Fishy in Seattle - U.K. perspective

Date: Monday, April 14, 2003 12:06 AM

H-1B and JOB DESTRUCTION NEWSLETTER

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Peter Kelly, executive director of U.K.-based Capita Business is just
as shameless and greedy as his American compatriots.

Kelly said that he "got rid of all our programmers, who didn't believe
in writing out specs (specifications) beforehand" and replaced them
with Indian programmers accustomed to using specs.

This goes to the heart of why corporations like outsourcing to India -
the workers are docile and obey orders without question. Kelly is
implying that unlike American or British programmers, Indians will
build exactly to the spec no matter how bad it is. Why bother with all
those fussy American or British programmers that insist on doing the
job right when you can hire a bunch of cheap coders that will design
your defective product without complaining?

Kelly also said that he likes Indian workers because he claims that
they can produce software in months that would have taken two to three
years using in-house talent. This dubious claim was never adequately
explained.

Kelly also hates pesky labor laws that make it cumbersome to fire
employees. He prefers to hire Indians because he can just "disengage "
them whenever he doesn't feel like paying them.

http://seattlepi.nwsource.com/business/114363_indiasoftware27.shtml

SEATTLE POST-INTELLIGENCER

Like it or not, outsourcing is here -- and hot
Speakers extol its virtues; pickets see it differently

Thursday, March 27, 2003

By DAN RICHMAN
SEATTLE POST-INTELLIGENCER REPORTER

Two British outsourcing firms yesterday sang the praises of moving
software development from in-house to India: lower cost, higher
quality, quicker turnaround, better skills.

And at the same breakfast meeting, sponsored by the Seattle Chamber of
Commerce, several Seattle-area outsourcers -- which make money sending
the computer-programming and other tasks of local companies to other,
more specialized companies, often overseas -- said business here is
booming.

But outside Rainier Tower, pickets presented another side of the issue,
arguing that although outsourcing may save a company money, it
disregards such considerations as a company's obligations to build its
community and to benefit local workers.

And in time, outsourcing can sap a company of its technical strength
and expertise by handing too much control and knowledge to foreigners,
one consultant warned.

Although arguments continue over whether outsourcing does more harm or
good, one thing is clear: It is hot.

Fully 260 of Fortune 500 companies outsourced some software development
to India in 1999 and 2000, said Mike Cast, the managing director of
outsourcing firm Mastek (U.K.) Ltd., London.

This year, 60 percent of companies are outsourcing, and that number
will increase by 50 percent in the next two years, Cast said, citing
figures from industry analysts The Gartner Group.

Indians will make $17.6 billion writing outsourced software this year,
getting far more outsourcing -- nearly 95 percent of the total -- than
any other country, Cast said.

Israel, Singapore and Ireland offer higher-quality work but at higher
prices, he said, and the Philippines, Hungary and China offer lower
prices but lower quality.

U.S.-based companies will give India 63 percent of its outsourced
business. European firms will give it another 26 percent.

Yet the outsourcing market has barely been tapped, said Peter Kelly,
executive director of U.K.-based Capita Business Services, which both
consumes and provides outsourcing. Less than 5 percent of the software
written in Britain is now outsourced, he said.

Attracted to outsourcing by its "flexibility and lack of management
distraction," Capita "got rid of all our programmers, who didn't
believe in writing out specs (specifications) beforehand" and replaced
them with Indian programmers accustomed to using specs, Kelly said.

Capita produced software in months that would have taken it two to
three years using in-house talent, Kelly said. And when the project was
over, it was easier to "flex," or disengage from, the Indian work
force, he said.

Outside yesterday's meeting, members of the Washington Alliance for
Technology, or WashTech, passed out scores of purple fliers decrying
Mastek's outsourcing as "not only shortsighted and greedy but a stab in
the back of workers in the Seattle area."

More than 22,000 people have been laid off from Washington high-tech
jobs in the past three years, so WashTech's Marcus Courtney, who
co-founded the high-tech workers' advocacy group, wondered how
outsourcing can be justified.

"It is impossible for Americans to compete with salaries as low as
those paid in India," he said. Those salaries, though often only
$20,000 to $30,000, put Indian workers among the top ranks of wage
earners.

"If companies just look at their bottom lines, sure, outsourcing makes
sense," Courtney said. "But that disregards issues like the obligation
of a company to its workers and its community."

He said Washington residents even pay for the elimination of their own
jobs by giving tax breaks to local companies that then outsource.

Those aren't the concerns Kelly thinks are most important.

"It's a global marketplace, and you have to compete with everyone
else," he said. "If your information-technology costs are up and
others' are down, you'll die."

Margaret Bartley, principal technologist with Medina-based consulting
firm The Bartley Group, cautioned that outsourcing can cost
organizations expertise that took years to accumulate. That can happen
as training overseas programmers becomes more important than training
local personnel.

In addition, she said, security is threatened when local governments,
insurers and e-commerce companies send software development abroad,
because their inner workings are exposed in the details of the
software.

And she worries that the United States will lose its edge in
information technology just as it did in heavy industry.

Regardless of such concerns, interest in outsourcing is growing in the
Seattle area, said Liz Ellingson, an account manager with Seattle-based
outsourcer Congruent Software Inc.

Mani Krish, that company's director and owner, said companies are not
just interested in saving money but also in splitting development
between India and Seattle. That way, because of the time difference,
Seattle-based testers can spend their days testing software the Indians
wrote 12 hours before, in effect creating a 24-hour workday.

"Like offshore manufacturing, outsourcing is inevitable," said Bartley,
the consultant. "All we can do is plan for it."

P-I reporter Dan Richman can be reached at 206-448-8032 or
danrichman@seattlepi.com

) 1998-2003 Seattle Post-Intelligencer

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