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Offshore Risk Factor

Two bad omens in one day. First, the San Jose Mercury reported last week that U.S. students are forgoing educations in computer science because of worries about jobs being shipped offshore. The second omen was a REAL LIVE college student sitting in my living room echoing the Mercury News, “Yeah, I’d like to study computers, but I hear all the jobs are headed to India…”

Hmmmm.

The topic of offshoring has been in my head for over five years. During the tail spin years of my start-up, our VP of Engineering decided to research moving our QA group offshore to save some money. I was responsible for doing the legwork into possible partnerships… eventually settling on three different groups as potential vendors.

Failed. Failed miserably. Didn’t even get to the point of discussing real dollars because we quickly realized there was no way in the world our engineering organization could support a remote organization. We weren’t a bunch of idiots and neither were they… we were a start-up and most start-ups work frantically on doing one thing: shipping product. And you can’t ship product overseas… you can only ship process.

Process. Management buzzword. Curse to the creative. Yeah, I’ve been to those Office Space-esque meetings, too. Some boob with charts and graphs jumping up and down telling your management team about “process improvement”. Jesus, is this over, yet? I’ve got real work to do.

Problem is, Wall Street loves process. They absolutely adore the likes of Dell Computer, a stock valued highly not because of the product it produces, but the process by which it gets repeatedly gets those quality products out the door. Reproducibility of the success answers the following question for investors, “Are you lucky or are you good?”

Financial types who surf balance sheets think of process as the “intangibles” of business because, at the end of the quarter, when they’re counting how much money you made, it’s the intangibles, the process surrounded the design, development, and shipping of the product, that made the whole thing possible.

Process is, by definition, dull. Process is a checklist of obvious bite sized things you must do to get from point A to point B. Process is predictability. It gives groups of people a common framework to get stuff done. Process helps people and product scale. A simple example: the blueprint for your brand new house. How many different people with different opinions stare at that thing all day making hundreds of little inter-related decisions about what to do next. Imagine these folks winging it… just building a house from the heart. I’m thinking it’s 10x over budget and 5 years in development for a house you don’t want. If you’re lucky.

Big, successful companies have lots of process. There are big fat binders, flowcharts, and an entire flippin’ language created around the company’s product development process. Yes, it breeds out creativity in favor of predictability, but that’s why they’ve got billions in the bank. These companies scale.

These companies know what they need to get a product to market. They know it down to the dollar because, you guessed it, there’s a process analysis process which describes in detailed colorful Powerpoint where the money is going. This is how offshoring came to be… it was a single pie chart… in the board room… with executives… “WE’RE SPENDING 120 MILLION ON TECH SUPPORT? HELL, WE COULD SPEND 10 MILLION IF WE DID IT IN INDIA!”

The early adopters had some challenges. Time differences. Poor network connectivity. Cultural differences. However, they didn’t have a problem carving out their process from East Nowheresville Pennsylvania and plopping down somewhere on the other side of the planet. Their corporate process are a well defined machine and whether the resulting product comes from the US of A or Taiwan, the machine still runs smoothly because it’s following a rigid specification

Now you’re sweating. You’re worried that you’re going to walk into work one day and your boss is already going to be sitting in your office, his head hanging low. You’ve been blindsided. You’ve been outsourced.

To help prevent this day from coming, I offer you the following process to gauged your Offshore Risk Factor. To do this, you need to look at two things: Your personal risk factor and your company’s risk factor:

Let’s start with the personal one. Go ahead and answer the following questions:

  • How much process is there in your job? Do you follow a proscribed rigid work regimen? Do you know what you are going to be doing every single hour of every single day?
  • Can you see a flow chart from where you’re sitting right now?
  • Can you see a work-provided clock (not yours) from where you’re sitting right now?
  • Do you work in customer service or technical support?
  • Are there big black binders which describe the work that you do?
  • Is there a glossary for new hires?
  • If you work in software development, are you handed specifications from nameless, faceless designers? Do you NOT have a relationship with the people who are responsible for testing your work?

If you answered “Yes” to any of the above, you’re may be at risk. You could be outsourced because your job is so richly defined that it can be documented and explained to any reasonable professional on the planet who might work for much less than you. Sorry. Go Capitalism!

