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Why Apple Backed out from India?
Posted by
Hemos
on Mon Jun 19, 2006 11:40 AM
from the gettin'-out dept.
from the gettin'-out dept.
rmunaval writes "BusinessWeek reports an interesting article on why Apple might have backed out from India. The prime reason being, India has grown at a much more rapid rate than expected and is no longer the cheap destination for the companies. It grew at an astonishing rate of 9.3% last quarter."
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News: The Myth of the New India 378 comments
theodp writes "An NYT op-ed on The Myth of the New India reports that only 1.3M Indians are participating in the so-called new economy of BPO, leaving 400M have-nots without a piece of the pie. Despite recent gains, nearly 380M Indians still live on less $1 a day, setting the stage for rural and urban conflict." From the article: "No labor-intensive manufacturing boom of the kind that powered the economic growth of almost every developed and developing country in the world has yet occurred in India. Unlike China, India still imports more than it exports. This means that as 70 million more people enter the work force in the next five years, most of them without the skills required for the new economy, unemployment and inequality could provoke even more social instability than they have already."
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Markets work yet again (Score:5, Insightful)
Re:Markets work yet again (Score:5, Insightful)
Part of what happened that made this happen sooner is that the Indian quality of life, bolstered by all sorts of outside companies outsourcing there and pouring money and jobs into their economy, rose. This of course becomes a positive cycle, where the newly wealthy* start demanding more**.
This sucks up potential labor far faster than simply looking at the unemployment/agricultural worker numbers.
We're seeing the results now. India's currency is gaining strength, the dollar is loosing strength. Soon it'll no longer be as economical to outsource to asian countries(China will take longer). Soon it'll make more sense to outsource from expensive american cities to inexpensive smaller cities, larger towns, or downright rural locations within the United States. Arkansas costs half as much to live in than Hawaii.
*relativly of course. They might still be 'poor' by 1st world standards, but they're no longer 'dirt poor'
** Services like telephones, internet, more frequent hair cuts, eating out, things like bigger, better constructed homes, vehicles, etc...
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Re:Markets work yet again (Score:5, Interesting)
It's happening now. I live in Indianapolis, and there are already three companies here who are getting on that trend. One thing they point out is that prices for land and housing are 1/2 to 1/3 of what they are in, say, Chicago, and that while wages here aren't THAT much lower, they are lower. The labor laws are also pretty much the same as elsewhere in the US, plus there are nice little junkets like Colts games, the Indy 500, etc. Indy isn't the only place seeing this, either.
Of course, over time, as wages adjust, ... but hey, that's just how the world is.
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India to start losing jobs. (Score:5, Insightful)
Now India will feel the pain as jobs are outsourced to Asia and Eastern Europe where rates are cheaper! Pretty soon, people in Zimbabwe will be coding :)
http://psychicfreaks.com/ [psychicfreaks.com]Re:India to start losing jobs. (Score:5, Interesting)
What are the major requirements for locations to which you want to outsource tech jobs?
- A stable power grid (if it's not there, build a small one yourself)
- An oversupply of labor with high population growth (to keep that oversupply rolling)
- A sufficient percentage of English-speaking workers.
The rest is training and, for large companies, will pay off quickly. I'm sure I've left off a couple items, but African countries, Indonesia and other PacRim countries, and SE Asia are where tech labor outsourcing is heading next.
This is a positive for these countries (standard of living will increase) and, in the long run, a positive for the US and other western powers (greater influence in those areas, long-term economic benefits).
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Re:India to start losing jobs. (Score:5, Funny)
You write that as if it's a joke. Sub-Saharan Africa is a big emerging supplier of tech labor, in the position that India was 20 years ago. We're already seeing major efforts in Nigeria, don't think for a minute that much of the rest of Africa won't follow.
It's already well underway; I get emails from nice people in Nigeria all the time offering to share their money with me. They must be working pretty hard coding all those emails!
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Most likely reason (Score:5, Insightful)
Not that this should be a shock or anything... (Score:5, Insightful)
In a way US corporation going to India stimulated this growth. It is interesting to me that India has changed because of outside investment but the way they have changed has made them less appealing to those same investors.
Globalization is bitch, isn't it?
Re:Not that this should be a shock or anything... (Score:5, Insightful)
Am I the only one who sees this as utterly fascinating?
The fascinating part about this is how by exploiting these people (Indians and Chinese, but also Poles or even to take older examples the Irish) we make them rich and reduce the differences between them and us. Shockingly enough, all that bad, shameful economy (can you remember of some "concious" person telling you not to buy Nike shoes because they were made in Chinese sweatshops?) did great good to them, in the middle to long term.
