Interesting things

A little known history of IT offshoring – Part I

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Part I – Setting the Stage

By Chuck Ritley & Ken Ritley

Anyone working in IT has heard the terms offshoring and nearshoring.  Two things about them usually come to mind.  First, that they are supposedly about transferring jobs to low wage countries. And second, they were supposedly made possible by recent advances in technology, as Thomas Friedman describes in his book The World is Flat.

These statements are not entirely correct.  In fact, IT offshoring began much earlier, even in the late 70’s and early 80’s, much before the Internet. And the motivation was less about saving money, but having access to top technical talent.

As an IT guy in the early 2000’s, Ken helped build large offshore and nearshore IT organizations in India and Eastern Europe. This is what we’ll call “second generation” IT offshoring – in which the work is made possible by the Internet and remote collaboration. But in the 1970’s Ken’s father Chuck was instrumental in setting up and directing some early “first generation” work – in which teams of foreign specialists were brought into the U.S.

What follows is a discussion between Ken and Chuck to tell the story of how first generation IT offshoring began, the strong impressions it left on the people involved with this work, and to highlight some differences and similarities between what happened then and what happened now.

KEN:  I recall it’s all about mini-computers, which don’t exist anymore today. Can you paint the scene?   What was the year, what was the industry like, and what were you and your company working on?

You have to understand the IT industry in the late 70’s and early 80’s. It was proprietary and minicomputer-based.  Each company had its own processor design and, therefore, a unique OS and language.  At the main-frame level, companies had their own mainframe programming staff who did custom programs.  But the minis were meant for the small and medium-sized business.  Since those companies could not afford a programming staff, or development time, the minicomputer manufacturers sold turnkey solutions.

The set-up involved a network of dealers, most of whom were specialty houses.  For example, in a large market, there would be a number of dealers.  One might specialize in finance, another in distribution, or wholesaling, or transportation, or retailing.  Most would start with a standard accounting suite of software and then tailor it to the needs of a specific industry.  For example, a trucking company would have different needs than a food wholesaler.

The main point is this:  it was a turnkey solution for the end-user, both HW and SW.

Now, to make this happen, the computer manufacturer would provide the basic accounting package: sales, orders, accounts receivable and payable, purchasing, inventory, general ledger, shipping, etc.  These are root functions that every company does – but a trucker does them differently than a clothing retailer.  They were designed to be customized.  Having customized one for a specific customer, the dealer now had some expertise and could sell the same customized version of the package to other prospects. The concept of having standard modules which could be tailored is probably the root of SAP and other systems like it.

KEN: That’s certainly much different than today.  Today the hardware is standard, the software and programming languages are standard, and the main differentiator between companies is the domain or solution.  Can you provide some details about your domain and solution? 

The system of customizing basic accounting packages was used by most of the mini-makers.  And all of them generally had the same set-up of specializing dealers.  But that wasn’t enough.

There was a need for more complex software suites to handle much more than basic accounting, things that dealers with limited staff couldn’t handle.  Manufacturers and distributors have complex operations and want to use computers for operations like scheduling work, planning lead times, and materials acquisition – far beyond the reach of normal accounting.  So we began to specialize in full-function enterprise resource planning and manufacturing resource planning software. In other words, handling all of the functions a company would need to control every function.  These were also meant to be customized easily at the dealer level, since individual needs vary.  We also had a few others, but these were the most complex, and beyond the development scope of any of our dealers.

We designed it, trained the dealer, he sold it, and then tailored it to the customers needs.  Now,  here is where the problems lay: creating these complex software modules required not only excellence in coding, but expertise in the mechanics of a business.  The solution was usually to have a business analyst working with the programmers to spell out the flow of work in terms that they could turn into code.

 

Coming next: Part II – The Challenge

 

IT Offshoring – It began differently than you might think!

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IT outsourcing – offshoring – nearshoring – global delivery?  They’re familiar terms today – in fact, they are buzzwords.  Once they meant only cost-saving, but now these term more often refer to technical excellence.

