Software Engineers of India – Software Coolies or not?

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This post was stemmed off a comment made by Ms. Imperfect for Software Engineers – A Knight’s Tale.

Ms.Imperfect had written

I was always of the belief that the term that is most appropriate for us s/w professionals was “Software Coolie” 😀

Today, India is a fast emerging economy thanks to the booming Indian industry providing goods and services. As part of the services, is the Outsourcing Industry, serving a menial 5% of the Indian GDP! Yes, we have grown from a meagre US $150mn in 1991-92 to a staggering US $23.4bn [2005-06] industry.

Yet, we are but skilled laborers by its generic definition! We have/had pretty menial jobs as far as the IT industry goes. The best of the work, the true software development, the Holy Grail, if you will,  does not come here. Why? Why not? A small analysis, without any in-depth reading, but mere observation, assumptions and inference :-D!

One reason as to why we have not had core work, so to speak, would be that we are branded as an Outsourcing Industry. What is outsourcing? Well, it’s a business model! Essentially, certain tasks, like maintenance, feature enhancement, etc, would require lots of manpower dedicated to it, but won’t return much as far as the investments go. So, what do you do? Well, you just give it to people who are ready to do that job for a cheaper price! That in essence is “outsourcing”! Here’s something from the Wikipedia.

Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on competencies. A related term, offshoring, means transferring work to another country, typically overseas. Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. “Outsourcing” became a popular buzzword in business and management in the 1990s.

India, having a plethora of skilled people, ready to do the job for some greens obviously jumped at the opportunity, and created a huge base for companies in other countries where people are costlier… Here’s where the term offshoring takes birth, the 5% GDP supplier of India!

Offshoring is basically transferring work from one particular place to another country for many reasons. In this case, cheap good labor!

India is not alone in this business. Closely following are China, Philippines, etc. Essentially countries where is an immediate source of qualified people!

Now, here’s the bad deal. So far India hasn’t received exactly top-notch work for many reasons –

  • It hadn’t proved to the “offshoring” companies that it’s a major player, involving issues like information security, and various other aspects
  • It was too keen in earning money to concentrate on research work
  • They were too comfortable in not taking any responsibility for ownership related work

So, till now, the Indian software engineer – the guy who enjoyed the maximum perks, the best work environment, moderately high salaries, etc was nothing but a proverbial laborer. He was a software coolie :-D! However, things are changing and fast. Today, the Indian software industry is one of _the_ best owing to experience and skill pool. Companies abroad are actually trying and testing the Indian pool for better, and more core work. They have found an awesome business model in generating more revenue [How, I will explain soon] for the company. And at the same time, they are actually getting innovative ideas from India. They are indeed impressed [DUH!] now!

The Indian has been of course on the forefront of every technological innovation ;-), but unfortunately the glory has never been passed to the country. To a certain extent, it’s the system and the life led by a typical Indian here. Abroad, once menial things are just that, menial, he gets time to exercise his wonderful brain on other things and hence has been able to contribute to better research :-D!

With the Indian scenario changing and demanding and actually providing this environment, the Indian is finally contributing as well!

Yes, we still do a lotta rote work, however, with many MNCs, Indian and otherwise, a lotta good work is done here :-)! Only sensitive material is still left to be touched by the Indian, but then according to the very basic definition of outsourcing and offshoring, it would never come here anyway!!

So, today the coolie is slowly becoming a master coolie ;-)!

Now to explain the business model. It’s kinda simple. According to American standards, a software engineer with my experience and skill level would be paid around $30.00 per hour. That would amount to $240.00 a day [considering an 8 hour day] and causing the company to pay $7200 per month, and $86,400.00 per annum. The costliest of the Indian software industries charge about $20.00 an hour! The amount saved per person per year for a project would be $28,800 per annum. Imagine a 10 member strong team! That would be $288,000 saved per annum for a single project. Now, you see why the business model works for the Americans! In Europe, the human resources are paid more than America, owing to a costlier lifestyle. So, the Indians bag the European projects as well!

