While many offshore outsourcing decisions are calculated moves to seed new markets and reduce costs, a smaller number arise simply from familiarity with the culture and economy in question—which may in fact be a bigger, more natural threat to the U.S. than the former because of its long-term commitment and drive for quality. Take software testing tool vendor Parasoft. In 1989, just two years after founding the Monrovia, Calif.-based company, CEO Adam Kolawa launched a subsidiary in his homeland, Poland. His experience has taught him that such a maneuver should be considered from a long-term, strategic standpoint—it’s not a quick fix, in his opinion.
“The fact that I’m Polish has a lot to do with me outsourcing to Poland,” Kolawa says, though he admits that the country’s low labor costs and abundance of educated people didn’t hurt. Today, half of the company’s software development is done in Krakow, along with other business services such as customer support, sales, travel booking, maintenance and almost any task that can be done remotely. Kolawa adds, “This [facility] didn’t reduce employment in our California office, but of course it kept it from rising—[over the years] the number of employees has increased at about the same rate.” Parasoft currently employs 250 people, 80 of them in Poland.
But Kolawa cautions that the road to positive returns was a long one, requiring years of nurturing before he could reap a bountiful harvest. First, the technical skill of his offshore employees was low. “They just came with basic programming languages and were able to write only small programs,” he says. To top it off, Polish isn’t an easy language to learn, so all Polish programmers must speak English. Even so, the lack of Polish-speaking managers in the U.S. meant that frequent visits to the U.S. were necessary.
Poor attention to detail was the biggest problem. “The first project of any importance was to write a GUI to one of our products. What they delivered worked on only the examples that were included in the program. They thought only about implementing the specifications. Once the product was used in a way which was not specified in use cases, it failed—there were memory leaks in the product, it was slow, and so on.”
Lack of creativity was the next stumbling block. “The first step in getting people to be creative is to get them thinking that the glass is half full, not half empty: Every problem is an opportunity to improve and invent,” Kolawa explains. “I had to get them to think that problems they find in programming are not excuses not to do their jobs, but opportunities to create new products.”
“The first reports from them were that it was impossible to do something the way we wanted them to do it—period. No solution was offered. What I had to teach them was that anything can be done—give me a solution. At first, I wasn’t getting very many good ideas, but for the ones that were good, I praised them a lot.”
Kolawa soon realized that one of the problems with creativity arose from a lack of confidence that Polish programmers could create software to sell in the world market. Introducing parts that they wrote into Parasoft’s products was a springboard to writing larger parts of products then full products—until finally, to Kolawa’s delight, they began to propose ideas for new products.
“I think that the lack of creativity is widespread. Japan and China have a huge problem with this,” he opines, attributing the deficiency to their overly restrictive school systems. “Bright people don’t lose creativity in the U.S. school system.”
The subsidiary model is critically important, Kolawa claims: “If the outsourcing organization isn’t part of the original company, outsourcing won’t work.” Subsidiaries are taxed in the country they reside in, and all employees are local, paid at local rates and currency. And while the products can be created cheaper offshore, “there’s no market pressure to reduce their price.”
“Today,” says Kolawa, “there’s no distinction among projects that can be outsourced [to the Polish team]. They’re the same as the U.S. groups—all the groups work together, even if the work is distributed.” And, now that his investment is bearing fruit, he’s considering expanding to other countries.
© Rosalyn Lum, DevTalk, CMP Media LLC