When I first went to Bangalore in the early 2000’s to manage a global delivery facility for Hewlett Packard, I was amazed. I had traveled India before as a tourist, so I wasn’t sure what to expect from Bangalore.  What I found was a metropolis of IT.  That was 14 years ago.  Today, depending on what source you read, Bangalore is the center of 41% of all engineering research and development (ER&D) and 39% of all global in-house centers (GIC) in India.  In human terms, it has 530,000 trained technical people.  And that’s just the one city.  Directly or indirectly, India employs about 3 million people in direct IT support, and another 7 million in indirect support.

That’s more than 50% of all global outsourcing.

So – when did this begin?  How did it start?  Where did it start?  Why?  Like Henry Ford’s garage it had simple beginnings.  And in 30 years it has become a mammoth industry.

I first waded into this water in 2005.  But my Dad, now a semi-retired systems designer and professor of computer sciences, remembers start-up days back in the 1970’s and 1980’s – literally decades before many people think “offshore” began.  Together we assembled some memories of those first days that we’ll be publishing in a series of upcoming blogs. I think you’ll find it both enlightening and fun.  It’s like looking back at Mr. Ford’s first assembly line.

 

The “offshore” model, with my team in Bangalore:

 

And the “nearshore” model, with my team in Bulgaria:

 

The story begins here on my Dad’s blog, with the link here:  A little known history of IT offshoring – Part I

Mysore Cow

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You can try if you want, but you just can’t take a bad photograph of a good cow!

This is a cow that I came across in a village just outside of Mysore, in Southern India:

Interestingly, I never stopped to think about it until now, but I really don’t know about how the rope shown above goes laterally through the nostrils of the cow.  I guess it’s a bit embarassing to admit I don’t know how this is done – but it also shows that I live a life where something is strange to me that is, in fact, quite ordinary to the overwhelming majority of people on earth.

Touch me and go to jail

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This is one of the gates (I believe it is called the Colmar gate) that leads to the medieval walled city of Neuf-Brisach in Alsace:

And if you look closely enough on the wall underneath the ladder, you’ll find a pretty rare sight in Europe, a mantis that I caught hanging upside down on (but to be honest, mantises that hang rightside up are just as rare!)

This is a protected species in Germany.  I am not sure what would happen in France if you bothered this little fellow. But if you found him in Germany (just about 5 km away is the border) you’d be violating a rather serious law to protect endangered wildlife, and the police would not hesitate to arrest you.

It did what it was supposed to do

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As just about any history buff knows, just prior to World War II France set up a series of underground military bunkers on their eastern border, to prevent an invasion of the Germans.

Did they work?  Many people say: they did what they were supposed to do! The Germans successfully invaded France, but by driving around the Maginot Line and coming down from the north, through Belgium.

Just about all these bunkers are still in existence, and some of them are now museums that you can visit:

They look rather boring from up on top, just a few gun turrets sticking out of the ground:

But underground, some of them are truly massive, as this sketch shows:

Great inventions – 1

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When you travel around to enough countries, you’ll often find that one country has an invention or system that is so stunningly good, you immediately wonder why other places don’t adopt it.

For me, the traffic light system in France is one of these incredible inventions.

The traffic lights in France have the usual red/yellow/green lights mounted high on a post, just as you’ll find in just about every country. But in addition, there are little red and green lights mounted lower on the pole, just at the eyeball height of drivers, as you can see here:

It means when you are stopped at a light, you don’t need to strain your neck or lean forward – you can keep your body in the driving posture and just look straight ahead at these little lights.

BRILLIANT!

Dijon Mystery Houses

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The French village of Dijon, nestled in the Bourgogne region of France, is not only famous for its mustard, but it’s a fantastic and large medieval city, filled with buildings dating back many centuries.

But it’s also the source of a real mystery for me.  If you walk around this huge town and admire the architecture, you’ll find that it is almost exclusively buildings made of stone.  But from time to time you’ll see something like this:

Or this

Which are wood “half-timbered” or Fachwerk houses.

