Why Indian outsourcing is doomed

More recently, during the discussion of the post Experience of searching for work on the Elance Exchange, a heated discussion on how to compete with Indians and Pakistanis at sites for freelancers broke out. In continuation of this topic publish your free translation
Evgeny Rozinsky's articles on the problems of crowdsourcing in India. According to Eugene, he has 15 years of experience in this field and knows what he is talking about. This is a view from the US, from the employers. The article was published back in 2013, but the problems that it addresses today have become even more relevant.

Indian IT outsourcing has become a streamlined business. Business without any innovation The only dubious advantage of which is cheapness. But is this a myth?

This is not an attempt to write a scientific article or predict the future. This is just a personal opinion, formed on the basis of more than 15 years of work with various service providers in India and around the world. You should not consider the article as an attempt to form a stereotype for each employee of the country with a population of 1.2 billion people. Over the years I have been fortunate enough to work with brilliant Indian engineers and managers, both in India and in the USA. With this review, I am trying to describe the Indian outsourcing industry as a whole, and to point out the characteristic problems we face as clients, not as people working there.
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My conclusions and assumptions are based on the fact that many companies are moving to more flexible development strategies, in which the decision-making process and the ability to adapt is key.

Availability of labor resources

Access to resources is becoming increasingly difficult. Finding talent in high-tech centers such as Bangalore is almost as difficult as finding qualified people in Silicon Valley. There are more jobs than good people. Even if you find the right person, you will need time to connect it to your project and it will be at least two to three months. In India, an employee is usually required to give notice two to three months before switching to another job.

Most people and their employers overestimate their level of seniority. In most summaries, the skill level is two steps higher than is customary in the USA. Employees have unrealistic (by American standards) expectations of the speed of their promotion and type of work.

Quality of labor resources

Do you remember how people impulsively became programmers or engineers in the late 90s? Remember all these schools that promised to turn anyone with a brain or without it into a qualified engineer for 3 months? India is there now. In fact, this is a continuation of the same high tech boom that has been happening for the past 15 years or so. Billions of dollars sent to India from the United States and European companies went to create a HiTech bubble. People without technical education and even their inclination to it become software developers, just because there is a lot of money in this area. Your project will be a testing ground for all these new engineers. You will pay for their training! Only after training at your expense for 6-12 months will they be able to proceed to your next projects, in which they will be able to assist in the training of other employees.

Staff turnover

Ask the recruiter you work with, what is the current staff turnover rate? Most likely you will hear a figure in the range of 8-10%, which they will pronounce with pride. Now ask them what the speed of the change of people who consistently participate in the project of the same company is. Your partner will do everything to never answer directly to this question. This is not surprising, since it is not uncommon when this indicator exceeds 50%. Above, in the “quality of resources” section, I have already said why.

Connection

The time difference between India and the United States of America is the worst possible. 12 hours difference with Pacific time just does not leave you a chance to communicate with your team in India at a reasonable time. When they finish their working day, you are not even ready to start your own. When you are ready to leave your post they are far from always to be found. It forces you to communicate via email or through third parties whose job it is to be a communicator and live in two time zones at the same time. However, in many projects it is the short communication time that is the key to success. Your team cannot succeed if the answer to the simplest question takes more than 24 hours. Especially if this answer raises even more questions.

Spirit and work ethic

Employees in India are very hard to motivate. You will notice that weeks and months pass with very little progress. Indian employees of outsourcing companies seem to have a natural talent for working poorly, producing little. Many developers are satisfied that they will take part in stagnant projects. This may be due to the fact that they do not have enough life experience and can not see the overall picture of what is happening. They have no clue about the ultimate goal. It’s hard to be motivated when you don’t understand why you are doing something.

I recently had an Indian contractor whose task was to conduct certain types of tests several times a day. The test consisted of the following stages: buy a product, place it for sale, buy it again, and place it again. He completed this task within two weeks, and sent a notice "test passed." After that, we found an error in the application that did not allow us to send the purchased goods. But a report on the latest tests claimed that everything works. How could this happen? Hindu during the test placed the goods purchased earlier, and available for registration. The tester knew that there was a problem with placing recent purchases, but did not understand that the purpose of this test was to test the performance of the full cycle.

Indian people will not doubt their bosses. As a customer, you are their host. They will not say no. However, “Yes” does not mean what we are used to. - “This project should be done by the end of the week”, - “Yes”. This “yes” does not mean that everything will be done, it simply means admitting that you need it by that time.

Justification seems to be the main thing, the art in which most Indian outsourcing companies have really succeeded. They are so good at this business that sometimes you begin to doubt yourself.

Issue price

It is very difficult for outsourcing companies to provide you with the best in terms of experience and productivity of the team for solving your problem. They simply can not withstand low prices, attracting employees with sufficient qualifications. The biggest smoke screen you get is a common concept called “blended rate”. When concluding a contract, something like this is explained to you: “We are a team that consists of people of different levels of training. Payment for services is at an average rate. Thus, if you need the work of qualified developers, they will cost you incredibly cheap. Too good to be true? In reality, your team will look like this: Super Junior, people who can hardly work - 50%. Junior, people who are not much better than in the first group - 25%, middle-level people who were juniors yesterday - 25%. At best, there will be one truly highly qualified person on this team who will most likely be part-time as a project manager.

It is no secret that wages in India are growing rapidly today, especially with qualified employees. To reduce costs, companies are forced to constantly add “fresh blood” to their composition and train them. This is the only way to survive. Unfortunately, this leaves you with a low quality workforce, which after training you should be willing to lose as soon as it starts to be productive.

If you add to this the loss of productivity and overhead costs for the operation of offshore companies in India, then it may turn out that you spend more money than with the traditional approach.

Conclusion: To date, I am very interested in the strategy of combating the dominance of Pakistanis and Indians in online freelancer exchanges. Judging by this article, they have weak points, the question is how to use them. If you can gather material, I will try to write an article on this topic in the near future. I would appreciate any help - links on the topic or short stories from personal experience. Write in a personal or in the comments to this article. Thanks in advance for your help.

PS This Eugene is not the same Eugene, which was devoted to my previous article, although their names and country of residence are the same.