Tag Archives: onshoring

Thoughts on Economist Special Report on Offshoring and Outsourcing

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As you outline your IT services sourcing strategies for 2013 and beyond, there are some great takeaways that buyers and providers alike should take into consideration stemming from this article in the Economist. [Not to mention, they give a little plug to our domestic sourcing industry.] Below are a few takeaways and some thoughts on reshoring of IT services to the domestic sourcing space:

  • “In a study of job creation in America McKinsey found that workers for high-level IT support in the cheaper parts of the country cost less than in Brazil or eastern Europe and just 24% more than in India.”
  • Standard & Poor’s is cited in CIO magazine to say that they used to offshore much of their IT work, but now they want to send it no further than three hours from Manhatten.
  • A survey of outsourcing executives by HfS Research in Boston last summer found that America is seen as the world’s most desirable region for expanding IT and business-services centres in the next two years. India now comes second, despite its lower labour costs.

Speaking of lower labor costs, the following chart highlights this dramatic loss of India’s labor arbitrage. Further, if you use US IT salaries from teir 2 and 3 locations (where we locate our development centers), you find that the labor arbitrage is less than 5%.

This chart is definitely something to take into consideration when deciding the future of your IT service needs. With high attrition rates in offshore locations, resources need to be rehired and retrained with each one that turns over. This takes time away from your project efficiency, and TIME IS MONEY. Per the Economist, “In a study of job creation in America McKinsey found that workers for high-level IT support in the cheaper parts of the country cost less than in Brazil or eastern Europe and just 24% more than in India.” When budgets are tight, do you really have the flexibility to risk sending work offshore and spend double the amount of time to get it done as you would with a domestic sourcing partner like Rural Sourcing?

As a matter of fact, we have a case study with one of our clients who experienced just what was outlined above. When looking for other outsourcing options, they came across rural sourcing as a cost-effective alternative and have become one of the biggest advocates for the domestic sourcing industry. They pay us dollar-for-dollar the same per month as they did to an offshore provider, and not only that, but they get double the amount of work done with much rework. Now, that is something to write home about!

Here at Rural Sourcing, we obviously believe in the success of utilization onshore resources instead of or in conjunction with other IT outsourcing options. But we are curious, what are your pains? Have you looked at using a domestic sourcing partner? Are you just starting to explore sourcing strategies? Feel free to comment on this post and let us know! Let’s get the conversation going.

The Economist: Outsourcing and Offshoring Special Report

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January 19, 2013 |   Special Report: Outsourcing and Offshoring

“… But now many companies are finding that they lost their connection with important business functions, says Mr Justice. At the same time the cost advantage that drew firms offshore in the first place is disappearing. Salaries for software engineers are going up rapidly and inflation is high. For IBM, says Bundeep Ranger, chief executive of IndusView, and advisory firm, the total cost of its employees in India used to be about 80% less than in America; now the gap is 30-40% and narrowing fast.”

Read the full article

 

Boxing: How to spar with the C.L.R. Part I

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The purpose of this blog is to help developers understand what Boxing is, when it occurs and how and why to avoid it.
Boxing is the term in .NET used to describe the action of assigning a value type, typically stored on the Stack, to a reference type, where it will now be stored on the managed heap. Below is a basic example of Boxing.

Int32 unboxedInt = 10;
Object boxedObj = unboxedInt;

The above code declares a 32 bit integer, unboxedInt, and initializes it to 10. The actual value of 10 is stored directly on the Stack in the C.L.R. Then a variable of type Object is created and initialized to the value of the unboxedInt. It might not seem like much, but a boxing action just occurred. When we initialized the boxedObj variable with the value type unboxedInt, a spot on was created on the managed Heap that held the value 10. The boxedObj variable does not hold the value 10 directly; it rather holds a reference or pointer to an address on the Heap. While in a small application the cost of Boxing is minimal, if memory management is a major concern this is a topic worth investing some time on.
Many .NET developers every day perform Boxing operations unknowingly and are none the wiser. For example can you take a look at the following two code examples below and identity how many Boxing operations occurred in all?

Example 1:
Int32 unboxedInt = 10;
Console.WriteLine (unboxedInt);

Example 2:
Int32 unboxedInt = 10;
Console.WriteLine (“{0}-{1}-{2}”, unboxedInt, unboxedInt, unboxedInt);

The answer is 3. And they all occurred in Example 2. WriteLine is an overloaded method and one of the overloads takes a 32 bit integer as an argument, which means in Example 1 there was no Boxing involved. The same cannot be said for Example 2. Since there is no overloaded method of WriteLine that takes 3 32 bit integers as arguments, the default overload used is:

WriteLine (object value)

This of course means that each of the integers passed to WriteLine will have to be boxed to a reference type, before they are written to the console. A better solution for Example 2 would be to rewrite it like this:

Example 2 Revised:
Int32 unboxedInt = 10;
string boxedObj = unboxedInt.ToString ();
Console.WriteLine (“{0}-{1}-{2}”, boxedObj, boxedObj, boxedObj);

In the revised version of Example 2, Boxing only occurs once, which is less of a performance hit on the application. You may not see the benefits initially but following little coding tips like this can really save you from the expensive cost of Boxing in the future. Stayed tuned for Part 2 of this topic.