Software development without borders.

Wisdom · June 28, 2019

Might want to move this to PRC if commenters can't keep it nice.

This month we had to make some hard decisions. Basically one of our divisions has been bidding on several contracts that are comprised of engineering, software development, and data management. The contracts are large by almost anyones standards and even if you only get half the RFPs, its generally enough to keep various teams employed for years.

We have a few high performing teams that work on extended contracts that have been without a project for a year. The other teams have been absorbing the cost. Not to say they haven't been working, but getting highly paid specialists to do generic work is like asking a surgeon to work reception at a hospital. You can, and they have the skill, but the pay gap and lack of engagement is absurd.
We've been holding off for more than a year and a half for these RFPs and the successful bidders were announced April.

We were the top North American bid, and 4th overall. The contract matrix has many factors with cost having the primary weighing. We exceeded in 7/10 categories but overall fell short on cost and timeframe.

At the end of the day we were outbid by 2 Chinese companies that practice 996 (72 hour workweek) and an Indian company thats would not disclose HR practices for "competitive reasons'.
The top company beat us by 1/3rd. These contracts are a lawyers wetdream and we were incredibly motivated to keep our teams employed. We sliced that contract every way we could think of to massage our core costs. Our margin was not even healthy, we bareboned it to keep our teams employed.

Didn't even matter, we weren't even close. We can't compete with a company that has half the salary and double the hours. After a month of internal deliberations we released two teams of people in a week. That is one of the hardest things to do. Unless you do it or are a part of the team that has to make decisions like that, you will not understand.

Social media has painted virtually every company as heartless corporate overlords with fat cat executives waiting to screw their employees. That is the one of biggest deceptions this world has to offer. It doesn't work like that in the real world. Do our lawyers, executives, and financial teams get well paid? Yes! You pay for skill, risk mitigation, leadership ability. Not one person that worked on this decision felt anything but frustration and sorrow that there were no viable options to retain the teams at the salary without specials projects to work on.

996 is another nail in the coffin of homegrown companies without a large overseas presence. If it becomes mainstream there is no way NA can complete with that, even without socialism pervading every facet of business. At the end of the day a company has to be profitable to be viable. This hurt.

Ripper · June 28, 2019

Well, from a long post we could get into super textwalls quite quickly if I tried to address every point. But let me just ask - what is your solution to this problem?

wolfgrimdark · June 29, 2019

Sad news for sure. I am a little confused, however, why you mention socialism in the last paragraph as this sounded like an example of what happens when you have unregulated capitalism. Meaning its all about the bottom-line, the profit, that matters and here was have businesses competing and in the end the one that offers the best deal is the one that wins.

I could see it being related to socialism if maybe the government stepped in to say business in our country can only do bids/contracts with external companies if they meet certain regulations, or maybe impose a tax to make the bids more appealing to the local business, or in some way worked to regulate capitalism in some manner like this. Or perhaps if the bidding countries (China, India) were more socialistic then they wouldn't be able to offer bids like they do as they would have to provide more humane working hours and conditions, thus reducing their leverage.

Unless you are recommending that we need more socialism and this was an example of what happens when capitalism isn't regulated?

Alrik Fassbauer · June 29, 2019

Wisdom said:
Wisdom said:

At the end of the day we were outbid by 2 Chinese companies that practice 996 (72 hour workweek) and an Indian company thats would not disclose HR practices for "competitive reasons'.

Click to expand...

This is pure Capitalism : The companies with the lowest human cost wins, no matter how.

wolfgrimdark said:

Sad news for sure. I am a little confused, however, why you mention socialism in the last paragraph as this sounded like an example of what happens when you have unregulated capitalism. Meaning its all about the bottom-line, the profit, that matters and here was have businesses competing and in the end the one that offers the best deal is the one that wins.

Click to expand...

No wonder why "western" companies have been chosing to let thgeir products be developed in India and in China - meanwhile the headquarters remain in the U.S. , Canada or in Europe, of course ! : Because the wages are the lowest there. What does not need to get paid for workers flows into the profits.

