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April 27, 2004

"US programmers can't get work even at lower salaries": BusinessWeek column

Cost is cited as the primary reason why US companies send programming work to India. So, if American programmers were willing to work for less, companies should be more than willing to hire them rather than deal with the time and distance challenges of offshoring. Right?

Wrong, says BusinessWeek columnist David E. Gumpert based on his study of Aliso Viejo, CA-based Synergroup Systems, an info-tech placement firm that offers the services of American programmers at rates competitive with those in India.

Synergroup rents out it "local" programmers for $38 an hour or less--a rate, the article, that's half the going price for contracted US programmers and only slightly more than rates available from India. And factor in the savings in travel, oversight costs, and management expenses, and US companies are actually getting a great deal.

Gumpert--whose column has an anti-offshoring fixation--spoke to Synergroup's prospects and customers . "In the view of some corporate types, the financial savings from going to India are enhanced because they include a total package," he says. One executive, from a human-resources services company, told Gumpert that he would prefer to continue to send the major portion of his company's outsourced work to Indian firms since they "can offer total outsourcing" covering all major functions including management, programming, communication. The executive also pointed out that Indian firms also have high ratings on the internationally recognized "Capability Maturity Model" (CMM) for software programming--something that Synergroup.

"One of the messages that comes through loud and clear...is that a huge amount of momentum has built up in favor of foreign outsourcing," Gumpert deciphers. He feels the best case for Synergroup is to hope that US companies view it as a backup in the event of the US government enacting laws that disincentivize offshoring and "if states enact privacy-related regulations requiring that sensitive information, like medical records, not be sent offshore".

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