Opinion: The Offshore IT Outsourcing Sky is Not Falling

There may be a lot of hype in the market about offshore IT outsourcing, but the fact remains that keeping things stateside is more cost- and time-effective

There may be a lot of hype in the market about offshore IT outsourcing, but the fact remains that keeping things stateside is more cost- and time-effective

The current rage over tech outsourcing, to places such as India and Russia, has caused a number of information technology (IT) professionals to wait for the proverbial sky to fall. However, while some good paying IT jobs are going overseas, the sky isn't really falling. Let me explain further.

The software development landscape today, where much of the offshore outsourcing concerns lie, is much different than it was 20, or even 10, years ago. Skilled software development labor shortages a few years ago, during the Internet boom days and Year 2000 scramble, jump-started the offshore phenomenon. Developers with only a few years of experience were commanding high salary and benefits packages, causing human resources and IT managers to look for cheaper alternatives.

In addition, the software development tools today have become much more powerful and easier to use. Thus, many more people the world over have instantly become eligible programmers. Combine that with improved worldwide communications, and just about anyone on the planet with a PC, Visual Basic and an Internet connection can put out their programming shingle. Besides, the precedent for outsourcing overseas has already been set in the manufacturing sector; it was really only a matter of time before the doors would open for overseas programmers.

It's not that the Indians or the Russians are smarter than we are; it's primarily an issue of availability and economics. We've made it too easy for anyone to join the software development party we've kept to ourselves for so long, and people in many countries are able to work for far less than the average U.S. programmer. I realize that up to this point I've made some good arguments in support of the sky is falling theory, so let's dig a little deeper.

A closer look at offshore outsourcing reveals some interesting trends; many of the offshore projects have not been successful, or at least not as successful as expected. Many accomplished their primary task, but at a higher than anticipated cost. Others did not deliver what the business unit really needed, and some offshore projects were not even completed.

SWAT Solutions has been involved in client projects where organizations outsourcing software development and testing overseas have walked away with nothing. And while this is certainly the exception, there are undoubtedly more of these cases when offshore outsourcing is involved, especially for first-time endeavors.

Many of the software projects outsourced are for maintenance or relatively straight-forward applications, such as those in established industries. It is quite rare to see a critical application for a new industry going offshore. However, it's not because the offshore programmers do not have the talent to succeed, but rather it's the risks involved with logistics and team communications that essentially force vital development activities to remain here in the United States.

The key to successful offshore development is the proper packaging of requirements in such a complete manner that all the offshore programmers need to do is connect the dots, so to speak. Historically though, the primary ingredient in great software development has been teamwork. It's quite rare when a great software product is completely specified prior to programming. Typically, the product evolves as developers come up with new ideas that the designers didn't foresee, better ways of accomplishing the same tasks or altogether new extensions to the product. This really is an iterative process that occurs over the life of the project and may substantially improve the product by the time it is finished.

While U.S. programmers cost significantly more, they are also substantially more productive. This should come as no surprise. These programmers grew up here, they understand the culture and how business operates in the United States, and they really do understand the language. They're also readily available for those inevitable and impromptu technical and design discussions just mentioned. This is something that's very hard to do when your programmers are 5,000 miles and 8 time zones away and have a limited understanding of the language and culture.

Some U.S. companies that have elected to build software offshore have decided to use Onshore Testing in order to hedge their bets that the requirements are being properly met. Besides making sure that the product is defect free, professional U.S. testers also ensure that the overall design and function goals are being met.

Our world is not going back to the analog days. The world will continue to digitize and automate at a faster and faster pace. This trend was set in motion over 50 years ago and has been accelerating ever since. This means that there will continue to be ample opportunities for developers here and for those overseas. In fact, the March 2004 issue of Business 2.0 claims that 850,000 skilled jobs will be created in the next four years in the top 20 major U.S. markets alone. In several of these cities, including Minneapolis, the growth rate is over 75 percent. Many of these new positions are software- and engineering-related occupations.

The real key for U.S. software related jobs long term is innovation. Companies that innovate must think twice about outsourcing programming overseas, because they need quick results with limited baby sitting. As a colleague said to me over lunch the other day, our best bet is to continue educating and promoting the software industry here in the United States and to work hard. This is the same formula that has worked for our country since its inception, and I doubt that it will change now.

A knee-jerk reaction to the relatively small number of tech jobs actually going overseas could end up causing many U.S. families to steer their college bound students away from technical fields. This however, would be the sure-fire way of bringing down the sky for U.S. technology in the coming decades.

About the Author: John Fox is vice president of Marketing at SWAT Solutions, based in Minneapolis, Minn.