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Outsourcing plus local AI will soon become more economical vs. frontier labs

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Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#401

Post by jujube3 »

goosejuice wrote: post #400
jujube3 wrote: post #399

Earlier quoted context omitted.

Because if I want a low-cost, low-quality dev, and Claude fills that role better than an outsourced dev, such people will "decrease in numbers" due to supply and demand.

Perhaps my point wasn't clear. The article suggests humans are needed. So does the person here I responded to. Someone has to tell the LLM what to do and verify it. Outsourced can be anywhere and when you're referring to US, anywhere else is cheaper. Commonwealth devs for example are at least 20% the cost of a US dev. That 20% more than covers the cost of access to a frontier model that this dev could drive. Thinking…

My point is that current-year LLMs are a better replacement for low-skilled developers than high-skilled developers. For example, if your mental model in 2016 was that you would have a senior engineer write a specification, and have an outsourced team in India implement the specification, in 2026, an LLM replaces the outsourced team in India, not the senior engineer. As a bonus, everyone is now in the same time zone, and there are no language or cultural barriers.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#402

Post by runtime_terror »

brookst wrote: post #375
runtime_terror wrote: post #369

Earlier quoted context omitted.

I'm not sure what you're talking about or referring to... I haven't heard anyone claim their S1 will show that but that it will show how poorly their revenue figures look against their costs.

Space'x IPO docs say that launch + Starlink will be 2% of their revenue opportunity, with enterprise AI being 98%.

Ah yes I see, SpaceXs IPO is a thing of beauty in how insane it is.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#404

Post by goosejuice »

jujube3 wrote: post #401
goosejuice wrote: post #400

Earlier quoted context omitted.

Perhaps my point wasn't clear. The article suggests humans are needed. So does the person here I responded to. Someone has to tell the LLM what to do and verify it. Outsourced can be anywhere and when you're referring to US, anywhere else is cheaper. Commonwealth devs for example are at least 20% the cost of a US dev. That 20% more than covers the cost of access to a frontier model that this dev could drive. Thinking…

My point is that current-year LLMs are a better replacement for low-skilled developers than high-skilled developers. For example, if your mental model in 2016 was that you would have a senior engineer write a specification, and have an outsourced team in India implement the specification, in 2026, an LLM replaces the outsourced team in India, not the senior engineer. As a bonus, everyone is now in the same time zone,…

Frontier models are pretty good at executing on a spec when all the decisions have been made already. The author reached the same conclusion. It's the agency that the humans bring that ties it all together, which is still required. Doesn't sound like you disagree.

I think where were missing each other is that the human agent can also be outsourced. Not all outsourcing involves rote tasks and the lowest skilled workers. The difference between the mean US senior dev salary and everywhere else is large enough to cover a manageable LLM cost. So there's no reason why a company looking to cut costs need stop at the lowest rung to makeup for LLM expenditure.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#405

Post by johalmed »

Chyzwar wrote: post #48

When discussing LLM pricing, people are missing the plot. The subscription token price is 10x-40x cheaper than API pricing. Your 90$ Claude subscriptions give you close to $1000 to $4000 in equivalent API token pricing. The second issue is that the quality of the model “operator” makes a massive difference in the outcomes. Highly skilled senior devs who know how to prompt and have high agency will outperform team peo…

[flagged]

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#406

Post by jujube3 »

goosejuice wrote: post #404
jujube3 wrote: post #401

Earlier quoted context omitted.

My point is that current-year LLMs are a better replacement for low-skilled developers than high-skilled developers. For example, if your mental model in 2016 was that you would have a senior engineer write a specification, and have an outsourced team in India implement the specification, in 2026, an LLM replaces the outsourced team in India, not the senior engineer. As a bonus, everyone is now in the same time zone,…

Frontier models are pretty good at executing on a spec when all the decisions have been made already. The author reached the same conclusion. It's the agency that the humans bring that ties it all together, which is still required. Doesn't sound like you disagree. I think where were missing each other is that the human agent can also be outsourced. Not all outsourcing involves rote tasks and the lowest skilled worker…

Outsourcing comes with significant costs. One of them is that it takes time to communicate with the outsourced team. For example, if you want to talk to someone in India, you might have to send an email that they read the next day, because they're almost 12 hours separated from you. So exchanges that would have just been 15 minute chats with a US-based developer turn into multi-day back-and-forths. If you are hiring someone to be the architect of your system, don't you want to be able to talk to that person? That's why even the most outsourcing-obsessed companies usually did not outsource architects.

Another issue is that there are cultural barriers. People in India or elsewhere may say "yes" when they really mean "hmm, probably not" because saying no to a superior could be considered rude.

If you replace a big team with a small team and LLMs, you are actually saving money overall because LLMs are much cheaper than humans. But you may actually need more skilled humans than previously, not less skilled ones, because they need to be able to manage a large volume of code being generated. LLMs are not good news for outsourced developers. They are the opposite: a cheaper substitute for the grunt work that they had been providing.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#407

Post by goosejuice »

jujube3 wrote: post #406
goosejuice wrote: post #404

Earlier quoted context omitted.

Frontier models are pretty good at executing on a spec when all the decisions have been made already. The author reached the same conclusion. It's the agency that the humans bring that ties it all together, which is still required. Doesn't sound like you disagree. I think where were missing each other is that the human agent can also be outsourced. Not all outsourcing involves rote tasks and the lowest skilled worker…

Outsourcing comes with significant costs. One of them is that it takes time to communicate with the outsourced team. For example, if you want to talk to someone in India, you might have to send an email that they read the next day, because they're almost 12 hours separated from you. So exchanges that would have just been 15 minute chats with a US-based developer turn into multi-day back-and-forths. If you are hiring…

You don't have to convince me, I've experienced what you're describing. I'm just being realistic with the options decision makers have.

Simply put, if you want frontier models at API prices, you can make up for that expense by hiring non-US talent. Many who have a good command of English and are willing to overlap US hours. There's plenty in LatAm alone. Whether or not that's a good choice for a business isn't relevant to the point I was making.

Where you appear to be stuck is that you think outsourcing is only workers with poor English who do grunt work. It's a rather myopic view of the situation to be polite.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#408

Post by jujube3 »

goosejuice wrote: post #407
jujube3 wrote: post #406

Earlier quoted context omitted.

Outsourcing comes with significant costs. One of them is that it takes time to communicate with the outsourced team. For example, if you want to talk to someone in India, you might have to send an email that they read the next day, because they're almost 12 hours separated from you. So exchanges that would have just been 15 minute chats with a US-based developer turn into multi-day back-and-forths. If you are hiring…

You don't have to convince me, I've experienced what you're describing. I'm just being realistic with the options decision makers have. Simply put, if you want frontier models at API prices, you can make up for that expense by hiring non-US talent. Many who have a good command of English and are willing to overlap US hours. There's plenty in LatAm alone. Whether or not that's a good choice for a business isn't releva…

You appear to be assuming that frontier LLM models will be more expensive than outsourced developers. That seems like a crazy assumption to me. Even with current prices of about $1000 a month, that's still just $12,000 a year, which you cannot live on, even in Eastern Europe. Maybe some people in India could live on that, but probably not the people you want writing your code.
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