Example : Bangladesh and cloithing workers.
Remember that catastrophe of a whole building filled with clothing workers burning down with all ways to escape blocked and the owner suddenly disappearing with al the money ?

Now, cynically put, companies of India and of China merely take advantage of the Capitalism and "free market" approach / philosophy.

In the end, this is like Colonialism : Having low-end wages workers work for the own american or european companies, and THEN complain that they are low-end wages workers.

This is like … - I've found this wording years ago - … "capitalism winning itself to death".

Ripper · June 29, 2019

That's why I'm curious about the proposed solution. If one wants to avoid the possibility of radical change, it seems the natural progression of capitalism has the prosperous countries in a bind. If we cannot compete against developing world wages, that is a problem. But, if we tried to pay our workers "competitive" wages, totally unlivable under our our costs of living, then you're going to see radical change pretty quickly, be it socialist-flavoured or otherwise. I think we can already see the signs of it, from various quarters.

joxer · June 29, 2019

The worldwide market has nothing with capitalism nor socialism.
Of course politics and politicians have an impact on economies, smart countries legalized THC and are getting rich for example. Another example, stupid countries censor art and aren't getting money from it (instead, pirates do).

The problem described in the first post is usually called - dumping. No huge profit from one job, but concentration on quality to earn respect for future contracts is an acceptable risk as will (sometimes) kill the competition in the process.
Not everyone however can afford to go dumping due to another, erm… Phenomenon? Who can then? Lemme give an example.

So there is that chinese island where in the past everyone was poor and all of them combined had less $ than one average USA homeless person. Why was that so? Everyone there worked on agriculture.
I have no idea who and exactly when decided it's time to stop kids dying from starvation. But the whole island abandoned worthless agriculture and shifted into hardware industry. Today there is no poor person on Taiwan.

But these people who had almost nothing yesterday do not ask for much today. They ask for just a bit more and it's great. So of course former dying from starvation workforce will accept wages so low you would never believe someone can live fairly with that.

And of course companies, 99% owned by less than 1% of people, want to pay workers as less as possible. To them workers are expendable cattle, not humans. Sleezy CEOs.

The only solution is abandoning the current market system where CEOs and companies have no ethics, where $ is the king, where scams rule screw everything else.
With average level of worldwide population IQ, that won't happen soon.

As usual, instead of continuing a wall of text that will lead us nowhere, I'll point on a movie that pinpoints another solution. This is an indie masterpiece not made for mainstream mediocrity loving audience, but it's there to make you think on the future and most important - it was made before Trump, yet feels so fresh even today:
Frozen River
7/10 says imdb. As usual, ignorant majority pans what they can't understand. And it's one of those works you need to watch before dying.

Alrik Fassbauer · June 29, 2019

joxer said:
The worldwide market has nothing with capitalism nor socialism.

There is one defining element, though : Greed.

Greed makes people strive for the maximum of profits = reduced costs. Instead of paying the worker more so that he / she can have a more comfortable life, companies pay only the absolutely necessary minimum.

And I'm not even talking about companies having to be effective in order to cover their running costs. Because I do know some comnpanies which pay more than they should BECAUSE they want their workers to lead a more comfortable life. (And I talk about workers, not bankers.)

In the end, it's all about profits, and profits are wanted because of greed.

Recently I developed a saying :
"From the perspective of money, humans are nothing but transformed money. From the perspective of money, Earth is nothing but temporarily transformed money.
In the end, EVERYTHING becomes money."

And money itself ... there are some numbers in bank accounts. We all believe that thee numbers are money. Or represent money.
In the end, however, they are nothing burt numbers. We only notice this, though, when a bank has crashed and fails to pay its customers the money in the bank accounts.
Apart from that kind of incident, they are merely numbers. As a meta-thing, they are so much apart from our reality that we can literally touch, feel, walk upon, eat, smell, grasp, that these numbers are ... almost like a ghost, or like a god-like status. They just cannot be touched.
Bank account numbers are like ... items in limbo.

