At What Point Do We Admit Off-Shoring Failed?
Roland is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As a citizen, I see all of the grand hoopla in corporate press releases about how much money they are saving using off-shore IT workers. As a senior IT worker with several niche skills, I get the frantic calls and desperate broken English pleas from recruiters tasked with bringing in people, for absolutely no money, who can save a cratered project. I have a pretty good example you should all be able to relate to.
Many years ago, when Caremark was still part of Baxter, I did some consulting for them. Years later, when Caremark was off on its own, I wrote a lot of Cognos PowerHouse on OpenVMS for the various pharmacy applications and internal reporting systems. Some time before CVS (NYSE: CVS) consumed Caremark I received a call from a manager who used to be a developer. As developers we never got along because there was an US vs. THEM mentality between the two IT departments in the company. It was only natural. There were two completely different systems which were supposed to be “compatible” that were being slowly, and painfully, merged into the new system written in PowerHouse and RDB. The final nail in the relationship coffin probably came from the fact one IT group didn’t have anyone working in it with an actual degree in computer science and the other group consisted entirely of comp-sci majors.
Surprisingly, some years after I left and he became a manager, he developed an appreciation for what I had done. He said so during this phone call/interview in the nicest way anyone ever could. He told me that all of the new hires had been stealing my code when they had to create new therapy systems and if one simply read through the source code it would appear that I had continued writing systems for them long after I left. An IT consultant can ask for no higher praise than that.
The purpose of this conversation was that he was trying to get budget to bring someone like myself back in. He told me that IBM (NYSE: IBM) was roughly 2.5 years into a two year fixed bid and nobody at the company believed their shiny new off-shore created Java system running on AIX was going to come any closer to passing acceptance testing than it had at any other point in time. Later I learned that IBM quietly took that project out into the woods, put two behind the ear, and left it there, never speaking of it again.
Not long after hearing that story, CVS took over/merged with, whatever the politically correct verbage is, Caremark. Part of the logic behind this was the fact CVS had applications written in DIBOL (Digital Business Oriented Language) originally developed by DEC on VMS. (DIBOL is now actually called Synergy, runs on many platforms, and is owned by Synergex.)
Upper management seemed to believe it would be no problem to merge both of these systems into one Utopian application for all business units. They so believed in this course of action, they put it out to fixed bid and ultimately awarded Tata a three year fixed bid payment based mostly upon delivery contract...at least judging from what I could make out given the various technical recruiters English skills. One thing was certain. No matter how much anybody had been paid in the past as an hourly consultant, recruiters for Tata weren’t going to pay more than $45/hr and that had to be on a W-2 salary so you were only paid for 40 hours even though you were expected to work a minimum of 60. The people who originally wrote most of these systems didn’t bother returning the recruiter's phone calls.
Time went on. Suddenly I started getting phone calls from broken English recruiters staffing for Cognizant (NASDAQ: CTSH). From what I could make out, at one minute past midnight on the date of contract expiration, management teams gathered in the building and began hurling Tata people out with a betting pool as to how many times their back sides would bounce before coming to a complete stop in the parking lot...or something similar. The recruiters stated that under no terms what-so-ever were they allowed to present anyone who had worked for Tata. Of course, they were offering an $80K salary which contractually obligated you to working 12 hour days 6 days per week AND you were supposed to work nights training the off-shore hires on OpenVMS, PowerHouse, RDB, DCL, and DIBOL. The training was to occur as often as needed and not be considered part of your 12 hour day. Suffice it to say, the people who wrote most of these systems did not bite at this bodacious offer either.
Just this week, a firm who used to sub workers to both Tata and Cognizant and made some of these same offers (less their cut) started running adds looking for DIBOL programmers with healthcare experience at a location pretty close to where these other contracts were supposed to be performed. Now they claim to be “outsourcing jobs back to the USA”. Judging from what I’ve heard so far, all they seem to be doing is attempting to get U.S. IT workers to accept third world wages.
At what point is the investing world going to force companies to fess up to all of their off-shoring debacles?
How does this happen and not make the business news in a post SOX world?
Rumor has it that Vista was Microsoft’s attempt to off-shore Windows development. Wasn’t that warning enough?