Thursday, July 5, 2007

Microsoft Plans to Open Office in Canada, Making It Easier to Hire Cheaper Foreign Labor

Microsoft believes that the worlds brightest employees are mostly found in other countries other than the United States. The truth of the matter is they want low cost workers. Microsoft will "open a software development office in Vancouver later this year." If they can't bring more cheap labor in they will open up shop where they can. There is a difference between the H1-B Visa and Canadian Permanent residency that has attracted Microsoft up North.

Technology companies want cheap labor:

About 58 percent of the $360-million worth of software that flowed out of India last year ended up in the U.S. That tiny drop hardly makes a splash in a $92.8-billion market. But several trends may propel exports beyond the $1-billion mark as early as 1997. The single most important factor, Pawar asserts, is the support of the Indian government, which has eased tariffs and restrictions, subsidized numerous software technology parks and export zones, and doled out five-year tax exemptions to software exporters. "The opening of the Indian economy is acting as a very big catalyst," Pawar says.

It certainly seems to have attracted the attention of large multinational firms eager to reduce both the cost of the software they need and the amount they build in-house. The primary cost of software is labor. Indian programmers come so cheap-$125 per unit of software versus $925 for an American developer, according to Jones-that some companies fly an entire team to the U.S. to work on a project. More than half of India's software exports come from such "body shopping," although tightened U.S. visa restrictions are stanching this flow.

Another factor, Pawar observes, is a growing trust in the quality of overseas project management. "In the past two years, American companies have become far more comfortable with the offshore concept," he says. This is a result in part of success stories from leaders like Citicorp, which develops banking systems in Bombay, and Motorola, which has a top-rated team of more than 150 programmers in Bangalore building software for its Iridium satellite network.

It is interesting this has gone on for years.