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kinds of sw development not likely 2 be outsourced

What kinds of software development are not likely to be outsourced?

Mr. Jiggy Fly
Sunday, December 21, 2003

All software can be outsourced. However, probably less than 20% can be outsourced successfully and profitably.

T. Norman
Sunday, December 21, 2003

"probably less than 20% can be outsourced successfully and profitably."

I disagree, I believe the correect figure is 35.7%

FullNameRequired
Sunday, December 21, 2003

May be 36.6, as the temperature of healthy boss.

Evgeny Gesin /Javadesk.com/
Sunday, December 21, 2003

I appreciate the responses, but I'm not looking for a percentage of development not likely to be outsourced, but what kinds aren't likely to be outsourced. Like development done for the Dept. of Defense.

Mr. Jiggy Fly
Sunday, December 21, 2003

As you pointed out, work done for the Department of Defense. All the rest is fair game. Some people believe that whatever is part of the core activities of a company won't be outsourced. I think that what is considered 'core' keeps changing and evolving, so that won't necessary hold in the future. If you are considering a career path in something that won't be outsourced, forget it. Just do what you love and become pretty good at it, so you develop competitive advantages against outsourcing.

uncronopio
Sunday, December 21, 2003

Actually, any healthcare CIO with half a brain won't outsource his IT, since HIPAA imposes personal criminal liability for violation of patient privacy. It's not an issue of trust, it's an issue of "who can I touch with a lawsuit"

For that matter, a wise CIO wouldn't outsource to anyone he can't meet personally and verify their identity and credentials.

Philo

Philo
Sunday, December 21, 2003

A better question might be "what are the kinds of software that will be least outsourced", because fad-chasing CIOs will try to outsource everything except themselves.

T. Norman
Sunday, December 21, 2003

Besides, as "In search of stupidity" shows, CEO's can make huge mistakes too :-)

Generally speaking, I guess it's counter-productive to outsource

- any software development that requires intimate knowledge of a country's legal climate where this software is sold (ie. how much do business software developers in Ukraine know about the Canadian tax system?)

- software whose development, for some reason, cannot be entirely moved off-shore, and hence, requires communications with developers over here. Microsoft originally tried geographically-dispersed development, but moved everyone back to Redmond because communication is just too damn hard when developers don't have an easy way to work face to face

- as said by others above, software or data that are just too sensitive, like medical or police records

Frederic Faure
Sunday, December 21, 2003

Maybe anything government related, anything that requires physical presence in the US. 


Sunday, December 21, 2003

Re: government stuff - New York (not sure if it's city or state) fines for things like parking and litter violations are processed in an office in Africa.

What's to say that a Ukranian developer working on software that requires intimate knowledge of Canadian tax law knows less about Canadian tax law than a Canadian developer? I'm sure it would be possible to find someone knowledgeable about Canadian tax law to sit with the developers in the Ukraine for an overall lower cost than employing n Canadian developers (hell, there is probably some tax loophole said knowledge holder might be able to exploit by being in the Ukraine :)).

I think the least likely thing to be offshored (**not outsourced**) is software solutions for small businesses. Offshoring is something large businesses can pull off, but I have a feeling that there is too much overhead for companies with less than (say) 10 staff to handle. That means: websites, Access + Excel solutions, customer database apps, etc.

Walter Rumsby
Sunday, December 21, 2003

Among the "least likely to be offshored" I would say game development.  Games don't lend themselves to the "here's the specs, develop this for me" model.  The developers have to know and do things straight through from top to bottom for it be successful. They also require lots of creativity. With nearly all games, either all the developers and designers are located inside the US, or the whole company is located outside the US.

Games also don't use large numbers of developers, they use a small number of expert individuals.  With small development teams the overheads of offshoring become too large compared to the benefits.

The art, music, and testing of it may be offshored, since a lot of it is already outsourced to specialist companies. But not the programming aspect of it.

T. Norman
Sunday, December 21, 2003

Ah, don't forget "anything that might cause a political backlash"

For example:
"Re: government stuff - New York (not sure if it's city or state) fines for things like parking and litter violations are processed in an office in Africa."

Paints a target on the forehead of the current Mayor of NYC - this is a nice juicy plum during the next election...

