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Outsourcing: Who's fault is it?

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Outsourcing: Who's fault is it?

Losing jobs overseas...

from JoeUser Forums

American college graduates are making themselves increasingly vulnerable to outsourcing. I'm not the only one who thinks this. A top Intel executive has expressed this concern too.

The problem is that American technology workers have a lethal combination upon graduation: A sense of entitlement and a lack of skills. 

The sense of entitlement is the from the belief that simply graduating with a degree in engineering, computer science, information technology, etc. somehow should entitle them to a high paying ($40k to $50k) job right away. 

The lack of skills has to do with the poor quality of college education these days in these fields. They don't keep up well. I've yet to meet a technology major college graduate who actually benefited from their formal "education".  The talented people we meet on the net are often in a scenario where we have to simply wait for them to finish college before hiring them.  Their degree made no difference in hiring, them, it simply delayed their hiring and slowed down their development on projects with us.

How much someone makes is dependent on how much "wealth" they produce.  A person making $40k per year has to be able to generate at least $120k in "wealth" to be fully secure in their position.

If I make a product that will make $1 million during its effective lifetime, I obviously can't spend more than that if I want to stay in business.  Since Americans don't really care that much about WHERE something is made, my products and services have to compete with products made by people all over the world (as well as with "freeware").  Look at all the people who bellyache'd last month about RightClick costing $14.95!

So how much we can pay someone is dependent on how much they produce. Typically, it takes quite awhile for someone to be able to produce high quality results in high enough quantity.  Many (most) Americans aren't willing to go without even if it's to their long-term benefit to sacrifice short-term.

When I founded Stardock, I was very poor for the first few years.  In its first year, the company made less than $15k. My (ahem) "salary" was obviously less than that.  It wasn't for a long while before I was able to make more than what I could have made had I simply taken an engineering job. But that short-term sacrifice led to greater long-term opportunities. Increasingly, I see fewer Americans willing to do that -- but I also see plenty of Europeans who are willing to.

The Americans we hire in the technology area typically start at far less for two reasons. One, because we're a fun place to work at for most people and two, because we have a consistent record of rewarding those who increase their skills and output with significant increases in salary. 

But where we can't find someone to do the job, we don't discriminate, we'll look to anyone we can do the job and that increasingly means Europeans who are willing to sacrifice short-term for long term gain.

If Americans want to make the big bucks right out of college without fear of being outsourced then they need to dramatically increase their skills. And the first step would be to get our education system improved so that college graduates don't require a few years of training before they can produce anything of real value.

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31,140 views 39 replies
Reply #26 from JoeUser Forums Top
As one of those fresh new college grads at the end of the Dot Com bust (Grad with BSCE in May 2001) I agree, yet disagree with some of the points laid out here. As in any interview or hiring decision, it must take into accounts many things and one of which is just the salary. Type of Job, benifits, etc... Of course, I am sure American benifits will a jack up the difference in compensation between an offshore and American employee.

When I graduated I had 2 job offers and I somewhat restricted myself to the East Coast and Midwest. In both job offers, I believe it was due to my experiences during school and prior to school (I was in the US Navy and the job was with the gov). The offers were about what to be expected ~40-50 k. I hoped for more of course, but didn't get it and even had a couple, that didn't even look at me any further. Friends, who I graduated with, were still looking for a job up to 1 full year later. Yes, it was bleak and I got somewhat lucky, yet I didn't.

I worked my a$$ of during school and did several various Internships/part-time engineering related jobs as well as participated in Formula SAE and had an ambitious Senior Design project. A Hybrid go-kart. In the end, I believe this is what put me ahead of others and told my potential employers, that I was someone they wanted on their team.

I took a job as a Project Engineer working on battery packs for hybrid vehicles. The company I am with is now over 200 employees (about 40 in systems engineering) and at the time, I was 1 of ~4-7 system engineers working on the battery systems. Granted, there were ~30 others who worked in the company as well.

