IT Development: USA - India Issues!
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Article from the New York Times
Companies Finding Some Computer Jobs Best Done in U.S.April 28, 2004
By EDUARDO PORTER
Even as the prospect of high-skilled American jobs moving to low-wage countries like India ignites hot political debate, some entrepreneurs are finding that India's vaunted
high-technology work force is not always as effective as advertised.
"For three years we tried all kinds of models, but nothing has worked so far," said the co-founder and chief technology officer of Storability Software in Southborough, Mass. After trying to reduce costs by contracting out software programming tasks to India, Storability brought back most of the work to the United States, where it costs four times as much, and hired more programmers here. The "depth of knowledge in the area we want to build software is not good enough" among Indian programmers, the executive said.
If it sounds like "Made in the U.S.A." jingoism, consider this: The entrepreneur, Hemant Kurande, is Indian. He was born and raised near Bombay and received his master's degree from the Indian Institute of Technology in that city, now known as Mumbai. Mr. Kurande is not alone in his views on "outsourcing" technology work to India. As more companies in the United States rush to take advantage of India's ample supply of cheap yet highly trained workers, even some of the most motivated American companies – ones set up or run by executives born and trained in India – are concluding that the cost advantage does not always justify the effort.
For many of the most crucial technology tasks, they find that a work force operating within the American business environment better suits their needs.
"Only certain kinds of tasks can be outsourced - what can be set down as a set of rules," said Nariman Behravesh, chief economist of Global Insight, a forecasting and consulting firm based in Waltham, Mass. "That which requires more creativity is more difficult to manage at a distance."
Another Indian executive in the United States who has soured on outsourcing is Dev Ittycheria, the chief executive of Bladelogic, a designer of network management software with 70 workers, also in Waltham. Bladelogic,
whose client list includes General Electric and Sprint, outsourced work to India within months of going into usiness in 2001. But it concluded that projects it farmed out - one to install an operating system across a network, another to keep tabs on changes done to the system – could be done faster and at a lower cost in the United States.
That was true even though programmers in India cost Bladelogic $3,500 a month versus a monthly cost of $10,000 for programmers in the United States. "The cost savings in India were three to one," Mr. Ittycheria said . "But the difference in productivity was six to one."
Bladelogic's chief technology officer, Vijay Manwani, born and educated in India, predicts that once the "hype cycle" about Indian outsourcing runs its course, projects will come back to the United States "when people find that their productivity goals have not been met."
The upshot is that high-technology corporations are likely to ship more and more business functions to India to take advantage of its well-trained work force. However, even as they do so they will keep many essential tasks here.
For instance, Storability Software, which designs systems to manage data storage and has 25 employees in the United States, first tried to outsource some core programming tasks to a big software contractor in India. When that did not work, it tried a more specialized boutique. When this company did not deliver up to Storability's specifications either, the company hired four programmers in the United States to help rewrite the code.
But Storability also stuck to India, setting up its own small shop in Pune late last year, where its 25 programmers perform noncore tasks. "We essentially realigned our motivations," Mr. Kurande said. "We were able to figure out areas of our engineering that suited them."
The Indian entrepreneurs in this country – business executives with the cultural affinity and local connections that might be most conducive to making offshore partnerships work - do not fault the work ethic of the programmers in India. But they say the geographic distance
and the differences in business contexts can be difficult to bridge.
A typical challenge is the difficulty of finding programmers overseas who can go beyond following well-known procedures to the next steps of identifying problems and creating new solutions.
For instance, ConnecTerra, a Cambridge, Mass., company that designs software to manage data from electronic devices like new radar-based ID tags that companies can use to track inventory, tried programmers in India last year. But ConnecTerra, which has 30 employees in the United States, ultimately gave up on outsourcing because the Indian company that it worked with could not deal with the fast-changing requirements.
Murali Menon, an Indian-born executive who was ConnecTerra's vice president for engineering at the time, dealt with the recruitment of the Indian company. He said the Indian programmers required more detailed instructions to write the software code than would a programmer here, who would be more familiar with the customer's needs. This slowed the process, which was a major drawback because this technology is new and changing very fast. Ultimately, the product that the Indian programmers delivered was unwieldy, with software code written in one big chunk rather than more flexible modules that top programmers use now.
No one questions the dedication of Indian programmers. "They worked hard," Mr. Menon said of the programmers in India, "but couldn't keep up."
(Executives at Bladelogic, Storability and ConnecTerra declined to divulge the names of the companies they have worked with in India, saying that it might damage potential
business relationships for other work in the future.)
In the end, many say the advantages of keeping some of the most sophisticated work in the United States are related to the factors that draw technology entrepreneurs from India
and elsewhere to this country in the first place: Indian engineers and software designers in this country know that the businesses whose needs are driving technological innovation are mostly in the United States. It comes down to being where the customers are.
A defense of the programming industry in India comes from Bassab Pradhan, the senior vice president for worldwide sales for Infosys Technologies. Infosys, based in Bangalore, is India's largest software services company. Of its revenue of $1.06 billion last year, about two-thirds came from American corporate clients including Visa International, Boeing and Cisco Systems; it provides them with services like data entry, programming and customer
technical support.
Mr. Pradhan, who is Indian-educated, disagrees with critics who say that Indian-trained workers lack creative ability. When outsourcing fails, he said, it is typically because
"less disciplined" businesses try to farm out projects that are not properly defined.
But Mr. Pradhan agreed that the need for proximity to the final user of the technology does place limits on what types of tasks can be outsourced. "Whenever the pace of innovation is very rapid," he said, "is when the work should be done closer to the client."
In the future international division of labor, Mr. Pradhan said, the production of the technology will be done in places like India, which can deliver it reliably at a low cost. What cannot be sent to India, he said, is the invention of new business processes and technologies.
Conceiving inventory-management software that helps a retailer make the best use of electronic product tags, for example, might be something best done by system designers
in the United States working closely with the retailer. Once such a system and its tasks have been mapped out, though, the software code could be written by programmers in India.
Such distinctions are why even the champions of India's programmers-for-hire industry are trying to do more work within the United States. This month, for instance, Infosys announced that it would spend $20 million to set up a consulting company in the United States. It has already hired some top consultants from companies including Deloitte Consulting, Cap Gemini, Ernst & Young and E.D.S., and plans to recruit others.
Innovative business processes result from "an understanding of the business that happens when people get into a room and talk to each other," Mr. Pradhan said. "That is very difficult to outsource."
