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Offshoring work

There has been a lot of rants and raves about US companies offshoring work to other countries.  Ok, granted that this does make you feel better... but it is not information.  A close friend working at Cisco is seeing this trend occuring to a drastic effect.  His job is going overseas in a month.  More than a few jobs are going to Wipro in India.  The surprising and worrisome thing is that it seems to be working out pretty well for Cisco.

Does anyone have first hand observations of how well or not-well an instance of off-shoring a contract is working?  It would be great if you could share those stories with us.

Hoang Do
Wednesday, October 22, 2003

I've heard anecdotal evidence about bad offshoring experiences, but obviously those are the anecdotes you'll hear.

Someone pointed it out on this forum, and I think it's a critical insight - evaluate "success stories" *very* carefully. Make sure the "massive cost savings" isn't based on an hour-for-hour comparison. For example, let's say development of an in-house HR system would have taken 1000 manhours for a local consultant @ $50/hr. Offshored, it took 2500 manhours @$30/hr. Of course, the after-action report is going to claim 2500 x (50-30) = $50k savings, instead of the (unmeasurable) (30 x 2500) - (50 x 1000) = $25k loss.

No telling if the offshore team will overrun, match, or beat the hours required, but by doing the math on the assumption that it's a match, then offshoring will *always* be a fiscal win, no matter the actual effect.

Philo

Philo
Wednesday, October 22, 2003

Ah, here's an interesting consideration:
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2003/10/22/MNGCO2FN8G1.DTL

Consider what it is you're outsourcing and the availability of legal recourse. I would also say this is a big huge warning to anyone using/considering outsourcing to NEVER send production data, allow access to production systems, and be cautious about proprietary information.

Philo

Philo
Wednesday, October 22, 2003

The company I am at basically has VB, Java & Mainframe systems. Right now the trend is to outsource all of the COBOL code and have US developers work on the Java & VB pieces.

So far it seems like the outsourced COBOL code arrives late, wrong, poorly coded, very buggy - but a lot cheaper.

As a result of the Offshore devs missing their target dates  and making a lot of mistakes, our VB & Java projects are being delayed also.

I have a bad feeling that business managers still won't care about any of the negatives - they only care about the mighty $$$$$$$$$$.

(Gotta love capitalism huh?????)

GenX'er
Wednesday, October 22, 2003

Philo - wow, thanks for the link. I have been alerting our Business Security team to the fact that all our customer's billing records, all login administration (and thus access), all employee info (including some sensitive data) is all being sent to our offshore firm. Obviously not one bad inciident incriminates the whole model, but a certian amount of risk management should be considered.

m
Wednesday, October 22, 2003

Make very good specs, and find a good, reputable company in India or Romania to implement them, and your project will be delivered before the deadline.

Prad
Wednesday, October 22, 2003

"Good specs" - Why start now?

m
Wednesday, October 22, 2003

The silliest part of Philo's story, in my opinion, isn't the fact that offshoring was used, or that an employee misused confidential information. It is that there were FOUR different layers of outsourcing involved! UCSF outsourced to Transcription Stat, who outsourced to Sonya Newburn, who outsourced to Tom Spires, who outsourced to Lubna Baloch. WTF?! How can this POSSIBLY be cheaper than doing it in-house, when FOUR different contractors (three of whom are apparently IN the U.S.) are involved, all taking their own cut? This sounds to me like PHBs seizing on "outsourcing" as a buzzword, not doing a rational cost-benefit analysis.

Firebug
Wednesday, October 22, 2003

Philo,

Couple of interesting points today.  I don't think managers completely understand the risks of giving away their corporate information.  My feeling is while the labor is certainly less expensively and often qualified, the business ethics just aren't the same. 

The US, for all its craziness, is based on a system of trust, and respect.  I have to trust that the truck driver in the lane next to me isn't going to run me off the road because he is late for a delivery. 

Likewise I have to trust those I give my personal or proprietary information to, to handle it properly.  Yes there are laws in place, but in the end they often won't protect the business owner.  I have to trust those I hire.  The US was built on a system of cooperation and a certain moral standard, and in the end, even with recent scandals, I feel it still influences business practices in the US.  Once the information crosses the firewall and heads out of the country, all the rules are off.

As a case in point, my current employer outsourced development early on in the lifecycle of their product.  The outsourcing company saw no reason why they didn't own the code they developed under contract, and took it upon themselves to start a competing company based on that code.  Even after winning a lawsuit, to this day they are the number one competitor in the market. 

My feeling is the day Cisco let the IOS source out of their control, is the day they agreed to their own demise.  With well over a decade and millions of dollars of development invested in IOS, it is easily the most valuable asset in the company.  An asset that is easily copied, but not easily reproduced...Clone routers have already started showing up in China, and with source in hand, I think it is only time before that knowledge spreads to companies in other countries who will products into the US market. 

