AOL takes passage to India
Last modified: December 22, 2003, 4:00 AM PST
By Jim Hu and Evan Hansen
Staff Writer, CNET News.com
         
America Online is quietly laying the groundwork to hire software engineers in Bangalore, India--a decision that is sparking some pointed criticism but also is becoming de rigueur among technology companies.

AOL's plans slipped out on its Web site in a Dec. 10 job posting seeking a global program manager to "coordinate software development teams" in the United States, Dublin, Ireland, and Bangalore. The posting bothered some people because it appeared at the same time AOL announced it was laying off hundreds of software engineers at its Netscape Communications unit in Mountain View, Calif., as well as other West Coast offices.

"It's America Online with code built where?" said one former Netscape manager. "There's an image issue that they should address, especially with all the people they just chucked."

Besides raising concerns about exporting high-paying, high-skilled jobs abroad, many of these workers have long griped that higher-ups at AOL allowed Netscape to falter.

AOL said the job posting and the layoffs are unrelated.

"We are considering opening a small (engineering) office in Bangalore," spokesman Andrew Weinstein said. "That action is completely unrelated to the Netscape job actions that were taken."

Like Ireland and other foreign countries, India isn't a new frontier for AOL. The company already operates a call center in Bangalore and has relied on software engineers in India previously through an alliance with Sun Microsystems. Still, this would mark the first time AOL turned to India to help build its flagship Internet software.

One out of every 10 jobs
AOL's Bangalore explorations come as U.S.-based businesses are increasingly tapping cheaper labor abroad, typically to handle low-level jobs such as customer service. In a newer wrinkle, some software companies are experimenting with hiring skilled programmers to assist on higher profile projects, including product development.

In July, AOL rival Yahoo outlined plans to hire programmers in Bangalore to help build its Web products. Google also is planning to open a Bangalore office and expects to hire 100 software engineers by year-end 2004.

These actions have heightened fears among U.S. technology workers that their jobs will be shipped abroad.

More than eight in 10 software companies are exporting their work offshore this year or next, according to a July study by research firm Sand Hill Group.

U.S. tech going abroad
A growing number of high-technology companies are boosting employment in foreign markets--sometimes at the expense of Silicon Valley job growth. Bangalore, India, is proving to be a popular locale for software development.

America Online:
A recent company job posting seeks a product manager in Dulles, Va., to lead global software development in the United States; Dublin, Ireland; and a new office in Bangalore, India. This comes on the heels of AOL laying off 450 software developers in California. AOL denies a link between the two events.

Google:
The search giant plans to open its first international research and development center in Bangalore next year, with a staff of about 100 programmers.

Hewlett Packard:
The computer maker plans to cut 4,800 U.S. jobs, after missing its earnings mark for the third quarter. HP also plans to outsource more work to India, China, Poland, Costa Rica and the Philippines.

Oracle:
The database company plans to double its 3,000-person workforce at two Indian research centers. It recently opened development centers in China, employing 200 developers.

Siebel Systems:
The business software maker said it would cut 490 jobs in July and move some business operations abroad to boost its bottom line.

Yahoo:
The Internet company opened an office in Bangalore in July and plans to hire 150 software developers by the end of 2004.

Source: CNET News.com
Gartner predicted that one out of every 10 jobs at U.S. information technology companies will be shuttled abroad by the end of next year. IDC recently estimated that by 2007, 23 percent of all IT services jobs will be offshore, up from 5 percent this year. The figures refer to IT work done for U.S.-based companies.

Cost cutting is the most commonly cited reason for this practice. Hewlett-Packard has pegged the cost of a talented programmer in India at about $20,000 a year, well below the cost of a top U.S. tech worker. Companies also face facilities costs and the expense of managing offshore work, offsetting the impact on the bottom line. The total savings from hiring an IT service provider to perform foreign work may be as high as 40 percent to 50 percent, IDC analyst Ned May said.

AOL appears poised to jump on the bandwagon at a time when it is paring back software engineering in Silicon Valley. It laid off 450 employees in its California offices earlier this month. Many of the employees who were laid off were software engineers at Netscape. AOL has offered to relocate 100 of the workers to its Dulles, Va., headquarters or its office in Columbus, Ohio.

Weinstein said the bulk of AOL's coding efforts will now be centered on the East Coast. AOL will also continue hiring software engineers and programmers in Dulles and Columbus.

One former AOL executive doesn't expect the company to outsource key programming projects any time soon, suggesting an India software engineering office probably would handle lower-profile tasks such as quality assurance, at least to begin with.

"There has not been much software-product off-shoring so far," this person said. "It can only be more difficult managing the process from afar."

Culture clash
Sources said AOL's recent Silicon Valley layoffs reflect a new focus on cost cutting, as well as simmering tensions between AOL headquarters and Netscape--a company AOL acquired in 1999 for nearly $9 billion only to end its signature engineering efforts such as its pioneering Web browser.

"The AOL guys always thought the Netscape guys were overpaid, they didn't ever integrate the Netscape stuff into their culture," said the former Netscape project manager. "The West Coast (engineering) groups make less sense for them."

Everyone's doing this.  IBM just announced as many as 4,700 programming jobs will be moved offshore.

What we need is a law that requires CEO positions to move offshore before a company can move any other jobs.  That would end this nonsense right quick.

"welcome to the Global economy, please send your job to India.  Thank you for your time."

I graduated with a CS degree in computer programming under 10 yrs ago.  I spent six months coding and saw the writing on the wall about that endeavor.  Changed to desktop support and helpdesk, made management and now help frame IT strategy for our firm.  That's one job that [b]won't[/b] be shipped off to Timbuktu!

And everyone says "it's just globalization" when some of us biatch about industrial jobs going across the ponds and everyone driving their new imports to Wally-World... I have ZERO sympathy for an out-of-work SW jock who can't keep up his payments on his Lexus.

Here's my take:

America Online:
Crap-o company with impossible to uninstall software. Send the jobs over there and please keep the software over there. If the rest of the world is saddled with AOHell, then we might just regain our competitive edge.


Google:
Works fine. Why the hell do they have to "fix it" with new SW when it ain't broke?

Hewlett Packard:
Take Carly Fiorina's paycheck & bonus and give it to the employees. She's going to destroy that company (and make 8 figures doing it)

Oracle:
If what's his name would spend some of the profits on his people instead of his billion-dollar pseudo-asian palace, there would be no need to outsource.

Siebel Systems:
Who cares.

Yahoo:
Almost as bad as AOHell. Messenger is a great portal for unwanted junk to bypass your firewall and automatically configures all sorts of things in your browser. Also a pain in the butt to remove. The ONLY worthwhile thing with Yahoo are the groups, which are unfortunately being overrun with porn/spam. Yahoo can fold & we'll go back to USENET. No loss.

Don't be so sure...

Why exactly is this nonesense?  AOL and IBM are in business to make money.  If they save money by outsourcing to the third world, they are simply doing what they are supposed to.