The Beginning of The End

I’m really not the kind of person who does doomsday predictions, but I simply have to make this one: it is the beginning of the end for software development outsourcing to India. There is not one but many factors that now come to a head; in fact it looks so uncannily like a Seldon crisis.

[Note: this post is too long and probably controversial. Flames welcome. Comments are not moderated.]

The story goes like this: India started to become a successful destination for software development outsourcing somewhere in the later half of 90s. By 1998-99, it became apparent to lay public that software engineers drew salaries like king’s ransoms and traveled abroad in business class — things that the previous generation couldn’t have done even with a lifetime’s dedicated employment.

The engineering graduate education situation however, was a tough one during those days. A state would turn out only maybe 450-500 computer science engineering graduates a year, and literally millions would write an entrance exam to qualify for a seat every year. Passing the engineering entrance exam (with a good rank that too) was possible only for talented, committed, hard-working students. And this reflected in the quality of engineering professionals that filled the ranks of software shops in Bangalore and elsewhere. They did a good job obviously, resulting in success stories of outsourced software development that made profit-minded capitalists sit up and take notice half a world away.

The meager annual supply of professionals, however, was not sufficient to meet the demands of the booming software industry. Enterprising people were quick to setup engineering colleges, and in a few years, the number of CS graduates jumped ten-fold, to 5000 per year. Yup. Ten-fold. However, (i) where did the extra people come from, and (ii) where did they get the teaching staff to teach these extra people?

The extra people came in not (significantly) because more people wrote the engineering entrance, but simply because the threshold was lowered (since now there were ten-fold more number of seats per year).

The extra teaching staff reality is a bit more pathetic. Mostly, the previous year’s graduates who could not land a job anywhere took up this task. Of course, surely this was not always the case, still every new college had a few such “young” lecturers.

The end result was that you now had 5000 graduates a year, of which 500 would actually be talented, committed and hard-working. Some of the rest could be trained and would be useful in the long run. Most of the rest would end up being a liability to the organization, having to be “hidden” “on field”.

Thus organizations evolved from 1998-2008, with their core, competent teams getting diluted by a constant influx of progressively less competent, less committed graduates. Organizations now need to have extensive, academic-like training/induction programmes. Senior (“old”) developers need to spend more time mentoring/directing/instructing “new” developers than before. The senior devs act as “seeds” around which teams gets built. All the while the ratio of pre-boom-era developers to the gen-x-era developers keep decreasing.

This process has now reached a point where it is no longer profitable for organizations to continue in this fashion. Teams have become unmanageable, unproductive and the business is on the brink of being unprofitable. Organizations that can come up with and employ radically different approaches towards building and sustaining productive, balanced, high-performance teams would probably survive. Big, bureaucratic, process-driven organizations would probably flounder. In less than 2 years. Yeah. That’s a prediction with my name on it.

But there are other factors too that support the prediction. Today, more than ever, the talent of Eastern Europe and China is accessible to the western world. The break up of USSR and the “opening up” of China (to whatever extent) made this possible. It now also makes possible the offering of a dev job to Hungary what would earlier have been definitely to India. It pains me to accept that they’d really probably do a better job of it.

The US economy, after many years, is in recession again. This would further affect the jobs that get outsourced at all from the US. And probably a few other countries too.

There are some more factors too, for which I don’t have space on this post — how pioneering organizations have become bureaucracies, how people-orientation has given way to process-orientation, how Bangalore infrastructure has collapsed totally, how the support professional groups (HR, IT, adminstration) are struggling, how dismal the hiring/head-hunting scene has become.

And therefore, my prediction, again:

This is the beginning of the end. Within two years, major earthquakes will spoil the dream run of the Great Indian Outsourcing saga. The industry will become sober, mature, and will leave quite a few in tears in the process.

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17 Comments

  1. Feb 20, 2008 at 1:07 am

    Hmmm. Indian software developers are less attractive because the USD is very low and wages have gone up consistently.

  2. Feb 21, 2008 at 5:41 am

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  3. Gentle Reader said,

    Feb 22, 2008 at 6:09 am

    I agree that there is overstaffing in software companies in India, and a few star developers make the projects run. (I am guessing you are one of the star developers feeding many other young hats).

