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Employee-Driven Outsourcing


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Outsource your job to earn more!

Outsource your job to get a new one! This is the new mantra doing the rounds in the US IT sector.

Programmers are outsourcing their software modules to cheap and efficient labour in India. This way they get the best of both worlds- more money and more time. They earn doubly - one from the outsourced job, other from the new job they undertake.

According to this concept the techie is able to give himself a promotion outsourcing the specific modules to one or more Indian techies . While he takes the charge as a overall project manager.

You can utilise the time in updating yourself to new technologies as well as learning a different domain thereby enhancing your market value considerably .

Says a programmer on Slashdot.org who outsourced his job: "About a year ago I hired a developer in India to do my job. I pay him $12,000 out of the $67,000 I get. He's happy to have the work. I'm happy that I have to work only 90 minutes a day just supervising the code. My employer thinks I'm telecommuting. Now I'm considering getting a second job and doing the same thing."

Smarter techies are working for three to four companies at the same time, outsourcing all the coding and just supervising them for few hours a day. This way they are able to earn four to five time more than what they used to.

This is called the principle of 'comparative advantage', whereby you concentrate on you core strengths outsourcing the non competitive areas.

The idea has given rise to firms named as micro multinationals. These firms hire a small number of sales and marketing people in the US. The software products are developed in Bangalore, Pune or Hyderabad.

The concept of micro multinationals is antithesis to the theory of 'Incubation'. Incubator firms are venture capital funded startups which divest some business functions to their investors.

Solidcore Systems, a security software developer with headquarters in Silicon Valley, is a micro-multinational. Solidcore has 20 employees in New Delhi and six subcontractors in Pune, India. The company also has 20 employees, including its CEO, CTO, and sales reps, in the US.

While micro multinationals purchase non-core services from outside concentrating on their core competetive advantage. An example may be the call centres themselves outsourcing the non essential services of security, food catering or maintenance to outside firms.

Says Rosen Sharma, president and chief executive of Solidcore: "We were a micro-multinational from day one. It didn't mean I hired fewer people in the US," he says. "It meant that I could hire more people in sales and marketing, because I didn't have to concentrate on building R&D in America."

Venture capitalists these days compulsarily demand that the companies they finance outsource what labor they can. Yogen Dalal, a partner at Mayfield, says more than half the companies he funds have offshore workers.

The wisdom of outsourcing applies to businesses great and small. When companies have some of their operations performed elsewhere, they reduce costs and allocate capital and labour instead to those activities that cannot, or should not, be subcontracted.

When businesses use capital and labor efficiently, they can better explore expanding markets. And faster growth creates a need for new workers. The result is almost always a net gain in employment.

Outsourcing is change. As ever, change will be unacceptable to a few; there will be "dislocations," to use the jargon of labor economists. Some people will be too old, too inflexible, or otherwise unable to find new work.

But most Americans can relax. Cheap overseas labor means more jobs in the US, not fewer. And working for a company that's both global and small might just be the best of both worlds.

Over the past 10 years, 325 million jobs were eliminated in the US, but 342 million jobs were created. According to the Information Technology Association of America, some 372,000 technologists were laid off in the recent recession. Some fraction of those positions moved to India.

But the ITAA also predicts that outsourcing will create 317,000 entirely new jobs in the US over the next four years as a result of cost savings. And outsourcing generated 90,000 jobs in 2003 alone.

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Guest SkinsHokie Fan

Interesting article. Shows that this is starting to become a truly global economy.

And that India is a step ahead in the game. They are going to be a major player in world economics very soon.

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India is the second fastest growing economy in the world. Sad thing is that it depends too much on the mosoon rains (This is a good year, so the 8% growth rate should be sustained). China is growing faster but most experts agree that at this pace India would eclipse China in the next 15-20 years. India is just begininng it economic liberalization and India has the infrastructure to help create world-class companies, something China can not do.

The key is sustaining this rate of growth, keeping inflation in check, and slowly decentralizing.

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The key for India is education, and keeping its geniuses in the country. Millions of educated Indians have left the country because of a lack of opportunity. Somehow if opportunity and jobs are created in India, the country could take a huge step forward.

But I have witnessed a lot of change there. Everytime I go there have been a lot of development in key infrastructure. There are major highways and road repavings going on all over the place, underground wires are being laid as well, beautiful cars are replacing the old box type marutis, cell phones are everywhere, luxorious houses are being built in many villages. Some of you may chuckle at these accomplishments as nothing, but if you were in India as early as the mid 90s you would see what I am talking about.

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Amartya Sen makes a convincing argument that the reason China's economic growth has by far outpaced India's, despite the horrors and restrictions of Maoism, is China's success in providing basic health care and education to every citizen.

I am not a fan of his. His anayalsis on a great deal of issues are suspect at best( imo).

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Originally posted by BDBuddy23

fantastic... Now it's official that I won't get someone who speaks english when I call a company.

Why would a company put a non-english speaker on the phone when Americans call? :doh:

The only difference is that Indians are taught to learn British English. I do my part whenever I go and tell the little kids its not "zed", its "zee".

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He makes around $33.00/hr. His company probably bills him out at around $60.00 to $70.00 an hour (maybe even more). If they fired him (and that's not cheap) and hired the other guy direct they may now be directly liable for his failure to perform, may loose the contract (they may not be allowed such outsourcing by contract but a small business may be allowed) and even if they could keep the contract, the available funds to meet overhead/profit requirements (total funds needed would probably increase in outsourcing the job to India but would at least stay the same) would drop from about $33,000.00 to less than $12,000.00.

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