Sending code offshore 'vital for profits'

By Ed Frauenheim, CNET News, 22 July, 2003 14:10

NEWS

Sending software development work to lower-cost locations overseas is vital for profits, software company leaders and industry advisers said on Monday. But speakers at the Enterprise Offshoring conference differed on whether software companies should dip a toe into the overseas practice or dive right in. "Make a big splash," recommended Romesh Wadhwani, chairman of Symphony Services, which offers software development assistance in India. He said shipping a wide range of coding work overseas can be a crucial catalyst in helping anaemic software companies improve their bottom lines. "We have to think of offshore outsourcing as a strategic transformation weapon," he said. "If you don't start with a large vision, this is never going to go anywhere." The three-day conference was sponsored by investment and research firm Sand Hill Group, which also released a study on Monday finding that more than eight in 10 software companies are now shipping work overseas or plan to do so in the next year. As a sign of interest in the offshore phenomenon, Monday's event attracted 150 participants; the Sand Hill Group initially expected 100. The software industry's use of cheaper overseas labour is part of a broader trend of exporting IT work and other business tasks abroad. It's a heated topic, with unemployment rising for US-based computer scientists and mathematicians, and questions emerging about the United States losing its technical leadership. At software company Manugistics, for example, the use of about 100 developers in India has corresponded with a cut in the number of US developers from roughly 450 to about 275, chief executive Greg Owens told the conference audience. Owens said more cuts are planned for the US work force. Owens' advice to US tech workers is to improve skills, such as learning the latest technology. "I still think it's a good profession," he said. Charles Stevenson, chief operating officer for software company Gupta Technologies, said US programmers actually can benefit from offshoring. Gupta hired India-based Sonata Software in January 2002 to help with coding chores. Although some US programmers have been laid off, remaining coders found they could focus better on their primary projects, Stevenson said. "The top engineers actually like the outsourcing," he said. Diving headfirst into an offshore arrangement isn't the only way to go, said V.A. Ramakrishna, associate vice president at Sonata. Experimenting on a smaller scale may make sense for software companies, he suggested. "Customers have to evolve into it."

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