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Offshore Outsourcing: Magic Bullet or Dirty Word?

It all depends on your perspective

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      In the world of IT, outsourcing is either the dirtiest word you can utter or a brilliant one; it's all about who says it to whom and where it is said.

      No matter who uses it, it is a word most often said in private. When corporate managers use the word, it is always mentioned in a most confidential fashion as a potential cost-cutting tactic, a magic bullet to increase margins.

      When technical people use the word in public it is always with a hushed tone, as if speaking it aloud would give management the idea. In private it is discussed as if it were the greatest evil ever to befall the world, a faceless monster from far away.

      The reality falls somewhere in the middle.

      Outsourcing can be an extremely complex and complicated undertaking. Each piece of the process needs to be considered with great care and executed with precision. There is little margin for error halfway around the world. Once a company decides to outsource its code, programmers know their days are numbered. It's just a question of when the ax will fall. It is also just a matter of time before a major project goes completely out of control and craters, leaving hapless managers thrashing about with a project team in India.

      So today we have corporate managers blindly sending work halfway around the world - and an endless drain of jobs overseas. Who came up with this latest corporate fad? How we got here is an interesting paradox.

      Let's take a walk down memory lane. During the dot-com days, American code writers as a group became major prima donnas. It all started with the attitude, "I'm a programmer and I can wear anything I want to work," which was taken to the extreme by some people. Management was wearing suits and in contrast the programmers looked like they came from some alien planet. The more outrageous the better.

      From there, showing up at work at the same time as the rest of the staff became optional - the later the better - with the excuse that they were up all night writing code. It's true that a lot of code writers were up late at night writing code, but often not for their day job. An awful lot of people were busy writing code at night for dotcom business plans with IPO dollars in their dreams, while the more pragmatic moonlighted for other companies desperate for anyone who could write code.

      Then the "I have to bring my dog to work" concept started. All of a sudden a menagerie of pets started show-ing up at work. Further, some programmers demanded and received trampolines. And not being happy even with all this, everyone was always ready to jump ship for more money and toys.

      The final straw was the attitude, "I must work from home; you people are distracting me and I do much better work at home."

      Well, to quote John Lennon, "The dream is over."

      There is no question that outsourcing is bad for America. I look at this every day, editing America's Job Market (americas-job-market.com). Quarterly driven corporate greed perpetuates the practice. If things continue in the direction they are currently going, corporate America will someday have to begin outsourcing customers for their products.

    • More Stories By Jacques Martin

      Jack Martin, editor-in-chief of WebSphere Journal, is cofounder and CEO of Simplex Knowledge Company (publisher of Sarbanes-Oxley Compliance Journal http://www.s-ox.com), an Internet software boutique specializing in WebSphere development. Simplex developed the first remote video transmission system designed specifically for childcare centers, which received worldwide media attention, and the world's first diagnostic quality ultrasound broadcast system. Jack is co-author of Understanding WebSphere, from Prentice Hall.

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      Most Recent Comments
      Andrew 09/13/04 03:12:32 PM EDT

      off-shoring is not done due to lazyness in the workforce, it is done due to greed from CEOs and stockholders. you guys cant have enough yachts and golf courses.

      I have been in IT for twelve years and I am almost ready to pack it in. Tired of the games companies play we will hire you till we find someone who can do your job cheaper.

      If "W" wins in November I am out of this field, pursue a career like plumbing or some other career where you know you have a job the next day.

      Also anyone I know that is getting ready to goto to school for It I tell them to avoid it like the plague, unless you want to spend money to be unemployed
      Andrew
      Fort lauderdale, Florida

      Almost 20 yrs as a developer 03/19/04 05:04:05 PM EST

      Will we ever see the craziness of the .com era again? I hope not. People were being hired if they said they could do any programming at all, and companies were desperate to have warm bodies at least answering the phones. Some of these "programmers" that were hired during this time were completely incompetent, but companies hung onto them because they were afraid of getting some one worse!

