Offshore outsourcing as an information radiator
In the 60s American programmers earned around $40 an hour. In the 70s they made around $60 an hour. In the 80s they made around $80 an hour. In the 90s, a time of much technical innovation, they made under $90 an hour. Now, in this fourth year of the new millennium, we are given to understand that clock has been reset and that a good Java programmer is earning around $40 an hour once again.
Forty dollars an hour – almost eight times the minimum wage – is a lot of money for someone sitting in a cubical all day. More to the point, it is four times as much as the twice-minimum-wage that one can pay for a good programmer overseas! Because of this price differential, not only in programming, but in a widening variety of areas, a lot of work that used to be done here – programming, review of your federal income taxes, management of your health care records, customer care, interpretation of x- ray, manufacturing and assembly, and accounting – can be outsourced internationally. If it involves a bunch of people, and doesn’t require someone physically here, it can probably be outsourced.
But there is a potential downside to outsourcing, particularly when it involves intellectual property: You are giving your intellectual property to someone who might not have the same standards regarding protection of intellectual property that exists in the United States. In fact, we are given to understand that a lot of Y2K work was outsourced overseas, and that the core processes within the programs were generously spread to competitors throughout the world.
A case can be made that while it is one thing to give away your core processes, the processes themselves don’t do all that much good without the data that goes with it. This may not be entirely true, as your competitors have their own numbers, and your processes might be of as great value with their numbers as they are with yours.
But let us say that it is true. As it happens, most companies do not examine all that carefully code that is written in-house, unless it fails, in which case someone looks at it. We can tell you from painful experience that relatively few organizations have coding standards, and that fewer still have people on staff to review code to make sure it adheres to those standards. And the likelihood of review diminishes when you have outsourced your coding.
You should therefore consider the possibility that, when you outsource programming, you are sharing your code with others, and that it is not impossible that backdoors will be built into the code to allow access to your data, as well as to the handling of that data.
While outsourcing is often the appropriate thing to do, be sure to throw the cost of lost intellectual property into your calculations.