Friday, May 4, 2012

Developing Countries Software Developers - on Their Way to Rule the World?

The pacific is small compared to the ocean of debate that has been held during the last decade concerning the possible evaporation of software development jobs out of western economies in favor of technologically developing economies (mainly India).

The main argument feeding that state of mind says that hiring developers in India (and other developing countries) in much less expensive than hiring personnel in developed economies. Let's have a look at the average annual hiring costs of software engineers in several countries:

Australia: $180,000
Canada: $155,000
Denmark: $146,000
United Kingdom: $145,000
United States: $130,000
Spain: $95,000
Poland: $50,000
India: $50,000
China: $36,000

Fine,now we all know that basically it's much more economical to close down your office in the the Silicon-Valley, Toronto, London (let alone Sydney) and move to the golden mines of Bangalore, Kiev or simply Beijing.

So why do you: Jeff, Philip. Francois, Jorgen and Kylie still employed? I guess that the decision-makers in high-tech firms also take into account the following arguments:

1. The hiring costs in developing countries rise constantly and quite sharply: about 10% annually. This means that by 2020 (if the trend continues), the hiring costs in India should be around $130,000. I assume that this trend deters mass transition of western firms to developing countries.

2. Mental gaps between continents may be excruciating: the mainstream cultures in the US, in W. Europe or in Australia are almost upside-down compared to those in most Asian nations, and those nearly reversed cultures should work together on a daily basis. Many decision-makers wouldn't take the risk.

3. Telecommuting is a fantastic idea, but most decision-makers just can't bear the possibility of not controlling face-to-face their employees, especially those involved in the core development of products. Let alone when the employees are located across the ocean.

4. Local patriotic concerns - many decision-makers can't come to terms with the idea of firing local employees in favor of foreigners, and do their utmost effort to avoid such steps. They know that they might meet the employee they fire at the local mall.

5. Disrespect for personnel in developing countries - Many decision-makers don't actually believe in the professional abilities of Programmers in developing countries, and tend to believe that the gap in the costs should materialize in gap of quality.

Conclusion - There are some decisive constraints on the move of software development to developing economies (primarily India). In my opinion, the large majority of software development is about to stay where it is today.

We should bear in mind that cultural changes (including organizational changes) take generally generations to take root. Think of how many services we can acquire on the web but still use the services of a professional: travel agents, matchmakers, newspapers, libraries and many more.

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