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June 25, 2001 (Computerworld) -- For global companies developing business-critical applications, time to market is of the essence, particularly as they launch e-business initiatives.
An approach that has worked in the past—adding second and third shifts here at home—doesn't play well these days, with skyrocketing salaries and a lack of IT talent defining the market. Increasingly, global companies are taking advantage of the fact that they have offices in multiple time zones and are expanding their development efforts by opening development centers around the world and staffing them with people who work in shared environments with U.S. teams.
One company that's doing so is San Francisco-based DHL Worldwide Express Inc., which has opened centers in the U.K. and in Malaysia, India and other parts of Asia.
The international delivery giant is able to take advantage of time differences between these locations and California to create an extended workday. More important, it's able to put more bodies on problems at a time when IT hiring in the U.S. isn't easy.
Circumventing Restrictions
Like other global companies, Fremont, Calif.-based ApplianceWare Inc. looked outside the U.S. when it couldn't find the development talent it needed here.
"Our location in Silicon Valley places us in the most competitive software environment on the planet. The lack of available talent and the exorbitant prices mean we can't afford to expand development operations here," says ApplianceWare President Stacy Kenworthy.
Initially, ApplianceWare decided to open its own facilities in Minsk, Belarus, to take advantage of a sizable pool of talented developers and a 10-hour time difference that, when complemented by the West Coast time zone, would increase the number of hours the company could work on projects.
However, says Kenworthy, the company found that government restrictions on private enterprise would make doing so prohibitive. ApplianceWare's solution was to partner with BelCaf, a development firm in Minsk. BelCaf has since changed its name to Sam- Solutions.
Although ApplianceWare doesn't have to hire developers in Belarus, it considers Sam- Solutions to be part of its business. Therefore, it worked with the developer to appoint a manager to oversee work and handle translation issues between Fremont and Belarus. The company also frequently sends an IT manager who works in Denmark to Minsk to ensure that processes and delivery are on track.
There are cost advantages to doing development in offshore locations, but they shouldn't be a primary driver, says Kenworthy. And those savings can be offset by additional travel and communication costs, he says.
"You need to make substantial investments in communications," he says. "And there's no getting away from face-to-face contact, so there's airfare, investments in process creation, investments in learning curve and other front-end work. You're basically changing your organizational structure."
- Kym Gilhooly
Recruiting people for time-sensitive application development projects is a growing challenge, says Colleen Niven, an analyst at AMR Research Inc. in Boston. "The problem with trying to launch second and third shifts here in the States is that there aren't enough skilled programmers to handle the projects in question, which are premium projects," says Niven.
Moreover, project managers and programmers balk at working late-night and early morning hours, and given the market for their services, they don't have to.
These realities, combined with the lower turnover rates and salaries in many foreign countries—the average salary for a skilled programmer in India, for example, is about $30,000, according to Niven—are driving global companies to open offshore facilities.
DHL's offshore developers tailor applications to country-specific requirements and even take lead roles in some development efforts, such as a wireless service applications project that's under way in Europe and Asia.
Joyce says the company looks at several factors when hiring in these locations, including the technical and linguistic skills of local workers, long-term business viability and knowledge transfer.
"A mastery of English is a key skill set, as it is the operating language of all cross-group communication for all development, whether it be verbal, hard copy or electronic communication," Joyce says.
Though hiring isn't easy in these global locations, Joyce says there are now advantages to hiring outside the U.S. for development work.
"PC skills are universal now, and I would say that it is actually easier to find cost-efficient skill sets that provide a good fit to our business needs outside the U.S. than in it," Joyce says. "We find less of a tendency toward flavor-of-the-month technologism outside the U.S.
"It is not so much the knowledge but the willingness and flexibility to learn that is important in hiring global IT workers," Joyce explains. "In an incredibly dynamic environment, it is the attitude, rather than gross capability, that counts the most in recruitment."
Nonetheless, Joyce acknowledges that success in such endeavors depends heavily on adopting market standards in technology infrastructure and on ensuring that there's continual communication among development teams in disparate locations. To that end, DHL puts a great deal of effort into developing what Joyce calls "hybrid managers" who are heavily immersed in both IT and business.
"This has been a process we have engaged in for over 15 years," Joyce says. "The boundaries are really transparent now, and managers and personnel are cross-comfortable with the business and its supporting infrastructure."
Gilhooly is a freelance writer in Falmouth, Maine.
A Passage to India
Hiring challenges in the U.S. contributed to Universal Technical Systems' (UTS) decision to open two development facilities in Pune, India. A maker of customized modeling tools for engineering and scientific applications, Rockford, Ill.-based UTS saw much potential in India, thanks to a strong technical education system, large numbers of tech-savvy workers and English proficiency, says company president Jack Marathe.
"India has a large pool of talent and a large pool of trainable people," says Marathe. However, he says, the huge demand for technology workers around the globe means there are now shortages in India as well, so UTS must employ numerous, aggressive recruitment methods. "We don't advertise anymore, as that approach doesn't work," he says.
The local team conducts high-level recruiting efforts, and executives from the U.S. travel there three or four times a year to ensure everyone's on the same page. They scour local training institutions, sometimes sponsoring projects in which they give students real-life development work to gauge abilities. They also give aptitude tests.
For this situation to work, UTS has established strict processes for collaboration between Rockford and Pune. Little things like differences in the way the two cultures write the date, he says, are frequently what cause the most problems in collaborative development efforts.
"Problems come up in communications, and technology doesn't solve those problems. This isn't rocket science, but you've got to sweat the details," says Marathe.
To ensure that such details don't fall through the cracks, workers at UTS India start their workdays later and work until 8:30 p.m. so they can talk with their counterparts in the U.S. And Marathe regularly calls during the evening in Rockford so he can talk with his project manager, who's just starting his morning shift.
Such communication will continue to be critical to the success of shared development and offshore outsourcing efforts, says Colleen Niven, an analyst at AMR Research Inc. in Boston.
"Though costs and available talent are a strong attraction to establishing development facilities in foreign countries, there are negatives, including communication hurdles and the lack of project management skills. You can't just throw things over the wall," she says. If a company isn't comfortable with the project management skills it finds in an offshore location, it should consider sending project managers from the U.S. to oversee work.
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