Don't outsource city jobs, silly.
Sunday, December 21, 2003

Okay:

a) Stuff with a stiff penalty for getting it wrong.
b) Stuff where the development is closely integrated with the creative aspects of the software, such as video games.

Though, I would argue that the thing that makes software outsourcing strange is that unlike manufacturing, it's not really a repeatable process - design and manufacturer are one and the same.

Therefore, it's really just more of the same if they outsource something like video game manufacture. Let's say Game Makers Inc. make the engine, why not outsource the sequal, while your core team goes on to make the next version of the engine for another platform, or why not outsource the porting to another platform, while your core guys work on the sequal.

I think once Company X gets a good enough reputation, they'll outsource anything to them.

www.MarkTAW.com
Sunday, December 21, 2003

Any project that requires a high degree of interaction with the end user.  The project I'm working on now is, at least in theory, using a programmer on the other side of the country who works dirt cheap.  The problem: there's a day or more lag to communicate with him.  Since he was at one time the lead programmer on this project and knows the details better than anyone else, this is a little inconvenient. This communications gap has doubled the cost of developing the software so far, and may do a lot more damage before it's all done.

Clay Dowling
Sunday, December 21, 2003

T. Norman,

EA have a development office in Australia.

Walter Rumsby
Sunday, December 21, 2003

Also,

Vaguely related to the whole "creative" thing - how many movies are being made in New Zealand and Australia these days:

- The Matrix trilogy (I missed Keanu Reeves by leaving a Sydney bar five minutes or so early)
- The Star Wars trilogy
- The Lord of the Rings trilogy

i.e. Nine of the biggest earning films of the last four years.

And these are by no means the only "Hollywood" films being made there. This is great for NZ and Australia, but obviously some people in the US have probably missed out on work they could have had on these productions.

This process repeats itself within a country: Adelaide gets film production from Sydney because it is cheaper to work there, the government is more accomodating. Same thing with call centers, they move from Sydney to Adelaide. The whole budget airline arrangement (at least in Europe) is based around small towns/cities bending over backwards to get the business of the budget airlines because of the flow on benefit to their economies.

I can't really process any judgement on this right now but I do think will become more common over the next few years and I do anticipate some kind of backlash against it to (or perhaps a "wider"/"noisier" backlash).

Walter Rumsby
Sunday, December 21, 2003

Walter, I presume you present the EA office in support of offshoring, but it's not really. The complaints about offshoring are not about normal competition between countries, but about the dramatic undermining by India and other low wage countries. Australia is not a low wage country in that sense.

In any case, if you mention the EA office to refute T Norman's claim that programming can't be offshored on its own, your reference is wrong. The EA office in Australia does complete titles, not just "programming."

The reference to the movie industry highlights how other industries handle these things. The Screen Actors Guild forced movie studios to a balanced approach where they didn't just hire cheaper Australian film crew. They worked it out in conjunction with Australian film unions.

me
Sunday, December 21, 2003

"EA have a development office in Australia."

I know about that, but they don't do "get the specs and develop it" type of work.  Whatever is done in Australia is done soup-to-nuts, and it is done in Australia because that's where they found some top talent, not because they will work for low wages there.

Australia is a developed country from which companies will offshore work to places like India and China.  Australia isn't a destination for low-wage work.

T. Norman
Monday, December 22, 2003

India is only a low wage economy because it is (relatively) a poor country. How can you draw a line that says "countries may only compete if the average wage in said country is above $x"?

Perhaps the move to make films in Australia was done with a bit more respect for US workers than other industries' moves to outsource, but lower costs were a factor in the decision to relocate. 

If a US worker loses their job because someone in Australia is making 80% of what the US worker makes they still lose their job.

Walter Rumsby
Monday, December 22, 2003

Let's not forget that a lot of these Indian workers are Phds.

Walter Rumsby
Monday, December 22, 2003

It's top talent, but they do soup to nuts?

Walter Rumsby
Monday, December 22, 2003

Walter, you don't get it. Offshoring is a threat to Australia.

me
Monday, December 22, 2003

"If a US worker loses their job because someone in Australia is making 80% of what the US worker makes they still lose their job."

