Latest Austin export: jobs
Smaller tech companies join trend of moving work in design, support overseas
By Amy Schatz
AMERICAN-STATESMAN STAFF
Monday, August 11, 2003
When Austin-based Pragma Systems Inc. released new software for personal digital assistants last month, it marked a significant turn for the 13-year-old firm.
The software was the creation of Pragma developers in Austin and Dhaka, Bangladesh, where Pragma's new partner, Grameen Software Ltd., is based.
Outsourcing some of the coding offshore cut the software's development time in half, said Quamrul Mina, chief executive officer of Pragma, which creates server networking and security software for servers running Microsoft Corp.'s operating system.
"This economy and this industry are very dynamic. You have to take advantage of all the possibilities," Mina said. He said the partnership has freed his Austin software engineers to focus on other projects while giving the company an opportunity to also sell products overseas through Grameen's sales force.
"In the future it's going to be pretty important for software companies to have a worldwide presence," Mina said.
Large corporations, such as Microsoft , Dell Inc. and others, have made no apologies about moving design and tech-support jobs overseas to lower-cost locations such as India, where workers earn a fraction of what information technology professionals in the United States make.
That companies as small as Pragma, which has just 15 employees, are also now looking to the Far East suggests how pervasive the practice is becoming.
It's a frightening trend for white-collar tech workers, who are increasingly finding themselves out of work, replaced by less-expensive Indian developers.
Tech research firm Gartner Inc. recently estimated that 1 of every 10 information technology or tech-service-related jobs in the United States will move offshore by the end of 2004. A separate study by Forrester Research estimated that 3.3 million U.S. service jobs will move overseas in the next 15 years, with information tech jobs leading the way.
On Wednesday, offshore outsourcing is expected to be one of the hot topics of a daylong conference on outsourcing trends at the University of Texas sponsored by Texas chapters of The Indus Entrepreneurs, known as TiE, a nonprofit international tech group.
T he rise of outsourcing in high tech also is opening the door for entrepreneurs in Austin who have experience in India to help smaller companies move jobs overseas.
"I think it's a huge growth opportunity," said Christopher Ewen, co-founder of Client Outsource, an Austin-based startup that helps tech companies set up back-office operations, such as customer support, in India.
Ewen and his partner, Switzerland-based Vinoo André Mehera, previously worked at Dell, where they were responsible for setting up and running customer-support operations.
Working out of their homes and financed by Indian investors, the pair have signed up nine clients since launching last October, although only one client is Texas-based. The firm operates two calls centers in Chennai, India, with about 600 seats, about half of which are already full. They expect to be profitable in 18 months.
Client Outsource helps small companies take advantage of Indian call centers without actually having to invest in infrastructure and hire Indian employees themselves. Client Outsource owns the call centers and staffs them for companies.
"A lot of companies coming to us that want to put four people offshore or eight people offshore," Ewen said, although he and his partner target companies with 100 to 500 customer-service agents.
"There a lot of competitive pressures on these companies here. The smart companies realize this is a continuing trend," Ewen said.
Outsourcing isn't a new phenomenon, even for high tech. Assembly jobs started migrating to Asia years ago, starting with computer parts. But now it includes design, as well.
"This is a natural evolution. It's part of the maturation of every industry," said Richard Lariviere, dean of liberal arts at the University of Texas.
For the past nine years, he has been a consultant for corporations interested in expanding their operations into India. Business is good these days, Lariviere said.
"We were an agricultural nation for the first 100 years of our existence. Then the industrial revolution hit, and our country's genius is that we're constantly reinventing ourselves," he said. "There's been a historical alarm sounded every time these industries reach a stage of maturity" and jobs move to places where products or services can be produced more quickly at less cost.
"The American labor pool then gets absorbed into the next new thing," Lariviere said.
Outsourcing is a two-way street, said Anupam Govil, president of TiE's Austin chapter. "In the short term, you will see some jobs moving offshore and see some job loss here. But on the flip side, we're also seeing a lot of those companies which are using offshore providers are also expanding in the U.S.," Govil said.
"Companies, in order to remain competitive, have to tap into global resources."