In other words, let us exploit you, it's for your own good :-)
Parent
I can vouch (Score:5, Interesting)
My company is currently using Indian developers to augment our in-house staff. Every time the offshore company presents someone to us that cuts the mustard, we end up having to rotate someone else on after that person bolts for another company in India three months later. We keep getting told that demand is so high for QUALITY Indian developers that no one can keep them. They keep bouncing from outfit to outfit, getting salary bumps with each move. It's second hand information obviously, but it certainly does synch with what we've experienced.
Time Magazine cover story (Score:5, Interesting)
Not sure how the subscription model for time.com works, but I have been able to access all stories in the Cover article without a subscription:
Bombay's boom [time.com]
Hooray for Bollywood [time.com]
India Awakens [time.com]
My lost world [time.com]
Worth a read.
A little premature to call it the right move (Score:5, Insightful)
Doesn't the part of knowing when to cut and run imply that it was the right decision? The way I've always looked at outsourcing as an engineer is that you want to have people of varying backgrounds in any large organization. I think that India and China are part of this along with the US and others. Other countries will come into the fold as well, but I think that it'll be for the better of the company to have multiple groups with different backgrounds and experiences.
Now, it sounded like this venture was purely for help desk, which I think is being performed at a commodity level nowadays (in the sense that all service seems to suck, given that good service costs money). In that case, moving to wherever it is cheapest is probably a good move. Though maybe they'll just add to the number of workers woring 15-hour days in China.
-dave
D'OH!!! No wonder (Score:5, Funny)
Actually, that episode was good social commentary... It's basically what's happening. The Indian labour force is developing the sense of entitlement so near and dear to our hearts.
Gotta wonder if the submittor (Score:5, Funny)
"All your base are belong to us."
"India has grown at a much rapid rate."
Yeah, seems like the same guy...
What we're seeing. (Score:5, Insightful)
India has been in a horrible financial condition. It's got large amounts of debt and it's trying to work it's way out of them. This comes with financial assistance from the international community. You have many of these poorer nations not able to afford the subsidies anymore for farmers , which means more people migrating to the cities for the promises of these fantastic tech jobs.
Problem is the cities aren't ready to handle all these people, and the government isn't ready to handle all this displaced workforce. Result? SLUM TOWN!
Uh Oh, now the international community is on nations to provide a base level of support for their people. They don't want sweat shops and shanty towns of workers paid pennies on the dollar of what others get. India has to rely for a good deal on it's own people to solve this problem for themselves because they don't have the money to. If they want to they have to start taxing these companies more, which means.... costs go up. On an individual level? How to get out of the slum, you have to get paid more so you can afford to live there, you demand more pay.. they demand more for your contracting.. Costs rise...
Suddenly all those cost benefits from outsourcing start evaporating.
From my personal perspective.. yay. This is far more effective a way to "keep jobs here" than trying to legislate some mandate for companies to do so. In this case, the "free market economy" is actually doing it's job.
Next Outsourcing Destination: China (Score:5, Interesting)
Re:Oh crap. . . (Score:5, Insightful)
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Re:Oh crap. . . (Score:5, Funny)
And it's probably higher than it is in Des Moines, IA, too... : p
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Re:Oh crap. . . (Score:5, Funny)
And don't even get me started on the commute.
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Re:Oh crap. . . (Score:5, Insightful)
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Re:Oh crap. . . (Score:5, Insightful)
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Re:Oh crap. . . (Score:5, Funny)
[this put in to defeat the lameness filter]
[this put in to defeat the lameness filter]
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Re:Reality Check for the Cult of Apple (tm) (Score:5, Insightful)
Doesn't have to be. Stand up and support companies that share and uphold your ideals and beliefs by giving them your money.
Or you can go for the cheapest company and help them screw over your fellow man.
Parent
Re:Reality Check for the Cult of Apple (tm) (Score:5, Interesting)
As an example, the Fortune 500 electronics company that I work for does most of its R&D in the US, but there are also R&D centers in other countries, mostly from acquisitions. It does most of its manufacturing in the US as well, even though it could get away with doing the job much cheaper in emerging countries, particularly China, where environmental rules are pretty slack and labor costs are much lower.
We've got at least one fab in China, true, but it meets US safety and environmental standards. I'm sure that the pay is not what it is in the US, but if the pay there is like the pay here, it's above the national average for the job.
Here in the US, we regularly win awards for going well above and beyond governmental requirements for environmental safety. We've got a fairly green operation, as much as possible, considering what it takes to do what we do.
The company has established a well-funded charitable foundation that supports education and arts in the community and around the country - and even in the big tech downturn when we were losing billions of dollars a year, it was able to give away millions of dollars each year.
And the thing is, we're not particularly different from most other large companies. So the "make money at any cost" mantra is getting pretty tiring.
-h-
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Re:where's the editor? (Score:5, Funny)
"Slashdot. News is for the nerds. Stuff that is the matter."
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