I've hired offshore labor for various tasks, while working on a small proprietary piece of software.  I consider certain portions of the code to be the core technology.  I DO NOT let the core technology leave my control.  This is best shot I have of not seeing my core technology end up in somebody else's hands or product.  It is not a guarantee, but it is certainly better than inviting others to view, and work on the code base.

If you believe your technology is proprietary the only way to outsource is by using black box interfaces, similar to those used by the military applications.  The fewer people who understand how the whole system works, the less likely it is that the system will be reproduced. 

That might sound paranoid, but you have to be prudent in protecting your IP.  In my opinion, most US corporations that are making use of outsourcing risk losing their entire business knowledge to the unscrupulous competition.  I think this one of the most serious threats our economy has yet to endure. 

barely anonymous
Wednesday, October 22, 2003

Another consideration is (just like human nature) that the 1 out-of 10 successes will always be quoted.  The 9 out of 10 failures will always be swept under the rug and never whispered about, ever.  The next project will be outsourced again just because it is cheaper on-the-books.

Now, if outsourcing fails,  why did it fail... with such a large financial advantage behind it?

Hoang Do
Wednesday, October 22, 2003

I've used offshoring on three occasions - and the same rules always apply...

1) Always check your references.. always.  There are as many crooked companies abroad as there are around the corner.

2) Send only coding - no design work.  I've never managed to find "creativity" in the offshoring space.

3) Spec it, spec it.. spec it.  And I mean - detailed program specs.. no details left out - see 2 above.  If you leave anything to guesswork - guaranteed the guess will invariably be something totally off the wall.

I've done it very successfully - in Porting work and straight coding.. heads-down, labour intensive.

If you send undocumented work and you leave it open to interpretation at all - guaranteed it will be a nightmare.  Which leads to... hell, if it's that much work - I'll do it in house.

... and yes, it's very high quality and its very inexpensive.

Sue Canada
Wednesday, October 22, 2003

"Spec it, spec it.. spec it.  And I mean - detailed program specs.. no details left out - see 2 above.  If you leave anything to guesswork - guaranteed the guess will invariably be something totally off the wall."

A spec written to this level of detail is most of the work of writing the program.  No wonder outsourcing at this point is cheap, there's very little work left to be done.

Jim Rankin
Wednesday, October 22, 2003

Like barely anonymous, I too have seen blatant theft of ideas and code by outsourcers with the same effect. The outsourcer learnt the ropes on the first job, stole code to do the job, and next thing was the dominant provider of such systems in a certain market.

I don't see local consulting firms as being boy scouts, but neither do they engage in blatant rip-offs. I think it IS a culture thing.

JM
Wednesday, October 22, 2003

I agree. I interviewed with a company that had a dozen "designers" who write detailed specs for their offshore group. They said they needed all these designers to guarantee they get what they want. Before they offshored they just had coders who did design, no formal design documents created. The whole time I was thinking, why not just let your designers code and save money on the offshore group???

m
Wednesday, October 22, 2003

I have found that offshoring has made me a more detailed spec writer.  Before it would be easy to assume a good developer would do the "right thing" by instinct.  This is NOT the case with the offshore developers I've hired.  They do EXACTLY as told.  The ability to act creatively seems to be about 0. 

This is good and bad I guess. I have found writing specs extremely tedious, almost to the point that I could see the logic in code as I typed the spec, which puts all the burden of creativity on myself. 

The good thing is I end up with the spec and the code, and if my intuition is correct the final result can be very good. 

If I forget a detail in the spec that isn't obvious until the coding phase, then I end up having to throw code out, re-write the spec, and have it re-coded.  This can be a waste of time. 

Sometimes a developer should ask, "Are you sure that's what you want?  You know this will result in XYZ being screwed up, don't you?"  When using local developers, most would know when something was awry in the spec, and not continue blindly down a poorly chosen path. 

The thing I have found odd is that I have tried to make the offshore programmers as comfortable as possible with asking questions, but they just don't seem to know when to ask a question.  Maybe it is a cultural difference, but maybe it is a technical one.  I'm not sure. 

But that is just my experience, and I think it puts MUCH more burden on the designer.  This reminds me of Erik Sink's http://www.eriksink.com/ web log where he concludes that ISVs should hire developers and not coders.  Well I haven't found many offshore developers, just coders....

That is just my experience, and maybe using someone like Wipro would yield different results. 

barely anonymous
Wednesday, October 22, 2003

Opps, Eric Sink is at:

http://software.ericsink.com/

barely anonymous
Wednesday, October 22, 2003

>"A spec written to this level of detail is most of the work of writing the program.  No wonder outsourcing at this point is cheap, there's very little work left to be done."

