Offshore Outsourcing:Offshore Outsourcing:Current Conditions & Current Conditions &

DiagnosisDiagnosis

Panel DiscussionPanel Discussion

SIGCSE 2004SIGCSE 2004

Norfolk, VANorfolk, VA

PanelistsPanelists

• Ernie FergusonErnie FergusonNorthwest Missouri State UniversityNorthwest Missouri State University

• Mary Ann RobbertMary Ann RobbertBentley CollegeBentley College

• Dan McCrackenDan McCrackenCity College of New YorkCity College of New York

• Clif KussmaulClif KussmaulMuhlenberg CollegeMuhlenberg College

IntroductionIntroduction

• OUTSOURCINGOUTSOURCING– use of external companies to provide servicesuse of external companies to provide services– 70% of companies outsource some 70% of companies outsource some

function or applicationfunction or application

• OFFSHORINGOFFSHORING– use of staff in other countries, especially use of staff in other countries, especially

India, China, former Soviet Union, etcIndia, China, former Soviet Union, etc– 277,000 computer jobs in US will move 277,000 computer jobs in US will move

offshore by 2010offshore by 2010

US IT Jobs Sent OffshoreUS IT Jobs Sent Offshore(Wired Magazine, Feb 2004)(Wired Magazine, Feb 2004)

Activity or PositionActivity or Position 20032003 20072007

Custom software Custom software developmentdevelopment

20%20% 47%47%

Software maintenanceSoftware maintenance 18%18% 47%47%

IT documentationIT documentation 13%13% 47%47%

IT telephone supportIT telephone support 9%9% 40%40%

Remote networking Remote networking monitoringmonitoring

3%3% 39%39%

Software reengineeringSoftware reengineering 8%8% 36%36%

Systems managementSystems management 5%5% 25%25%

IT admin & operationsIT admin & operations 3%3% 24%24%

Common MotivationsCommon Motivations

• Overcome resource limitationsOvercome resource limitations

• Access expertiseAccess expertise

• Reduce costsReduce costs– most IT organizations save 15-25% most IT organizations save 15-25%

during the first year, up to 40% later onduring the first year, up to 40% later on

• Increase speed & agilityIncrease speed & agility– ““round-the-clock” developmentround-the-clock” development

Common Problems & Common Problems & ConcernsConcerns

• CommunicationCommunication

• Cultural differencesCultural differences

• MicromanagementMicromanagement

• Change controlChange control

• Intellectual propertyIntellectual property

• SecuritySecurity

Ernie FergusonErnie Ferguson

Northwest Missouri Northwest Missouri State UniversityState University

BackgroundBackgroundIn 2002 Forrester Research predicted by 2015

– at least 3.3 million white-collar jobs would be exported

– $136 billion wages are expected to shift overseas

– 1 million IT related jobs will move offshore

Gartner Inc calls the movement of tech-related jobs – an “irreversible megatrendirreversible megatrend”

– 80% of all U.S. companies have considered shifting IT jobs overseas,

– 40% of all U.S. organizations have completed offshore pilot projects or have outsourced IT services from non-U.S.-based service provider

Offshore != New IdeaOffshore != New IdeaIn 1993 Ed Yourdon published Decline and Fall of the American Programmer

The 33 page Appendix A was entitled “Software Testing in India”The introduction of the World Wide Web and more productive programming environments caused Yourdon to publish Rise and Resurrection of the American Programmer in 1996.

Yourdon’s Basic TenetsYourdon’s Basic Tenets

Software professionals in other parts of the world –Are far less expensive

–Are substantially more productive

–Develop software of higher quality

Described American programmers as “cowboys” in their approach to Application Development

My BeliefsMy BeliefsDistributive Software Development is not new.

– Linux project

– Apache project

Much of the software development that is done offshore was a candidate for automation if continued onshore.

