Flutterby™! : Overseas IT 2003-11-16 18:39:52.752471+00

Overseas IT

2003-11-16 18:39:52.752471+00 by Dan Lyke 4 comments

SF Chronicle article on moving IT work overseas, pointing out that not only are there hidden travel and communications costs in moving data centers to India, the fact that there are now jobs there is driving the cost of labor up at 20%+ per year.

#Comment Re: Overseas IT made: 2003-11-16 20:01:49.636432+00 by: aiworks

Here's a question... Does this software development outsourcing trend really worry anyone?

It seems to me that this trend appears to be tracking closely to hardware and IC manufacturing moving to Asia (espcially Taiwan) in the late 80's and early 90's. Remember those $12 ISA game/serial/parallel/HDC/FDC combo boards? The design and manufacturing of those boards was thoroughly uninteresting (a true commodity).

From my vantage point, almost all of the outsourced software development projects are about as exciting as those multi-I/O cards. It all seems to be related to garden variety order entry, accounting, POS, insurance underwriting, etc... Nothing cutting edge; applications that have been written thousands of times before and will be written thousands of times again. Other than the personal financial benefits, who really wants to work on projects like that?

#Comment Re: Overseas IT made: 2003-11-16 22:37:05.221854+00 by: Dan Lyke

Mark, I think you nailed it. Once anything becomes a commodity, let it go; I think it was back in the days when I was selling computers over in Hixson that I realized that any time a business became based on price it was time to get out.

As a corollary, I also think that a worthwhile IT strategy needs to be intimately involved in the business processes. If all you're doing is running data centers, then yeah, put 'em wherever it's cheap. But if your IT folks aren't wandering around talking to the people using the systems and adapting the systems to those users, then you're not getting the most out of your technology.

This is one of the reasons that Meuon had success with HTMMS

. He built that software by talking directly to the people who use it, and because of that was able to build a system that actually worked the way they needed something to work. When he and I integrated that code into the existing systems (by pretending to be a printer or a terminal...) we raised the hackles of those who rightly saw competition but were unwilling to adapt themselves.

#Comment Re: Overseas IT made: 2003-11-16 23:44:02.857009+00 by: dws

I have a different vantage point, having seen several quite interesting software development projects go offshore, or get started up entirely by off-shore "components" at the expense of local (Silicon Valley) staffing. These were hardly "commodity" projects, unless you widen that definition to say that all software developers are now commodities.

My experience with managing a set of projects that included an off-shore team parallels the article. We had communication problems due to the eleven (or twelve) and a half hour difference, and these tended to take a lot longer to shake out than local issues. It's a lot easier as a manager when you can walk into someone's office and have a direct conversation with them. We also had staffing problems (in India) due to competition for talent from the many other U.S. companies that were building up an offshore presense, and we were seeing wage inflation in the 20% range (3 years ago).

Moving work offshore makes sense if you're really good at front-end project work, like writing good requirements and analysis specs. A lot of companies who aren't good are finding this out the hard way.

#Comment Re: Overseas IT made: 2003-11-17 02:50:00.936491+00 by: aiworks

Well, I do think that any project that can be accurately spec'ed out to the detail needed to make outsourcing a success is a commodity.

I also believe that a software developer that strictly implements specifications (drawing screens, putting code behind buttons, etc...) is definitely a commodity. Depending on which sand box you like to play in, it's much too easy to develop adequate code for an application: why pay very much for it?

And just to mention... I see outsourcing pressure as not just a foreign phenomenon. Many firms (IBM Global Services among them) have made huge investments in hiring developers and system administrators from Kentucky; entry-level positions for people with 2 years experience start at $25,000/year. That may be equivalent to what you would pay in India by the time you factor in some of the incidentals. Although, I've still seen some of the same cultural and distance issues you mention.