      I wish it weren''t as bad as it is, and I''d really expected it to have recovered more by now, but finally the riff-raff are leaving the field because they found out that they actually have to work now, and they are expected to perform to get raises - not just show up for work. (This glorification of programmers is thanks to hollywood, not any programmers that I know.) So, they are retraining into pharmacy techs and other fields that show a shortage of workers, chasing the dollars. It''s just too bad that in the process some of our best talented people who really like working in IT are also being forced out.

      I do have to wonder about companies that say they can''t find qualified workers. Is it because they are expecting people to move to where they are, in spite of the practice of sending jobs overseas? If a job can be done in Europe, why does a US programmer have to move to Bozeman, MT to get a job, where, if said company doesn''t make it, there is zero possibility of finding another one? Is the mentality that US programmers have to be watched to get work done & overseas doesn''t?

      Joseph B. Ottinger 03/05/04 06:01:20 AM EST

      Thank you for your comments, and while I appreciate your passion and accept your feelings, realise that this is not a political forum and future comments such as Mr. Button's may be altered to be more on-topic.

      Please restrain yourselves somewhat.

      Looks like you can''t see beyond your belly button 03/05/04 12:19:32 AM EST

      It seems obvious to me, being a programmer in Argentina, that you don't have a clue of what is going on in the world.
      You are selling the American dream all over the world, stealing everything on your way with the excuse of "We are the good guys" and now are afraid of loosing your jobs.
      Welcome to the club, guys. We''ve been living like this for a long time, thanks mostly to you (I will not understate our own responsibility on this).
      Since September 11 you have increased your xenophobia and turned the "Land of the free" in the "Land of the we don''t like you so will launch some bombs on you and your friken oil pumps"

      Tom Clifford 02/17/04 04:08:37 PM EST

      If indeed management 'teams' across this country are
      missing the boat by keeping software development inhouse,
      this leaves an opportunity for those of us who love
      development to open our own companies and show them that
      we can do better, at a competitive price.
      When their offshore-developed software breaks or is
      in need of changes or upgrades, who will they go to ?
      The great American reply is to achieve massive success
      in the face of other''s myopia.

      T Waller 02/16/04 06:16:37 PM EST

      The point always was to get you to THINK.

      You mean that you think people in IT have been treating the subject lightly? Not where I work. We now have ex-coworkers who have been seriously underemployed for nearly three years.

      25 years ago no one stood up, instead people just hid their heads in the sand.

      Thats not true. The people in manufacturing screamed and shouted until their lungs burst. And the rest of us watched in horror. Please dont repeat the canard that IT workers were contemptuous or dismissive of these people. We were as helpless to do anything for them as we are now for ourselves.

      You journalists and politicians and media people have the whole stage to yourselves. You announce what we should be thinking or doing. You prognosticate what is good for the country. You even presume to tell us what we are thinking. And when you mess up  as you all did over the ridiculous Y2K date problem  you blame us.

      As crudely mismanaged as the manufacturing issue was, the current situation is going to be worse. Manufacturing workers lost homes and jobs, but (if they were young enough) moved on to service jobs. Theres no stepping stone forwards for knowledge workers. Many people will drop back into personal care jobs but most can expect to jump from one scrap of a job to the next for the indefinite future. Forget security. If youre not flaoting in the top 0.1%, youre drowning in the bottom 99.9%.

      The current improvement is based purely on an increase in borrowing. With no substance to base a true recovery on, we are still on the downslope with no end in sight. And no voice.

      Gerald Cheves 02/15/04 09:06:38 AM EST

      The outsourcing craze is just that: a superficial remedy for the failure to produce enough home-grown programmers. The industry needs more programmers but what are they doing to solve the problem other than shipping jobs over to India?

      Martin Krause 02/15/04 07:07:19 AM EST

      This is not so much an artical, but rather pure editorial opinion. He seems to be implying that American programmers are getting what they desserve. Sure - there were prema donna programmers who had agents and demmanded some respect from management. The DotCOM ventures were offering outragious perks to attract the best tallent and many brick and mortar buisinesses found themselves offering similar perks just to keep a minimum IT staff.

