Why Indian outsourcing is doomed

More recently, during the discussion of the post, the Experience of finding work on the Elance exchange a heated discussion arose about how to compete with Indians and Pakistanis on the sites of freelancers sites. In continuation of this topic, I publish my free translation of an
article by Evgeny Rozinsky 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 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. A business without any innovation whose only dubious advantage is low cost. But is it not a myth?

This is not an attempt to write a scientific article or predict the future. This is just a personal opinion that I have developed 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 create 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 outsourcing industry of India as a whole and to note the characteristic problems that we face as clients, not people working there.

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.

Labor resources

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

Most people and their employers overestimate their level of seniority. In most resumes, the level of skill is two steps higher than what is generally accepted in the United States. Employees have unrealistic (by American standards) expectations of their speed of promotion and type of work.

Workforce quality

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

Staff turnover

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

Communication

The time difference between India and the United States of America is the worst possible. 12 hours of Pacific time difference simply does not leave you a chance to chat with your team in India at a reasonable time. When they finish their working day, you are not even ready to start yours. When you are ready to leave your post, they can not always be found. This makes you 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 precisely 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.

Attitude and work ethic

Employees in India are very difficult to motivate. You will notice that weeks and months pass with very little progress. Indian employees of outsourcing companies seem to have the natural talent to work poorly, producing little. Many developers are happy to be involved in stagnant projects. This may be due to the fact that they do not have sufficient life experience and cannot see the general picture of what is happening. They have no clue about the ultimate goal. It is hard to be motivated when you do not understand why you are doing something.

Recently, I had an Indian contractor whose task was to conduct some types of tests several times a day. The test consisted of the following steps: buy a product, place it for sale, buy it again, and place it again. He completed this task in two weeks, and sent a “test passed” notification. After that, we found an error in the application that did not allow us to send the purchased goods. But a recent test report claimed that everything worked. How could this happen? During the test, the Hindu placed 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 full cycle.

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

Justification, it seems the main thing, is an art in which most Indian outsourcing companies have really succeeded. They are so good at this matter that sometimes you start to doubt yourself.

Issue price

It is very difficult for outsourcing companies to provide you with the most experienced and productive team to solve your problem. They simply can not stand low prices, attracting employees of sufficient qualifications. The biggest smoke screen you get is a common concept called “blended rate”. When concluding a contract, they explain something like this to you: “We are a team that consists of people of various levels of training. Payment for services is at an average rate. Thus, if the work of qualified developers is required, then they will cost you fabulously cheap. Too good to be true? In reality, the composition of 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%. In the best case, this team will have one really highly qualified person who will most likely be part-time as a project manager.

It is no secret that salaries in India are growing rapidly today, especially among skilled employees. To reduce costs, companies are constantly forced to bring “fresh blood” into their staff 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 prepared to lose as soon as it starts to be productive.

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

Conclusion: Today I am very interested in a strategy to combat the dominance of Pakistanis and Indians on online freelance exchanges. Judging by this article, they have weaknesses, the question is how to use them. If you manage to collect material, I will try to write an article on this topic in the near future. I would be grateful for any help - related links or short stories from personal experience. Write in a personal or in the comments to this article. Thank you in advance for your help.

PS This Eugene is not at all the Eugene to whom my previous article was devoted, although their names and countries of residence coincide.