Recently, I was hanging out with a buddy who is a full time programmer and we some how got on the topic of “Outsourcing.”
“Outsourcing?” he asked somewhat reluctant “Yup, for better or worse we have had to move in that direction.”
This left me a little shocked, because I hadn’t heard him mention that his company was moving into this programmatic (and potentially problematic) arena. We then got to the very heart of the topic itself by discussing salary, and it turns out that some of their programmers make as little as $2 a day.
“$2 bucks a day?” my voice strained with disbelief “That can’t be right!”
He chuckled slightly and said “Not only is it right, but it is a huge money maker.”
As if I wasn’t already shaken enough, he then went on to do a detailed break down of the pay structure.
The Weighing Of The Pay Scales
“Basically our $2 dollars a day people write simple scripts to preform needed tasks.” he said.
I looked at him and asked “Can you give me an example?”
Chewing on his lip he thought for moment, then answered “You know, stuff like backing up data, writing small angel processes to monitor daemons, that type of thing. We then turn around and charge $45 dollars an hour for their work.”
“Holy Crow!” I yelped.
“Yeah” he agreed “But that ain’t all. We have our next tier of programmers who make any where from $15 to $20 an hour. And we bill these guys out at like $95 dollars an hour. These are the guys who do a lot of the heavy lifting, even treading in the abstract areas of systems engineering.”
I sat their for a moment letting the facts sit for a moment, then asked “What I can’t believe, is the small percentage of the pie these programmers and developers get. How can they live off that?”
“Well in our research, and from the areas where we hire, these salaries are the equivalent of anywhere from $20k-$60k in the States. These people are more than happy to make what they are making”
I had always known conceptually about outsourcing, but never had I spoken with someone directly involved. And at such a level as to provide these intimate data points.
So as our conversation wound down and we went our separate ways, my mind and conscious were left with an after image of such weight that I couldn’t stop thinking about it.
Questions For The Community
I mentioned this exchange to John and Chris in an email, and we found it so intriguing that we wanted to see what the 8BIT community thought. So here are some questions for everyone to weigh in on:
- How do you feel Jesus would respond to the outsourcing business model?
- What do you think of the pay equality mentioned above?
- Would you purchase a piece of Christian software if it was heavily outsourced?
Looking forward to everyone’s thoughts!
Adam Shields says
I am going to wait to hear from the community before giving my thoughts. But I do know some Christian software the depends on an outsourcing model. They do not mark up the developer time like you have described because they are building a product not working as a service. But they have a part time US developer that manages a team of outsourced developers. It allows for a very cheap piece of software that is then able to be used in churches.
Jared Folkins says
Yeah man, the complexities surrounding this issue continue to tie my thoughts in knots.
-peace
Gavin Baker says
As Christians we buy plenty of items made overseas and I’m curious why technology should be any different? Particularly when groups such as samasource.org use outsourced technology as an empowerment tool.
Pay inequality is a leading question, assuming that $2/day is not equivalent compensation to what a US entry-level programmer would make. While it may sound ridiculous to us, we news to use a PPP or other measure to know. http://en.m.wikipedia.org/wiki/Purchasing_power_parity
Looking at it from a business model, the same “exploitation” happens to almost everyone who doesn’t work for themselves. As an employee I cost X an hour to my employer and they benefit at Y an hour. Because of their increased risk they receive the difference in what I provide in value and what they pay me.
I’m interested to see the discussion that emerges.
John Gibbs says
The guy who is happy to do the work for $2 a day must be absolutely desperate for the money, and maybe we need to be thinking of ways of getting him more and higher paying work.
Joanna says
Yes, there is a difference in purchasing power, but I don’t buy the excuse that because of where their workers are located $2 a day is an acceptable wage. That is not going to get you far anywhere, especially if their workers have families to support. If they are working 8 hour days that’s 25 cents an hour! This would be unacceptable regardless of what they were billing their time at, but to have the audacity to bill at $45 an hour but only pay around 25 cents an hour is staggering.
Stephen Bateman says
I have friends in Indonesia. When I asked them how much it costs to eat for a week for one person, they replied: “$5.”
As Christian software developers, this gives us an incredible opportunity. We can overpay a quality designer by 5x and in doing so, still lower prices while increasing units sold. It’s like charity, but better!
Doug says
Really looking forward to the discussion here. I’m going thru the same exercise with a call center (vs. software development) but the economics are the same. Part of me feels like we are leveraging people and taking advantage of them but another part says if we are paying people the prevailing wage – or in some cases better – then we’ve fulfilled our duty and any profit that can be made on top of that is acceptable.
There is a whole different conversation around what you do with that profit but that’s a topic for another day.
Jeremy says
I have to admit, I’m struggling with this topic myself.
I currently live in China, and have been for the past 5 years, and recently had an idea for a project which I hope would benefit churches back in the USA. This is not a non-profit service, so I want to make sure that is clear. It would be a standing business. However, in going through the “how should I go about this” I feel drawn to keep the development here in China and not go back to the U.S. with it. I do sit with the fear in my mind that some in the States would not use the service because it was done here.
I still struggle with this, primarily because it feels discriminatory in some way. People tend to get defensive around this topic in a hurry, as if their work were innately superior to what could be found elsewhere and that their value was also superior. I’m not judging, we all have these feelings about our own work. However, deep down, I feel as though we’re saying someone else is not good enough.
And at this point I think Jesus would have a problem. If a company is profitable enough to hire developers in their own country, that’s great, but for some of us trying to bootstrap things, going back to our own country is an insanely expensive solution. So if my reason is to betray a financial logic and stay with my own countries developer (who may do the same quality work) just because their skin color or language is like mine…well, I start getting uncomfortable and feel as if I’m prioritizing one man or another.
