Why US companies are taking back their software development from India? Why are they starting to think about near-shore opportunities?
In the past few weeks I have met with several companies that are talking about bringing their development back from India to their own headquarters or looking for near-shore possibilities.
1. Why do you think this is happening?
2. Is your company one of them?
3. Has been a source code problem? Is the source code held hostage?
Any ideas? thoughts? suggestions?
Good Answers (2)
Tom F
Engineering Management Executive
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Different size organizations are home-shoring for different reasons. I have advised several companies on how to return development to a more stable and predictable process, and this is what I have found.
1. ROI- It will cost you plenty to hire cheap programmers. Like cheap labor anywhere, they must be managed very closely if the project is to succeed. That means lots of con-calls, video is even better. Often these calls have to be made at "oh-dark-thirty", which is not compatible with the typical Western programmers' biorhythms. Periodic travel is a requirement to build the personal and business relationships that will insure success. If you get cheap with the communications, the project will fail every time. Think about the amount of management and supervision that is needed for any other group of $7 an hour employees.
2. Unreliable schedules. Any promises made about delivery fly out the window as soon as all the milestones collapse. One reason relates to item one above. Another is a difference in culture- time just isn't as important in many other cultures.
3. Quality. I shudder to think what will happen to Rover & Jaguar once Tata Motors buys those marques. The problem is not just India, as I have seen this with Russian off shoring efforts as well. No matter how much you try to instill quality into their process, they will revert to their old ways as soon as you're on your way to the airport.
I have never seen problems with the source code release, but I have always handled that very diplomatically.
Greg B
COO GolfTraxx, Founder & CEO Offthehookjobs
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1 - Economics
With the decreased value of the Dollar and increased value compared to the dollar of foreign currencies, the profitability of off-shoring has SIGNIFICANTLY decreased.
2 - Difficulty
Offshoring is difficult. You have increased communications issues, lost productivity when re-communicating rather than doing. Schedules are difficult on employees, requires double/triple backups for lapses in infrastructure, etc. (again this increases costs.)
3 - Strategic Advantages are Decreasing
In particular, the Indian job market has HUGE turnover (IE 30+ percent.) Employees are trained and they leave with that knowledge. That is a risk most US companies won't tolerate with their source code.
More Answers (3)
Eileen B
IT Professional, Information Security Quality Assurance Operations & Administration / President, CMU SEI LI SPIN
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Hi Emilio,
Maybe the lack of data has finally reached the red zone. Rational Outsourcing is gaining ground. At long last, a sound, factual, data driven solution!
Eileen
Rajesh V
Senior Technical Lead at HCL Technologies
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Mostly outsourcing has its own set of challenges... Companies which jump into outsourcing without fully realising the "effort" it takes generally are the ones that go back.
1) Outsourcing is not a magic solution that will simply take off your development pain
2) Micro management because of the feeling of "Loss of control" once outsourcing happens.
3) Cultural differences are difficult to overcome
4) Business Alignment is something difficult to achieve. When you pay for a service that whats you get, a service. You dont get the "extra" commitment for a product release since the teams actually doing the development is not the company that wants to release the product.
5) Its very important that the offshore team feels part of the "idea". A typical development only - no involvement in market team does not feel the same sense of responsibility that a product team that wants its product release does.
Subir D
Principal, Strategic Global Sourcing at Infosys
Best Answers in: Offshoring and Outsourcing (1), Non-profit Management (1), Computers and Software (1)
Hi,
Some clients may be considering taking software development back to US or near shore, but I do not think this is becoming a trend.
1. Why do you think this is happening?
Firstly - The clients may not be achieving the expected cost savings or any true strategic advantage (like shorter product development cycle) as envisaged earlier.
Secondly - The near shore destimations are scaling up to become attractive destinations. In many cases, the Indian IT firms are setting up centres to cater to the existing clients.
Thirdly - Many a times, the clients do underestimate the efforts they have to put to see the success of the engagement. Very few client executives see the extent of travel, or jetlag etc. while signing the contracts. If the size of the projects are very small, the efforts (and related "Transaction Costs") that go in to make the initiative successful are quite disproportinate.
So, unless the Software Development initiative is significantly large to justify Offshoring to India, one maye consider looking for a closer location. Today, the leading Indian IT Service Providers have set up locations closer to client locations, so as to provide better interaction and communication in similar time zones.
2. Is your company one of them? - I am from Infosys, an Indian IT Service Provider.
3. Has been a source code problem? Is the source code held hostage.
I have never heard of clients backing out due to Source Code issues. Source Code is never held hostage - the fact is, the Indian Legal System is quite robust, and there is respect for Intellectual Property. The clients do have recourse to Legal safeguards, and no Indian company will go to that extent, as it will be disatrous for it's business prospects.
Regards