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By David E. Gumpert An Atlas of Offshore Outsourcing Like it not, the use of overseas programmers isn't going to diminish. For entrepreneurs, here's a quick guide to which nations offer what The outsourcing of America is shaping up as a seemingly inexorable trend, with various consultants estimating that the number of U.S. jobs shipped overseas will climb from the hundreds of thousands we have seen over the last few years to several million in 10 years. While many executives will continue to view sending American jobs overseas with distaste, smaller outfits keen to remain competitive will increasingly be joining major corporations in seeking cheaper foreign options for completing computer programming, call-center work, assembly, and a myriad other tasks. How are executives of smaller businesses supposed to decide which country is best for their particular projects? Entrepreneurial outfits tend not to have the international staffs that major corporations have for roaming the world, engaging consultants, and scouting things out, sometimes for weeks at a time. It's a big world out there, and to the extent a smaller company can narrow its search, it will save time and money. THE CHALLENGE. Not surprisingly, lots of people will tell you that this country or that is best -- and, invariably, it will be the country they are from or do lots of business with. Having written three previous columns on various aspects of outsourcing, I have been bombarded by e-mails from consultants (and others) giving me the nationalistic pitch. You should check out Russia, they say, or Romania, or the Philippines, or Panama, even Africa (see BW Online, 1/12/04, "A New Tide in Offshore Outsourcing"; 12/22/03, "Offshore Outsourcing: Time to Get Creative"; and 12/2/04, "U.S. Programmers at Overseas Salaries".) So I decided to call the bluff of some of the consultants. Tell me, I challenged four of them, about both the strengths and weaknesses of your favored country or countries as they might affect a small business that is considering outsourcing. What follows is a country-by-country synopsis of the responses: INDIA Strengths: The two biggest ones may be that Indians have the best command of English and possibly the most established, broadly based, knowledge of mainframes of any of the outsourcing countries. "They know COBOL/CICS or RPG and can do it tomorrow," says Larry Miner, president and CEO of TRIA Group, a firm that arranges for outsourcing of software and financial services. "Because they've been doing it for so long," he adds, "they understand [Americans] better." Moreover, says Steven DeLaCastro, a partner of Tatum Partners, a provider of information and technology services, because India produces more than 300,000 computer engineering graduates annually, "support of leading new technologies is easily found." Weaknesses: The biggest are ongoing power outages and a cultural gulf that can lead to communication problems. "It can be days before the power comes back on," says Miner, leading to project delays. And then there is what Miner describes as the Indian tendency to "say 'yes' while they mean 'maybe.'" An emerging problem, say some, is rising costs and turnover among Indian programmers, a la the U.S. during the Internet boom of the late 1990s. PHILIPPINES Strengths: The Philippines is trying to bill itself as a credible alternative to India, with strong technical skills and a mature infrastructure, which means its workers are especially eager to please, says Chuck Rudisill, director of sales of Software Ventures International, a firm that manages offshore technical projects. Moreover, it has "a close cultural affinity to U.S. businesses, process, and language -- English is taught and spoken." he notes. Weaknesses: It lacks the overall "software prowess of India," and still has the same time-zone difference to the U.S., says Rudisill. There are also ongoing concerns about terrorism, though the problem seems isolated to its southern islands.
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