The other way to assess your Offshore Risk Factor is to look at two things in the organization: the quality of the process and the quality of the product. Use your own judgement here. Do we have process? If so, how much? Does our product suck? Really, how bad?

If you have, LOUSY PROCESS / LOUSY PRODUCT, then:

Whether you’re at a start-up or a established company, you have a bigger problems than outsourcing. Your company is about to fail, resting on it’s laurels, or is just lucky. In any case, you’re not in a sustainable situation, so start looking for a job. You’ll be happier elsewhere. Trust me.

LOUSY PROCESS / GOOD or GREAT PRODUCT:

Most start-ups who make it through a year or two fall into this category. They’ve spent millions of dollars getting the product right, but, chances are, they’ve cut some corners on process. This is good news for you because you’ve got the essential process in your head and that means job security. For now.

Big fat companies fall into this category, as well. This seems odd because you’d think that it’d require good process to build a successful company. Wrong. Great product can cover a lot of process stupidity. The bad news is that the growth potential for your company is limited by the fact that you’re probably spending a lot of money on process errors… poor communication… duplication of effort. The good news is that your company’s inability to communicate itself makes it an unlikely outsourcing candidate. Congratulations. You’ll never get rich, but you’ve got a job, right?

GREAT PROCESS / LOUSY PRODUCT:

Start-up: Again, company viability is your concern. Why all the process? Aren’t you worried about time to market? Aren’t you worried about selling something that folks want to buy? Who is paying the bills?

Established company: Ouch. High risk area. Clearly your company doesn’t have a dedication to excellence hence the lousy product. More bad news, you’re process heavy and your product sucks which means the Execs are already thinking of way to cut costs because, I’ll say it again, the product sucks. This could be the biggest opportunity for outsourcing firms in America. This is kind’a sad because rather than fixing the problem of quality of product, the Execs are trying to save the company by reducing the run rate rather than fixing the core problem… no one really wants the product.

GREAT PROCESS / GREAT PRODUCT:

Wow. Where you do you work?

Still sweating? Answered “Yes” a few too many times above? Well, here’s the good news. Now that you know your job may be ripe for outsourcing you get to do something about it.

Outsourcing exists because of the Internet and it’s ability to shrink the planet. As I look at my iChat buddy list on Sunday morning, I can name ten folks who I’ve met in the past two years that I consider good solid friends who live nowhere near me. Never seen ’em probably never will, but we talk… lots… My gut tells me if I had an idea worth running with that I could summon a virtual investigation team together in about a week. If the idea had legs, we could producing code in a month.

As we grow more and more adept at using this next generation of communication, our ability to work together when we are geographically distant increases… Think of your favorite open source effort. Think those guys are sweating outsourcing? Nope. Job security comes from actively adapting to the world around you.

So, stop sweating your job and start looking to the Net for activity… looking for the buzz. It’s the next great idea that you’re looking for and it could come from anywhere.

9 Responses

  1. Dear Rands;

    Outsourcing is an insideous, Mr. Nutty Industries, business practice that’s shrinking the middle class. Business week has a special report that discusses outsourcing as one factor in the lack of job generation:

    http://www.businessweek.com/magazine/content/04_12/b3875601.htm

    The industry is looking for that ho’shi’man moment more than ever. Since I have relatives and buddies in the comp. science business, I have been thinking about your article about the “next big thing” in our daily lives. I look at medical insurance claims and predict that if a software developers who can get a medical insurance claim processed like greased lightning, that would be a ho’shi’man product.

    Peace Out,

    F104 (Still zooming and booming)

  2. I’ve always thought this (but then, when the infamous “IT DOESN’T MATTER” article came out in HBR, the rest of the business world seems to have started to pay attention) : if you aren’t adding significant value to the company that they can’t get from anyone else who is younger/cheaper/in-another-country — your job is not secure.

    My father used to work for one of the big defense contractors; Sr. Scientists (his actual title; now more analogous to Engineers) there typically had one or two projects they were working on at any one time. My father typically had at least half a dozen. Towards the end of his career, he’d gotten to the point where they just sat him in an office and people would came to him with problems — and he’d solve them — because he knew so much about everything that was going on. Needless to say, when the entire industry was going through massive layoffs in the 90s, he didn’t even blink.

