What is it that we don't understand

I have spent nearly two weeks in Bangalore working with a client and the outsourced engineering team they contracted for the project. Though I am contractually prevented from identifying the "players", my client is a household brand with a global footprint. Likewise the off-shore development partner is among the largest in the world. Together you would think that they would have this down to a science but you would be mistaken. Tools and processes are sophamoric and (IMHO) my client made a fundamental mistake by not having people embedded from day 1. This is a large project with 10s of thousands of staff hours and yet, untill recently, when they felt the project was in serious jeopady of missing key milestones and objectives, there was no direct representation of my client here in B'lore. The dev partner, eager for the potential long-term relationship, failed to demand reasonable terms, again IMHO. Now neither side is "happy"; people are working serious hours that may have been the norm for strart-ups 10-15 years ago, but neither of these are start-up. They are both companies billion dollar revenues but they short-change the effort regardless of the resources available to them. Some of it politics, some of it financial.

Now, as it often does, coincidence strikes. I exchanged email with another former collegue who is starting his own company. He has asked me to provide any insight I can give him on off shoring to India. My advice, particularly for a start-up with limited resources (both capital and time) is to seriously consider on-shoring. Sure from a finacial analysis on paper, India looks to be a much better deal but I am not sure they build in the true cost accurately. Travel, time, wear and tear on the staff that has to be on calls from 8:00 PM until midnight to discuss critical issues with the development team. The cost of doing business in India is rising, the cost of doing buisiness in the US is stabilizing or dropping in some instances. Plus, given the current financial situation, perhaps on-shoring serves a greater good.

Whatever my friend decides to do, my advice is to provide adequate resources, if he wants to off-shore, my council is that he have one of his own in B'lore and one of their staff at his site. Pay the price necessary to succeed, don't cut corners on tools or process, or it will come back to bite him in the a__.

A sign of the new economy?

Though I am not convinced it is a direct result, I find myself in an interesting position where I am being contracted by a "household name" company to help manage a project they have off-shored. I am not going to turn down the money but had they on-shored the project, in some other place than the high-tech hot-beds, they probably could have saved a considerable amount of capital.

As all two of the people who read this blog know, I am from Boise, Idaho. Boise is a pretty good sized town with a population > 200k (> 500k in the surrounding area). It has four distinct seasons, great lifestyle and good schools. The only negative I can say about it is that it still tends to be a bit conservative for me. All-in-all it would be a great place to live and raise a family. It has reasonable airline access to Portland, Seattle, Silicon Valley etc. and a good labor pool. Boise State and the University of Idaho bot have campuses there. The biggest names, at least in high-tech are HP and Micron. So why can't we on-shore to places like Boise, I am sure there are other cities that fit the bill as well? I don't know the answer but I think it may have as much to do with a false sense of financial economy than anything else. That 5:1 cost ratio we found in India during the latter part of the 1990's is now more like 2:1 today and shrinking. India is getting more expensive, in fact I have heard tales of India sub-contraction out to places like China and Viet Nam.

I believe in an open global economy but maybe we need to re-think our business strategies; move away from the short term view and look forward to a once again, expanding US economy.

Oh well, for me it is most of the next three months in Bangalore...