Outsourcing: Interview with Harley Lippman, CEO of Genesis10 (Part 5)

Sramana Mitra: The only question mark would be the skill set, whether the skill set is still contemporary or not.

Harley Lippman: That is true. It all depends on how long they have been out of work, what skill sets they have, etc. If you are dealing with legacy systems and there is an increasing shortage of people who know COBOL or CICS, clearly you will find more people than you may realize. So, people have those old skills, and there is more of a need for them than ever because young people are not interested in learning them. But it also depends on how good and smart they are, and if they are quick learners. Even if they have been out of the marketplace, they can show success from when they were in the IT sector, and employers believe that they are quick learners and they are eager to embrace learning.

Technology has actually become easier to learn than it used to be. Even if people have been out of the market, learning technology has become easier. That is another reason why workers come back. What is increasingly important is the business knowledge. Ten or 15 years ago, companies around the world were somewhat insecure in their lack of technology knowledge and were eager to embrace technology because at that time it was more complicated to learn. A lot of people offshore have strengths on the technical side. But the U.S. is still the leader on the business side. If you just take the banking sector, you have people in the U.S. who could be older, but they may have 20 or 30 years of experience knowing fixed income derivatives – they know the business of banking. Overseas, that knowledge has come late. Countries overseas like Poland could be ahead of the U.S. because they can start with a clean slate, and they can start with the hottest and latest technology. But the business knowledge is where the U.S. is still ahead.

SM: That is right. On the technology knowledge side right now, there is a higher level offshore than in the U.S. on a broad basis – not in the hubs like Silicon Valley, but in the mid-level work. How much more expensive is it to do a project in America these days compared to in India, Eastern Europe, or Latin America?

HL: That is a good question, and it varies by role.

SM: There are ballparks. In the case of outsourcing, when it started, there was a 1:10 ratio with India. Then it became 1:6, and later 1:3. Where are we now?

HL: It is definitely becoming closer. We had work that we were looking to do in the U.S. compared to India, and the cost difference was less significant. If you say it went to 1:3, I have an example where there was one work at a major bank, where in India it would have been $35 per hour, and in the U.S. it was $55 per hour.

SM: I know that if you have a pretty experienced VP who has the experience managing and delivering a lot of projects in India today, that person costs $100,000 per year. That would maybe not even be the case in Michigan or Kansas City.

HL: Once again, it depends on the role. Are they a senior architect, project leader, project manager, program manager, etc.? It depends on how much experience they have and how difficult the work is or the complexity of the project. I understand we are making generalizations with these numbers, but you really have to be more specific to make a good point.

This segment is part 5 in the series : Outsourcing: Interview with Harley Lippman, CEO of Genesis10
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