Anyways, I think it depends on the company, what they are looking for and what the potential employee brings to the table. I do believe, that to some degree new grads can benifit a company greatly, since they are paid lower than others, can bring relatively new ideas and insights to the company and if they are go-getters, then yes, they can contribute. Many college grads, who worked on extra-curricular activities, which enhance them professionally have already learned to contribute some.

Granted, maybe not as someone may like, but either way, there is almost always a ramp up time for any new employee. I do sometimes wish I would have went to a 'big' company, which has already established a career growth path for new college grads, but of course those big companies attract a LOT of competition for those few precious positions as well.
Reply #27 from JoeUser Forums Top
No, Universities aren't meant to be job-training. But they should at least teach the foundational skills for whatever field they are for. IT degrees should have a strong foundational knowledge of technology/networks/computing. CompSci grads have the foundation in programing. Most IT programs are bastardized business programs with a bit of "Tech mumbo-jumbo" tossed in.

In the case of PSU, it was a program that was researched and developed during the 90s, when everything was booming and they needed smart people with big-picture thinking and no real tech skills to manage the hordes of tech workers out there. Now, the whole thing bottomed out and companies want people with solid skills in at least one area. Be it networks, coding, security... whatever.

We're not asking that 4-year schools become training centers for coders, network admins and security experts, but to put out people wo have a solid base of knowledge to start from. As it stands now, we come out of school with a ton of crap floating in our heads that doesn't always fit together. I wanted to take additional technical courses to get better value out of my education, but I couldn't because I had to fit in an art class, or a social sciences class. Yeah, I'm well-rounded as a result, but I missed opportunities that would have made me more marketable as a result.

There are a lot of 2-year tech programs out there that deliver those base skills, but unfortunately unless you have a degree from a 4yr school, it's a lot harder to be taken seriously.

Schools need to readjust their curriculums
Graduates need to readjust their expectations
Employers need to reassess their requirements and expectations (don't discount self-taught people, or those who did 2yr programs)
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Reply #28 from JoeUser Forums Top
I can either: (a) Just hire American developers off the college assembly line and pay them $40k to $50k right off the bat and be uncompetitive in th emarket thus eventually going out of business or (b) Hire the best and brightest developers from around the entire world who may or may not cost as much as that American college grad.


and we can either: (a) Just buy Konfabulator, which is programmed by Arlo Rose in California, and not in Argentina(like DesktopX) or (b) Just use one of the great freeware ones.

And despite what Kobrano may believe, I have no problem finding top notch developers -- reality check, we dominate our market completely.


Reality check, most companies I know that "Dominate" their market, are roughly 100 times larger than Stardock. Whats missing from the puzzle there? Are you sure its as dominating as you think? Is what you dominate in, so limited in client base that nobody substantial cares to enter the market? I'll let you ponder those things.

Remember, it works both ways, and its a two way street. Your condemnation of American workers is at best, an indictment of your own moral fabric and character, and frankly, rather insulting. Also the mere fact that a majority of your employees work overseas, and your claim you want "Keep jobs here" by buying an American car is probably one of the most gross examples of hypocrisy i've seen in months.
Reply #29 from JoeUser Forums Top
This trend is not limited to tech workers. A good friend of mine who is a research scientist for Motorola recently told me that he is on a team that is in the process of patenting a new invention. He says that an Indian law firm is doing all the patent work and then when it is complete it will be sent back to a US patent lawyer for sign off. I have heard similar stories in the health care field but no first hand knowledge.
An argument can be made that this is a good thing for the country as it allows technology to move forward here while the current tech is handled by seemingly "less-talented" people. I am not convinced of this argument but there it is.


outsourcing may not solely impact technicians but it is inexorably tangled up in technology. an equally good argument could be made that--assuming anyone besides those with sizeable stockholdings in the companies shipping jobs overseas could afford to take advantage of it--this was the dawn of the new american age of leisure.

