Tuesday, March 23, 2004

Outsourcing - good or bad?

There has been a lot of hubbub these days about business process outsourcing. Many companies have started to outsource software development, customer service, and other processes. This has become a major election year issue, as many people are fearing for their jobs as forecasts predict that outsourcing will increase tremendously over the next few years. Unlike many factory workers who were laid off in the 80s and 90s, these workers are generally high-paid and middle class.

It's practically a no-brainer to outsource from a business' point of view - for the $80K you pay for a senior developer here, you can get 3 or 4 in Inidia or Russia. Obviously those of us who's jobs stand to be outsourced are worried.

But as much as I see jobs going overseas, I see new jobs staying here. For example - to maximize efficiencies, it makes sense to have somone in the US test the code that is written 8,9,10, or 11 hours away. Delhi is 11 hours ahead of New York so when a Q/A person leaves his or her office in New York the person in Delhi is starting his or her commute - and has bug reports waiting for them. 24/7 operations without paying someone extra to work a night shift.

I also think that even if companies outsource development, they will still need someone on site to gather requirements and manage the process - whether that person works for the outsourcer or outsourcee, it is still a job that is best filled on American soil - if not for anything else than logistical reasons.

In addition, people who started a company in 1999, would hire developers on the spot - requiring a lot more capital expenditure for in-house bodies. That same company could initially outsource the development, thereby saving start-up costs and spurring growth - which might lead to other types of jobs.

I also have heard from several colleagues that some companies (although not necessary explicitly) sell higher levels of service that are only staffed by americans. They realize that many people are willing to pay a premium for support engineers that are native speakers of their own language and not reading from a script. Because of the revenue associated with these sevices, support technicans get the opportunity to earn higher salaries as well.

I guess there is a silver lining to the looming gray cloud of IT outsourcing. The trick for those of us in the industry is to find an umbrella to wait out the rain with and we'll be okay.

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