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Information Regarding Outsourcing In Application Development Forums on Software Development Register |
| The Competitive Pressures On Firms To Bring Out New Products At An Ever Rapid Pace To Meet Market Needs Are Increasing. As Such, The Pressures On The R&D Department Are Increasing. In Order To Alleviate The Pressure, Firms Have To Either Increase R&D Budg |
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The enthusiasm for overseas outsourcing and offshoring, mirrors the enthusiasm for Internet companies in the Nineties. In a recent article, Ravi Chiruvolu, a partner at Charter Venture Capital wrote that "Venture Capitalists decided that because of cheap engineering talent in countries like India it would be more cost effective to outsource software development. If Nike could outsource sneaker manufacturing, we could do the same with code." Following similar logic, Oracle has announced it will more than double the number of software engineers it employs in India to 6,000.
Jean-Marc’s gold and blue boxes are an example of successful outsourcing. Jean-Marc sells chocolates, not boxes. The design and production of chocolates is his core competency. Jean-Marc can outsource box production to improve his operational efficiency without sacrificing his reputation as a maker of superlative chocolates.
While outsourcing boxes improves chocolatier Jean-Marc’s operational effectiveness, he would never consider outsourcing chocolate production because he would lose his core differentiation advantage. Yet, in their enthusiasm for cost savings, several US technology companies have done precisely that-- outsourcing their core technology and key strategic differentiator.
[...] Michael Bean, Le insidie della programmazione in outsourcing [...]
You argument seem to be based on two assumptions - one, that programmers overseas are less able to innovate than in the US, and two - that outsourcing means literally moving the (software) production outside the company.
Regarding the second, "outsourcing" in software is often not oursourcing at all - but realized by setting up operations in lower cost countries, rather than simply asking some entity outside the company to realize a product. In this way, an outsourced outfit is a part of the company, only one where overhead and costs are generally lower.
Companies should not compromise their core competence with cheper cost in the form of outsourcing
Don't get me started on confusions between increased productivity vs. transference of wealth vis-a-vis the outsourcing question.
The term Outsourcing has been abused a lot. I don't believe that the people or companies who are actually taking up the outsourcing work are inferior in any sense. This is the fact that work force in India or China has been cheaper because of cost of living. This could be the reason that why did outsourcing started at all.
But now this is not the case. The whole lot of R&D work is also being outsourced and transaction is happening other ways as well. Indian companies are outsourcing efforts to other countries like Singapore, etc.
As soon as the outsourcing word is used, India comes up automatically. This is an eternal debate whether to outsource or not, what to outsource, etc. Common subject of such outsourcing discussion include, "Job loss in US due to outsourcing", which in fact proven to be false. For every 1 $ of job outsourced to India, US/Any other country gets in return $1.25-1.5$. This in turn is invested back in the country to create more jobs.
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| | Forio Business Simulations - The enthusiasm for overseas outsourcing and offshoring, mirrors the enthusiasm for Internet companies in the Nineties. In a recent article, Ravi Chiruvolu, a partner at Charter Venture Capital wrote that "Venture Capitalists decided that because of cheap engineering talent in countries like India it would be more cost effective to outsource software development. If Nike could outsource sneaker manufacturing, we could do the same with code." Following similar logic, Oracle has announced it will more than double the number of software engineers it employs in India to 6,000.
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The Pitfalls of Outsourcing Programmers
In Staff Articles
Clothing and toys are manufactured overseas. So why not make software there too, where labor is cheaper?
Many U.S. technology companies have outsourced their software development to India. Last year Hewlett-Packard became India's largest multinational IT employer , with more than 10,000 employees.
Although the offshoring trend has resulted in a net transfer of jobs outside of the US, this article isn't about job losses in the United States. We live in a global economy and people in India deserve jobs as much as people in the United States or anywhere else. It's worrisome when companies are criticized solely because they have hired people overseas.
Offshoring is a mistake when technology companies confuse operational effectiveness and strategy . Operational effectiveness is about working cheaper or faster. Strategy is about the creation of a long-term competitive advantage, which for technology companies is usually the ability to create innovative software.
Outsourcing programmers works when the software developed isn't a key part of the pipeline of innovation for products a company actually sells. For example, when website design or back-office software such as payroll or inventory control is outsourced, that can be good because it improves operational effectiveness.
But writing innovative software cannot be done on an assembly line. It requires hard-to-find development and design skills. Farming out development to legions of programmers overseas will not create a differentiation advantage. When a technology company outsources software development, that company loses its capacity to innovate and its competitive advantage.
Why Some Software Companies are Confusing the Box for the Chocolates
Recently, I bought some chocolates as a gift for some friends from a specialty shop . These chocolates are remarkable. Owner Jean-Marc Gorce makes them by-hand and his small shop has been rated as one of the top ten in the United States. In addition to being a chef, Jean-Marc is also an entrepreneur and an innovator.
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