Offshore Development, Outsourcing, Visas and Adapting a Changing World

February 5th, 2007

SIIA is the principal trade association for the software and digital content industry.  Their recent report issued January 11, 2007 titled “SIIA Report on Global Software Development Shows Importance to Business Growth” was the culmination of a survey with 114 American-based software companies last year.  Sixty-eight respondents had offshore operations while forty-six did not.Software companies are increasing offshore software development efforts.  However, companies are not looking to displace American workers, said David Thomas, executive director of SIIA.  “Global software development is in the process of transforming the nature of the
US software industry,” said Ken Wasch, SIIA President. “Our survey covers many of the influences on and results of this sea change.” 
  Respondents claim:

·         Attaining 80-100% of their cost savings goals ·         Gains in productivity appear to be less than expected
·         73% of respondents reported a positive impact on profits ·         66% claim the quality of work is above average when compared to onshore staff
·         25% rate the quality as “excellent” or “outstanding”  

Two underling points need to be examined:

  • H1-B, L-1 and L-2 visa allotments are being discussed by Congress and this report would indicate increasing the allotment should not have a negative impact on unemployment figures.
  • Companies surveyed were in the software development industry and not corporate America companies with IT departments, so by inference we should draw the same conclusion and apply across the board. 

The premises behind these two points are fraught with a number of problems.

  • Visas should not be increased because the US government cannot keep track of the holders of the visas it has already issued and this just represents a hidden immigration loop hole. 
  • Software companies are creating a product to sell and development is a means to that end.  Corporate America use IT as a tool that addresses their own product development and software is an ancillary support tool.   

Our economy is a global economy and outsourcing is not a fad.  US workers must adapt or become marginalized.  Issues for companies to consider: 

  • What is the true cost of moving development offsite and how much time and money will be required to develop complete and accurate technical definitions?  
  • Does the company have a mature project management track record? 

Issues for US development staff to consider:

  • Software languages and tools change continuously and staying an ‘expert’ is always transient.  Business analysis and project management is constant and not a candidate for outsourcing.
  • Consumers like to pay the least amount for whatever they usually buy, but that does not always translate into “made in
    America”.  Companies will always look for the least expensive and effective means to create their products.  The research found that some companies underestimate what is needed to succeed and how much effort is necessary for adaptation.  Developers have to adapt and become ‘integrators’ or some other form of the solution.  

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