IT offshoring will put US corporations to their knees

During tough times, large US corporations try to find ways to cut expenses. All of a sudden, you don “t see those people who were watering plants on your floor. Then, the access to the drawer with office supplies becomes as restricted as getting to a safe deposit box in your bank.

The other day I met an employee of a large corporation, and she told me that her manager didn “t allow her to send a delayed report via Fedex because it was more expensive than using US priority mail.

The training budget gets circumcised next.

During the crisis times people start worrying about executives ” bonuses and try to take their corporate jets away.

But there is one expense that these jetless and bonusless executives don “t want to discuss. Yes, I “m talking about the money spent on offshore software developers.

I spoke to an employee of a huge corporation – he goes through an annual performance review and was punished for not keeping the offshore consulting team busy when they didn “t have anything to do! No, they are not allowed to cut this umbilical cord. The management keeps lying that offshore development is cheap. They keep covering up the facts that the programming quality is poor and their US-based employees have to quietly re-do the assignments received from overseas. This subject can “t even be discussed. The big shots made their decision many years ago: hiring offshore teams is good. Case closed.

I ‘m a partner in a small company, and we also work with offshore programmers. But we don “t work with teams, we work with individuals that we like and need. Every morning, I spend a couple of hours on the phone with our developers working overseas, and trust me, as soon as I “ll see that they either not deliver of don “t have work, they will be gone.

Large American companies don “t have this luxury and keep carrying this unneeded cargo. Dear CEOs and CIOs, corporate jet expenses are peanuts comparing to the amounts of money YOUR corporation loses because of wasting money on low quality offshore “helpers rdquo;. Your mid-level managers will keep lying to you that “our offshore partners are profitable rdquo;. They keep waving flags that read “Can “t beat $15 per hour rdquo;. Lie. In many cases people getting these $15 per hour just don ‘t deliver, are underutilized, and work productively only 5-10% of their time!

Let “s do some math. Say, one offshore programmer costs your organization $15*8*40=$600 a week. It looks cheap. Ten programmers cost you $6000 a week

In the best case scenario, only 3 of them are good developers and deliver. If the rest of the team that you are forced to work with is just taking your time, requires writing more detailed spec and delivers poorly tested code, this means that you are actually paying $6000 a week for the work of three developers. Each of them costs $2000 a week, which translates into $400 a day or $50 an hour.

There is so many great developers in Texas, Colorado, Utah, Georgia that will be happy to work for you for $50 a hour!

My hat off to IBM that demonstrated ultimate creativity. If you work for IBM in the USA, get prepared to get shipped to India. You ‘ve heard it right. They call it Project Match. If in the past century there were companies who were helping, say a white male to find a perfect match among black males. IBM will find a match between you and a third-world country. They ‘ll also match your compensation to level it up with salaries of people around you. Sure enough, your cost of living in India will be lower than in New York, but you ‘d better not plan to come back home with those savings you ‘ll make in Bangalore.I smell a mismatch here…

Three years ago I “ve written an article “What CIO Should Know about Outsourcing Enterprise Java rdquo;. Forget about Java ndash; it “s happening in any large IT organization regardless of what programming platform they use.

I wonder how deep our economy should sink to force executives cutting these large offshore vampires loose?


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