The only numbers that become kind of real are those which materialize into things bought by them. Like buildings, jachts, cars, but also food, clothes ...

In the end, and I think that Sir Terry Pratchett would agree, these bank account numbers are nothing but some kind of trick or scheme to make people believe they actually own something. And the profits of these schemes wander into the pockets of those who make people believe them. Like magicians in a circus.

Cacheperl · June 29, 2019

That's software development experiencing the same stuff that many other industries have already suffered. Maybe with the difference that it's even easier to outsource a service like that. I'd hate to be part of that, on either side of the table (employee or management).

In the end, the only way to survive that is to offer very specialized products or services that are not (can not be) offered by the competition. If that is possible at all.

Of course, government regulations could also help... but I would not count on it. Let's just say you manage to regulate reasonable minimum wages / work times for contracting companies, even if they do not operate in the same country as their customer. In the end, the effect may very well be that you customers are the ones who suddenly can't keep up in comparison to their international competition any more, due to the price hike. And sooner or later, you're ****** again.

you · June 29, 2019

The only way to win against the china/india is via quality. The problem is when bidding on a contract is how to prove you will produce higher quality code.
--
When it comes to raw $$$ it simply cost less in certain region by a significant factor...

Arkadia7 · June 30, 2019

I don't see how this could be changed, at least in the near term. Unless you want, like, some kind of one world government, where there are no longer individual countries, but a centralized government dictating world trade and prices and ensuring no exploitation of workers anywhere. What a utopia, eh.

I'm sure that is just a conspiracy theory though, and no elite types actually would ever want that - total control of the world - and it would be just dandy anyway if it ever happened, with no problems or issues at all....*sarcasm*

I guess maybe we just have to accept that yes, some populations in certain places are going to be exploited for the foreseeable future, and made to produce cheap goods and cheap labor for those in wealthier, more powerful countries...*gasp* So politically incorrect, but reality can be like that a lot of the time.

Ripper · June 30, 2019

Arkadia7 said:
I guess maybe we just have to accept that yes, some populations in certain places are going to be exploited for the foreseeable future, and made to produce cheap goods and cheap labor for those in wealthier, more powerful countries…*gasp* So politically incorrect, but reality can be like that a lot of the time.

I think that misses the point, though. The problem for the US, is that the days of western capital simply exploiting cheap developing-world labour are coming to an end. Those nations have developed capital and infrastructure of their own, and can now compete (as in Wisdom's example) at a much higher level.

Thing is, you guys keep talking about what you don't want - socialism, one-world government(!), etc. Fair enough - but what policies do you want to address these problems?

Because, if these circumstances continue to bite to a worse and worse degree, which I think they will, I really don't think the US is going to say, "Oh well, that's reality for you. We've had a good run..."

joxer · June 30, 2019

It will end up exactly in a way you said.
USA is not France so there won't be any yellow jackets. The Alabama antiabortion law copypasted from Ceausescu proved it, noone even coughed on it.

Not sure why do you think some people don't want socialism. As it happens, assuming we all want $, it's working for China so why it wouldn't work elsewhere?
It doesn't work for North Korea though, but then again capitalism doesn't work for Ethiopia. Or Somalia. Or, ever heard of illegal immigrants from Philippines?

I think I wrote the worldwide market doesn't care about capitalism nor socialism. It cares only for $ and thanks to the sick minority called CEOs, there is no ethics involved in business.
Do you really think capitalism is responsible for USA's exploits? Capitalism can not decide anything on it's own. It's people who make decisions and all of them are CEO. CEOs do exist in socialism and are as evil as in capitalism.
So how about shifting the eye on the actual filthy rich minority who screwed things up for the majority and leaving the system, any, alone?

Kos · June 30, 2019

I am in Switzerland so my experience may differ. When we need something developed we generally split the project because nowadays it is easy to implement that. The Specs, User requirements etc ..are done by local people (Europe actually), the heavy code is done in India. DB depending on the complexity is either in India or in Europe. UI is always in Europe.

