Flattener #5: ?OUTSOURCING?: India
Outsourcing is the process of taking work that used to be done in-house (e.g., accounting) and paying another company to do it.
If there is another company and all it does is accounting, there?s a good chance that it can do accounting cheaper than you can do it in your company.
Why not reduce costs by eliminating your accounting department and outsourcing
that task?
One consequence of the flattening of the world is that it is now possible to outsource
?knowledge industry? jobs such as accounting, software development, or radiology to anyplace
with 1) a broadband Internet connection, 2) expertise, and 3) proficiency in English.
Friedman describes three major factors that contributed to India?s recent attractiveness to knowledge industry companies in the U.S.:
1) a huge amount of fiber-optic cable was laid in India by U.S. companies in the 1990s, which became incredibly cheap after the dot-com bubble burst in 2000, giving Indians a nearly-free broadband connection to the U.S.;
2) India?s Institutes of Technology provide world-class education in engineering, computer science, and management;
and
3) thanks to its history as a former British colony, India has the world?s second-largest
population of English speakers.
In the beginning, US companies outsourced only low-level services such as data entry or transcription (listening to audiotapes of doctors and lawyers and typing out what they said) .
Then in 1999, the ?Y2K? fear gripped the U.S. Y2K refers to the Year 2000, and the concern was that much of the existing software stored information on year using only two digits: 97 instead of 1997.
The fear was that when a program advanced from December 31, 1999 to January 1, 2000, it would behave as if the year was actually 1900, potentially disrupting a huge amount of business and scientific calculations.
In 1999, U.S. companies were scrambling to make their software ?Y2K compliant? and they were in short supply of English-speaking programmers.
Enter hordes of well-trained Indian programmers who would work for a fraction of the cost of an American programmer and deliver high-quality work.
When the dot-com bubble burst in 2000, many software companies needed to cut costs and an
easy way to do that was to hire back those Indian programmers they had used in 1999.
Only
now, thanks to the fiber-optic cable in India, those Indian programmers never have to travel to
the U.S. ? they can do all their work from home.
Now, it is not uncommon for hospitals in the
U.S. to send digital X-rays to radiologists in India, who have the reports ready when U.S.
doctors come back in the morning.
Outsourcing is the process of taking work that used to be done in-house (e.g., accounting) and paying another company to do it.
If there is another company and all it does is accounting, there?s a good chance that it can do accounting cheaper than you can do it in your company.
Why not reduce costs by eliminating your accounting department and outsourcing
that task?
One consequence of the flattening of the world is that it is now possible to outsource
?knowledge industry? jobs such as accounting, software development, or radiology to anyplace
with 1) a broadband Internet connection, 2) expertise, and 3) proficiency in English.
Friedman describes three major factors that contributed to India?s recent attractiveness to knowledge industry companies in the U.S.:
1) a huge amount of fiber-optic cable was laid in India by U.S. companies in the 1990s, which became incredibly cheap after the dot-com bubble burst in 2000, giving Indians a nearly-free broadband connection to the U.S.;
2) India?s Institutes of Technology provide world-class education in engineering, computer science, and management;
and
3) thanks to its history as a former British colony, India has the world?s second-largest
population of English speakers.
In the beginning, US companies outsourced only low-level services such as data entry or transcription (listening to audiotapes of doctors and lawyers and typing out what they said) .
Then in 1999, the ?Y2K? fear gripped the U.S. Y2K refers to the Year 2000, and the concern was that much of the existing software stored information on year using only two digits: 97 instead of 1997.
The fear was that when a program advanced from December 31, 1999 to January 1, 2000, it would behave as if the year was actually 1900, potentially disrupting a huge amount of business and scientific calculations.
In 1999, U.S. companies were scrambling to make their software ?Y2K compliant? and they were in short supply of English-speaking programmers.
Enter hordes of well-trained Indian programmers who would work for a fraction of the cost of an American programmer and deliver high-quality work.
When the dot-com bubble burst in 2000, many software companies needed to cut costs and an
easy way to do that was to hire back those Indian programmers they had used in 1999.
Only
now, thanks to the fiber-optic cable in India, those Indian programmers never have to travel to
the U.S. ? they can do all their work from home.
Now, it is not uncommon for hospitals in the
U.S. to send digital X-rays to radiologists in India, who have the reports ready when U.S.
doctors come back in the morning.
