The Missing Piece: VALUE
Recently I read a blog post on outsourcing, and I thought I’d respond here.
I just taught a course and participated in a software conference in Vilnius Lithuania. Over the last 3 years I have taught Scrum to over 800 software development staff in the Ukraine, and hundreds more in the US and Brazil. The situation is much more complicated then you portray, and not as negative as the article implies for US/EU workers.
The huge missing piece in this article is VALUE. The perspective presented is only focused on cost. It is about the same as saying if only there were lower taxes the US job market would improve. This is false thinking, and surprising from an investor. Why do we invest? Because of the potential opportunity. For example take the team of A players tweaking the Linux kernel yet again, and compare them to the B players who develop a hugely popular web site like gamespot. Which team generates more value? Another missed point is the huge demand for software. Unemployment in the US IT sector is 3.2%, compared to over 10% in other sectors. A more recent phenomena is companies who outsourced all development now rehiring developers because of communication, speed and quality problems. Capital One and Wells Fargo are examples.
By far the largest problem in software development is management. Managers who learn how to build and nuture lean and agile organizations will create organizations able to respond much more quickly to the market while growing the strength of their teams. This is where many companies fail miserably, and generate huge amounts of waste in failed projects, burned out staff and unmet expectations. There are no lean and agile organizations in our industry today.
Toyota became the largest and most profitable car company with staff from all over the world. They did it because the Toyota Production System is unmatched in terms of creating successful results. This is a management system and a way of viewing the world of work. Whether the cars are built in Manila or Kentucky, the driving force for success is not the cost of labor.