Basically, everything complex or requiring business facing is done here. The complex topic is not because Indians are not able but because experience proves than those companies pay a just and fair price for their HR policies: Once the devs have got a bit of experience, they leave for a better pay or less hours. And they do that often.

Due to that all their projects are late. Ok, IT projects are always late but those ones give a new meaning to the word "late". Mainly because of the endless movement of people in and out. Obviously the knowledge transfer is bound to be poor and the new guys are always junior and really clueless or they would not accept that.

Everything is a matter of experience and that is why for example we always have a strict and detailed schedule to our contracts with enforced financial penalties. Also planning for baselines and a huge time to go in production is mandatory.

Some projects had more time spent to iron out bugs and validate the required features which were painstakingly described but still screwed in multiple and funny ways than actual time of development. QA is huge and mandatory.

All in all when you add the support, the time, the QA, the endless meetings with them or the business it is difficult to justify to use them for every projects. But again, sadly, this comes with experience: we went from 100% in India to the approach I described earlier which is more like "what is not critical?" or "very time consuming in terms of man/hours" and those elements go there.

you · July 1, 2019

That has also been our experience cept we actually had an office in India. Once they had a bit of experience the better personal demanded that they be given visa for usa position while the not so good used the company name on their visa to shop for a better (higher paying) job. Very few stayed around for a long time. In USA many of the eng stayed with the company 10 to 15 years; though turn over has increased recently (the company is only 20 years old).

Kos said:
Indians: Once the devs have got a bit of experience, they leave for a better pay or less hours. And they do that often.

Ripper · July 1, 2019

Yes, I'd say that's a pattern that would sound familiar to a lot of people. But, as time goes on, the roles that the developing world workers can take on move further up the food chain.

At the same time, if you're, say, China, it's a pretty nice situation. You have western companies employing your cheap low-skilled workforce, while at the same time developing your own high-skilled companies, and having that cheap labour at your disposal, too. I suppose, in time, one would expect living standards and wages to rise in those countries too, and start to even things out, but I think the situation will persist long enough to cause serious economic and political upheaval in the west.

Maylander · July 2, 2019

In Norway, we often do something similar to what Switzerland does. We try to keep the more complex tasks and development local, but outsource a lot beyond that. It's not really due to costs here though: Almost every company would rather hire local developers, but we simply don't have enough developers around.

Kos · July 2, 2019

Maylander said:
In Norway, we often do something similar to what Switzerland does. We try to keep the more complex tasks and development local, but outsource a lot beyond that. It's not really due to costs here though: Almost every company would rather hire local developers, but we simply don't have enough developers around.

hehe

Well that is exactly why I mention Europe as 'local' ;-)

Kos · July 2, 2019

Ripper said:
Yes, I'd say that's a pattern that would sound familiar to a lot of people. But, as time goes on, the roles that the developing world workers can take on move further up the food chain.

At the same time, if you're, say, China, it's a pretty nice situation. You have western companies employing your cheap low-skilled workforce, while at the same time developing your own high-skilled companies, and having that cheap labour at your disposal, too. I suppose, in time, one would expect living standards and wages to rise in those countries too, and start to even things out, but I think the situation will persist long enough to cause serious economic and political upheaval in the west.

I was surprised when Wisdom mentioned China. I understood when he said they would not communicate about working conditions: They are probably outsourcing themselves. They are not really that competitive anymore if you add all the extra costs associated to any remote projects.

However, some companies are quite volunteer to do some 'Troy Horse' approach, loose a bit on few contracts to get a footprint in the company. From there, you can participate to bigger projects or get the coveted 'Preferred vendor' medal.

Hurls · July 3, 2019

The long term Chinese plan is Africa, current to the middle term for China and countries in China is Mongolia and Siberia. Philips has already moved a major manufacturing facility to Mongolia from China ’proper’ over five years ago. For India, their outsourcing target currently seems to be Bangladesh, after that?

Africa? Yup, lots of Chinese investment and free colleges teaching mandarin located in Africa have been active since before 2010.

Software development without borders.

Wisdom

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