if those who so loudly support even the most harebrained american foreign policy decisions and disparage the the opinions and actions of anyone who doesnt live up to their standard of uberpatriotism would expend their energy locating, purchasing and talking up american-made products, we might not now find ourselves in this discussion.
Reply #30 from JoeUser Forums Top
The skinning and customization market is still small, but growing, just as Stardock is small, but growing. Microsoft (for example) is a huge company and so can dominate many large markets. But large companies are not the only ones around. It is possible to dominate as a small company as well, if you are a small market. However, to do so it is important to keep your edge, and that requires hiring the very best people for the job, and that is really what this whole debate is about. You seem to be claiming that if there is a job, there is a US developer coming out of college who is ideal for it. I claim that this is not always the case.

To my knowledge, Stardock is not unwilling to hire US talent when it is available - both local and remote. It is simply that sometimes the best and most appropriate people for the job are not in the US. Bright people with bright ideas can spring up everywhere, and limiting the company's scope of hiring/employment/contracting to the US would cause big problems. Imagine if Stardock had not allowed skinners from the UK to contribute to WinCustomize - you think maybe they would have gone to competing sites? Well, the fact is that now some of the best skinners are in the UK. Does that mean that Stardock should not work with them when it seems like a good idea?

As for hiring overseas workers on contract, this is actually becoming less of an issue. Stardock had to use contracted development with royalties in the past because coming out of the OS/2 years it could not afford to pay people on a salary. Fortunately, some of the best people were available on those terms . . . but not all were in the US. Considering that one of these (few) contract developers is the person responsible for WindowBlinds (among other things), I feel that questions of quality are moot. As Brad mentioned, Stardock worked with people who were willing to deferred income (and I think most worked at least part-time in another job) in order to reap benefits in the future. As time has gone on, Stardock has started to directly employ more and more people, although some types of workers still tend to work on contract because that is the nature of their work (skin artists, for example). Even there, we have mormegil - from California!

I must admit that I am personally involved in this. I am a UK citizen who will shortly be moving to the US for a job with Stardock, having been involved with them online for almost five years now. I feel I should point out that the US government is not making this easy, which does tend to encourage outsourcing of the type you appear to fear most of all - the whole job, to another country. Stardock would probably have be willing to take me on as a contracted worker, but that's not what they wanted - they preferred to have someone on site, in America. Because if they can't get the people they want most from the US, isn't the next best thing to have another country pay to bring up a new graduate, then bring them into the country and have them pay taxes without representation to the US for the next 10 years?

I suspect you may have personal reasons for posting here on this topic. If so, I suggest you consider whether arguing the point is really the best use of your time, as is not going to change anything that's happened in the past. Moreover, I feel the view you have is not likely to help you in the future, either. Like it or not, the US does not have a monopoly on talent - tech skills are global, and as companies are created for the specific purpose of making money for their shareholders they must take account of that. If the appropriate way to do this is to hire developers from Europe who happen to know what they're doing and avoid graduates in the US who don't (and yet expect large salaries off the bat), then that's what they'll do. If they want those salaries, they'll have to prove that they're worth it. And what's wrong with that?
Reply #31 from JoeUser Forums Top

Kobrano has a much different understanding of business than I do (to put it mildly).

Ones dominance in a market does not strictly determine the size of a company. The size of a market and ones penetration in that market determines the size of the company much more so.

You can be 2% of a $10 billion industry and be a much bigger company than the company who has 80% of a $10 million market.

Stardock looks to work with the best and brightest no matter where they are. That means often times those people are not in the United States.

DesktopX's lead developer, btw, is in Italy and there is no freeware alternative to what it does nor is Konfabulator the same.  Konfabulator competes with ONE of DesktopX's features (and not even the main feature people use DesktopX for). Italy is not some third world country.

And finally, no where have I condemned American workers.  I simply stated my observation that American college students are not graduating with the skills and tools needed to compete in the emerging global technology market. That Intel executives also share that view should be a wake up call to the typical 4 year engineering/CS student who thinks they're entitled to a $40k+ job on graduation. 

