Are you looking to increase productivity at your company? Google believes that its engineers are 10 times more productive than a typical engineer or programmer. On its surface, that sounds astounding. Yet, Google believes this to be the case. Is it that the people Google hires are 10 times smarter? That doesn’t make sense. We know the distribution curve of IQ means there is no such thing as someone 10 times smarter. So, something else is going on here. What is it?
Let’s take Google’s claims at face value. Here’s how they make their claim a reality. Google hires smart people and then puts them into an environment with accelerators (such as cloud, automation, integration tools and agile product disciplines) that enable them to be 10 times more productive. The results are astounding both in impact and cost to operate.
Let’s compare this this impact to the other most important factor that shaped the market for the last 20 years: labor arbitrage. If you can move work offshore to a third-party service provider, they can pay workers between 20-60 percent of what is paid to onshore workers. After taking into consideration service provider profit margins and overhead, on an hourly cost comparison, this realizes savings of 20-30 percent. If we just compare the cost savings to Google’s claim of 10 times greater productivity, the benefits dwarf those of the arbitrage model.
This raises a profound question for enterprise IT departments. Should we put increased investment and effort into moving more work offshore, or should we invest in building elastic, automated, integrated environments with cross-functional teams that are fully down the learning curve?
In theory, labor arbitrage and hyper-productive environments are not mutually exclusive. However, there is plenty of emerging evidence that the talent models Google and other high-tech firms have adopted are not conducive to the factory model utilized in offshore factories. Furthermore, it appears that placing these high-performing teams in close proximity to the business further increases their impact by significantly strengthening the alignment between technology and business, resulting in faster, more agile teams, which create better solutions.
My conclusion: Even if Google is overstating the claim of 10 times greater productivity, it doesn’t matter. Getting even close to this rate shatters current thinking of how to deploy IT. If Google’s claim is possible, enterprises have been investing in the wrong places for years. I’m not arguing that offshoring has no benefits; but when it comes to the benefit of improving productivity, the offshore benefit is paltry compared to the Google route.