One of the engagement model choices for outsourcing your software development I have described in the past is the Body Shop. Another name used by Reza Imam in his recent article is Software Sweatshop!

The problem is in most cases, you don’t need just bodies (sweating or dry) to develop your software offshore. You need a team that can work together well to get the job done. The reason the body and sweat shop fees are so low is they don’t invest in a good recruiting process or effective software development methodology.

Avoid them!

Bookmark to:
          

Gartner predicts that Outsourcing Prices Could Fall 10%. It is hard to judge the accuracy of these reports because they cover several different categories of outsourced IT services – datacenter, helpdesk and network services – besides just software development. But there is no question that business is less than booming these days and buyers are in a position of strength when it comes to negotiating prices.

If it made sense to outsource your software development globally to save money in the past, then it is even truer today. That is, if American companies are not too afraid to develop anything these days!

Bookmark to:
          

“Outsourcing is no longer just about cheap labor. … It’s also no longer just about India and China.”  That’s the beginning of a recent article in Forbes that describes global Outsourcing’s Big Picture.

Of course. Doesn’t everyone know this already?

Maybe not. The article suggests there are five key drivers to the growth of the global outsourcing of services. However, it mentions only these three:
1. Tremendously lower cost of labor in multiple global locations
2. The digitization of business processes
3. There is a global pool of educated talent such as engineers and programmers.

Again there are no surprises here.

Is there anything to slow or stop the trend? Maybe government regulation. But the recent warnings of a possible trade war and the downside of protectionism in the so-called Buy America Act by President Obama are likely to be heeded.

This article is a good summary of the global outsourcing trend, but most business people probably know about this already. Accelerance has over 40 partners in a dozen countries. I don’t think it’s a question of if you should outsource, but where.

“A decade ago, if you wanted to cut costs it was an India story. We identified 30 countries that have policies in place to promote service exports. … It won’t be one country that will knock India off the top. It will be a lot of small countries.”

I agree.

Bookmark to:
          

I saw this short article about students in the UK outsourcing their IT homework assignments to India.  Thomas Lancaster, a Birmingham City University computing lecturer, has led the effort to catch these cheaters.

I first hear about this last October when Fred Looft, head of the ECE department at WPI told me he received an email from a professor in the UK saying he suspected a WPI student might be cheating this way. Allegedly a WPI student had posted a project inquiry on one of the job boards and his academic email address was the tip off.

I think that email Fred received must have been from Lancaster.  Fred said he had “a talk” with the student and the project inquiry was withdrawn. 

Clearly cheating should not be tolerated.  But I also shared a different opinion with Fred. 

What if students posted programming projects online, not to have them implemented, but to get an estimate of the cost and effort required if they were implemented?  Actually, that’s not completely fair to the freelancers and vendors that might respond. So why not have them manage small projects for a few hundred dollars with global programmers? 

I think we ought to start teaching our students how to manage programming projects as well as coding them.    

Bookmark to:
          

In general, I agree with most of the points in an article published in InformationWeek about How To Select An Indian Outsourcing Partner. The author takes a sober view about outsourcing that comes across a bit negative.

I wouldn’t write off Indian or global software development just yet. My experience with global outsourcing of software development shows two major pitfalls that people run into:

1. Selecting the wrong kind of vendor
2. Not providing the right kind of specifications

By wrong kind of vendor, I mean one that is happy to charge you for some junior programmers put in a room for you, and even give them computers and an Internet connection, but then fails to follow through with any kind of supervision, management or professional software development process.

This kind of vendor is what I call a “body-shop” and is only acceptable if you have the time and experience to manage these programmers remotely. It’s an easy mistake to make if you can’t hire programmers locally. You think you’ll just hire them over there.

A better approach is to select a vendor that can offer you a combination of junior and senior programmers and experience with a software development process

Other vendors may be great at executing fixed-price projects but only if they are given very detailed specifications. And the author says you should have detailed specifications, but this is where I disagree a little. Anyone that develops software, especially new applications, knows detailed specifications are just not completely practical.

New Agile software development methods have become more popular lately for the development of new software. But this highly collaborative approach is difficult (but not impossible with the right vendor) to do at a long distance. That’s why many U.S. companies are now looking at outsourcing to Latin America where there is more workday and cultural overlap.

In summary, I think a key mistake people make is treating software development only as a financial transaction rather than recognizing it as a collaborative and creative process. If all you hire is cheap programmers without experience, no matter what country they are in, then you will get what you pay for.

Bookmark to:
          

To be fair, that really isn’t the point of this blog post The damaging aspects of offshore outsourcing made by Mark Kobayashi Hillary in the U.K. But that was the first impression I got when reading about his first trips to India where a drive through poverty is required to get from airport to hotel.

I just arrived after finishing a similar ride from the airport in Mexico City to the city of Queretaro. There was much less poverty than India I am sure. But the thought of outsourcing software development to Mexico having some relationship to the small and dirty concrete apartment buildings I saw an hour earlier just didn’t make sense for me.

Mark’s real point is as we outsource our work, our culture also comes along for the ride. Indeed I saw too many MacDonalds and Burger Kings in my ride through Mexico. Let’s just hope some of our values of freedom of choice and education will also come through along with our sometimes less-than-healthy eating habits.

My friend Bert (who has an MBA from Stanford, but I don’t hold that against him) says that when you are in business about 20% of the people out there - employees, partners and vendors - will try to screw you. “It’s not a huge problem,” continues Bert, “when you find out who they, then you just never do business with them again.”

Similarly, some managers and workers in these less wealthy countries will undoubtedly grow corrupt from what seem like windfall profits and then arrogantly cheat their employees or us consumers of their services. Then we won’t do business with them and drive home another lesson about free choice in the market place.

Bookmark to:
          

A cut to two undersea communication cables in the Mediterranean Sea caused greatly diminished bandwidth to India on January 30th. You need to consider possible disruptions to communication if you are considering offshore outsourcing.

Meanwhile, a third cable was severed a few days later in the Persian Gulf near Dubai.

An analysis of the impact on modern Internet communications is sobering. Is it a conspiracy?

There isn’t much of an impact on the U.S. and Europe if it is.  According to the Analyzing the Internet Collapse article in Technology Review, “This kind of damage is rarely such a deep concern in the United States and Europe. The Atlantic and Pacific Oceans are crisscrossed so completely with fast fiber networks that a break in one area typically has no significant effect. Net traffic simply uses one of many possible alternate destinations to reach its goal.”

Good thing. I’d hate to think the rest of you could get cut off from California.

Bookmark to:
          

Indian IT Outsourcing giant Tata Consultancy Service TCS has announced a decrease in salaries as reported in a recent article in the Economic Times of India.

It’s not clear if this is just an issue with the business performance of TCS or is a general economic trend, influenced by rise of the rupee compared to the dollar and talk of a recession in the U.S.

Clearly rising salaries and value of the rupee have hurt the profits of Indian companies in general. American companies are proceeding carefully when outsourcing software development to India these days .