Although these types of buildings are the de facto standard in Eastern France, Germany, and Northern Switzerland – why are are few of them here?  And why are they interspersed so spartanly in what are otherwise stone buildings?

It’s one of the many mysteries on my list that I hope to clarify someday!

Medieval village of knives

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Deep within France, just inside a French national volcanic park, is the medieval village of Thiers:

Manufaccturing more than 90% of all cutlery sold in France, the artisans have made this village not just the knife capital of France, but truly the knife capital of the world:

The village is home to literally dozens upon dozens upon dozens of shops run by knifemakers.  The shop shown above sells custom handmade knives made by a family whose been living here and doing this for six generations!

So it was really exciting and unique for me to practice my French and purchase a pocketknife here, with handles made of Brazilian rosewood:

Interestingly, the inhabitants of this village are something of a language enclave, speaking a language (Auvergnat) derived from Langue d’Oc, one time quite important but now mostly extinct in France.

Jaw dropping experience

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Humans aren’t really so diverse as we might think.

Myers and Briggs created a test to classify people based on their personality. The idea being, that there are just a few types of different personalities. There are plenty of free online versions of the test: you spend a few minutes, answer a few questions, and your personality can be classified into one of several types:

Usually when I manage a team, I ask some of my key team members and high achievers to take this test – and, as happened with me, usually people fall off their chair when they read the detailed description of their personality type and see just how accurate it is, as this example shows.

Why do I find this so useful as a management tool?  I really don’t want or need to know about what Myers-Briggs category people fit into – for me, there are just too many categories to make this a useful management tool. But I find when people read their own self-assessment, it provides them a lot of insight into their own personality, which in turn can help them develop in the team.  In German we call this the difference between Selbstbild und Fremdbild.

Black Church

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Probably not what you are thinking when you read the title.

Here is a snap of the famous Cathedral of Our Lady of the Assumption of Clarement-Ferrand, in the city of the same name, in France:

What’s absolutely amazing about this cathedral is its color.  Claremont-Ferrand sits in an area of France filled with volcanoes, and the cathedral is build with black lava stone.

It’s a pretty impressive sight!

Even more interesting than the church are the people, many of whom do not speak French, but rather a descendant of the old and nearly extinct Lang d’Oc language.

Srirangapatna – The Logan’s Run of South India

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As a small child I was impressed by the scene in the 1976 movie Logan’s Run, when Logan and Jenny escape the hermetically sealed dome only to find that Washington DC – originally the bustling capital of America – has reverted to a quiet, peaceful, animal-filled natural area.

So you can imagine how I felt when I first encountered Srirangapatna in Southern India.

It was once home to the Kingdom of Tipu Sultan, center of a vast dynasty across Southern India.  To be here then was to be at the seat of power, side to side with the movers and shakers of society, truly to be in the company of giants. Today it is little more than sleepy villages filled with farmers and shephards:

Alemanic rituals of Switzerland, Southern Germany and France

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Switzerland, Southern Germany as well as the eastern Alsacian region of France are home to a more evolved form of the German language, called Alemanic. And this region is also filled with tiny medieval villages, some of them still having impressive city walls like Riquewihr in France:

Inside of the village you’ll often find public fountains, which until quite recently supplied the residents with drinking water:

But the most interesting bit are the yearly celebrations such as Faschtnacht, planned for months in advance by the locals and usually involving street festivals and parades:

Unbelievably, in many of these towns the specific characters in the parade and even the costumes themselves are hundreds of years old, each accompanied by elaborate stories and detailed historical myths.

Bodensee: the lake with two faces

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The Bodensee, also known as Lake Constance in English, straddles the border between Germany, Austria, and Switzerland – and it’s also Europe’s largest lake.

But what many people don’t see are its two distinct faces. In fact, I never recognized this either, until someone point it out to me.