Well, anyway, coming back to the reply for the comment, well we are, but slowly we are making it an industry. ;-)! And personally, there’s nothing wrong with that, unless you want bigger glory. Btw, the next big thing that the Indians are targeting are business and management consultancy outsource markets :-D!!

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10 thoughts on “Software Engineers of India – Software Coolies or not?

  1. sukhi

    Anyone terming what our industry does as mostly a coolie’s job is correct to an extent – but is missing a big chunk of the picture.

    “Software industry” per se is an industry. Which means its going to have all the trappings of a regular industries – services, products, vendors et al.

    Most biggies of the industry are into services, because, lets face it – its easiest to make money in services – AND services, are the hallmark of advanced economies, I kid you not. A good economy will generally tend to have a lot of services contribution to it followed by similar amounts of agriculture and industry – that is 3 pillars of the classical economy – primary, secondary and tertiary industries. In India service industry contributes to half the economy.

    Now, just because a lot of the Indian IT industry is in the service industry does not mean its bad per se. IBM – the BIGGEST software co is wholly into services now, after selling its PC biz to Lenovo. So IT services per se is not bad – and is lucrative as well.

    One can complain that there are not too many product companies in India – but there are never too many product companies anywhere – and its the US that has the bulk of them anyway – any other country doesnt even come a distant second.

    That doesnt mean I think its great to have too many service oriented industries – but that I think its unavoidable. Cos IT services is vastly more needed than product development – and even there, we’ve some mid-sized cos operating, like Subex, for example.

    btw, Guru, I’m curious about your figures on hourly rates. From what I know its way too low for the Yanks, and for the Indians as well.

    and this:

    Now, here’s the bad deal. So far India hasn’t received exactly top-notch work for many reasons –

    * It hadn’t proved to the “offshoring” companies that it’s a major player, involving issues like information security, and various other aspects
    * It was too keen in earning money to concentrate on research work
    * They were too comfortable in not taking any responsibility for ownership related work

    is wrong. All of it. Check out the Indian presence among security services, for example – there are plenty of Indians there.

  2. Dude, you enlighten me everytime :-)! Hehehe!!

    But yeah, regarding the pay package… Simple, it’s for a 1 year experienced person with a skill set of Microsoft technologies would be getting about $80,000 per annum and now just calculate back!

    Regarding the Indian billing, are you completely sure? Either that or I was grossly misinformed!!

    Will post after discussing with some people :-D!

  3. sukhi

    Thanks mate. (hope it wasnt sarcasm!)

    A pay package is vastly different – its a fixed thing, and given for employees. Consultants, and outside hires – even temps maybe – get hourly rates.

    From what I have seen, hourly rates for yanks working at the client site start around 150$ or so. Indians charge much lesser – both figures for consultants.

  4. Not at all man!! :-)!

    Exactly, the pay package is what I was talking about! Consultants are definitely paid more, by the hour. However, even the pay package is decided based on the hourly rates. So, that’s why the build up was given.

    Yes, for that matter, the SAP Netweaver technology platinum consultants are paid exorbitant rates dude! Something like around $450.00 per hour and more :-D! I was talking about the regular employees. And I confirmed, the going rates sound definitely right according to the post :-D!

  5. Well, it all began with Y2K coolie level jobs but slowly companies like IBM are moving real hard-core research jobs into its development centers. IBM employees have grown from 4,200 in 2002 to 43,000 this year – that’s a sign that they’re moving work that they once did elsewhere to India. IBM still hires people in USA because of their superior higher education system, but they then deply them in India.

  6. Hmmm, yeah that is what I am talking about. We are slowly getting into the “core” work.

    Btw sukhi, what do you mean by “security services” I didn’t exactly get that part :-D!

  7. fred

    Indians get work because they are cheaper than the competition. Truth is, that if they were the same price, the work would go to Western companies employing western staff. Indians dont communicate well, have a poor work ethic and frankly, arent very good, but they are cheap. Their culture, much like the American culture is becoming, dictate you take the money and run, not invest in R & D. India is a giant slum with corruption, racism and crime. Indians would rather work and live in a country that is working than use their supposed intelligence to fix their own country.

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