    When I was in college I got a part-time job in an industry, which lead to a full-time job post college, where I actually learned the business — and eventually segued to the tech side of things, where I’m senior management in a debt-free company and head of the department. I don’t just oversee stuff — I actually extend and grow the Company using technology. I can do this because I understand not only the tech, but the business of the company as well. And I’m not quite thirty years old.

    When talking to people that want to get into “the tech field” (what doest that mean, exactly anyway? Tech support? Programming? Systems design? Networking? Know where you want to go, and what you’re getting into!), I always tell people to strive to understand more than just their little corner of the world.

    If you yourself are fully modular, you’re easily replacable. Become part of the structure and design, not just a cog in the machine.

    This is easier in a smaller company, obviously. It used to be “safer” to work at a huge behemoth of a business, because you had security and pensions and all that jazz. Not so much, anymore. Now I think working at a large business is just as risky as working at a mid-size business. The risk one place is you’ll get replaced — the risk at the other is the business will go belly up. I tend to think you’ve got more control over your own destiny at the smaller shops. 🙂

  3. Floid 12 years ago

    Outsourcing is an insidious business practice that is slightly better than a World War with all the factions of the 2.5th and 3rd world who could otherwise afford bombs but not lawn flamingos.

    In other words, we’re fucked either way.

    I think the only way to tackle the ‘problem’ sustainably is in the educational domain, wherein a few small improvements (taking a cue from http://www.livejournal.com/~neutopian/64468.html) on both ends could produce a ‘workforce’ at least as relevant to ‘American problems’ as India is.

    On the CS (and pure math) end of things, when your introductory profs are convinced MS is the world, and have no conception of Dijkstra’s “teaching how to think,”* it’s no wonder most of the ‘coders’ churned out are expensive wastes of management time, no matter what your continent.

    *I used to think of Dijkstra as just another ivory-tower academic jackass before I actually flipped through some of his work. Maybe I’m being charitable, but I’d say “how to think” encompasses both knowing how to wield the wrench and knowing the wrench isn’t the solution itself.

    Then again, maybe I’m a neurotic bastard with a track record of picking schools that couldn’t teach and the ability to find more than enough other excuses when they could. (Ever have a roomie who liked to take out credit cards in his fellow roomies’ names?)

  4. Eli Sarver 12 years ago

    One thing to keep in mind: NEVER TAKE AN INDIAN SERIOUSLY WHEN HE/SHE SAYS “YESYES”. It is apparently a cultural thing to say yes to everything and then either succeed or fail at doing it later. (Fail in my personal experience)

    We had some QA work done by our outsourcing partner in India, and the whole thing was a disaster. We gave them requirements, checked up on them, and still got crap back. I am currently wasting much of my time repairing what they wrote. Not that everyone will have this problem, but it is something to be wary of. It’s not the loss of American jobs that I’m concerned about; it’s the loss of quality where it counts.

  5. Phew. Thank god I’m an unemployed art student.

  6. T RANDS THAT’S VERY INTERESTING BUT NOW THAT THERE’S A JERKCITY RESTAURANT IN FLORIDA OR WHATEVER I THINK WE NEED TO SHUT THEM DOWN AND START UP THE “OFFICIAL” JERKCITY RESTAURANT IN HAIGHT-ASHBURY. THE MEN’S ROOM WILL BE MUCH LARGER AND MORE LUXURIOUS THAN THE WOMEN’S ROOM, THE FRIES WILL COME WITH JIZZ SAUCE, ETC. THE VALUE MEALS WILL BE CALLED “HOMPHS” AND WILL FEATURE A VARIETY OF GAY SANDWICHES, SUCH AS LADY FINGERS AND MAN NUGGETS.

    PS I LOVE POO

  7. Jonathan Beilin 12 years ago

    Thanks for this post. I’m at the tender age of 19 and it’s getting around that time where one has to declare a major and CS is certainly tempting. Between /., peers, parents, et al, I was nervous regarding the decision but this post gave me renewed hope.

    PS wooo 2000!

  8. As I currently seem to be heading in the direction of “starving writer,” I can’t really say whether or not this article applies to me, but I definitely found it informative, as I have most of your other entries on the tech world. Who knows, I might find myself in a similar situation somewhere down the road (Though I’m still assuming starving writer is probably what’s going to happen to me. I can’t help it that I can’t function very well in the real world. CURSE MY OVERACTIVE IMAGINATION.)