Reply #32 from JoeUser Forums Top

BTW.. Well said, Greenreaper.

Reply #33 from JoeUser Forums Top
That Stardock outsources anything overseas I am suprised to discover. That they "had" to outsource overseas I find hard to believe. It does not change my opinion (not that mine matters more than others) which is favorable, but I do find it interesting.
I would love to know how many positions Stardock has had to outsource, ,although I do not expect a specific answer and would not blame them.
Reply #34 from JoeUser Forums Top
It's perhaps not so much "had to contract work out for monetary reasons" (I'm pretty sure Stardock has contracted work out to US people, too) as "the people who were doing the cool stuff were in Europe, so Stardock dealt with them". It's not like Stardock had fully-formed product specs that they sent out to prospective foreign programmers for the lowest quote - these are the original developers who came up with the ideas that Stardock is hiring. If you want to get into desktop customization on Windows, and there's someone who happens to have made a good start on (but not sold or fully-developed) a cool new skinning product (let's call it "WindowBlinds"), and you don't have a lot of money up-front to pay them, it makes a lot more sense for all concerned for you to sign a deal with the people who made it to continue working on it and start selling copies almost immediately rather than wasting time and effort making a duplicate and competing with them in the marketplace (remember, it was a very small marketplace then!).

Then, naturally, if in the future they have more time free and you have ideas, you're quite likely to say "hey, would you be interested in doing this as well?" - because you trust them, you've worked with them before, you know you can rely on them to do a good job (all things that are lacking when you make a new hire). It's just good business sense! If some guy in Nebraska had come up with the idea and made it happen, then things might have worked out differently, but that's the nature of ideas - there are smart people all over the world, and you can't pick and choose where innovation comes from. All Stardock can do is make sure that the revenue goes to a US company rather than a foreign one - and that Uncle Sam gets his share, which he wouldn't otherwise.
Reply #35 from JoeUser Forums Top
good points, GreenReaper
Reply #36 from JoeUser Forums Top

DesktopX is an even more apt example.  When it came time to do our OpenDoc-type desktop feature for Object Desktop we started by looking around to see if anyone had yet figured out how to put irregularly shaped things on the Windows desktop (remember, back in 1999, putting alpha blended, non-square windows on the desktop was pretty radical).  We found a young developer in Italy who was making something that could do that.

So we teamed up with him.  I do want to clarify - Stardock had the ideas, and we found developers who shared our vision.  And we didn't discriminate on where they lived.

Reply #37 from JoeUser Forums Top
while contracting with an individual (or even a number of individuals who work independently from each other) residing outside your business' home country is outsourcing, it's a whole different thing than sacking an entire division in order to transfer its functions to foreign-based enterprise. what yall are discussing here isn't any more or less problematic (if it's a problem at all) than contracting with any consultant to develop or realize a project requiring specialized skills or knowledge. while i clearly missed your point entirely (for which i apologize), after rereading the entire thread a couple times, it appears i wasnt alone in that.
Reply #38 from JoeUser Forums Top
while contracting with an individual (or even a number of individuals who work independently from each other) residing outside your business' home country is outsourcing, it's a whole different thing than sacking an entire division in order to transfer its functions to foreign-based enterprise.


How so? In both cases (ideally), the company has found superior product at a cheaper or equal price (quality is hard to put a price on).

The Big 3 Autos makers have done it, you just dont hear about it. The only industry that has not been able to do it is Mining, and they are kind of stuck where the sources of materials are. But even then, they have been known to close mines due to too high a price to extract the materials. The biggest varaible expense being wages.
Reply #39 from JoeUser Forums Top

One of the biggest problems I see is that the United States is increasingly becoming more and more expensive to run a business in when compared to developing countries like China and India.

We have some groups demanding higher minimum wages. Other groups trying to expand the "Free trade" agreement all the way to Central America (which I STRONGLY disagree). And other groups more concerned helping the NEA than trying to make our high schools competitive.

It's a potent combination that will ultimately make the US comparatively suffer.