After decades of IT offshoring, why haven’t the world’s coding factories taken it to the next level?
I’m about to enter my third decade of IT work. Very shortly afterwards I will be entering my third decade of offshoring IT work.
The small software house that gave me my first job was quickly snapped up by a firm busying itself snapping up lots of small, tired software houses with the vision of having everything re-written by their team in India. By building the next versions of these applications with cheap resources and common frameworks, tools and business objects they would slash costs and have a guaranteed market.
On paper it was a no-brainer.
In practice it was a disaster.
Good in practice
Well, not entirely a disaster. That small software house that gave me my first job is still going twenty years later. They’ve changed hands a few times, the strategic direction has swung through every point of the compass, but the one constant over that time has been the use of offshore resources for writing and testing code.
And while I’ve long since moved on from that software house, the use of offshore resources for writing and testing code has been a constant for me too.
That small software house survives in no small part because of the cost advantages of sending the development, testing and fixing of code to a low-cost country
That small software house survives in no small part because of the cost advantages of sending the development, testing and fixing of code to a low-cost country. A friend’s new smartphone app is profitable in no small part because of the cost advantages of sending the development, testing and fixing of code to a low-cost country. From the vast functional sprawl of modern business applications down to the comparative simplicity of a trendy new download, the business end of delivery takes man months or man years of routine work. If you can package that work up and send it somewhere cheap, you can save money, improve margins and make money.
Good on paper
Offshoring the mechanistic drudge works on paper and works in practice. Down the years I’ve seen many attempts to take it to the next-level by offshoring the management, the innovation and the design. This works even better on paper. Sadly, in practice, it’s almost always a flop.
According to a recent report in The Economist the offshoring tide has started to ebb a little. Amongst the reasons they highlight are the reducing cost differential as wages rise in these fast growing offshore centres, the political costs of sending work away from moribund western economies and both the responsiveness to competitive markets and the responsiveness to customers within those competitive markets.
Some of these points certainly apply to IT but by no means do they all. For sure companies like Tata, Infosys and Data Inc. have progressed beyond coding and into consultancy but not into product. After so much time and so much experience why hasn’t offshore taken it to the next level? Just where is the Indian Apple or Microsoft?
Better here
To deliver in a market you need to understand that market well. You need to fully appreciate its nuances, what works well and what doesn’t. To do that you need to be part of that market. To meet the needs of a different culture you must be absorbed in that culture.
These guys are building their own product and their own businesses. They’re just not doing it back home
Consultancy will never work remotely and the offshore companies that have moved into it do so with a local presence. The “near-shoring” cult of onshore-offshore has attempted to improve knowledge transfer and understanding by keeping a small pool of offshore resource close to the client. Yet consultancy seems to be as far as it goes. Innovation and invention, building your own product rather than building someone else’s for them, we’ve yet to really see.
Talent certainly isn’t lacking. Some of the finest IT guys I’ve ever worked with came from offshore IT centres. If I had to assemble a team of the best people I’ve ever worked with half of them would be from India.
But here’s the thing. None of them are still there. The best offshore guys I’ve worked with are now onshore in the fullest sense, living and working in Europe or America. When near-shore guys become offshore guys again, the best and the brightest find their way back as quickly as possible. The best never go back at all. The knowledge and experience doesn’t transfer home, it transfers away. These guys are building their own product and their own businesses. They’re just not doing it back home.
Those with the get up and go get up and leave. And it seems to me that until countries like India become places where the brightest and the best aspire to be, rather than aspire to leave, their brightest and best will continue to find new homes from which to innovate. And while they continue so to do, the industry back home will continue to deliver other people’s dreams, rather than deliver their own.
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Where is India’s Microsoft?
After decades of IT offshoring, why haven’t the world’s coding factories taken it to the next level?
I’m about to enter my third decade of IT work. Very shortly afterwards I will be entering my third decade of offshoring IT work.
The small software house that gave me my first job was quickly snapped up by a firm busying itself snapping up lots of small, tired software houses with the vision of having everything re-written by their team in India. By building the next versions of these applications with cheap resources and common frameworks, tools and business objects they would slash costs and have a guaranteed market.
On paper it was a no-brainer.
In practice it was a disaster.
Good in practice
Well, not entirely a disaster. That small software house that gave me my first job is still going twenty years later. They’ve changed hands a few times, the strategic direction has swung through every point of the compass, but the one constant over that time has been the use of offshore resources for writing and testing code.
And while I’ve long since moved on from that software house, the use of offshore resources for writing and testing code has been a constant for me too.
Good on paper
Offshoring the mechanistic drudge works on paper and works in practice. Down the years I’ve seen many attempts to take it to the next-level by offshoring the management, the innovation and the design. This works even better on paper. Sadly, in practice, it’s almost always a flop.
According to a recent report in The Economist the offshoring tide has started to ebb a little. Amongst the reasons they highlight are the reducing cost differential as wages rise in these fast growing offshore centres, the political costs of sending work away from moribund western economies and both the responsiveness to competitive markets and the responsiveness to customers within those competitive markets.
Some of these points certainly apply to IT but by no means do they all. For sure companies like Tata, Infosys and Data Inc. have progressed beyond coding and into consultancy but not into product. After so much time and so much experience why hasn’t offshore taken it to the next level? Just where is the Indian Apple or Microsoft?
Better here
To deliver in a market you need to understand that market well. You need to fully appreciate its nuances, what works well and what doesn’t. To do that you need to be part of that market. To meet the needs of a different culture you must be absorbed in that culture.
Talent certainly isn’t lacking. Some of the finest IT guys I’ve ever worked with came from offshore IT centres. If I had to assemble a team of the best people I’ve ever worked with half of them would be from India.
But here’s the thing. None of them are still there. The best offshore guys I’ve worked with are now onshore in the fullest sense, living and working in Europe or America. When near-shore guys become offshore guys again, the best and the brightest find their way back as quickly as possible. The best never go back at all. The knowledge and experience doesn’t transfer home, it transfers away. These guys are building their own product and their own businesses. They’re just not doing it back home.
Those with the get up and go get up and leave. And it seems to me that until countries like India become places where the brightest and the best aspire to be, rather than aspire to leave, their brightest and best will continue to find new homes from which to innovate. And while they continue so to do, the industry back home will continue to deliver other people’s dreams, rather than deliver their own.
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