As stupid as many CxO's are, they aren't dumb enough to send work halfway around the world just to save 20% on wages.  They can save more than that by sending it to a low-cost US state, without all the time-zone issues.  With such a small wage differential, there is something else driving such a decision -- usually specialized expertise.

When the decision is done on the basis of expertise, it is usually because the expertise wasn't available in the US (or the US experts were busy doing work for somebody else), so it likely doesn't cost US workers any jobs.  Or maybe the Australians were just that much better, which is honest-to-goodness competition, not cheap labor that exists because workers aren't free to move from country to country like the products of their work can.

T. Norman
Monday, December 22, 2003

Remember we're talking about software development in this thread, not filmmaking.  There are over 100 good reasons (other than lower wages) for American producers to make a film outside the US. And most of those reasons don't bring any worthwhile advantage to software development.

T. Norman
Monday, December 22, 2003

There are many threats to Australia - US and European economic subsidies and tarriffs amongst them.

This issue is not simple - at least I can't see it in simple terms. Australian clothing labels manufacture a lot of items in low labour cost countries. This benefits me as a consumer because I don't have to spend so much on clothes. Why am I as a computer programmer more entitled to work than a garment machinist?

Lets not forget the legacy of IT - how many threads are there on JoS about incompotent managers and co-workers? If 50/60/70/80/99/99/everyone-but-me% of workers are incompotent then why not replace them with incompotents* who are 1/5th as expenisve. Far too many IT projects fail and fail expensively. Now, I'm not going to put my hand up and say "I did it, it's all my fault", because it isn't (entirely :)), but its not to hard to see why businesses want to lower costs and why they are skeptical of the return on their previous IT investments. If you've been to India, you certainly wouldn't begrudge an Indian worker taking the opportunity to better for his or her quality of life.

Maybe I come off sounding like an anti-programmer. I'm not and I do think a lot of lazy decisions are being made to outsource by people not admitting the real nature of the problems they are faced with. However, I can't see things in such black and white terms as other people seem to and I think dealing with the problems that outsourcing has will take some thought, not just reaction.

I'll reiterate my original reply to the original thread - I think that small businesses will have a hard time outsourcing and most businesses are small businesses. Developing Excel and Access skills is probably a good idea (I say this as a Java programmer with  a strong aversion to Access).

Funnily enough open source software provides opportunities to those developing solutions for small businesses (e.g. can use software that traditionally would be too expensive), and provides a threat to those companies who are outsourcing (e.g. Oracle, Microsoft, IBM). Is this the cathedral and the bazaar?


* I'm not implying that employees of outsourcing firms are incompotent.

Walter Rumsby
Monday, December 22, 2003

Hold on here. Now I know Canada was used in the recent Kevin Costner movie (I think it was him) because it looks like the old west, and is cheaper than, say, Montana.

New Zealand is used because it's just gorgeous, so that will count for Xena, LOTR, and Star Wars. The place looks like it's uninhabited, so when you want that, that's where you go.

The Matrix was shot in Australia, and I remember reading an article about it. The Australian government (down to local) makes it very amenable to blocking off city streets and filming, plus the city has a very generic look to it.

Also, I wouldn't call it outsourced. The actors, artists and directors were most likely chosen in the US and shipped overseas. The extras and grips are probably local. The computer effects guys can, and I'm sad to say this because it's the most relevant to the thread - can be anywhere.

That you farm out the the company who can either do it best, or cheapest. With these huge budget movies, you go for best. Other houses will go for cheapest, or somewhere in between. In 10 - 20 years you'll be able to duplicate the effects in The Matrix on an iMac.

www.MarkTAW.com
Monday, December 22, 2003

"... then why not replace them with incompotents* who are 1/5th as expenisve."

If they were that cheap for real, then let them go ahead.  Savings of that magnitude will benefit me in other ways, like cheaper goods and a sustainably strong stock market, even if it means I won't have a software career.

However, the real savings are more along the lines of 20-25%, if there are any savings at all.  That figure is in line with what CxO's who are willing to admit the real savings will tell you.  Is it really sensible to add more variables into the picture that would increase the already high failure risk that software projects have, just for a reported* 20-25% savings?

