In software industry, a passage to India
In software industry, a passage to India
Date: Tuesday, January 21, 2003 2:39 PM
H-1B and JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Scott Kirsner claims that Boston-area programmers aren't on the "verge
of marching, striking, demonstrating, or even flaming their
representative in Congress." I'm not sure what poll he used to make
this erroneous generalization because I hear from programmers all over
the country that want to take action to prevent the loss of their jobs.
There is great concern over the job losses that H-1B and outsourcing
are causing.
If so many programmers in Boston are happy with their new found
joblessness it's surprising that Kirsner had to find a programmer in
Arlington who lost his job as a programmer at Lucent in May 2001. This
programmer said that, ''I'm not a xenophobe or a nationalist. People in
India need work, too.''
Harris Miller's ITAA office is in Arlington. Perhaps that's where
Kirsner got that quote because it's hard to believe that an unemployed
programmer could be that clueless.
http://www.boston.com/dailyglobe2/020/business/In_software_industry_a_passage_to_India+.shtml
AT LARGE
In software industry, a passage to India
By Scott Kirsner, 1/20/2003
One way you could spend the holiday today is by visiting the American
Textile History Museum in
Lowell, learning about how the industrial revolution made New England a
center of the textile business.
And in another 25 years, you might be able to spend a day off at the
American Software History Museum in Waltham, which would document the
era in which thousands of computer programmers hunched over
workstations throughout Eastern Massachusetts, spinning out line after
line of software code long into the night.
Today, the textile industry thrives in other parts of the world, like
Pakistan. The last remaining shirt factory in the United States,
located in Maine, ceased operations in 2002. You don't run into a lot
of Bostonians these days who answer the question ''What do you do?''
with the reply: ''I work with wool.''
Fast forward a few years, and programmers could be just as scarce. Much
of the work of cranking out code will have moved to places like India,
Russia, China, and the Philippines, where it can be done much more
cheaply - by some estimates, at a third of the cost of creating
software in the United States.
A recent report from Forrester Research predicts that, by 2015, the US
will lose nearly half a million computer-related jobs to other
countries. Most will go to India. While the business of producing and
maintaining software in the United States is stuck in quicksand, it is
growing at an annual rate of 30 percent in India.
''I don't know of any software company right now that isn't considering
moving some part of its software development to India,'' says Shikhar
Ghosh, a founder of the pioneering e-commerce company Open Market and a
former chairman of the Massachusetts Software & Internet Council. ''The
impact will be really big. It's a major structural change to the
technology field.''
That structural change is a double-whammy to programmers who are
already out of work. The first whammy was losing a job because of
headcount reductions or a company going out of business entirely. The
second whammy is realizing that the next job to come along that matches
your skill set might very well be in Bangalore, India, or the suburbs
of Moscow.
This isn't to say that the whole software industry will move overseas,
just as the entire apparel industry didn't move. The shirt you're
wearing may have been made in Malaysia, but odds are that it was
designed in the United States, the advertising campaign that persuaded
you to buy it was conceived here, and you purchased it from a retailer
at your local mall. The same could happen with software.
Already, the state's biggest software company, PTC of Needham (formerly
known as Parametric Technology), has more than 200 of its 1,100 product
development employees based in Pune, India.
''There's an undeniable cost advantage in India,'' says Rich Butler,
vice president of PTC's research and development operations. The
drawbacks, though, are that employees in India may not be as productive
since they're not as tightly linked to the corporate strategy that
emanates from Needham, and that some highly complex projects are better
handled, at least for now, in the United States, according to Butler.
Still, he says, ''If I was going to move into a growth period, I would
probably bias my growth toward India.''
Companies like Fidelity Investments and EMC Corp. are also
experimenting with doing software development overseas. EMC, for
example, has outposts in Belgium, Australia, South Korea, Japan, and
India, where some software development or maintenance of older software
is done.
Chris Gahagan, vice president of EMC's software group, says that ''the
creative juices have tended to stay in the US, whether you're talking
about the auto industry or high tech.'' He adds that ''the key in
software development is the [creation of] intellectual property,'' even
if later maintenance or updates to those new products is done overseas.
