Bryan Mekechuk, Partner with the Pacific Crest Consulting Group, who just came back from India.
Some guy just said he has outsourcing in Estonia, which is too cool. Not a transcript...
More than a business issue, a political issue. Offshoring is neither a good or bad thing, its both. References the Wired article on India as a recent good read.
In-house, Contract or Outsource. Contrasting those three methods with sourcing location Onshore, Nearshore and Onshore in a nice 3x3 grid.
10% of the Fortune 1000 is using Offshoring. GE has 100k people in India, even doing R&D and couldn't close their books if there was a conflict there...but the geopolitical risk has changed dramatically. Interesting that the US now has vested interests we need greater stability, but also GE has done its risk analysis before, and despite the Pakistan conflict made big bets there.
Apparently, soo long as its not to get sales, its okay to pay government officials according to US laws. Chinese state council mandated that all government entities must switch to products majority owned by Chinese interests.
Enterprise Software: SAP has a huge new facility in Bangalore, Tech support is going offshore, Global sourcing is key -- not just for large companies (ScanSoft example).
Used to have maintainence development only offshore, now foreign workers don't really want to do the low level work either.
Arthur Patterson at Accel pushing his portfolio companies to push 100% of their development offshore. Venture firms are telling their Limited Partners about their India strategy. Sequoia invested in 24/7 customer, which has 2.5k people in India and a handful in the Valley.
Some discussion about if offshoring fosters competition from abroad. Most people thought that this was not a risk and new innovative products. Risk of stealing IP is the same although practices differ. Ben Smith: Its social captial -- a lot easier to burn someone thousands of miles away than someone in your own Valley. I create new competitors everyday in the Valley (104 at last count, Ben).
SEA ME WE3 undersea fiber optic cable severed by an earthquake and work was interrrupted for three days, Satellite not dependable, all a factor for your due dilligence. Bob Gardner, Citrix, host onshore, only "GUI and keystrokes go to India." Someone tried banning paper and notes to protect business secrets, but people circumvented using memory sticks. Quality of education (IIT) and language skills (only way out of the Caste System), but of course each hire is different.
Compare India with China and Russia and IP, Education, Quality and English pale. Geopolitical stability is the greatest risk for Brand India. India is also protectionist itself.
"Getting" requirements can be a problem...is 20-30% savings worth the operational risk? His analysis showed a 31% savings. Level 3 technical support not being provided in India.
I pointed out the work of Catherine Mann which suggests that offshoring software component production with local assembly and implementation could drive a wave of productivity growth.
Howard Dean: As long as half the world's population survives on $2 per day, the world will never be secure.
Kerry wants to provide tax incentives.
Finance, legal, IP, every service you can imagine is going offshore. (moving the legal profession was seen as a positive in this room). Sending a wage offshore, however, is different from buying a shoe from offshore.
So here is the wonderful irony I see about offshoring. Finally people are getting to understand very personally what happened in the manufacturing sector. Corporations are generally concerned with what will happen to their own competitiveness. The same parties the once drove globalization and policies that provide universal rights for corporations as people. Unfortunately these same rights are not afforded people as people. The imbalance of cost structures from western societies adhering and investing to hold such standards compared to the Third World creates the great sucking sound. The world will be engaged in a ruthless commodity game that will redistribute wealth in every sector until this cost (and benefit) structure is evened out.
We are in for disruption, deflation and worse than anything run the risk of becoming protectionist. We started globalization, just because now we realize what it means to compete in global market we fostered, doesn't mean we should try and stop the inevitable. Adapt.