1 FLiP and Outsourcing: A Guide to Survival Hal Helms halhelms.com

2 What we'll cover What are the forces behind outsourcing? What are effective strategies? What is FLiP? How can it help us in terms of outsourcing?

3 Outsourcing facts In the past 3 years, the number of offshore programming jobs has tripled, from 27,000 to more than 80,000 according to Forrester Research Average pay for offshore talent: 20% of what it is for North American programmers According to Gartner Group, software produced overseas is not only cheaper, but better as measured by the Capability Maturity Model (CMM) CMM 4: US: 41%, Overseas: 59% CMM 5: US: 17%, Overseas: 83%

4 Outsourcing facts Indian software exports have topped $10 billion/yr and are growing at 30% annually Efforts to legislate against outsourcing, while politically popular, are seldom effective since large outsourcing companies (IBM, EDS, GE) are multi-national corporations 80% of outsourcing is currently done in India, but other nations are scrambling to create offshore industries Still, America's unemployment rate is 5.7%, the envy of France with 9.3% and Germany with 9.0%, and even Canada with 6.8% Cold comfort for those whose livelihoods are impacted

5 Outsourcing facts In August of 2003, the price per hour/programmer in India was $22/hr. Of the 44K generated, the programmer kept 10-11K/yr By the end of 2004, 1 in 10 IT jobs will have been moved offshore In 2003, 68% of IT execs responding to a CIO magazine survey said their offshoring will be increasing while 30% said it would remain the same. You can do the math for the amount of jobs returning to the US The CIO survey found that 11 percent of the companies had outsourced system and architecture planning offshore, and 14 percent had outsourced research and development—two categories that analysts and chief information officers have predicted would never leave these shores.

6 Forces towards outsourcing Enrollment in undergrad computer science programs is in slight decline while demand increases The belief by many thought leaders in the programming community that programming is an art form rather than an engineering discipline

7 Will Work for Rupees US jobs are fleeing overseas... United States GDP per capita $35,060 Unemployment rate 5.8% Labor force million Population below the poverty line 13% Typical salary for a programmer $70, and heading to the subcontinent... India GDP per capita $480 Unemployment rate 8.8% Labor force 406 million Population below the poverty line 25% Typical salary for a programmer $8,000 Top 5 US Employers in India General Electric 17,800 employees Hewlett-Packard 11,000 employees IBM 6,000 employees American Express 4,000 employees Dell 3,800 employees

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9 The skills line Technical skills LowHigh Survival

10 The skills matrix Weak technical skills Strong Project skills Strong technical skills Weak Project skills Consider a career in the arts Project management Project architect Outsourcing Survival

11 Forces opposed to outsourcing Language differences Culture differences The time zone issue Upward pressure on salaries in o/s countries Loss of critical expertise Degradation of service quality Loss of intellectual property and control over proprietary data

12 Quotes/facts While pay for basic application development has plummeted 17.5% in the past two years, according to Foote Partners, a consultant in New Canaan, Conn., U.S. project managers have seen their pay rise an average of 14.3% since rentacoder.com Outsourcing will put downward pressure on programming jobs that remain here

13 Quotes/facts

14 Education The half-life of engineering knowledge—the time it takes for something to become obsolete—is from 7 to 2.5 years William Wulf, Pres. National Academy of Engineering Pragmatic programmers recommend an education investment plan, similar to a financial investment plan invest a minimum amount per month plan time in advance have a plan for what you'll be studying

15 To learn more… Books The Inmates Are Running the Asylum by Alan Cooper The Goal by Eli Goldratt Any of Edwards Deming’s books Any of Tom DeMarco’s books Training/Mentoring Project Success with FLiP by Hal Helms, Inc.