Wednesday, February 18, 2004

I've got a long post on outsourcing, and the rhetoric around it, which I've been chewing over for a while -- but while I beat it into shape, those with an interest in the topic might want to peruse this Slashdot "interview" with the Indian workers themselves.

A couple of salient points:

First off, this makes it clear why programmer hours are so much cheaper in India -- everything is cheaper in India. It's not too much of an exaggeration to say that all of the major household expenses of these guys -- rent (about $175/month), food ($50), and excellent medical care for very few dollars -- are literally one tenth of the prices paid by American tech workers, for a roughly comparable lifestyle. Hours and working conditions are similar (the Indians generally get more vacation). Apartments are about as big, perhaps with fewer gizmos, but the servants they can afford make up for that. Medical care available to professionals (though not to peasants) is of high quality. And so forth.

The two most marked downsides are that transportation is worse (roads choked, even with smaller cars, public transport choked and filthy) and that utilities are flaky. Even these points aren't quite as cut and dried as you'd think -- commutes seem, from what little I can tell, to be shorter (no one addressed that directly, but apartments a half hour away from downtown -- not a bad deal by American standards -- are at a deep discount). And as to the utilities -- remember Silicon Valley a few years back?

It is difficult to read this and believe that exchange rates are not seriously out of whack. And while even The Economist is printing cover stories that read "let the dollar drop", they aren't talking about so much as a factor of two, and it would need to fall a lot more than that to make up this difference in observed purchasing power -- with potentially disastrous short-term results here. Yet despite a trade deficit, over the past five years, the trend in rupee/dollar exchange rates has been the other way. There's something really strange about that.

The other point? Americans often wonder if the Indians feel the pain and worry of Americans losing their jobs to cheaper workers elsewhere. They do. They're deeply worried about low-priced competition from the Phillipines.


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