By and large, Germany doesn’t have great lakes, so the Bodensee has developed into the place for many Germans to vacation and own second homes: ritzy and glamorous. Filled with fancy restaurants and hotels.

But for the Swiss, on the other side of the lake, the Bodensee is one of the more boring lakes, as far as Swiss lakes go: not surrounded by breathtaking Alps, no sculptured coastline to compare with Norway, relatively flat and boring.  So the Swiss side of the lake never developed in that same way.

Here are some scenes of the Bodensee, taken from the ferry landing at Meersburg:

Wine is produced along the German side of the lake:

And in the summer, you can usually find a huge Zeppelin flying around, since Friedrichshafen is the home to the company that invented the Zeppelin.

Indian apartment essentials

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During the time I lived in India, my apartment was one of the best ones I ever had. Not because it was huge, had three balconies, and was regularly kept clean by a maid and a gentleman who ironed my shirts.  Also not because it overlooked a small park, during the day filled with brightly colored birds and in the evening with huge “flying foxes.” But because of the infrastructure.

Here in my bathroom you can see my “Geezer” – a tank on the wall that heats the water only just before you use it:

 

(I’m not sure if this is where the expression “You old geezer” comes from or not, but it still confuses me why this highly efficient system is not in more widespread use, particularly in the U.S. where the homes are very big.)

Here you can see my water filter, attached to the sink.  It had a canister containing carbon, and a second canister containing an UV light. Thanks to this set up, I think the water I drank in India was probably the best, cleanest water I’ve had in a long time. Because of the low flow rate, however, it meant that I would practice my own “water management” – and I kept my refrigerator stocked with water that I would bottle myself from this system, ready to be used in volume if I needed to:

Here you see my washing machine. There was no real need for an intense spin cycle, because the air was so dry, no matter how wet they were, my clothes would usually air dry within just a few hours:

And finally the best part, my stove, fed by a tank of gas underneath the counter:

Once you get used to cooking with a real flame, it is hard to go back to induction, infrared, or electric.

When the wind blows

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I didn’t see any rocking cradles, but anyway I took this snap just a few meters from a spot called Bodega Head, on a cliff high above the Pacific Ocean, near Bodega Bay, California:

What you can’t see here, but what I find amazing, is that this tree is leaning almost 90 degrees to shoreline.  If I simply turn around, this is what it looks like behind my back:

So even though you’d expect the wind would travel perpendicularly to the shoreline, in fact the local geography and hills somehow influence the wind to run south, parallel to the coast.

(By the way, I am no expert on trees, but I suspect this is a Cypress tree.  Cypress trees are amazing – and I hope to write a number of photo blogs (PHOGS) about them soon!)

Because it is so amazing, here is a close-up of the tree:

Unbelievable hole in the ground – what were they thinking?!

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A lone black crow sits on a sign and contemplates an interesting landmark at Bodega Bay, California, which is nothing more than a hole in the ground:

But unbelievably, this water filled hole – or more precisely formulated, this water filled hole sitting directly on the San Andreas Fault – was originally planned to be the location of the largest nuclear power plant in the United States.  Until, of course, sanity triumphed over business interests in the end.

You can read more about this hole on the sign:

Where the “exotic niche” is mainstream

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On a recent trip to the San Francisco Bay Area, I was shocked / surprised / stunned to see this advertisement on a public transportation bus:

Here’s a close-up of the advertisement:

Even within the IT community, there is probably only a small fraction of people who will understand this advertisement. And a tinier fraction than that who would be motivated to go find out more about this company.

So it is SHOCKING to see that a company expects enough value in paying for an advertisement like this. I don’t know the demographics of San Francisco, but it now must be one high tech city!

Ansel Adams was here – 1

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This is the world famous photographer, Ansel Adams:

And this is the photograph he took in 1953 of a church in Bodega Bay, California:

And this is the same church, photographed by me in 2018:

One of these days I will play around with the color effects, and see what happens when I convert my photograph to black and white.  But . . . I still think Ansel did a better job than me!