      Wearing cassual clothes to work, I think, is nessesary in order to put in 12 to 24 hour days. I would sometimes sleep under my desk for a few hours before the other employees came in. When my boss would see me getting coffee at 7:00 AM he would comment "You''re here! You must have stayed all night again"

      What most managment and apparently this author doen''t realize is that there are good reasons for many of the strange work habbits of programmer. About the casual clothes - if I am not dealing with the public, why should I sit in front of my computer all day and night with a noose around my neck. Or wear shiny, painful leather shoes fermenting fungus and funky ouders. Is a wool suit appropriet attire for sleeping on the floor?

      My favorite shift was to come and leave two hours late. I would get more programming done in those last two hours than the whole of the previous eight. Why - because the other worker and management think programming is just data entry. That I can program for a few minutes, answere the phone, program, fix the printer, program, attend a meating, program, go to lunch, program, train a new employee, program, etc. If the few minutes, here and there, of programming add up to, say, four hours, that four hours of programming should be finished. They think of programming as a commodity, requiring skill, but no art or craftmanship. They wouldn''t let their doctor or dentist or even a carpet cleaner do work for them in such a peace-meal fashion.

      I understand why offshore outsorcing is an unstoppable phenomenon, but why is our own government making it even easier to displace American programmers by importing Indian workers through H1B and L1 visas?

      20 or 30 years ago the big job crissis was heavy industry moving offshore; steel, clothing, shoes, furniture, electronics assembly, etc. Our governments response was to re-train the displaced workers for the "Information Age". Now that those IT workers are lossing their jobs, what new "Age" are we to train for.

      Here in the LA/Orange County area people are so discuraged by the lack of jobs for IT worker that they are staying away from IT education en-mass. At the junior college where I am re-trianing attendence in CIS and CS classes is down by about 50 percent. Last semmester they had to cancel 50 percent of the classes offered, just to attain the minimum people required to keep classes open. This semmester they offered about 50 percent less classes and still had problems filling many.

      What will happen to America in a few years when the "Offshore Outsorcing" bubble bursts just as the DotCom bubble did? How will they convince smart Americans to return to IT?

      Oh - you didn''t realize that there is an irrational rush to outsource "just to stay competitive". Businesses are throwing causion to the wind to get the same cost savings that their competition is already getting by outsourcing.

      As the U.S. Dollar continues to drop in value and forien workers demand higher pay rates, those forien job shops are finding it difficult or impossible to complete their contracts at the prices quoted. Maybe they should start offering trampolines to attract tallented workers.

      Tomas 02/13/04 01:19:09 AM EST

      Well, it was interesting to scan through comments. The tone of the article was clearly ironic, thus I would not take it so much seriously (''the corporate greed''...).
      It seems most of commenters understand the situation pretty well, and my comments are not needed for them.
      But for a few others, I can tell that I''m from the Eastern Europe, where quite a few American (and European) companies have directed the outsourcing jobs. Thus, my position seems to be different, and you might be interested to hear how it seems from the other side of barricades. :-)
      First, I would recommend to look around to see what happens in other industries. It''s a common practise in all areas to look for lower operating costs, and software development should not be an exception.
      Software development is just another kind of industry- and the rules of game still applies (that was proven by so many dot-coms which crashed because of ignorance of any business logic.).
      I assume, because of famous dot-com boom, a demand for programmers was so high that people got accustomed to the idea of being ''exceptional''.
      There are no exceptional people- if you are, then I would suggest to start your own business to make the most money out of your skils - even I myself realize that one day the outsourcing stuff we have today shall move further to the east (eg., Russia, Ukraine, etc.). I see no problems with this- that simply means, that one day I shall have to do something else- as outsourcing is just one kind of things that programmers can do.
      The same is with jobs in the US- not everything can be outsourced, that''s simply impossible. Even if jobs market has shrunk, it still remains there. Simply everyone has to evaluate his skills and ajust them to the market demand.

      jj 02/12/04 10:38:10 PM EST

      Look, it is clearly true that management and engineering have NEVER gotten along. Witness all the "Pointy-Haired Boss" jokes, the disrespect that MBAs are treated with by engineers etc etc (I''m an engineer, btw). Engineers frankly like to code, and in their honest moments will frankly admit that they don''t give a rats ass whether what they are working on makes the company money.

