[This post is a work in progress and is not finished]
I just got back from an Entrepreneurs Lunch at PwC, the title of which was “Offshoring & Outsourcing Lunch with Scott Linden Jones & Mike O’Hagan”. I’ve been to a few PwC events; they’re always well organised and very interesting, but this is the first one I’ve walked out of thoroughly depressed.
On the surface, it might seem like it’s just because I co-founded a Brisbane-based software development company and I’m worried about overseas developers eating our lunch. That is certainly true, but it’s not the whole reason I came out of the event wanting to go straight to a pub and cry into a pint. Outsourcing software development is nothing new; we feel that the value we add by being an on shore solution more than makes up for the difference in price. (And of course, some places that offshore custom development aren’t super interested in passing on the cost savings back to their clients.)
The main reason was that I was disappointed about this ‘New Entrepreneurialism’. At an entrepreneurs lunch, the main focus on being entrepreneurial was basically stripping an existing business down to its component parts, identifying the bits that could be easily compartmentalised, and then figuring out how to make people overseas do them for a fraction of the cost.
Anyone that’s spent any time on developer/tech-heavy communities, especially American ones – like Slashdot – will have seen complaints about this sort of thing before. Developers in large companies that have been doing outsourcing for a while seem to have seen this sort of process a lot, and usually end up blaming “the MBAs” for gutting the company, sending jobs to India or China, and generally making their lives suck.
So this technique isn’t new. Mike O’Hagan, the owner of the moving company Mini Movers and one of the speakers, acknowledged this. Outsourcing is something that the big companies have been doing for ages, but thanks to the Internet removing some of those barriers and increasing access to this global employment market, things have changed and now small companies can take advantage of it as well.
This is all well and good – but it this really what entrepreneurial activity looks like now? Outsourcing some business processes to third world economies and calling it “entrepreneurship” (a word which I’ve always hated) feels like it’s missing the point to me.
[ NOTES TO FINISH WRITING UP]:
- irony of entrepreneurs all doing the same thing, instead of something new
- Mike’s talk
– security not a concern? what about customer data/privacy in outsourced environments?
– noted corruption is a problem (no solution)
– need to know who to go with
– “same problem in Australia” with a bag full of money
– political issues in Australia – no plan to deal with “high minimum wage”
– Economics of outsourcing
– prices already increasing in some outsourcing markets (implication that this sucks and is unfair and is going to mean they’re going to have to outsource their outsourcing when it gets too much and they can find a cheaper country)
– Quality of outsourced work has not been an issue (… based on one anecdote?!)
– No real data presented (many people have good stories of outsourcing success but just as obviously, but many don’t)
Other points to note:
- Equilibrium will be probably be restored over time as markets evolve and cheaper outsourcing markets develop & become more “first-worldy”
- Some links about offshoring as references: