Offshore Advocates Woo Silicon Valley

Computerworld ^ | March 8, 2004 | Mark Hall

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MARCH 08, 2004 - ... execs and denounce politicians who campaign against the shipping of U.S. high-tech jobs abroad. At the Software 2004 conference in San Francisco last week, Romesh Wadhwani, chairman of Symphony Technology Group LLC in Palo Alto, Calif., exhorted an audience of 1,100 IT vendor honchos, including 400 CEOs, to get on the offshore bandwagon in order for their companies to have a viable, profitable future. "Most software companies that reinvent their business model will use offshore in a large and strategic, not tactical, way," he argues. Translation: More software development work is heading to India. As Computer Associates CEO Sanjay Kumar remarks, "If you work behind a computer screen, your job is up for grabs."

• Some politicians' jobs may hinge on their positions on outsourcing IT work to India, and a few are getting critical of the trend, which amuses Wadhwani. He quips, "You know when politicians say something is bad, that's a good thing."

• In an often rambling and disjointed keynote talk at the same event, Ray Lane also endorsed the exodus of U.S. jobs to India. The former chief operating officer of Oracle Corp. who's now a general partner at Kleiner Perkins Caufield & Byers, Silicon Valley's leading venture-capital firm, claimed that for every IT development dollar sent to Bangalore, $1.14 gets generated in the U.S. Pointing to the distinction between the two political parties on the issue, Lane concludes, "You should be able to figure out how I'm going to vote in November."

• Charles Stevenson keeps his politics to himself, but he readily shares his views on outsourcing. He is the chief technology officer as well as COO at Gupta Technologies LLC, a database and software tools vendor in Redwood Shores, Calif. As such, he's intimate with the tactical value of outsourcing. After all, he cut five quality assurance jobs and gave the work to Sonata Software Ltd. in Bangalore. But he says he did so to protect 68 workers in the U.S. He suggests the views of Wadhwani and Lane "are completely out of sync with the reality of innovation." He explains that face-to-face collaboration is key for critical product architecture, design and core development work. By tactically adding Sonata's quality assurance work, he's able to push projects out the door 33% faster. This is true, in part, because his California programmers can see Sonata's analysis of their previous day's coding when they reach their desks in the morning. With an in-house quality assurance team, there would be another day in between to slow things down.

• Another Silicon Valley executive who isn't buying the wholesale rush to offshore is Jim Green, CEO of Composite Software Inc. in San Mateo, Calif. Green says he doesn't care whether your developers are in Boston or Bangalore, you better have a foolproof way to manage a distributed development environment. And if you have one, please share it with him, because he hasn't seen one yet. Green says "teamwork and staying close to the customer" were critical during the development of the Composite Information Server, a technology that lets you run queries on multiple sources through a single view of the data. When you're spending R&D money, Green argues, you want every dollar invested to return $10, which means success is paramount. "How do you maximize your confidence that an R&D project will be successful?" he asks. Saving a few nickels by going overseas is nice, but will the extra management and communication hassles put the project at risk? Maybe, maybe not. It's your choice. That's why they pay you the big bucks.

• With the flood of venture-capital dollars drenching Silicon Valley this year, maybe companies there won't have to move jobs abroad. "There's so much venture money in the Valley, it's obscene," says Michael Howard, CEO of OuterBay Technologies Inc., which just moved into its snazzy new headquarters in Cupertino, Calif. He points to a recent $900 million venture-capital fund so desperate to invest the cash hoard that it hired a dozen telemarketers to call execs like Howard and beg them to take their money. He says he treated them like he does other telemarketers. Click!

Software Stats

• Venture capitalists invested $3.6 billion in software companies in 2003.

• The top U.S. capital investment is in software, with $203 billion projected to be spent in 2004.

• 84% of software companies are sending work offshore.

Source: Sand Hill Group

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[Shermy]

With the flood of venture-capital dollars drenching Silicon Valley this year, maybe companies there won't have to move jobs abroad.

They don't "have to" do anything. They move jobs abroad to cut labor costs. If the labor costs are significantly different they move...regulations, taxes, etc. are irrelevant. Just as irrelevant is the lack of free trade treaties and reciprocal agreements with India and China. Protecting America's interests is old fashioned, apparently, though everyone else in the world practices it.