    At the same time, software technology is developing such that there is a place for people who don’t understand pointers (and don’t want to). The barrier to entry is becoming lower with managed code, scripting languages, HTML and Javascript ‘programmers’. The amount of software that needs to be written is also growing exponentially, as we continue to build layers upon layers of abstractions.

    I would say that there is a place for everyone… the amount of code that can be written is so much. As long as there are people to put money, there will be work.

    Companies come and companies go… this has always happenned. The innovative companies of yesterday, that have become bureaucracies of today will slowly rot away. The huge ones will become slow moving elephants – they will keep trodding at their slow pace towards obscurity. But innovation will happen. It will happen in the garages and the spare bedrooms… ideas will blossom, passion will fuel it, and we will see some spectacular companies born out of India itself. The barrier to entry is also lowered in the business aspects of software.

  4. Feb 25, 2008 at 9:29 pm

    […] what an architect turned blogger who writes anonymously from Bangalore is predicting. The author is writing from the movement’s Ground Zero, so he may have better insight than […]

  5. bdm said,

    Feb 25, 2008 at 11:55 pm

    interesting point of view and predict, but i think that in a world where work is always serialized the quantity will ever win on facing quality.
    The felt of the USD in these days had raised the costs, but i dont’ think that will pass the costs that incs must have in “first world”.

  6. Scott Swank said,

    Feb 26, 2008 at 12:25 am

    My experience with outsourcing. This is anecdotal, and should be taken as nothing more. Our company outsourced two medium-sized development efforts to an Indian company. We had two of our senior developers oversee the efforts. Both were abject failures. The code was awful in ways that I’m sure are familiar to us all: cut/paste code everywhere, no sense of OO (i.e. classes were either dumb beans or masses of procedural code what worked on the beans), broken scoping (i.e. values were passed as parameters, or set on the object and then used in a subsequent method, or BOTH AT THE SAME TIME). And then much was simply not understood at all: hibernate, transactions, oh my.

    So with two of our best people overseeing the development effort and constantly, daily sending back instructions for correcting the above — both projects utterly failed. They are both locked up in little closets until we can throw them out and re-write them. And we payed a lot of money for them.

    And the above was with two separate companies that each had good reputations after substantial research on our part.

    So I can only conclude (remember that is is anecdotal and is only my conclusion) that it is almost impossible to reliably get quality development from India. That does not mean that there is not good development — but how does a foreign company reliably secure quality development for their money?

  7. Bloomberg said,

    Feb 26, 2008 at 2:03 am

    It’s not just indian code bad, but even in Europe the Eastern Europeans code bad as well the South Americans, Africans and Asians as well. I think Scott is right that only Nordic Men write the best programs and it is proven all around and across.

  8. Jon H said,

    Feb 26, 2008 at 3:40 am

    I don’t believe race has anything to do with development skill.

    I believe it is created by two scenarios.

    A. CS universities churning out CS majors like a factory.

    B. People entering CS as a job, and not a passion.

    I don’t have a CS degree. However, I’ve been a programmer for almost 10 years. To me, programming was a passion that I was lucky enough to get paid for.

    The difference in quality code is simple. Do you love what you do? If not, you probably shouldn’t be doing it, and your work will show it.

    As far as this blog entry, I believe the author is absolutely correct. The outsourcing projects I am involved with have been abysmal nightmares, despite our onshore best efforts to keep things under control. There is no savings in development if I have to rewrite all the code once we receive it.

    This is nothing new to us, the developers. It is only a painful realization that the upper level project managers who only thing in dollars are finally starting to get.

  9. Ashu said,

    Feb 26, 2008 at 7:29 am

    Personally I don’t think the problem is with skill level or the dedication or the hard-work of the youngsters. This might be the assertion of an oldie who is just is not able to accept the fact that youngsters these days are paid many times higher than what he or she earned 10 years back. As I see the problem, I blame it on the big outsourcing companies that recruit students in masses even in the 3rd year of their engineering degrees. This makes the otherwise hard-working and passionate young engineers to slack off and fail to hone their most required programming skills as part of their final year projects. This results in young engineers who are not yet ready for the big exposure. So in my opinion, these companies have to base their recruitment on the final year project/dissertation of every individual and this will in itself improve the quality of the engineers that India produces by large extent.