Even when the offshore developers are technically competent, they aren't going to be so good at "giving the business what they want without them having to write ten thousand pages to say what they want."

*(If a CxO tells you 25%, the reality is probably still a bit less than that, due to the hidden costs which are difficult to quantify.)

T. Norman
Monday, December 22, 2003

To me, smaller companies/departments/projects are less likely to be outsourced.

Even when you outsource, you need several developers in your home office to oversee the process, to write the specs, guide the outsourced developers, and manage the testing process.

For smaller companies/departments/projects, where you only *have* several developers in the first place, I don't see how they could be outsourced efficiently.

Your thoughts, please....

John Rose
Monday, December 22, 2003

Least likely to be outsourced:
- Small office work.  They want to touch the person doing the work and it is cost prohibitive to create a long distance relationship
- Trade secret work.  This is work a company cannot risk being exposed.  I have personally seen a case where a foreign company provided detailed specifications, and workings of a system we had.  Although covered by NDA and contracts, their position was reduce the price or we give the details to a company that will. [Yes, you can sue in international court.  Contact a lawyer to get an education on your chances of winning in time for it to matter.]
- Health Care, specifically patient information.  As mentioned above HIPAA is an industry unto itself.  As was seen recently when a transcriber in Pakistan threatened to put patient records on the internet if not paid. http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/10/22/MNGCO2FN8G1.DTL
However, there are several companies selling "off the shelf" software, that is HIPAA compliant, but written offshore.

Everything else is load bidder.  Someone mentioned Microsoft, but that was misleading.  They brought back only a small portion of the jobs they sent out.  Much like HP announced they were bringing back their _corporate_ support desk services.  The rest of us are still talking to a freighter at the docks in India.

Jobs are going to the lowest global bidder, even state, as well as DOD work.  In the DOD they contract with Halliburton or IBM and those companies do the work in low income countries.  (Can we say LOOP HOLE?)  My state, allows foreign companies to claim minority status to ship work off shore.  I would bet most states do, because minority law did not consider someone would actually take the work elsewhere.

It will not be what development remains, it will be what positions.  Most of the good people who want to stay in the industry should be looking to expand to project management and technical leads.  You will be the liaison to the work. While it sounds bad, and it is, as our CIO just told us, "it's purely a financial issue to use off shore coders."  Which means, off shore or figure out how to do it in the US at $15/hour.  Which is $1 less than a baggage handler at most airports, and $20 less than most Domino's pizza managers.

MSHack
Monday, December 22, 2003

I'd say any embedded software development for a new product has to be done in the same country that the hardware is being developed in, preferably in the same state/city/building.  There are too many cycles you have to go thru between HW and SW debugging to allow for any kind of significant (>6hrs) communication lag without seriously impacting your schedule.

JbR
Monday, December 22, 2003

"If a CxO tells you 25%, the reality is probably still a bit less than that, due to the hidden costs which are difficult to quantify."

So lets call that a 20% price difference. Suddenly these outsourcers don't look so difficult to compete with. If you assume they have the industry standard amount of dead weight, then a company with less dead weight will probably be able to compete in terms of price AND deliver better results.

W00t!

Walter Rumsby
Monday, December 22, 2003

It isn't that hard to compete against the outsourcers.  I am confident that with my knowledge of the systems and the company's business, and my closeness to the users, I can produce what two average developers in India can.

The problem is that the PHBs often declare the winner of the competition even before the opening bell rings.  They just up and lay off dozens or hundreds of staff without doing any form of analysis to determine how their staff performs compared to the competition.  The outsourcers are cheaper, so we *must* be saving big bucks!

T. Norman
Monday, December 22, 2003

---"Which is $1 less than a baggage handler at most airports, and $20 less than most Domino's pizza managers."---

So you're saying that managers at Domino's pizzas get $70,000 a year for a forty hour week. How do I get the job?

Stephen Jones
Tuesday, December 23, 2003

Kinds of SW development in which outsourcing is a liability:

* Any software development in which speed to market is the crucial element of possible success.

This includes anything cutting edge; ever hear of the curse of the tail end of the bathtub curve?

Dennis Atkins
Tuesday, December 23, 2003

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