July 29, 2004 11:19 AM PDT

Labor group: Microsoft offshoring work on Longhorn

Microsoft is outsourcing some of the work related to its next-generation operating system to India, according to a labor group.

The WashTech organization said Wednesday that it obtained internal Microsoft documents showing that at least two of India's offshore outsourcing companies are working on the operating system dubbed Longhorn, which is expected in 2006. One of the documents indicates that a contract with India-based Infosys Technologies concerns a "Longhorn Migration Guide."

WashTech also said Microsoft indirectly employs more than 1,000 people in India through contractors.

"The high-tech industry and proponents of offshore outsourcing have argued that the next generation of technology work will always be done by U.S.-based employees while the low-level and routine legacy work will be sent offshore," WashTech said in a statement. "These documents clearly dispute that idea and show that U.S. employees are directly competing with Indian companies for work on next-generation technologies--that originally were developed in the United States."

Microsoft denied that work on key pieces of Longhorn is being done by third-party companies but declined to comment on the number of workers assigned to the company through contractors in India. "The development of our core technologies, our intellectual property, is done by Microsoft employees," Microsoft spokeswoman Stacy Drake said.

Drake also emphasized that most of the company's "core" development work is done by U.S. employees.

Offshore outsourcing, which refers to farming out tasks to lower-wage nations such as India or the Philippines, has become a hot-button issue over the past year or so. Defenders of the practice--including President Bush's top economic advisor--say it ultimately assists the U.S. economy. But critics say it costs U.S. workers jobs and threatens the country's long-term tech leadership. The exact scale of the trend remains unclear.

WashTech disclosed what it said were contact lists for direct and indirect Microsoft employees in India, agreements with companies such as Wipro and Satyam Computer Services and lists of alleged Microsoft contracts with companies including Infosys, Wipro and Satyam. Among the contracts with Wipro were two that indicated testing work for Longhorn.

Microsoft's Drake said the company does business with Indian technology services companies, but she declined to comment on specific projects. She did say, though, that "testing is not development work." She also said a migration guide would not involve a key piece of Longhorn, but rather a way to move from another technology platform to Longhorn.

In the past year, about 4 percent of Microsoft's multibillion-dollar research and development budget went to outside companies doing work for the Redmond, Wash.-based software giant. Less than 1 percent of the R&D budget went to companies outside the United States, Drake said.

Microsoft R&D activities include development of what the company considers its core products--such as Longhorn--but also work considered less central. In one instance, Microsoft turned to an outside company to help it build a customer support system that lets consumers buy products through its MSN Web site.

Marcus Courtney, president of WashTech, said Microsoft's distinction between "core" and noncore work on Longhorn gets into a "semantics debate." "Clearly they are doing next-generation product development for something that is a core product of Microsoft," Courtney said. "And it's being done offshore."

Wipro and Satyam could not be reached for comment. Infosys said in a statement that it "does not comment on the specifics of client contracts."

Microsoft has about 1,000 employees in India, Drake said. The company has about 57,100 employees worldwide. It plans to hire 7,000 people in the coming year, with 3,000 of the new hires to be added to its Redmond, Wash., offices.

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Who am I?
I just wonder how much Bin-Laden's group has contributed to the developement of the worlds most used OS.

The US uses more computers and does more with them than anyone else. For that matter, there is discussion of conducting federal elections online. Shipping to India----HA! Most of these people can't even speak english, and the few that can really can't.

Hat's off to Micro"suck" for turning over such power to potential enemies and destructive death crazed lunatics......

It is the potential I'm concerned about.
Posted by Prndll (382 comments )
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What can you expect?
based upon the quality I see of Indian workers where I work--You can expect it to br late, bud ridden and sloppy.

These people are not being hired because they're good. Hiring 3 Indians to make a bug ridden mess of a module and 1 American to fix it all is still cheaper then hiring 2 Americans to get it mostly right the first or second time.
Posted by waynehapp (52 comments )
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Now I Know!!!!!!!
Now I know why every release of a Microsoft product has the same bugs and problems that prior releases had. Quoting Stacy Drake of Microsoft - "testing is not development". Instead of testing and putting out a quality product all Microsoft wants is to continue putting out new releases that have the same bugs and virus-trojan-hijacking vulnerable garbage that prior releases had. And charge an arm and a leg for it.
If you think I'm wrong, just look at Internet Explorer. Every new release has the same vulnerabilities and exploits that the prior releases had. How about testing before release instead of quick releasing and then patching after peoples computers have been screwed up?
Posted by (3 comments )
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Could it be cost?
Actually, that's an easy one to answer. Microsoft has found that it is not cost effective to release stable software. It takes time to test and rework code and that costs too much.

If you look at it from Microsoft's view, if we really don't want to use their buggy software, then why keep buying it? We are telling MS that it is OK that their software has serious defects and that we will line up for the next release as soon as they have it ready. If we didn't like the way they are doing business, then we wouldn't do business with them.

Well, that's my philosophy anyway. That's why I have installed Linux on my laptop and I force myself to learn it. I'm not supporting their software based petri dishes anymore. Besides, I'f floored by what I have access to through Open Source! I'm not going back. I'm making the switch and I'm taking my clients with me.
Posted by (2 comments )
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The numbers don't add up
There are two issues I have with the statements that the economy will improve due to offshoring.

Let's say that $10 billion goes overseas this year for outsourcing. That means there is $10 billion removed from our economy. How does that improve it? There is $10 billion less that will be spent here in the States. Not only do the jobs go offshore, but the cash goes as well. I don't expect it to be spent in here in the States - not when the goods are less expensive overseas. It truly is the American dream - in India. nfortunately, that means that India or the Philipines really will not be creating their own economies. They are simply siphoning off ours.

Also, the chain of events that the instantaneous, self-described "economists" are talking about happen in a closed, or somewhat closed, system. The fact that the cash is going offshore means that the chain of events that leads to more jobs is broken.

As a side note, the cost of labor for these companies are being lowered, but we will not see that reflected in price cuts for their goods or services. You can expect their labor cost to go down and their product prices to continue to climb. More bad math.
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