Content Matters

For the past decade, one way that companies have been able to increase productivity is by outsourcing much of their development to offshore locations.  Skilled developers, typically at one-fifth the cost of their U.S. counterparts, helped us get through Y2K and to offset the developer gold rush of the dot com days.  Initially much of that work was performed in India; as costs there began to increase, Russia, Bulgaria and other spots opened up as offshore development centers.

For a time, it seemed that these regions had a seemingly limitless supply of IT talent, freshly minted from their technical institutes.  But as demand has increased, the supply has leveled off and offshoring no longer offers the deep discounts that it once did.  Coupled with a depreciating dollar, offshoring does not appear to be the bargain it once was.

So points out Assembla in their post Offshoring is Dead: How to Thrive in the New World Order.  In the post, they describe how one of their key suppliers, in St. Petersburg, has seen their labor rates increase 200% in the past two years.  Russia’s oil-led economic boom has driven increases there, while India now faces shortages of technical talent and China’s booming economy keeps their engineers focused inward.

So, what’s the solution? 

According to Assembla, the key is to look at your development team on a global basis.  Rather than identifying the less critical tasks and trying to match them to inexpensive outsourced functions, the key is to find the most productive developers wherever they may be located.  It has never been easier to work in a distributed team environment than it is today.  Meanwhile, agile development, web services and SaaS models reduce the development effort required to launch an application.  So, build small and talented teams and you can keep your costs manageable.

Andy Singleton, Assembla president, has long been a visionary in the technology field.  He was the first one to show me the Internet (in the early days of Mosaic) and among my first colleagues to seriously embrace outsourcing.  The full blog post, on the Assembla blog, is must reading for anyone involved in the development of technology products.