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Offshore Lore
Myths and facts of white-collar out-sourcing
Jeff Taylor

... But the catch is that out-sourcing is being embraced without much sign that it will actually make high-tech firms, particularly software companies, more effective. Highly collaborative, imaginative work might suffer in the hands of technically adept but inexperienced programmers.

The Times also passes along some dubious information on the actual cost of Indian outsourcing which makes the pay gulf between the U.S. and elsewhere seem impossibly wide. Stephanie Moore, vice president for outsourcing at Forrester Research, claims that "crackerjack" Indian programmers can be had for $5,000 a year. That might be close to what the programmers see, but it doesn't represent the cost to a U.S. company to outsource.

According to people who actually negotiate outsourcing contracts for a living, your costs are more like $22 an hour for each warm body once all the third-party finders' fees are paid. An experienced programmer's take in India would be around $11,000 out of total cost of over $40,000. That's still quite a gap from the $60,000 an American might demand but once the all-important question of productivity is factored in, it may not be much of a bargain.

Simply put, once you leave the U.S. you are leaving behind the world's best, most proven pool of programmers. That's is not to say that there aren't excellent programmers in Russia, China, India, and elsewhere. But large-scale, world-changing software development ain't easy. The Net bubble devalued just how hard it is to build neat technology. Shawn Fanning is the exception that proves the rule.

Or as one software engineer who has worked with out-sourced labor for years puts it, "If software development in India is so great, why don't they have a single software company worth a crap?" ...