Offshore Still Offers the West Opportunity
CIO magazine observes that the number of developers in India is set to surpass those in the US in 2017. I’m a little surprised that it will take that long, but be that as it may, there is clearly still fertile ground in the sub-continent for a technology business to plow.
Ten years ago, you couldn’t get a start-up funded without an outsourcing strategy that would explain how you planned to get your system built by managing the costs through employment of offshore resources. That notion has grown out of fashion for two reasons. Firstly, there were costs and difficulties involved in working with an offsh0re organization that weren’t anticipated. The low-hanging fruit that everyone expected proved to require a stepladder. Communication is impeded by cultural differences, in which the things said aren’t as immediately understood as when talking to a colleague over the cubicle wall. One is more likely to intuit the thoughts and intentions of those you can see, especially those with whom one has vast common experience, who roots for the same teams, perhaps shares the same commute. Time zones and holidays matter, when one is working together for the long term; their mismatch inserts friction in the transmission of the message. And ironically, the very success of offshore development strategies increased the demand for developer talent and so raised the cost, as Cnet noticed in 2006, making the whole undertaking less desirable.
Nonetheless, there’s still a business case. If it’s not as strong in India as it once was, Southeast Asia, Eastern Europe, South America or North Africa (although in the latter cases the advantages aren’t so great if you operate in English). But the second factor, the softening of the Western economies, was another wet blanket. Now even where the numbers still make sense when all the costs are included, businesses have been loathe to go offshore for social and political reasons. There is certainly value in being seen as a good corporate citizen, doing your part for the economy; and for maintaining strong in-house capabilities while engendering the loyalty of your employees, even when it would be cheaper to have the work down outside. Perhaps its anecdotal, but I’ve found my network – which includes a substantial number of first generation immigrants to the US – is eager to embrace the notion that the most strategic sense is to be found in returning development in-house and to be very selective about what is left offshore. Mature and legacy systems may be maintained from afar; but new development, support of mission critical systems and much else is kept close.
What the CIO article suggests is that the pendulum may be ready for another swing. As the job market re-warms, the argument for supporting the economy with local resources will seem less compelling. To be sure, there are all kinds of developers, and the raw numbers don’t tell us whether these resources are likely to help us keep the old mainframes running or build out a new cloud service. Quantity doesn’t imply quality or even any kind of alignment with the array of skill sets available at home. At the moment, if demand is driving the growth of supply, it will be the commodity code most readily found, and where you are truly working on the cutting edge, it’s unlikely you’ll find any help overseas. But it’s still true that number two tries harder, and given those numbers it is probable that you’ll be able to find most of the skills your team needs – at least those involving mature technology – at a reduced cost outside of North America and Western Europe.
One thing we have learned about working with offshore organizations is that it pays to develop a strong relationship, so it makes sense to get ready for a change in the tides now. Chances are you’ll find quite few places in your organization that will be able to benefit from some kind of offshore arrangement. For one example, IDG Connect argues that even tight teams of Agile developers can productively incorporate offshore resources. As economies recover, more trade pacts get signed and education systems in developing nations continue to improve those strategies that depend wholly on in-house technology staff are going to be called into question once again.
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