And of course, they won't count all the extra time you spent reeling off hundreds of pages of detailed specs, when they calculate their "massive cost savings".

T. Norman
Wednesday, October 22, 2003

I don't like outsourcing and fully agree it is an exceptional security risk.

That said, in the particular case mentioned, the people in tho wrong were the Americans who were shafting over the poor Pakistani woman who was doing all the honest work for ZERO pay while a huge chain of people was profiteering off of her. As a foreign woman, she had NO legal recourse to get paid and was desperate. She had to do what she had to do. I would have done the same damn thing if I was in her position -- if I had made reasonable attempts to contact everyone in the chain to get paid and they all told me to blow off and I had NO legal recource, vigilane action would be the only reasonable course.

That's one reason we have a legal system and need to make sure no one is disenfranschised. If people are not allowed to bring legal actions, vigilatism and all that entails will be the natural and reasonable result.

Dennis Atkins
Thursday, October 23, 2003

That poor Pakistani woman claimed to be a medical doctor - and quite likely was - and you just know that the system's fucked up when a doctor is reduced to this.  She ought to be out there saving lives, but her own people don't have any money to give her, and she needs to do mindless clerical crap just to get by - and she's forced to violate her own oath and ethics just to get the wages owed her. 

How are we supposed to compete economically with a ruined, destroyed, post-colonial wreck of a country like India, where a skilled professional can make a better living as a shoeshine boy for our megacorps than he could doing his real work?  And how can India survive without her own doctors, scientists, or other professionals - carefully educated by taxes extorted from Indian peasants, all in vain.  And how can any American have any job at all?

This has to end soon.  If things were spread equally, the Indians would be a little better off, and the average American would be maybe 90% poorer - but that cannot happen, simply because we have so much wide open space and natural resources - we just can't physically get to the point where beggars pay rent to live on squares of sidewalks like people do in Calcutta.  Instead, the dollar will become worthless toilet paper, as the Indians and Chinese realize that they've got piles of the damn things and the US has nothing to sell them in return.  The entire American economy will collapse along the way.  It's time to buy gold, and to get a bunch of guns, and to go hide in the woods protecting our gold with our guns. 

Trollumination
Thursday, October 23, 2003

---" She ought to be out there saving lives,"--

Actually a large proportion of Pakistani and Indian doctors spend their times saving the lives of the British and Americans. "Goodness Gracious Me " did a nice spoof a few years back in which well educated  Indian univeristy grads went to do a years voluntary service for the Indan Peace Corps going to undeveloped countries like the Uk where the education system was in tatters, and the health service only survived because of a constant influx of medical specialists from the East.

Stephen Jones
Thursday, October 23, 2003

"If things were spread equally, the Indians would be a little better off, and the average American would be maybe 90% poorer - but that cannot happen, simply because we have so much wide open space and natural resources - we just can't physically get to the point where beggars pay rent to live on squares of sidewalks like people do in Calcutta."

Here's an idea.  Let's create MORE wealth so both Americans and Indians have enough to live nicely.

Too radical?

Jim Rankin
Thursday, October 23, 2003

---"If things were spread equally, the Indians would be a little better off, and the average American would be maybe 90% poorer"-----

Err, somebody's mathematics are at fault here. The average GNP for an American is about sixty times that for an Indian. So if there were one Indian for one American than tthe average Indian would be thirty times better off and the average American half as rich. As there are four Indians for every American, then the average Indian would be seven times better off (which is hardly "a little").

Same lack of mathematics comes in when people keep talking about the US economy collapsing because 3.5 million jobs will be outsourced to India by 2015. Even if the labour force in the States remained static, and it has been increasing almost every year since 1776, that would still only represent less than 2% of the whole US work force.

Stephen Jones
Thursday, October 23, 2003

m wrote:
"The whole time I was thinking, why not just let your designers code and save money on the offshore group???"

If they were doing Extreme Programming, the coding and the design would be the same thing, and the designers would be the ones doing it.

The company would probably get a higher-quality result faster that actually meets their needs better that way, too.  Especially if the project's customer is on-site.

Chris Hanson
Thursday, October 23, 2003

""Goodness Gracious Me " did a nice spoof "

It was a spoof? I thought it was a news bulletin.


Friday, October 24, 2003

Here is an detailed write-up of an off-shore experience:

http://www.nwc.com/shared/article/printFullArticle.jhtml;jsessionid=XJLPXZTEXGIIAQSNDBGCKHQ?articleID=15201900

Hoang Do
Tuesday, October 28, 2003

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