To close, I’m not accusing anyone involved this article of thinking this way. It’s just my own personal observation and struggle. I just wanted to add in the dimension to seriously think about why you would “reject” this model…and to make sure you do it for the right reasons. If you drive to outsourcing for greed alone, then Jesus would obviously have issue. But if you reject it because of any feelings of superiority, I suspect he’d have an issue with that as well.
Matthew Orley of Akron, OH says
As a buyer, I now have friends in the 10-40 window who listen to what I say. If I were to go there, I would likely be shot for my beliefs. It is likely an incredibly painful effort to discuss things of everlasting importance over SKYPE, but, hey, that’s the best I can do. Matthew Orley, Akron, OH.
Matthew Daniel says
I know the disparity between $2 and $45 seems gigantic, but let me give two examples here that I hope bring clarity. I work for an outsourcing company – that doesn’t mean it’s all outsourced overseas (though some is) – it just means that businesses outsource to those of us who are specialized in a field in multiple environments who can consult and see things that “internal” folks don’t always recognize or value.
1. The company I work for pays me to do a job – I live in Tennessee. My hourly pay is about 80% of what those who live in Metro Baltimore make. We do the same job – billed at the same exact rate to our customers. I don’t complain – I know the difference and I’m okay with the COLA (cost of living adjustment) between the two. If I moved to work from our office, I would see the pay increase, but also experience my own COLA.
2. The disparity in those numbers doesn’t necessarily result in profit. We outsourced a portion of our work overseas to A. Increase production by having a nearly 24-hour crew to respond to customer needs. B. Reduce overhead because we can’t bill for all of the work we do. The difference between their pay and the bill rate will go to pay for unbillable managers and executives, office space, business development, and all of the employees who make more per hour than we can charge a customer.
One final thought – our outsourcing folks are company employees. They get nearly double the holidays we do – we call them by their native names, we schedule conference calls based on their calendars (usually 11PM or 12AM), they receive benefits and sometimes visit our local offices and our management does the same. They take pride in their work and we recognize them for the quality of their work.
Micah says
The company I co-own takes a good amount of pride in the fact that we don’t send our work overseas. In fact, we dedicated an area of our website to ensure that prospective clients know this. We firmly believe that money spent in the USA should stay here.
BenJPickett says
There’s a lot of arguments for and against in the current economy. Keep the money and the workers here vs. save cut costs and save money for other things and business expenses.
My personal thought goes the ethical treatment of the employees. Are they making a comparable wage that they can make a living on? Is it enough for them to support their family, pay for shelter, food, medical expenses and what ever else is considered a need (keep in mind in America, we have a very different definition of the word need than the majority of the world)? Are these people being over worked, working in unhealthy or unsanitary environments, are they being treated fairly by OUR expectations (given holiday’s and days off or breaks that allow them their freedom of religion, sick days, regular days off, paid vacation time and maybe even offer retirement, medical, etc.)?
Outsourcing is one way that we as Americans can benefit the rest of the world by offering more competitive work environments, pay and benefits. This in turn will leave local companies in these areas the need to offer more to retain employees and that will trickle down and over years eventually start improving the quality of life in some of these poorer areas. The big problem comes when very few American companies that outsource to these very poor areas do this. They see the cheap “slave” labor and only think about their bottom line and the bonuses they can reward themselves with.
If you support and use outsourcing it boils down to ethics vs. greed. I think an awesome follow up question to this conversation, especially with all of the cost break down you were given, would have been: “What do you do with these cost savings?”
Gavin Baker says
Fred Wilson, a well known VC recently tackled outsourcing. It’s not from a Christian viewpoint, but he brings a lot to the table. Interesting read.
http://www.avc.com/a_vc/2010/09/outsourcing.html
Ben forsberg says
I have been a business owner and employer of multiple businesses since I was 19 (that’s nine years if you’re counting). And I like the outsourcing model if the right principles are in place.
For businesses to stay competitive they have to find and walk the line of finding good work at low rates.
Personally, I have always favored finding quality people and paying them a little extra. But there are some jobs that just don’t need a very high level of quality so why pay for it? BUT, people deserve quality treatment regardless of their pay scale.
That that means to me is that for a Christian to “justify” outsourcing these things must be in place:
1) Pay that is on par (or above) the cultural norms
2) Honesty about what they (employees) will get in exchange for what they must put out
3) A work environment that is safe, respectful, and considerate of all people.
4) An employer who has the best interest of his/her employees in mind as well as the best interest of the company – these things are not and should not be in conflict with one another
If you have the aforementioned things in place, I see no reason why a company shouldn’t outsource. Many people in foreign countries would be ecstatic to receive a job that could support their family, even it was WAY less than the average wage in America.
When considering outsourcing we must consider the person and the culture, not the numbers and the comparison.
Of course, I agree with Stephen Bateman. If it were up to me (and if I ever find one of my future companies outsourcing) I will take full advantage of the opportunity to overpay employees and really bless their hard work and dedication.
PS. “inaccurate weights” that the Lord detests as in Proverbs does not refer to differences in pay scales, but to dishonesty in pay scales. If I tell someone they will get X for Y and they take the job that is fine. But if I don’t give them X then that is wrong. Even Jesus acknowledges in the parable of the workers in the vineyard that it is okay to reward some more than others so long as you were upfront about it (although I acknowledge that was a spiritual implication)
Gavin Baker says
Another issue to throw in the ring is something like Mechanical Turk from Amazon. Paying people pennies to perform routine tasks that take a human eye – could be done from India or USA. Does that change the game?