Other companies, like Charlestown-based Keane Inc., an IT services
firm, produce custom-written software for clients using ''offshore''
programmers. Last year, Keane acquired a company called SignalTree
Solutions that employs several hundred programmers in Delhi and
Hyderabad.
''We needed to adjust to how the world was changing,'' says chief
executive Brian Keane. ''In the last three or four months, we have won
a bunch of projects that we never would have won if we didn't have an
offshore component.''
The good news for the Boston area is that it seems to be emerging as
one of the US gateways for offshore software development. Companies
like Keane or Virtusa of Westborough will serve as liaisons. Sales and
marketing of software takes place here, and employees here ''spec
out,'' or outline, what the software must do, and ensure that what gets
built offshore integrates neatly into a customer's business.
''What stays here are design activities, conception, and vision,'' says
Hariharan Murthy, Virtusa's executive vice president of sales and
marketing. ''Pure software coding activities will necessarily go out of
high-cost economies and into lower cost economies.'' Virtusa has 900
employees, 700 of whom work in Sri Lanka and India.
There are those who say that the trend will only affect the lowest
level of programming, or that once the economy picks up again, we won't
notice it. I think they're wrong. GGA Software of Cambridge, for
example, has a team of 120 employees in St. Petersburg, Russia. Nearly
everyone there has a master's degree, and 40 percent of them have
doctorates or MDs.
''We tend to focus on more technical, scientific applications,'' says
chief executive Richard Golub, ''things like drug discovery programs,
data visualization, signal processing, and statistical modeling.''
Low-level stuff like that.
''It won't happen over two years,'' says Ghosh, ''it'll happen over 20
years. And at some point in that period, you reach a tipping point,
where companies that aren't having work done offshore realize that they
can't afford not to, because they're competing with companies that have
lower costs.''
Ghosh's most recent company, Verilytics (formerly iBelong), is in the
process of selling its assets, but it held on to developers in India
even after it had laid off its developers in Burlington.
''When we had 20 people [in India], our total cost was $25,000 a month,
including rent,'' he says. ''Here, each programmer was $10,000 a month.
Do you cut two people here, or 20 over there?''
Oddly, though, Boston-area programmers don't seem like they're on the
verge of marching, striking, demonstrating, or even flaming their
representative in Congress. The trend is ''a negative for me because it
shrinks the job market locally,'' says Morris Keesan, an Arlington
resident who lost his job as a programmer at Lucent in May 2001, ''but
I'm not a xenophobe or a nationalist. People in India need work, too.''
What good would complaining do? Not much.
''Programming skills will become commodities over time,'' says Keane.
''Where we really focus our people is around project management.''
Local schools like Wentworth Institute of Technology are already making
changes to their computer science departments to make sure they're not
suddenly in the position of producing minimum wage workers.
''Having people who can understand how the business and the technology
work together is very important,'' says John Russo, head of the
computer science department at Wentworth.
Says John McCarthy, author of the Forrester report: ''It's not going to
be enough to be a great geek anymore. If you can't apply that geekdom
to the operations of the firm, you're going to find yourself in less
and less demand.'' In other words, get out from behind the workstation
and get into the conference room.
Either that, or put in an early application to become a docent at the
American Software History Museum.
Descending on Davos This week, several local tech and biotech CEOs are
heading to Davos, Switzerland, for the annual meeting of the World
Economic Forum. They're part of the ''Technology Pioneers'' program, a
set of 40 executives at companies ''that are developing and applying
the most innovative and transformational technologies,'' as selected by
the forum.
The group includes Stuart Patterson of SpeechWorks International; Kenan
Sahin of TIAX; Dev Gupta of Narad Networks; Jeff Taylor of Monster.com;
and Joshua Boger of Vertex Pharmaceuticals.
Among the topics they'll address: ''Building Trust,'' the theme of this
year's forum, and ''Responsible Innovation,'' which will explore the
need for societal controls and checks on the development of
technologies.
Scott Kirsner is a contributing editor at Wired and Fast Company
magazines. He can be reached at kirsner@att.net.
This story ran on page C1 of the Boston Globe on 1/20/2003.
) Copyright 2003 Globe Newspaper Company.
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