      This wasn''t caused by the dot com: it''s been this way since the 70s at least. Programmers are not business people.

      So now, with electronic communications networks giving them access to a workforce that''s cheaper, management is only too happy to give their american programming workforce the boot. This is as much a cultural decision as it is business one.

      Jack Martin 02/12/04 01:53:01 PM EST

      Ladies and gentlemen the piece is SATIRE!

      A parody if you like.

      The whole point of what I wrote was to get people to think about how we have gotten to where we are and what if anything can be done about the endless loss of jobs in this country.

      If I wrote a similar piece 25 years ago the parody would have been directed at union workers. Focusing on their endless work, the all-powerful union representative and their Mafia corruption.

      25 years ago no one stood up, instead people just hid their heads in the sand. The blame was assigned to greedy management and cheap foreign labor and slowly we lost the American manufacturing base.

      Today in America we have over 10% of our working population - thats 15 million people classified as the working poor.

      These are the people who would have been working in our factories if we collectively decided NOT to BUY our televisions, automobiles and dare I say, computers jam packed with components made in foreign countries.

      The point never was how many people brought a pet to work or worked from home. The point always was to get you to THINK.

      Joe 02/12/04 09:51:31 AM EST

      JDJ loses credibility with every "article" you write. I hope you''re half joking, but your writing is so horrible, I''m not completely sure.

      sam courtney 02/11/04 09:45:17 PM EST

      Interesting comments about developer''s attitudes - though I agree with some of this view, I truly believe that the source of the problem lies in the quarterly driven corp greed factor that is persisted by execs and mgmt in companies who only seek to increase their own pockets by keeping labor costs flat and rather than keep product prices flat, they increase product prices and profit margins. When was the last time you saw product prices stay flat or decrease because of lower labor costs? You won''t because the greed factor of corp execs won''t allow it - that is just fewer dollars that they get to split up between themselves while they lay off more workers who really DO need the jobs. I wish I knew a way to outsource corp exec jobs! Maybe then someone at the top would listen and know how it feels to have your company turn your back on you and give the money to someone else who is not a US citizen!

      Rick LaBanca 02/11/04 08:34:58 PM EST

      This article was certainly mistitled! Looks like just a reason to vent about developers. None of that has to do with outsourcing, does it?

      I don''t know about everyone else, but I never "demanded" anything, the companies put it out there. My job hopping was because of these companies fading away, while our management took the cash (and ended up in jail in one case)! God forbid a company make an enjoyable workplace that keeps people humming along.

      Moonlighting for dot coms? You read too many industry reports, that''s such a tiny stereotype. The vast majority of us worked late and had huge workloads, not to mention agreements that made the company own everything done onsite or off, related or not.

      And I''ve had it with this working at home "envy", it''s just silly. Learn to measure productivity instead of counting lines of code and you''ll be much happier.

      Wow, finally to india. We do need some good viewpoints on this (not this article). Just a silly management idea by people that think developing systems is like assembling jewelry. Send data entry, internationalization, and maybe porting there, but that''s about it. I''ve not had a good experience at all yet.

      Elizabeth Garlick 02/10/04 12:25:17 PM EST

      I read the article expecting an objective view of the problem of outsourcing and was diappointed at the conclusions.
      As a developer here in Europe ( Belgium, France and Luxembourg ) I never got a trampoline but have had to recycle my skills SEVERAL times !
      We don''t really have the outsourcing problem you have in the States ( how many Indians speak Dutch and French ? ), moreover developers ( even contract like myself ) are treated as part of the organisation.
      I seriously don''t believe you guys took pets to work and feel genuine sympathy for people displaced by corporate greed.

      anon 02/10/04 07:56:14 AM EST

      "The Economic Times,
      India''s leading financial newspaper, reports that Diana Farrell,
      Director, McKinsey
      Global Institute during her speech at Nasscom 2004 aid
      that Bureau of Labour Statistics is predicting a job gain of 22m in the US by
      2010, against a job loss of 2m, due to offshoring. You can read the full
      article here.

      ashishK 02/09/04 01:56:19 PM EST

      Rob ''Roblimo'' Miller of Slashdot fame has come up with another term: "Onshore Insourcing" - in honor of the fact that he''s in New Delhi this week (at a Linux conference). He''s going to be quizzing Indian developers about the whole issue: http://interviews.slashdot.org/interviews/04/02/05/0227255.shtml?tid=126...

