As for judging outsourcing as being evil, i think it is not fair to say that
It may work sometimes under the right conditions.

It seems that a great many people automatically equate “outsourcing” with “off-shoring.” Collectively we seem to have virtually forgotten about service businesses located in our own locale.

We do have personal experience with this model: maybe we’ve had an attorney with his or her own practice, an architect, or an MD who’s part of a local private practice. Professionals who are local to us and who can contribute through service-delivery ought to be pretty familiar to most of us.

Now can this be of use to a software development organization?

Suppose this: managers are under pressure to avoid creating permanent positions to meet shorter-term needs. Some also perceive that there is too much risk in sending some work overseas where laws and law-enforcement may provide inadequate protection, or perhaps where communication issus could cause expensive difficulties.

Wouldn’t it be powerful to have additional hands, with additional creative energy, who also happen to be domestic and who have skills in communication and in readiliy understanding requirements and translating those into realized vision?

These are intangibles that (imo) can and do make a huge difference in sucessful and productive projects, which local service providers are capable of offering. But when “outsourcing” is discussed, this model of engaging with local talent and creative teams doesn’t even come to the minds of some decision-makers.

“Why get great service and a talented team with good communication skills available domestically, when I can try to do a 2-for-1 play by going through the hassles of going to an unknown company on foreign soil with less-expensive labor and possibly lower standards of living?,” seems to be the question … i.e. the question that isn’t being asked.

First I think you arguments are not correct.
You say outsourcing is bad, and then you prove it by taking one example (outsourcing support) as your proof. This just proves that outsourcing support has been bad in many cases! It doesn’t say anything about outsourcing in general.

Now from my personal experience, an example where outsourcing was good.
I worked for a company that produces television sets. Now you may know that TV’s are changing rapidly. From just displaying analogue images to a real digital hub, with USB, Firewire, network, digital video and audio processing.

For us, making a USB stack or network stack is not core television business.
We had no experience in this, no knowledge and not the right tools.
Would it be best to try to do this ourselves or leave it up to another company that has proven experience (and already working code!) in making USB stacks?
I think it’s clear what was the best decision.

Also on the subject of outsourcing testing: USB is a standard, but apparently it is not followed that strictly. You really have to test with a lot of devices to get it right. Again, do you want to buy all those devices for one test yourself or do you want to leave that to a specialized company?

Even when software is your core business, not all your software has to be.

Some companies may be extremely good at marketing and identifying business opportunity in a particular domain while other companies may excel in executing quality software development projects.

In a free-market economy, why would two organizations with these characteristics not engage each other’s services to mutual gain?

Admitting that another company has capabilities and valuable services to offer is not a sin. Some people might call it humility and yet others might call it wisdom when mutual gain is the result of partnership or exchange of services.

Recently I had a discussion with some professionals who were acquainted with a “we’re better” company. That company’s products were stagnating and suffering because the employees “knew” they had a company that was better than any other. The employees became resistant to acknowledging and benefitting from the value and skills of others around them.

I might want to think through the analogy a bit more, but at this moment of writing I’m reminded that Boeing airplanes are powered by jet engines built by such as Rolls Royce and Pratt & Whitney. Is Boeing’s greatness somehow tarnished by this decision?

Wow. That last glib statement is quite an implausible stretch, and a feeble attempt to employ an offensive strawman in your argument. Do you understand the purpose of national governments? Each government’s first job is to protect its citizens. And you have blithely dismissed the loss of hundreds of thousands of American software engineers that the United States has suffered in the past decade. And it happened simply because our own broken government failed to rein in corporate greed.

You’re just plain wrong. and wrong.

Of couurse you have to STRICTLY FOLLOW important outsourcing rules:

1) sign the contract stating that YOU totally own the product (source code as well as documentation) so there is no way it can be used either partially or in total by your SW development service provider you are quite on a good track.

2) Do not forget to keep the key knowledge (high level designers) within your company. High level design MUST clearly specify what you are paying for and (if you insist) also how do you want it done. If you fail to do so this will be a large problem.

3) You should always request the possibility to prolong the contract with your SW development service provider. I suggest that you do not pay the last cca. 30% of work if they decide not to prolong the contract for the period they promised to do so at least 3 months before it ends. This will give you money and time to easily find another SW development service provider (of course in case that you did not fail to fullfill point 2).

If IBM would follow these 3 rules they would not be in the position as they are today. As far as I understood HP outsourced it’s SW development to Slovenia, and you can find its HP Open View deployed all around the world. They just know how to manage it!

What if you start a new R&D project that would include 6 SW developers, 3 people in testing team and 2 people to write the documentation and your old experienced team is already fully utilized?

1st question that you run into is: “”What would my time to market be?”
2nd question that you run into if “what will I do with these people after we conclude this project and we do not have new projects for them”?

These are major two problems that companies that do not use external SW development service providers run into.

SW development engineers, project managers, test teams, good documentation writers are almost impossible to find on the HR market. Smart SW development service provider invests in “growing” these experts for long periods of time.
SW development service providers also HAVE to take care that they resources are utilized enough to be competitive on the markets.

These two important issues are the reason why you get more experienced TEAM for less money. That is the trick. This is why this business is still on the marker as is not going away.

What most of the managers tend to forget is to ask them selves “Do I have some people in my company that my business would stop if they would be hired by another company or run-over by a car”. This is because he is not pa part of the system. In a business system HR is replaceable. Having someone that is not replaceable says to me that your internal processes are not transparent and setup as they should be.
What I want to say is that if you have SW project managers of your own who says that his project is impossible to outsource you should think why is he saying so. Either
1. he really has some good reasons (like in case that you have your business in Hungary, “no one speaks Hungarian, and we would spend millions in translating our Hungarian documentation to English and back”, or “we cannot export these expensive highly sensitive equipment that cannot be accessed/programmed through the internet”) or
2. he is not trained/capable of managing a team remotely, he does not have all the necessary documents or he is not ready to, his team is hiding things from himself so he is hiding them from you.

I would be happy to continue this discussion.

wkr
Igor