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INTEGRATION WATCH: Adapting to Offshoring
By Andrew Binstock
 February 15, 2004 — In my previous column, I discussed offshoring, which is the growing practice of outsourcing services to offshore companies, especially ones located in India. I projected that this trend will grow at an accelerating pace and it will inexorably move domestic programming jobs from American shores to lower-paying climes. The trend is irreversible, and hence denials and fulminations against it by U.S. programmers are misplaced.
Turning a blind eye to change in a professional field is a serious miscalculation, because it shortens reaction time when the supervening reality finally hits home. History has proven repeatedly—especially when business models are forced to adapt—that denials make adjustment more difficult. With this in mind, thoughtful developers who have recognized the trend are moving quickly to adapt to it. You should too.
If you feel your job is in jeopardy because of offshoring, accept—even embrace— the change. How? You must start conceptually. Envision your site five years from now as a place where all software development is done off-site. Where do you fit in?
If the answer is, you don’t because you want to be coding, then you need to make important moves soon to assure your ability to continue programming. Your first option is to seek work at small businesses that are not candidates for offshoring, either because they’re too small or the model is just too far-fetched for them to really explore. Of course, at such companies, programmers tend to be techno-jacks of all trades. So your coding skills will be doing lots of maintenance and support in addition to development.
A second option is to find employment with companies developing cutting-edge software. These firms are not expected to offshore very much of their product development. To get in the door, you will probably need to sharpen your skills—not only as a developer, but within a specific domain area as well. In many cases, the latter will be more important than the former.
In counterpoint, if you can see a future for yourself in which you forgo coding all together—both the drudgery of maintenance and the scintillating satisfaction of creating new software, then you have other options available to you. To exploit them, you must understand that the programming chapter of your professional life closed, and that you’re beginning a new chapter. The first option is to look for project-management work. Some of this work might even entail supervising a team working offshore. It’s clear that supervising offshore work is a skill that will be in considerable demand during the next few years.
Other paths exist, however. All of them place more value on your business-domain knowledge. By being an IT analyst and understanding your company’s business and its technology requirements, you become a more valuable commodity. Moreover, your skills are ones that cannot readily be shipped overseas. And you’re developing useful credentials for finding other employment within the same industry. Whether it’s by moving into analysis or management, you must move up the food chain. And if you do so, you’ll find compensation is more generous and based more on your judgment than on your ability to understand persistence in EJBs.
Small shops that offer software development to select industries on fixed-bid or time-and-materials bases are also in jeopardy because of offshoring. Increasingly, they’re finding themselves underbid by such substantial margins that they can no longer make a compelling case for the prospective customer to choose them. These shops need to re-evaluate how they obtain business.
One shop I spoke to recently has managed to get out from the trap of responding to low-ball bids. It changed its business model. Rather than provide programming services, it offers wider-ranging computer services. It’s become an ASP or service bureau of sorts. What the company found was that as it brought on local clients (hosting their Web sites, performing IT services, tuning applications), it began receiving inquiries about development work that needed to be done.
Today, the company has the safety of monthly payments for the service-bureau work, and the additional higher-margin billings for development work. This model is resistant to offshoring and is a comparatively simple way of selling programming services.
Offshoring is a reality. Time should not be wasted denying, decrying or deriding it. That time is truly lost. Spend the time adapting: Move yourself up the food chain, become more valuable, change your business model. Change of this kind is never fun, but done right, it leads to growth.
Andrew Binstock is the principal analyst at Pacific Data Works LLC
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