Freeing up resources changes feasibility of projects

– Switch from manual dirt digging to bulldozers made landscaping of golf courses feasible

– Innovative uses of software not previously feasible are on the horizon

Interviews of Small Sample of Interviews of Small Sample of Representatives From Area IT Companies Representatives From Area IT Companies

IndicatesIndicates

• Many ARE either outsourcing or doing offshore development

• Entry-level hiring emphasizes strong potential to move into project management positions

Strong technical expertise

Evidence of leadership ability

Good oral and written communication skills

Teamwork skills

Business understanding

Internship experience

My ViewMy ViewImpact on CS/IS Impact on CS/IS DepartmentsDepartmentsIntegrate project management throughout program

Develop business savvy

Expand treatment of risk assessment and system/network security

Include quality processes such as Six Sigma and CMM

Emphasize communication skills both oral and written

Encourage majors to take a foreign language and multicultural courses

Encourage majors to take leadership roles in clubs and organizations

Conduct research on distributive software development whether in India or Indiana

Work to abolish “Cowboy” methodology

Educate media about aspects of Computer Science other than programming

Mary Ann RobbertMary Ann Robbert

Bentley CollegeBentley College

Jobs Initially OutsourcedJobs Initially Outsourced

• Call CentersCall Centers– Labor intensiveLabor intensive– Separate unitSeparate unit– Minimal SkillsMinimal Skills

• Programming ModulesProgramming Modules– Well defined separate unitsWell defined separate units– Specs determined in US and sent off Specs determined in US and sent off

shoreshore

Moving Up the Value ChainMoving Up the Value Chain

• Whole units move overWhole units move over– Manufacturing branchesManufacturing branches– Functional unitsFunctional units

• R & DR & D

Jobs Remaining in USJobs Remaining in US

• Business AnalystBusiness Analyst

• IntegrationIntegration

• Strategic decision makingStrategic decision making

“IT worker of the future will be technically savvy, but will not necessarily have majored in CS or CE. More likely individual will be a business major of some Variety. Gartner Group

What are recruiters looking What are recruiters looking for?for?• Solid business skillsSolid business skills

– Company trains in technologyCompany trains in technology– Fidelity Ireland’s 5Fidelity Ireland’s 5thth year program year program– CertificationCertification

• People SkillsPeople Skills– CommunicationCommunication– Customer FocusCustomer Focus

• Ability to manage projectAbility to manage project– Using contractors on and off shoreUsing contractors on and off shore

• International experienceInternational experience– Study tour Study tour – InternshipsInternships

What are we teaching?What are we teaching?

• Focusing onFocusing on– ProgrammingProgramming– Software EngineeringSoftware Engineering– Systems Analysis and DesignSystems Analysis and Design

• CS, IS, CISCS, IS, CIS

• Model CurriculumsModel Curriculums

Dan McCrackenDan McCracken

City College of New YorkCity College of New York

0

20

40

60

80

100

120

Spr2000

Fall2000

Spr2001

Fall2001

Spr2002

Fall2002

Spr2003

Fall2003

Spr2004

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Comp. Eng.

Enrollment in Data Structures

City College of New York

0

20

40

60

80

100

120

Spr2000

Fall2000

Spr2001

Fall2001

Spr2002

Fall2002

Spr2003

Fall2003

Spr2004

CS

Enrollment in Data Structures

City College of New York

Percentage of entering freshmen planning to major Percentage of entering freshmen planning to major in CS, for schools of Low, Medium, and High in CS, for schools of Low, Medium, and High selectivity, as measured by SAT scoresselectivity, as measured by SAT scoresSource: Higher Education Research Institute`Source: Higher Education Research Institute`

0

1

2

3

4

5

6

2000 2001 2002 2003

Low

Medium

High

Clif KussmaulClif Kussmaul

Muhlenberg CollegeMuhlenberg College

My Experiences & My Experiences & ObservationsObservations

• 3 years working with development 3 years working with development teams in southern Indiateams in southern India

• offshore companies have invested in offshore companies have invested in CMM & ISO, but recognize their CMM & ISO, but recognize their limitationslimitations

• no significant skill differences no significant skill differences between average developers onshore between average developers onshore & offshore& offshore

Disruptive Innovation?Disruptive Innovation?

