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INTEGRATION WATCH: Don't Deny Offshoring
By Andrew Binstock
 February 1, 2004 — An unpopular topic today among U.S.-based programmers is the impact of outsourcing development offshore or what is colloquially termed offshoring. When I speak to developers, I repeatedly hear passionate condemnations or flip dismissals of offshoring—usually articulated in one of the following ways:
1) Only grunt programming is going offshore. The really hard stuff—the magic—is staying right here.
2) Before long, companies will recognize that offshore programming is either not of very high quality or not very economical.
3) Security concerns will force companies to rethink offshore commitments.
It’s a point of faith that soon the attraction of offshoring will fade and companies will recognize the benefits of returning those jobs to U.S. shores.
Interestingly, when small travel agencies were wiped out due to disintermediation by the Web, travel agents offered precisely the same denials: quality of service would suffer; the savings were illusory; once people had gone without agents for a while, they would recognize their error and come back to how things used to be. Of course, none of these predictions came to pass. And, likewise, none of the fond illusions developers hope for regarding offshoring will come to pass either. By all estimates, offshoring will accelerate—IDC expects it to double next year and triple by 2007.
Let’s examine the counterarguments, by the numbers.
1) Only the easy, boring coding is going offshore. This was true in the pilot offshoring projects before large firms became comfortable with the model. Now, increasingly, core software is being coded overseas.
Even if this weren’t so, however, and only the grind-it-out code were moving overseas, it would represent a serious squeeze on American programmers, who, let’s face it, spend most of their time doing just exactly this kind of journeyman coding.
The second part of this argument—that the magical coding will stay in the United States—smacks of xenophobia: It avers that American programmers have an innate ingenuity or savvy that cannot be duplicated easily. Images of Bill Joy, James Gosling, Dennis Ritchie and Richard Stallman come to mind.
But, in fact, most of today’s celebrated technologies are the product of foreign programmers: Linux (Finland’s Linus Torvalds, based on Minix written by Holland’s Andrew Tanenbaum), C# (Denmark’s Anders Hejlsberg) and, of course, the Web itself (England’s Tim Berners-Lee).
In addition, C++, Python and Turbo Pascal/Delphi are the product of foreign-educated programmers. So, the assertion that true programming innovation is the province of U.S. developers seems to lack supporting evidence.
2) The claim that savings are far less than anticipated is another canard. Let’s be clear: Cost savings are the principal (and in most cases, the only) reason for offshoring. If there are no savings, there will be no offshoring.
It’s probably true that as programmers in, say, India become increasingly skilled, they will seek higher wages. But if this pricing pressure reduces savings sufficiently, it will force the work to migrate to even less-expensive countries—certainly not back to the United States. And as other countries see the success currently enjoyed by India, they are entering the market and competing—a move that will accelerate offshoring.
3) There’s no reason to believe that security concerns will force companies to re-examine their commitments to offshore development. And, if security does prove to be a problem, companies will change their offshoring policies to solve the problem. Companies change policies and adapt—which is how offshoring began. They don’t give up savings because of security risks—they attend to security.
What about the quality of the delivered product? Naysayers point to Dell’s decision late last year to pull tech support from India back to the United States as evidence that foreign workers simply cannot provide the quality that American businesses require.
This may be true for support, which is an activity that contains inherently important cultural factors beyond basic English language skills and knowledge of a specific product line. But we should note that Dell repatriated only the top-tier tech support to the United States; the rest of the support is still overseas.
Difficult as it might be for U.S. developers to accept, offshoring is bringing home two important realities: globalization and the fundamental reality that much of programming work requires skills that are not difficult to learn quickly or provide inexpensively.
The fact that developers have been able to command high salaries and preferential treatment in the face of this latter reality underscores why American companies are so willing to abandon them for their less expensive counterparts abroad. Holdouts and nonbelievers will wait until reality is forced upon them. Meanwhile, salvation comes to those who recognize the new reality.
Andrew Binstock is the principal analyst at Pacific Data Works LLC
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