Offshore Costs

The new economy is creating a huge headache for the newly minted U.S. Department of Homeland Security.

The spending downturn has affected both users and manufacturers of information technology products. CIOs respond by cutting budgets and putting pressure on tech vendors to lower their profit margins. Vendors, in kind, respond by pulling out all the stops to lower costs. Often this means offshore manufacturing.

It’s yesterday’s news that the only thing “Dell” or “HP” about those vendors’ machines is the logo glued on the computer casement. What is becoming news?and it should be a serious concern for Homeland Security Secretary Tom Ridge?is that U.S. software giants are following suit by increasingly delegating important software development and quality assurance work to offices in foreign countries.

It’s one thing to assemble the component parts that go into a PC. Not much opportunity to change the product there. But software development is a horse of a different color. Foreign nationals who work as software engineers for Cisco, Intel, Microsoft and Oracle in Bangalore, India, personally build?or corrupt?the software products that make up the foundation of the global digital economy and infrastructure.

In this post-9/11 environment, it’s tough for end user companies and technology manufacturers to strike a balance between the security concerns and worker privacy rights, respectively. While Secretary Ridge can mandate strict privacy and security measures in Boston?if Congress goes along with it?what can he do about such policies in software development shops in Bangalore? Not much. And all it takes is one errant line of code written by a terrorist posing as a software engineer to create global chaos.

I am convinced that offshore software development is the soft underbelly of this nation’s future technology infrastructure. True, offshore development offers CIOs and technology vendors a short-term gain by lowering costs, but it creates potential for long-term and catastrophic pain by making it easier for bad guys to get jobs building American software.

The answer? We need to dramatically improve our country’s math and science curriculums.

If you’re concerned about offshore software development, drop me a note.