• Christensen’s Christensen’s The Innovator’s DilemmaThe Innovator’s Dilemma1.1. Starting with low margin, low value workStarting with low margin, low value work

2.2. Models & processes improveModels & processes improve

3.3. Expand into higher value areasExpand into higher value areas

4.4. Existing players are undercut from belowExisting players are undercut from below

• examples include steel, cars, disk drivesexamples include steel, cars, disk drives

• offshoring seems to fit the patternoffshoring seems to fit the pattern

Global ImpactGlobal Impact

• mixed for more developed countriesmixed for more developed countries

• good for less developed countriesgood for less developed countries– requires infrastructure – IT & educationrequires infrastructure – IT & education– trickle-down effect on other industriestrickle-down effect on other industries

•construction, servicesconstruction, services

• others are eager to join the gameothers are eager to join the game– Ashesi University in GhanaAshesi University in Ghana

My BeliefsMy Beliefs

• Offshoring will continue to increaseOffshoring will continue to increase– infrastructure technology will improveinfrastructure technology will improve– supporting processes will maturesupporting processes will mature– quality of service will improvequality of service will improve– range of services will expandrange of services will expand– non-IT areas will feel it toonon-IT areas will feel it too

My BeliefsMy Beliefs

• Offshoring has limitsOffshoring has limits– Small, unpredictable, & high-risk Small, unpredictable, & high-risk

projects projects are best done close to customerare best done close to customer

– Excellent developers & organizations Excellent developers & organizations anywhere in the world can be anywhere in the world can be competitivecompetitive

Curricular ResponsesCurricular Responses

• Working with diverse & distributed teamsWorking with diverse & distributed teams– oral & written communicationoral & written communication

• Continuous improvement & risk analysisContinuous improvement & risk analysis– formal (CMM/ISO) or informalformal (CMM/ISO) or informal

• Client- or value- intensive activities & Client- or value- intensive activities & skillsskills– requirements, business case, prototyping, requirements, business case, prototyping,

high-level designhigh-level design

Other ResponsesOther Responses

• Emphasize value of logical thinking & Emphasize value of logical thinking & problem solving in many careersproblem solving in many careers– management, law, ...management, law, ...– entrepreneurshipentrepreneurship

• Educate students & colleagues Educate students & colleagues regarding current & future conditionsregarding current & future conditions

• Be ready to help other disciplines Be ready to help other disciplines adaptadapt

Capstone Project CourseCapstone Project Course

• for juniors/seniors in liberal arts CS for juniors/seniors in liberal arts CS majormajor

• students develop product conceptsstudents develop product concepts

• student teamsstudent teams– define processes, roles, responsibilitiesdefine processes, roles, responsibilities– develop a product proposal / business develop a product proposal / business

planplan– prototype products (or try to...)prototype products (or try to...)

Areas of EmphasisAreas of Emphasis

• Distributed teamsDistributed teams• Effective communicationEffective communication

– email, forums, instant messaging, email, forums, instant messaging, phone, web & video conferencing, ...phone, web & video conferencing, ...

• Written documentationWritten documentation– proposals, white papers, proposals, white papers,

• Peer reviewsPeer reviews• Continuous optimization & risk analysisContinuous optimization & risk analysis

Recurring ThemesRecurring Themes

• Value of spiral processesValue of spiral processes– ““perfect is the enemy of good enough”perfect is the enemy of good enough”

• Tradeoffs between discipline & agilityTradeoffs between discipline & agility– project should determine processproject should determine process– process should evolve with projectprocess should evolve with project

• Importance of reflection & Importance of reflection & prioritizationprioritization

DiscussionDiscussion