Instead of helping creating technical jobs in India, China or Russia, a U.S. entrepreneur decided to keep jobs at home, near Boston. But BusinessWeek says he's paying his programmers half of what they are used to earn.
Outsourcing programming jobs is not new, and hundreds of thousands of jobs have been lost in the U.S. these past years, only because Indian or Russian programmers cost much less than their American counterparts. But why not try a different approach?
That's what Jon Carson wondered a few months back, when confronted with the need to complete a major programming project in a hurry, and at the lowest possible cost. Jon is a serial entrepreneur whose latest venture, cMarket, helps nonprofit organizations increase their revenues by putting fund-raising auctions online.
Recently, the company had to hire four programmers for a new project. He had to choose between experienced American programmers, at a cost of about $90,000 per year, or Indian programmers provided by an intermediary for $40,000 per year.
What would you do? Saving $200,000 annually by hiring Indian programmers? The question is pretty simple, but Carson hesitated for a while.
And then Jon had a brainstorm. What if he offered Americans the jobs at the same rate he would be paying for Indian programmers? It seemed like a long shot. But it also seemed worth the gamble. So Jon placed some ads in the Boston Globe, offering full-time contract programming work for $45,000 annually. (He had decided that it was worth adding a $5,000 premium to what he'd pay the Indian workers in exchange for having the programmers on site.)
The result? "We got flooded" with resumes, about 90 in total, many from highly qualified programmers having trouble finding work in the down economy, Jon says. His decision: "For $5,000 it was no contest." Jon went American. And the outcome? "I think I got the best of both worlds. I got local people who came in for 10% more (than Indians). And I found really good ones."
OK, this is a limited experience. But what will happen if other companies followed suit? Here is the conclusion of the author.
While cMarket has solved its immediate challenge, the implications of Jon's approach are potentially mind-bending. What if other companies begin taking the same approach -- offering Indian-style wages to American workers? On the positive side, we could begin to solve our job-creation problems. But on the negative side, America's standard of living would inevitably decline. There's only one way to find out for sure how it all might shake out, and that is for other executives to replicate Jon's experiment. The results could be quite interesting.
Do you think other companies will offer these overseas kind of wages to Americans? And what is your opinion about it?
Source: David E. Gumpert, for BusinessWeek Online, December 2, 2003