    I strongly disagree with the fact that Indian outsourcing is a problem. I have seen bad code written by men and women from all parts of the world. Just singling out Indians because they are far more spread out in the IT arena makes no sense. It wouldn’t take too long to realise that once the outsourcing starts spreading to other countries that bad code problems lie everywhere. It all lies in achieving maturity in the process of producing quality engineers and in fact I think India will be the first to refine this process and the all the other candidate countries will follow the same strategy. As we all know, concepts require improvisation before they become mature and I truly believe that this is the phase of improvisation if the big outsourcing companies take steps towards it.

  10. Hrishikesh said,

    Feb 26, 2008 at 11:17 pm

    @Ashu: Computer science students who are really interested in programming should not have to wait for their final year projects to pick up or hone their skills. Going by the same logic, ‘slacking off’ in the final year should not lead to such weaknesses as is under discussion here. Most such Indian degrees courses have a basic programming course in the first year itself(in Pascal or C). And believe me (I speak from personal experience) the quality of a final year dissertation tells you nothing authoritative about the people who worked on it. There is a 50/50 chance that if project is good, the people who worked on it will be good as well.
    I don’t think that the author of this blog is singling out Indians. It feels more like an observation of the current state of things leading to a prediction.

  11. Hrishikesh said,

    Feb 26, 2008 at 11:19 pm

    Oops.
    “It feels more like an observation of the current state of things leading to a prediction.”
    should have been
    “It feels more like an observation on the current state of things leading to a prediction.”

  12. Feb 27, 2008 at 9:35 pm

    […] Anonymous Bangalore Architect has written an interesting article on how outsourcing to India is at The beginning of the end. He has a lot of valid points of the current state of outsourcing in India, mainly too many people […]

  13. Mar 1, 2008 at 7:35 pm

    I think outsourcing as a concept will continue to exist since it is driven by the economic disparity between different parts of the world, whether India gets a pie of it or not depends on the simple principle of ‘survival of the fittest’. Whichever company learns to adapt to this equation will continue to get assignments.

  14. NP said,

    Mar 8, 2008 at 10:57 pm

    Me: I am an Architect of Indian origin. I did all my schooling in India and came to US 25 years ago. I never held a job in India.
    Comments: The original prediction about doomsday scenario seems real. The event that are predicted; may in fact begin to surface and show in next 2-5 years. I have to agree with many observations that code developed by Indian outsourced psuedo Software Developers is of low quality. I have seen that myself. Yes, bad code (it is subjective in some sense) is written by everybody. But the code written by Indian outsourced Software developers is very visible; simply because a large base of psuedo Software Engineers.

    But this is nothing new. There is an opportunity on part of Indian Outsourced Software Industry to improve. I am not old enough to have seen this; but around WW2; Japanese were known for poor quality in manufacturing. We all know how that changed in next few decades.

    Is it likely to happen with Indian Outsourced Software Development Industry? I have a pessimistic view. That view is shaped by some fundamental traits in the culture and society; the attitude towards long term thinking vs. short term quick bucks; investment in infrastructure etc. So I think Indian Software Developers will not be able to shed the perception of poor coders for a long time. It will be synonymous with poor quality, “you get what you pay for” metaphors. It takes a few years before a seasoned developer starts get good instincts and Indian developers (yes, I am generalizing here), by and large; are not getting that baking-in period. Revolution will be over after first initial chest thumping.

  15. Mar 14, 2008 at 2:25 pm

    IT will just shift to a more favorable destinations like Russia, Belarus, Ukraine, China. That’s the clear tendency I see being a marketing manager for an offshore outsourcing company. In Belarus we do not feel the decline of dollar much b/c the economy is being structured around US dollar and the exchange rate for Belorussian ruble/dollar remains the same.

  16. Mar 15, 2009 at 3:32 am

    […] con los resultados de enviar trabajos a dicho país. Me ha parecido bastante interesante el post publicado en The Tired Architect en el que se predice el fin del offshoring en la India. Siendo un comentario […]


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