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Nine months ago a marketer wrote an article in Business Week trumpeting the magic virtues of offshoring and more or less telling Western programmers: "stiff." He wasn't the only one.  Business magazines and IT groups like Gartner have been full of these articles by 10 cent experts who've never developed anything in their lives. Now reality is starting to catch up to them.

The marketer who wrote the Business Week article has written another rueing the larger-than-expected costs in extra quality assurance, project management and legal issues. He also warns of the risk of having intellectual property stolen.

"Local" outsourcers who pad their invoices also come in for some severe criticism.

An excellent read for the new year. Has anyone got any references to similar accounts of changes of direction?

Wednesday, December 31, 2003

I agree with the author that very low-rates can be indication* of new risks completing the project on time and in terms of project management procedures.

Evgeny Gesin /
Thursday, January 1, 2004

That was a good balanced article.

It reassures me that a major fraction of programming jobs for US companies will remain in the US instead of being outsourced. Consequently, I'll continue to earn a decent living as a software developer, even though outsourcing make the field less lucrative.

Thursday, January 1, 2004

This isn't surprising.  I see what goes on in offshore projects where I work.

However, the difference between this guy's situation and the typical BigCorp is that he is the president of a small company, which makes it more difficult for him to fool the company for big bonuses by creating illusions of savings.  It is harder to keep hiding the hidden costs, and his own financial future is more closely tied to the health of the company, as they don't have a huge vault of million$ to fund a huge bonus or golden parachute.

So his interest in outsourcing is more closely tied to the genuine goal of saving money for the company.  As a result, he will care much more about whether or not actual net savings result from offshoring, being ready to pull back if the savings don't materialize.

Whereas with the BigCorps, the executives are more motivated by the opportunity that offshoring presents for making themselves look good and appear to save megabucks for the company, which in turn can be used to justify bigger bonuses and other short-term compensation.  They exaggerate the costs of local developers, and downplay the indirect costs and risks of sending work offshore, in order to make the savings look larger than they really are.  At the same time, they ignore the risks to IP and data privacy.

Companies run by those individuals will take much longer to face reality and scale back the offshoring activity, because the offshoring is done to benefit the decision makers and not the company as a whole.

T. Norman
Thursday, January 1, 2004

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