Companies Finding Some Computer Jobs Best Done in U.S.

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Wed, 28 Apr 2004 09:48:05 -0400 (EDT)
From: Evan Korth <korth () cs nyu edu>
Subject: Companies Finding Some Computer Jobs Best Done in U.S.
To: Dave Farber <dave () farber net>

Dave,

For IP?  From today's NY Times.

Evan korth
------------------------------
Companies Finding Some Computer Jobs Best Done in U.S.

By EDUARDO PORTER

Even as the prospect of high-skilled American jobs moving to low-wage
countries like India ignites hot political debate, some entrepreneurs are
finding that India's vaunted high-technology work force is not always as
effective as advertised.

"For three years we tried all kinds of models, but nothing has worked so
far," said the co-founder and chief technology officer of Storability
Software in Southborough, Mass. After trying to reduce costs by
contracting out software programming tasks to India, Storability brought
back most of the work to the United States, where it costs four times as
much, and hired more programmers here. The "depth of knowledge in the area
we want to build software is not good enough" among Indian programmers,
the executive said.

If it sounds like "Made in the U.S.A." jingoism, consider this: The
entrepreneur, Hemant Kurande, is Indian. He was born and raised near
Bombay and received his master's degree from the Indian Institute of
Technology in that city, now known as Mumbai. Mr. Kurande is not alone in
his views on "outsourcing" technology work to India. As more companies in
the United States rush to take advantage of India's ample supply of cheap
yet highly trained workers, even some of the most motivated American
companies . ones set up or run by executives born and trained in India .
are concluding that the cost advantage does not always justify the effort.

For many of the most crucial technology tasks, they find that a work force
operating within the American business environment better suits their
needs.

"Only certain kinds of tasks can be outsourced . what can be set down as a
set of rules," said Nariman Behravesh, chief economist of Global Insight,
a forecasting and consulting firm based in Waltham, Mass. "That which
requires more creativity is more difficult to manage at a distance."

Another Indian executive in the United States who has soured on
outsourcing is Dev Ittycheria, the chief executive of Bladelogic, a
designer of network management software with 70 workers, also in Waltham.
Bladelogic, whose client list includes General Electric and Sprint,
outsourced work to India within months of going into business in 2001. But
it concluded that projects it farmed out . one to install an operating
system across a network, another to keep tabs on changes done to the
system . could be done faster and at a lower cost in the United States.

That was true even though programmers in India cost Bladelogic $3,500 a
month versus a monthly cost of $10,000 for programmers in the United
States. "The cost savings in India were three to one," Mr. Ittycheria said
. "But the difference in productivity was six to one."

Bladelogic's chief technology officer, Vijay Manwani, born and educated in
India, predicts that once the "hype cycle" about Indian outsourcing runs
its course, projects will come back to the United States "when people find
that their productivity goals have not been met."

The upshot is that high-technology corporations are likely to ship more
and more business functions to India to take advantage of its well-trained
work force. However, even as they do so they will keep many essential
tasks here.

For instance, Storability Software, which designs systems to manage data
storage and has 25 employees in the United States, first tried to
outsource some core programming tasks to a big software contractor in
India. When that did not work, it tried a more specialized boutique. When
this company did not deliver up to Storability's specifications either,
the company hired four programmers in the United States to help rewrite
the code.

But Storability also stuck to India, setting up its own small shop in Pune
late last year, where its 25 programmers perform noncore tasks. "We
essentially realigned our motivations," Mr. Kurande said. "We were able to
figure out areas of our engineering that suited them."

The Indian entrepreneurs in this country . business executives with the
cultural affinity and local connections that might be most conducive to
making offshore partnerships work . do not fault the work ethic of the
programmers in India. But they say the geographic distance and the
differences in business contexts can be difficult to bridge.

A typical challenge is the difficulty of finding programmers overseas who
can go beyond following well-known procedures to the next steps of
identifying problems and creating new solutions.

For instance, ConnecTerra, a Cambridge, Mass., company that designs
software to manage data from electronic devices like new radar-based ID
tags that companies can use to track inventory, tried programmers in India
last year. But ConnecTerra, which has 30 employees in the United States,
ultimately gave up on outsourcing because the Indian company that it
worked with could not deal with the fast-changing requirements.

Murali Menon, an Indian-born executive who was ConnecTerra's vice
president for engineering at the time, dealt with the recruitment of the
Indian company. He said the Indian programmers required more detailed
instructions to write the software code than would a programmer here, who
would be more familiar with the customer's needs. This slowed the process,
which was a major drawback because this technology is new and changing
very fast. Ultimately, the product that the Indian programmers delivered
was unwieldy, with software code written in one big chunk rather than more
flexible modules that top programmers use now.

No one questions the dedication of Indian programmers. "They worked hard,"
Mr. Menon said of the programmers in India, "but couldn't keep up."

(Executives at Bladelogic, Storability and ConnecTerra declined to divulge
the names of the companies they have worked with in India, saying that it
might damage potential business relationships for other work in the
future.)

In the end, many say the advantages of keeping some of the most
sophisticated work in the United States are related to the factors that
draw technology entrepreneurs from India and elsewhere to this country in
the first place: Indian engineers and software designers in this country
know that the businesses whose needs are driving technological innovation
are mostly in the United States. It comes down to being where the
customers are.

A defense of the programming industry in India comes from Bassab Pradhan,
the senior vice president for worldwide sales for Infosys Technologies.
Infosys, based in Bangalore, is India's largest software services company.
Of its revenue of $1.06 billion last year, about two-thirds came from
American corporate clients including Visa International, Boeing and Cisco
Systems; it provides them with services like data entry, programming and
customer technical support.

Mr. Pradhan, who is Indian-educated, disagrees with critics who say that
Indian-trained workers lack creative ability. When outsourcing fails, he
said, it is typically because "less disciplined" businesses try to farm
out projects that are not properly defined.

But Mr. Pradhan agreed that the need for proximity to the final user of
the technology does place limits on what types of tasks can be outsourced.
"Whenever the pace of innovation is very rapid," he said, "is when the
work should be done closer to the client."

In the future international division of labor, Mr. Pradhan said, the
production of the technology will be done in places like India, which can
deliver it reliably at a low cost. What cannot be sent to India, he said,
is the invention of new business processes and technologies.

Conceiving inventory-management software that helps a retailer make the
best use of electronic product tags, for example, might be something best
done by system designers in the United States working closely with the
retailer. Once such a system and its tasks have been mapped out, though,
the software code could be written by programmers in India.

Such distinctions are why even the champions of India's
programmers-for-hire industry are trying to do more work within the United
States. This month, for instance, Infosys announced that it would spend
$20 million to set up a consulting company in the United States. It has
already hired some top consultants from companies including Deloitte
Consulting, Cap Gemini, Ernst & Young and E.D.S., and plans to recruit
others.

Innovative business processes result from "an understanding of the
business that happens when people get into a room and talk to each other,"
Mr. Pradhan said. "That is very difficult to outsource."


http://www.nytimes.com/2004/04/28/technology/28SOUR.html?pages=all 

-------------------------------------
You are subscribed as interesting-people () lists elistx com
To manage your subscription, go to
 http://v2.listbox.com/member/?listname=ip

Archives at: http://www.interesting-people.org/archives/interesting-people/