AOL outsources to India

from News.Com bq. 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. and more: bq. 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. bq. 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. The other side of this is when India will be going through in a few years when AOL and other companies pull out and move somewhere else. India is spending a lot of cash to develop these resources (education, specific training and data centers) and if they are only hired for a couple of years, they will not recoup their investments. There is nothing to tie AOL to India, they could move to Malaysia or China in 2-3 years if they get a better deal... This is bad news for a lot of people.