mentioned and in most cases if you analyze retrospectively - it would have cost lower if you did not cheap-offshore in the first place. The release may seem less costly, but the maintenance and operating costs will ultimately outgrow.