Pakistan is trying to copy India’s success in luring IT work, but it’s slow going

Think software and services outsourcing, and places like Bangalore, Manila, and perhaps Budapest spring to mind. But Lahore or Karachi? The Pakistani cities might not be on the outsourcing map yet, but the country’s software shops are out to change that. “As a natural course, American companies would not look at Pakistan,” acknowledges Jehan Ara, president of the 250-member Pakistan Software Houses Assn. “So we have to get them to look at us, and once they do business with us and credibility is established, they come back for more.”

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There’s much more to offshore outsourcing than lower labor rates. Industry experts and CIOs with offshore experience caution would-be customers to carefully examine all of the risks, including the hidden costs. It’s also important to protect intellectual property, examine the geopolitical risks in the region where the work will be done and effectively communicate the company’s overall outsourcing strategy to stateside workers.

Offshore outsourcing “creates some stressful situations, some motivational factors and some confidence factors with your own people,” says Rick Greenwood, CIO at GMAC-RFC Residential Capital Group in Minneapolis. Greenwood addresses those issues, in part, by keeping his company’s most important IT work in the U.S.

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Day says before sending source code to a country companies should check what laws are available to protect them – and whether they’ve been successfully used by prosecutors. The prevalence of corruption in law enforcement can also stop a case. In many parts of the world, for example, it’s not uncommon for police to refuse to help unless bribes are paid first.

To mitigate the risk of offshoring, Day says companies should use an offshore partner with tight security practices and release only portions of the source code at any one time so that the offshore programmers never have the complete program.

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“Good morning, you’re fired and getting replaced by a software engineer from India with an H-1B visa … APRIL FOOLS!” This is a bad joke to play on an engineer these days, because it is just too close to actually being true.

Who are NOT the fools?

Some parties, however, have not been made fools of. In fact, they’ve been playing an April Fools prank on all Americans. Outsourcing companies, 7out of 10 from India, have played a bad joke on American engineers, American companies, American students, and American politicians, playing all of them for fools. The top 10 H-1B requestors of 2006 are all outsourcing companies, who use the H-1B program to train their junior engineers in America, and rotate them back to their country of origin to facilitate outsourcing contracts.  This is a list of the top 10 companies who applied for H-1B visas last year:

1. Infosys
2. Wipro
3. Cognizant
4. Patni
5. Mphasis
6. HCL America
7. Deloitte & Touche
8. Tata
9. Accenture
10. Satyam

International American-based corporations, Microsoft and IBM are numbers 15 and 18 respectively.

The chief of business and trade services for USCIS, Efran Hernandez, said, “ …there is no preference given to U.S. companies over non-U.S. companies. You have to be a U.S. employer … That doesn’t mean you have to be a U.S. company.”

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When I read this story about McAfee wanting to buy up security technology companies, I thought about a company I know that is looking to be acquired.  So I read the entire article first instead of forwarding it on to my colleages at that company.

Lo and behold, at the bottom of the article, Sridhar Jayanthi, head of the company’s operations in India, is reported to have said these words, “There is a shortage in the US of security professionals and researchers, and in India the company found a large and trainable talent base.”

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Boston, San Francisco, San Jose and Stamford, Conn., could see highest losses

ffshoring may eliminate as many as one in five programming, software engineering and back office jobs such as data-key entry during the next several years in certain metropolitan areas where employment in those fields is the heaviest, according to a study (download PDF)by The Brookings Institution released this week.

Brookings, a Washington-based think tank, has attempted to put job loss numbers around one of the most worrisome issues for IT workers today, while also recommending steps the government can take to slow the trend.

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 Companies often forget about cultural differences that may affect security

When it comes to outsourcing IT operations to countries such as India and China, companies often focus on slashing costs and gaining productivity but fail to take into account cultural differences that may affect their security, according to experts attending the Gartner IT Security Summit in London today.
“India is seen as an answer when outsourcing applications but is actually a problem in the security space,” said Gartner India research vice president Partha Iyengar while moderating a panel on offshoring security.
At issue is not so much the security that outsourcing service providers use to protect companies’ systems — such as firewalls and data backup — as it is the cultural differences, Iyengar said. For instance, standards of privacy are often looser in India because it’s a close-knit society where, say, reading someone else’s e-mail wouldn’t be considered much of an intrusion, Iyengar said.

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New designations and degree programs may raise outsourcing expertise to a career path.

Godfrey Pinto has great credentials. He has three master’s degrees, including an MBA, and a bachelor’s in economics. He has a solid position, too, as director of offshore outsourcing, a role he has held for six of the nine years he has worked in IT at a large East Coast technology company.

Now Pinto is adding one more accomplishment to his list: earning the certified outsourcing professional (COP) designation. He acknowledges that many people haven’t yet heard of the certification, but he believes it’s valuable nonetheless.

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Myth 1: Offshore outsourcing is costing U.S. jobs.

Myth 2: There’s a stigma to offshore outsourcing.

Myth 3: The cost benefits of outsourcing are overstated.

Myth 4: It’s a buyer’s market for IT workers right now anyway.

Myth 5: There are huge cultural barriers.

Myth 6: What about the other risks of outsourcing?

Myth 7: The ROI of outsourcing hasn’t been proved.

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Outsourcing is a source of stress, struggle and angst for many IT managers, and no wonder: More than half of outsourcing agreements end up prematurely terminated, according to a study released last year by DiamondCluster International Inc., a Chicago-based consulting firm. That leaves a lot of companies far from outsourcing nirvana, but it doesn’t have to be that way. We asked IT experts and veterans to talk about the bad decisions and faulty assumptions that can cause your outsourcing project to fall from grace. They came up with seven deadly sins.

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