Renewing the Economy

By Larry Dignan  |  Posted 2003-09-05 Print this article Print

You want to lower costs. You will be managing projects globally. But the move of programming and other top jobs abroad has implications for national security. And you just might be creating your next rival.

Renewing the Economy
Clark, like other technology executives who use offshore suppliers of talent, wonders if the topic would get attention if the U.S. economy were creating jobs and growing 4% to 4.5% annually.

"If business were better there wouldn't be so much doom and gloom," says Clark. "Right now offshore outsourcing is one more brick to carry on your back. It's a huge issue that'll be around until the economy picks up."

Perhaps. It's possible the issue may stick around. Technology executives and analysts expect companies to continue using offshore resources even if business turns up. And the advance of communications networks will make it easier to simply move every project to the cheapest source of a particularly defined skill anywhere in the world.

Still, different companies draw different lines in the sand.

For Clark, LexisNexis' data center will stay in the states because he considers it to be the company's competitive advantage. Product development, however, can go offshore.

For Fridenberg, it makes sense to keep systems architects who know technology and how to meld it with the needs of an insurance company.

Peter Weber, CEO of SevenSpace, a company that manages infrastructure for the likes of CVS and FootLocker, and is planning a pilot for offshore development, won't take his call centers offshore, contrary to most executives.

Weber says most of the calls SevenSpace gets won't adhere to a script. Given that the call center is the first contact with customers, he'll keep such centers in the U.S. Instead, he will move application maintenance, development and systems management positions offshore.

Weber also wants some face time before moving parts of his infrastructure offshore. He's likely to bring overseas programmers and engineers to the U.S. for six months. The full cost savings is delayed since SevenSpace will have to house and feed his new workers, but the company will save as much as 80% when they go back to India, he says.

Even Bingham, an ardent supporter of offshore outsourcing who marvels at the creative destruction of the U.S. economy, has his limits. He says "core" research and development will remain domestic. Bingham's job as CEO, the finance and legal teams, and the folks who cook up the strategy for Cadence will all stay stateside.

Would Cadence one day move its headquarters and operations elsewhere, altogether? Bingham says no way. Indeed, he argues that if the economy creates a lot of jobs, it's likely that technology talent that currently resides in India and other countries will flock to the U.S. to start companies that will hire Americans and pay taxes, analysts say.

"The core technology development and strategy best resides where it is today," says Bingham. "The reason is that this is the right place to be for the things that have to come together. The U.S. has unmatched infrastructure. The U.S. has a robust leading education system, venture capital, capital markets and an open, free legal system. It's also a safe place to live. Most countries simply can't replicate that."

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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