      Jim 02/09/04 11:39:33 AM EST

      Gee,

      I never had a trampoline. I never jumped from job to job either. The only time I left an employer was due to yet another lay off. Two times in 6 years.

      "American code writers as a group becam major prima donnas" I really cannot believe that you would be so bold as to make such a sweeping statement.

      Give credit where credit is due. Generally speaking, most developers that I know, work hard on the projects they are assigned and to keep their knowledge, certs, and skills current. I, as many of the developers I have worked with, have a dress code. That has held true at every job I have ever had. To this day, I still know dev shops where developers must wear ties.

      To the editor of Java Developer''s Journal: You have severely lowered the quality and integrity of this publication by allowing this type of garbage to be printed.

      jay 02/06/04 02:09:54 PM EST

      This article understandably raises my hackles a little bit but I won''t bother rehashing the obvious (the above comments should be sufficient).

      I would like to say, however, that despite all of the talk of "Oh, outsourcing is risky and complex, etc.", from what I''ve seen this has zero relevance.

      Basically, management takes a "Yea, yea, risky, whatever... we''ll make it work" kind of attitude. Even if it ends up costing them MORE in the long run, the *perception* is that it''s cheaper and so the cost/savings numbers will very rarely be even looked at.

      Yes&No 02/06/04 02:08:43 PM EST

      Maybe some of that about the boom is true of developers. Who cares.

      I assume we are talking about real developement of a product, not client service. Client service can work this way without a hitch, no doubt.

      What management needs to keep in mind is that outsourcing development IS very complex, especially when it is half a world away. There are two scenarios:

      If you completely outsource, and fire your development staff, then you have just increased your respobsibilities orders of magnitude. No longer do you have people that also have a stake in your success, you have folks that will execute according to the requirements that YOU have created and signed off on... to the letter and no further. Sometimes this works, sometimes it doesn''t. It depends on your talents as a manager, and that IS different. Inhouse professional developers will generally figure out what you mean and determine what you really meant to say, because it is in their own interests to.

      If, on the other hand, you go with a hybrid approach (development team here and larger cheaper team there) it is even more complicated. Now you''ve got to coordinate two sets of developers, keep them on the same page, manage two disjoint sets of scheduless, etc. Plus, now developers have to collaborate with folks they don''t know, with different customs (and these can be large obstacles), in a different timezone. The bottom line is, if you (as management) choose to go this route, you MUST understand that you are greatly incresing YOUR responsibilities and the savings you gain in developer costs may just be balanced by large quantities of YOUR own time. You''ll be working the hours your developers used to.

      pb_lall 02/06/04 02:07:52 PM EST

      Your article makes it sound like developers are responsible for the current trend of outsourcing jobs to countries like India. In my opinion, nothing could be farther from the truth. The cause of this trend can be summed up in one two words - corporate greed. Developers are and have always been the backbone of this industry. They often work twice as hard as their counterparts in management. For every trivial point you make about such things as "dress codes", I could counter by telling you of numerous instances where Managment received huge bonuses because of the work done by their development teams. I also now of numerous instances where developers were blamed for mistakes made at the managerial level. In short, credit rolls uphill, and blame rolls downhill. As a CEO, it is obvious that you are biased on this issue. Try coming out of your ivory tower for a while and look at the faces of those who work for you. They are far from the irresponsible people you make them out to be. They care about the quality of their work, and the welfare of their company - wereas people like you only seem to care about how to secure their next bonus, and a golden parachute. But after years of layoffs, etc, we have become a bit cynical about the company''s loyalty to us. Outsourcing jobs in just the latest in a series of things managment has done to make us feel this way. Not only are they giving us the shaft, but they are doing the same to our Indian counterparts.

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