MedSite Inc. figured it could save money by using offshore resources to bulk up its IT staff, but the online marketing and education services firm also knew it had to think carefully about which jobs would make sense to push overseas.
Today, the company uses back-end application developers in Minsk, Belarus, as a way to cut its software development time by a third.
“We’re not leveraging offshoring as a head-cutting resource, as much as leveraging it to augment our in-house expertise,” says Jason Hogg, COO at the New York company.
By using the offshore resources through service provider Epam Systems Inc., MedSite is able to increase and decrease its pool of developers as needed, while maintaining more critical business-focused software architecture expertise at home.
“What we did is we brought (offshore workers) in to co-develop the next version of our interactive detailing platform (a marketing program), which is a major initiative,” Hogg says. “We work as a single project team: They’re doing the back-end coding offshore, and we’re doing the front-end architecture and user interfaces. So all of the front-end stuff is designed in-house and then moved offshore for actual development …. In doing so it enables us to do things much more cost-effectively and faster.”
With more businesses looking seriously at sending IT work offshore, the question is what IT jobs are most at risk. MedSite is not alone in deciding to offshore back-end functions that don’t really give the business a competitive edge. Analysts say the more repetitive, commoditized positions such as application programming, database management, technical support and data entry are those most likely to be sent overseas.
“If you’re doing maintenance work where an application is already built and you’re sitting in a back office updating code or maintaining code, you may be at risk,” says Ravi Kalakota, CEO of E-Business Strategies and co-author of Offshore Outsourcing, Business Models ROI and Best Practices. “Database management, database administration, the commodity database work probably can be done remotely, as well.”
Forrester Research Inc. says offshore vendors continue to expand their offerings and are providing more in the way of business-process outsourcing, implementation of packaged applications, and remote monitoring and administration of infrastructure, all of which will expand the range of IT jobs that could be vulnerable to movement overseas.
On the flip side, companies will be looking to more tightly integrate IT with business objectives, and people who have the expertise to tie together technology and business will continue to be marketable in North America.
“People who truly understand the business side and are able to translate it into technology are going to be very valuable,” Kalakota says. “I’d expect there will be more high-end architecture jobs created.”
As a result, positions such as project manager are expected to grow because of the need for companies to integrate the offshore work into its overall business objectives.
Healthcare technology company St. Croix Systems, for example, which set up a subsidiary in Hyderabad, India, with the help of service provider i-Vantage, offshores primarily application development work and plans to beef up project management resources in the U.S. as the company grows.
“Right now project managers are all here, and then the next layer of management, the team leaders, are in India,” says Troy Kenyon, president and CEO of the Cambridge, Mass., company. “My expectation is we’ll need more of the higher-value jobs here in the future.”
