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Outsourcing: Persistent Systems Interview (Part 8)

Posted on Sunday, Jun 6th 2010

By guest author Tony Scott

Product Development – Indian Style vs. Silicon Valley

Tony: Anand, how do you compare the process of product development in your company with the way software companies traditionally work?

Anand: The entire value of what we have done in the Indian software industry has been our ability to use junior people who do not have the “right” levels of expertise and experience, but forcing them into some structure. We define the processes and what work needs to get done. We distribute the work in such a way that the senior people focus on more difficult problems, and the rest of the work can be distributed among junior people.

If you go to a startup here in Silicon Valley, you’ll find that they hire ten really smart people who are doing the entire process.  Now if they need an installer on the product, the way they will typically do it is say to one of the programmers,  “You’re hired, you are a smart programmer, why don’t you go figure out Install Shield for us.” Sure that person can do it, and in three weeks he or she will get it done, but now three weeks of the smart programmer’s time is gone, and it could have been done in three days, if you know what to do. The next time that programmer has to do it he or she can do it in one day, but when is the next time?  It is not likely that he or she is ever going to do this again. So we see companies using their people resources very inefficiently in the United States – at least at this moment when it comes to building products.

Tony: You said it’s an issue in the United States, but it’s a bigger issue in Europe. Why?

Anand: If you go to these companies, especially some of the engineering-driven companies, you will find that there are some very big egos in the people in those companies who are in their mid to late forties or early fifties. Those people been in the job for ten to fifteen years, and they have become accustomed to working in a certain way. They typically have not kept themselves up to date with what’s happening in the market, because they have not had to so. They are just happy coming to work and doing what they do, and often their products have all sorts of problems because they’ve stuck with the old ways of doing things and are using outdated technology.

Tony: What is the level of awareness on the customer side about this, and what are their alternatives?

Anand: They are not as aware as they ought to be, and that’s a problem. But I think this is going to change, and in fact I am very optimistic about where we are in relation to all of this as a company, and why we will continue to grow.

It’s a fact that customers sometimes believe that they know it all, and therefore they are never that open to suggestions on some areas. They simply do not believe that they can partner with someone who will understand what they do.   Also, a lot of companies, especially startups, think in terms of extending the company through building their own offshore capability as much or more as outsourcing a piece of the product development process. You find a historical bias toward off-shoring rather than outsourcing at many product companies. They like to think, “OK, I can get some labor that is cheaper than my labor rate.” Then they like to micromanage their teams. On a headcount basis they say, “Give me one guy, or three guys, or five guys, and I’m happy because I’m saving salary costs.”

But if you look at it, outsourcing and offshoring are two very different things. Well yes, they are saving the salary cost, but they aren’t taking the advantage of the potential of design for manufacturing – and that is where we have a big advantage as we continue to build our expertise in our core areas of focus.

This segment is part 8 in the series : Outsourcing: Persistent Systems Interview
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